Supreme Court New South Wales Medium Neutral Citation: Despot v Registrar General of New South Wales & Ors Sky v Despot [2011] NSWSC 273 Hearing dates: 8, 12 March, 30 April, 13, 30, 31 August, 1, 2, 3 September, 20-24 September, 18 October, 7 December 2010, 3 February 2011. Decision date: 31 March 2011 Jurisdiction: Equity Division - Technology and Construction List Before: Associate Justice Macready Decision: I direct the parties to bring in short minutes to reflect my decision and argue any outstanding matters and costs. Catchwords: CONTRACT - relief - damages - rectification - specific performance - declarations sought that that the purported sale of plaintiff's property pursuant to a power of attorney and a deed of security and indemnity were fraudulent and should be set aside - allegations of breach of fiduciary duty - allegations of breach of s 12 of the Powers of Attorney Act 2003 - allegations of negligence and misleading and deceptive conduct - allegations of breach of s 74O of the Real Property Act 1900 CONTRACT - building - defendant builder sold property to recover amount owing under purported building contract - identification of contract terms - performance - oral terms - evidence - breaches of the provisions of the Home Building Act 1989 - claim for a quantum meruit for building work performed Legislation Cited: Fair Trading Act 1987 s 42 Conveyancing Act 1919 Home Building Act 1989 ss 5, 4, 10, 92, 94, 99, 102, 103BA Home Building Regulation 2004 r 66 Interpretation Act 1987 s 8 Powers of Attorney Act s 3, 8, 9, 12, 13, 15, 16, 48 Real Property Act 1900 s 47O Cases Cited: ABB Engineering Construction Pty Ltd v Abigroup Contractors Pty Ltd [2003] NSWSC 665 Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 at 263 Broulee Developments Pty Limited v Mackay [2008] NSWSC 32 Chan v Cresdon Pty Ltd (1989) 168 CLR 242 Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005 Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 301 Daniels v Pynbland Pty Ltd (Nos 1 & 2) (1985) 4 BPR 9716 Eddy Lau Constructions Pty Limited v Transdevelopment Enterprise Pty Limited [2004] NSWSC 273 Griffin v Clark (1940) 40 SR (NSW) 409 Hawkins v Clayton & Ors [1988] HCA 15 Madden v Kevereski (1982) 2 BPR 9645 Montgomery and Rennie v Continental Bags (NZ) Limited [1972] NZLR 884 Orr v Slender [2005] NSWSC 1175 Otter v Lord Vaux (1856) 6 De GM & G 638; (1856) 43 ER 1381; Bankes v Small (1887) 36 Ch D 716 Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 Renard v Constructions (ME) Pty Ltd v The Minister (1992) 26 NSWLR 234 at 276 Repington, In re; Wodehouse v Scobell [1904] 1 Ch 811 Smart v Sandars (1848) 5 CB 895 Sopov v Kane Constructions Pty Ltd (No2) [2009] VSCA 141 Spina v Conran Associates Pty Limited; Spina v M&V Endurance Pty Limited [2008] NSWSC 326 Tobin v Broadbent (1947) 75 CLR 378 Tingley v Muller [1917] 2 Ch 144 Urban Traders P/L v Proceris P/L [2005] NSWSC 1192 Walsh v Whitcomb (1797) 2 Esp 565 West v Read (1913) 13 SR (NSW) 575; (1913) 30 WN (NSW) 204 Wollondilly Shire Council v Picton Power Lines Pty Limited (1994) 33 NSWLR 551 Texts Cited: D Cremean, M Whitten, B Shnookal, Brooking on Building Contracts, 4th ed (2004) S Furst and V Ramsay, Keating on Construction Contracts, 8th ed (2006) Rawlinsons Construction Cost Guide 2008 Category: Principal judgment Parties: Ranko Despot (Plaintiff) Registrar General of New South Wales (1st defendant), Roy Maalouf (2nd Defendant), Stelli Pty Limited (3rd defendant), St George Bank Limited (4th defendant), Dominic Carbone (5th defendant), Jay Tyler (6th defendant), Joyce Azzi (7th defendant),Sky Constructions Pty Limited (8th defendant) Sky Constructions Pty Limited (Plaintiff) Ranko Despot (Defendant) Representation: Counsel: Mr G Laughton SC for Despot Mr R Gracie for Sky Constructions and Maalouf Mr P Dowdy with Mr Harris for the St George Bank Mr J Kelly SC for Mr Carbone Mr B Gross QC Mr Williams for Stelli and Azzi Solicitors: Johnston Vaughan for Despot Spinks Eagle Lawyers for Sky Constructions and Maalouf Henry Davis York for St George Bank, the 4th defendant Colin Biggers & Paisley for Mr Carbone, the 5th defendant Kheir Lawyers for the 3rd and 7th defendants File Number(s): 2009/298869 2009/298832 JUDGMENT 1HIS HONOUR : This is the hearing of two proceedings with the evidence in one hearing being evidence in the other. A judge of this Court has referred the proceedings to me. 2Ranko Despot ('Mr Despot') brings the first proceedings in which he sues his builder, Sky Constructions Pty Limited ('Sky Constructions'). Mr Despot is the owner of a unit on New South Head Road, Double Bay, New South Wales ('the property'). Sky Constructions entered into an arrangement with Mr Despot to undertake extensive renovation work on the property, which Mr Despot had purchased in 2005 for $1.19 million. 3Mr Despot seeks orders and declarations that the purported sale of his property by the principal of Sky Constructions, Mr Maalouf, to Stelli Pty Ltd ('Stelli') pursuant to a power of attorney and a deed of security and indemnity, dated 5 September 2007, given by Mr Despot to Mr Maalouf and Sky Constructions were fraudulent and should be set aside. 4Mr Maalouf sold the property to Stelli (the third defendant) to recover amounts said to be owing to Sky Constructions by Mr Despot. The property was sold for $1.6 million. 5Although completion of the sale of the property took place on 3 July 2008, Mr Despot obtained interlocutory orders to prevent the registration of the transfer and Stelli's mortgage to St George Bank. Mr Despot remains the registered proprietor of the property. 6The second proceedings were commenced by Sky Constructions against Mr Despot to recover $1.485 million allegedly owing under a home building contract for the extensive renovations to the property. Mr Maalouf claims there was a written contract for this sum between Sky Constructions and Mr Despot, executed on 16 July 2007. According to Mr Despot, there was an oral agreement between himself and Mr Maalouf, on behalf of Sky Constructions, that the building work would be done for $250,000. 7The parties accept that Sky Constructions was not the holder of a builder's licence at the time the contract might have been signed and the claim is now (subject to the court's approval) for a quantum meruit for the building work Sky Constructions performed. 8The parties' different contentions pose irreconcilable differences and there are improbabilities that make their acceptance impossible at different levels. 9In order to understand the many factual matters that will need to be debated, it is useful to provide a short chronology of events that have occurred or have allegedly occurred. CHRONOLOGY 10In 2004, Mr Despot purchased a unit on the southern side of New South Head Road, Double Bay. The unit was on the fifth floor of a seven story building and enjoyed views over the harbour. Mr Despot's partner, or former partner and their child, occupied the unit after its purchase. 11In 2005, an application was made to Woollahra Council in respect of renovations to the unit and on 9 August 2005, development consent was issued for the renovation works. Mr Despot says his partner obtained quotations that ranged from the high $300,000's to over $1 million. Nothing further was done at this stage. 12In May and June 2007, Mr Despot placed the Double Bay unit on the market but it did not sell. The highest offer was $1.29 million. Mr Despot decided to renovate the unit. 13In July 2007, Mr Despot met Mr Maalouf who offered to undertake the renovation work to the unit. Mr Despot and Mr Maalouf inspected the unit. 14There is an executed building contract in evidence, which was dated 16 July 2007. Mr Maalouf suggested that Mr Despot signed the contract that day at the offices of Jonathan Clarke, an interior designer. The contract was in the usual coloured form provided by the Office of Fair Trading and showed a price of $1.485 million for the cost of the renovations. 15Following expert evidence in the proceedings, Mr Depot concedes that it is his signature on the building contract and it is his signature on other documents that I will refer to later, these being the power of attorney and deed of indemnity and security, but Mr Despot suggests that his signature was obtained fraudulently and at a much later date. 16On 30 July 2007, Mr Maalouf and Mr Despot attended the office of an architect who Mr Despot had previously engaged to obtain the DA and plans for the unit, which the Council had approved in 2005. 17In early August 2007, Mr Despot says he reached an oral agreement with Mr Maalouf that he would complete the renovation works for the sum of $250,000. Apparently the keys to the unit were handed to Mr Maalouf at that stage. 18Mr Despot claims that in late August 2007, when Mr Despot and Mr Maalouf attended the unit, he was surprised to see that it had been stripped out before revised plans were completed and before quotes from sub-contractors were obtained. 19On 3 September 2007, Mr Despot gave Mr Maalouf a cash cheque for $15,000. Mr Despot says Mr Maalouf provided him with a document to sign and he was told it was an authority for Mr Maalouf to deal with the Council. Mr Despot says he signed the document. 20A deed of security and indemnity and a power of attorney, dated 5 September 2007, are in evidence, which were prepared by Mr Dominic Carbone, Mr Maalouf's solicitor. Mr Carbone is now the fifth defendant to the proceedings and he is the subject of a number of different cross claims. The power of attorney appointed Mr Maalouf as Mr Despot's attorney. The deed of indemnity and security was with Sky Constructions and it was to secure amounts owing on the construction contract. 21Mr Maalouf alleges that at approximately 5pm on 5 September 2007, he and Mr Despot met at a Double Bay restaurant, during the meeting Mr Despot signed the deed of security and indemnity and the power of attorney. Mr Maalouf says that Mr Tyler and Mr Michael Larry, who have given evidence in the hearing, attended the meeting and they observed Mr Despot signing the documents. 22Mr Despot denies he signed any documents on that day. He called a number of witnesses who gave evidence of his movements on that particular day. 23On 6 September 2007, Mr Despot was picked up from a Double Bay restaurant at approximately 1.30pm and driven to the airport. Mr Despot departed for Croatia on 6 September about 3.30pm. 24In August 2007, Sky Constructions commenced work on the unit in breach of the DA and the consent issued by the Council. The breaches included a failure to obtain an acoustic report, commencing work without a construction certificate and numerous other matters. In addition, Sky Constructions did not have a building licence. Council issued a construction certificate on 4 December 2007. A building licence was finally obtained on 12 March 2008. No insurance was taken out as is required by the Home Building Act 1989 ('the Act') and by the conclusion of the initial hearing; it still was not in place. 25Mr Despot returned to Australia on 26 November 2007. 26In December 2007 and January 2008, Mr Despot made a number of payments to Mr Maalouf for building works, which were often in cash. In these proceedings Mr Despot alleged he paid a sum of $324,00 by cash or cash cheques and purchased appliances for the unit worth $44,139. This makes a total of $368,139. 27Mr Maalouf for Sky Constructions acknowledges the receipt of payments amounting to $207,725.95. 28In February 2008, Mr Maalouf travelled to Lebanon and in late March early April 2008, he returned to Sydney. 29Building work on the unit continued in the first half of 2008. 30On 8 May 2008, Mr Despot attended the offices of Jonathan Clarke, an interior designer and signed numerous documents including a schedule of finishes for the unit. 31In April and May 2008, Mr Maalouf arranged the sale of the property to Stelli Pty Ltd a company owned by Michael and Joyce Azzi. Mr Maalouf had met Mr and Mrs Azzi at their caf known as Alcatrass. Mr Maalouf instructed his solicitor, Mr Carbone, to prepare a contract of sale. Stelli and Mr Carbone executed a deed of settlement on 12 May 2007, which was allegedly to cover any possible shortfall in funds that were to be left outstanding by way of vendor finance. The Azzi's were selling a business to provide them with the money necessary to complete after they had borrowed a large amount from St George bank. Contracts for the sale of the property were exchanged on 16 May 2008. 32Strangely, the deed of settlement was in a common form of a discretionary trust with the general beneficiaries being Mr Maalouf and his family. Mr Maalouf was also the appointor and in this role he could remove the trustee Stelli. This effectively gave him apparent control over the property after its sale. 33In May 2008, Mr Despot discovered that Mr Maalouf or Sky Constructions had placed a caveat over the property and he telephoned Mr Maalouf demanding he remove the caveat. A lapsing notice was served and the caveat lapsed. Mr Maalouf hid the fact that he had arranged for a sale of the unit from Mr Despot. 34On 2 June 2008, Mr Despot left for overseas. While he was overseas he says he received a telephone call from his bank manager informing him that Mr Maalouf had come in to the bank to obtain his bank statements, whilst claiming to be Mr Despot's son-in-law. 35On 3 July 2008, while Mr Despot was still overseas, settlement of the sale of the property to Stelli took place, pursuant to the alleged power of attorney between Mr Despot and Mr Maalouf. 36On 18 July 2008, Mr Despot returned to Sydney from Croatia. 37Mr Despot discovered on 21 July 2008 that the unit had been sold and it was possible he did not own it. 38The vendor was paid $1,028,914 on settlement, of which $502,540 went to discharge Mr Despot's mortgage to St George Bank. $464,932 went to Sky Constructions and the balance paid outstanding rates. $480,000 was left owing as vendor finance. There was a failure to pay the balance of $91,086 of the purchase price. 39On 21 July 2008 Mr Despot attended the Department of Lands and revoked the power of attorney that had been registered on 6 May 2008. On the same day he made a report of fraud to the Surry Hills Police Station and the following day he obtained an injunction in the Supreme Court restraining the registration of any dealings over all his properties. This effectively prevented the registration of the transfer to Stelli and the registration of the mortgage to the St George Bank, which had financed the purchase. CLAIMS 40Shortly after the commencement of the hearings, the claims against St George Bank were settled on terms that depend upon orders the Court might finally make in the proceedings. St George Bank then took no further part in the proceedings. The claims between Mr Carbone, Stelli and Mr and Mrs Azzi were also settled. Mr Despot raised claims in the hearing that can be summarised as follows: (1) Fraudulent conduct by Mr Maalouf, Stelli, Mr and Mrs Azzi, Mr Tyler and Sky Constructions; (2) Breaches of the provisions of the Home Building Act 1989 by Mr Maalouf and Sky Constructions (3) Breach of fiduciary duty by Mr Maalouf, Mr and Ms Azzi and Stelli; (4) Breach of s 12 of the Powers of Attorney Act 2003 by Mr Maalouf; (5) Negligence and misleading and deceptive conduct by Mr Carbone; (6) Breach of s 74O of the Real Property Act 1900 in respect the lodgement of a further caveat 41There are now two cross claims remaining in the principal proceedings that are as follows: (1) A third further amended second cross claim brought by Stelli and Mrs Azzi against Mr Despot, Mr Maalouf and Sky Constructions. The claim seeks declarations as to their entitlement to be registered as owners of the property and it seeks damages, compensation and contribution in respect of any loss they may suffer. (2) A third cross claim brought by Mr Maalouf against Mr Despot and Mr Carbone. It claims damages for various causes of action that depend on the outcome of the principal claims by the plaintiff. 42In the proceedings by Sky Constructions there is a first cross claim by the defendant, Mr Despot, against Mr Maalouf and Sky Constructions. It seeks to set aside the power of attorney and the deed of security and claims monies paid, the sale proceeds and damages. ISSUES 43As pointed out in the parties' submissions, there are number of threshold questions that arise for consideration and there are some consequential issues. Depending upon how these are answered, questions might then arise under the various cross claims (to the extent that they are still extant in the proceedings). 44The threshold questions would seem to be the following: (1) What was the arrangement between the parties for the construction work performed and were the: building contract dated 16 July 2007; deed of security and indemnity; power of attorney, both dated 5 September 2007; and contract for sale of land, dated 16 May 2008, vitiated by fraud? (2) Are the building contract, the deed or the power of attorney or the contract for sale, or combination any of them, unenforceable by operation of sections 4, 5, 10, 92 or 94 of the Home Building Act 1989? (3) Is Stelli entitled to an order for specific performance of the contract for sale? 45The consequential issues are: (1) Whether Sky is entitled to a quantum meruit under section 94(1A) of the Act and the amount of that quantum meruit. (2) The amount Sky has been paid in respect of the work. (3) The amount, if any, to which Maalouf or Sky or both are liable to account to Stelli or Despot or both for moneys had and received. 46I turn to each of these questions. THE THRESHOLD QUESTIONS 1. What was the arrangement between the parties for the construction work performed and were the: building contract dated 16 July 2007; deed of security and indemnity; power of attorney, both dated 5 September 2007; and contract for sale of land, dated 16 May 2008, vitiated by fraud? Introductory considerations 47The case put forward by Mr Despot was that he was the subject of a fraudulent scheme on the part of Mr Maalouf and later with the connivance of Mr and Mrs Azzi. Submissions were put in general terms: "2. There is sufficient evidence to support a finding by the Court that the Building Contract was a sham, at the hands of Mr Maalouf. His company, Sky, was an unlicensed builder. The purpose of the Building Contract was to take advantage of the then recent sale by Mr Despot, to the knowledge of Mr Maalouf, of properties which Mr Despot owned in Victoria Street, Darlinghurst, for which Mr Despot received significant sums, by inserting into the Building Contract a value for the work which far exceeded the actual of value of the work performed, and then using improperly signed documents, the Power of Attorney and the Deed, to acquire the title to the unit or improperly obtaining benefits under the Power of Attorney. 3. It could not be said that the work which was actually performed was complex, or onerous. 4. The work involved relatively simple renovations, constrained by the fact that the building was a unit and that supporting walls could not be removed in any event. 5. The amount of the fraud, based upon the difference between the work as quantified by Mr Beencke and Mr Heymann is in excess of $1Million. 6. The Court would find that Mr Despot has been the victim of a significant fraud perpetrated by Mr Maalouf and aided and abetted by Mr and Mrs Azzi. 7. The sham Building Contract is central to the case of Mr Despot. The Deed purports to enforce an entitlement to a sum under the Building Contract, a sum due by Mr Despot to Sky under the Building Contract, and the Power of Attorney has been used to confer a benefit on Sky and, indirectly, Mr Maalouf. 8. Mr and Mrs Azzi and Stelli particularly, were on notice that Mr Maalouf was to receive a benefit from the exercise of his power; improperly obtained a bargain for Stelli, and were involved in the fraud by Mr Maalouf. 9. In those circumstances, Stelli was not a bone fide purchaser for value without notice; is not entitled to specific performance of the Contract for Sale and is not entitled to take priority over the registered proprietor, Mr Despot." 48The evidence Mr Despot put forward as to the arrangements for the work was quite simple. It is contained in his first affidavit in these terms "21. A few days later Maalouf met me at the "B @ the Bay" and he said to me words to the effect of: 'I can do this job for about $250,000 and very quickly, I should be able to finish the whole job by Christmas. To do it for this price however we will have to agree to change the plans. The bathroom and kitchen will stay where they are and the laundry will have to moved to save the plumbing costs. My father is a very fine cabinet maker and he can make all the cabinets fairly cheap.' We went to Maalouf's car and he got out the architect's file and plans he had obtained from my architect and indicating to the plans he discussed with me what he intended to do. I said words to the effect of: 'Ok let's see what you are going to come up with. Shall I use my architect to make the changes to the plans?' He said: 'No, I'll use mine.' I said: 'OK' Maalouf then went away. 22. About mid August 2007, Maalouf telephoned me and said words to the effect of: "Ranko I want you to meet me at the unit and have a look at what I have done" 23. I went to the unit with a friend of mine, Bradislav Ciric. I don't have a drivers licence and Ciric usually drives me around when needed. 24. When I went into the DB unit, the whole apartment had been stripped, there were no doors and cabinets, everything had been stripped down and removed. The carpets and the items belonging to my partner Penny, such as the washing machine, dryer and fridge were stored in the garage. I was shocked, I said: "How come" Maalouf said words to the effect of: Don't worry I'm Catholic, trust me I'll finish this job for $250,000. 25. I then had a talk with Ciric and said words to the effect of: 'Well even if it costs me about another 20% its OK.' Ciric said to me: 'Even $250,000 is to much'. 26. I said to Maalouf words to the effect of: 'You don't have the new plans or anything'. He said words to the effect of: 'Don't worry, I'm catholic. Everything is on the way. I'll have everything in a day or two.' When saying the above Maalouf showed me the gold crucifix he was wearing. I didn't say anything further. I was shocked. I had not even given him the go ahead and he had stripped the apartment. I left without saying anything else." 49Mr Maalouf denied this and suggested that in early discussions before 16 July 2007, he quoted estimates of $1,000,000 to $1,500,000. 50Mr Maalouf claims that the building contract was signed on 16 July 2007. What is clear is that after his initial denials, Mr Despot now accepts that he signed all the relevant documents including the contract. The handwriting experts report was dated 16 July 2009. His evidence as to his signature is contained in his second paragraph 121 of his affidavit of 20 November 2009 in these terms: "121. In relation to the Office of Fair Trading contract, the Deed of Indemnity and Security and the Power of Attorney to Maalouf, I have no recollection of signing these documents if however the signatures on these documents are deemed to be mine, I stress that I would never knowingly, and would have never knowingly signed such documents and have never or have no recollection of seeing these documents prior to the commencement of these proceedings. The only time I may have unknowingly signed off on the documents was on the 8 May 2008, when I signed off on a bundle of documents at the office of Jonathan Clarke which Maalouf informed me were required to be signed in order to obtain the Occupation Certificate." 51Given the purchase price of the unit ($1.19m) and the sum at which it was passed in at auction in May and June 2007 ($1.29m), the concept of Mr Despot agreeing to pay any such figure as that suggested in the contract is highly improbable. That is, unless Mr Despot intended to deceive Mr Maalouf from the start because he had no intention of paying him for the quality finish that Mr Despot conceded he required for the refurbishment works. 52It is clear in this case that Mr Despot and Mr Maalouf both have serious credibility issues. The defendants made the following submissions as reasons for not accepting Mr Despot's evidence: (a) Mr Despot originally claimed that he did not sign documents such as the deed but then when confronted with the handwriting expert report changed his mind. (b) Mr Despot painted the unbelievable position that he was somehow tricked into signing these documents because he thought they were an application for an occupation certificate. (c) Mr Despot altered his position regarding the text message. (d) Mr Despot made self-serving statements in an attempt to distance himself from the works. (e) Mr Despot withheld from the Court the fact that he had obtained quotations for renovations works from a company other than Sky in excess of $1,000,000.00 and then he tacitly admitted knowledge of the higher quotes. (f) Mr Despot made the unbelievable claim that he turned up to his unit and found it stripped and yet did nothing to stop the works. Mr Ciric, who is Mr Despot's driver, says that Mr Despot was not surprised when he went with him to the renovation. (g) Mr Despot tried to claim that he did not know what works were being carried out, claiming, " I used to go to the unit a couple of times a week but most of the time no one was there". On the other hand Mr Ciric, claimed that otherwise "we speak every day about his renovation". (h) Mr Despot claimed that he was not at the restaurant on 5 September 2007, yet Mr Ciric said Mr Despot came down the restaurant at about lunchtime till about 4.00 - 5.00 pm. (i) Mr Despot changed his evidence from saying that he signed papers on the 8 May to the 5 May because he knew that the documents were registered on 6 May 2008. (j) At a directions hearing before Hammerschlag J, lawyers for Mr Despot sought to have a power of attorney uplifted and inspected by a handwriting expert before Mr Despot put on further evidence. Hammerschlag J rejected that request and refused Mr Despot access to the original power of attorney until he had put on his evidence. (k) The facts surrounding the power of attorney are further evidence of Mr Despot's unreliability as a witness. As noted by Counsel for Mr Carbone, the power of attorney came into existence on 5 September 2007 and the signed power of attorney was returned to Mr Carbone on 6 September 2007. Mr Despot gave no explanation how it came to be that he signed that document prior to 6 September 2007 and he admits in his amended statement of claim that he did sign the document see Para's 17, 42,42a particular (a) and Para 39(a). 53Leaving aside the contested matters of fact such as (g) and (h), Mr Despot is plainly prepared to say whatever will help his case. He has not been truthful in putting his case to the court and given his lack of explanation of what really happened about signatures on the documents, I find it difficult to accept his evidence unless it is corroborated. 54All other parties in the proceedings attacked Mr Maalouf's credibility. To pick up on a number of the matters referred to in Mr Carbone's submission by way of example: (a) Mr Maalouf's evidence about the checklist for owners in the Building Contract shows that he was prepared to and did deliberately falsify the document with the intention of deceiving its readers. (b) Significantly, the false answer given by Mr Maalouf to the question "Does the contractor have a current contractor licence?" and "Does the licence cover the type of work included in the contract?" contradicts Maalouf's evidence that he told Despot he did not have a licence and would write in the licence number when a licence was obtained. (c) In answer to the question "why is it you were so willing to falsify the answers appearing on this check list? Mr Maalouf said "Firstly, to start the job". That answer proves his preparedness to falsify a document in order to advance his commercial aims. (d) In the same answer Mr Maalouf went on to say, "Secondly, after getting instructions from Mr Carbone that there shouldn't be a problem getting the licence later". Mr Carbone says he gave no such advice. Indeed, the answer says nothing about all of the other falsifications in the checklist for which Maalouf was responsible, including his knowingly false answers to the questions concerning insurance, such as whether a copy of the certificate of insurance had been handed to the owner. That answer suggests that Maalouf is prepared to give false evidence to lay off responsibility for his own actions to other people. (e) "Thirdly", Mr Maalouf said, "Mr Despot knew from the beginning or from day one that I was not a licensed builder and he was happy for me to start, knowing I would put the licence in there later". If everyone knew Sky did not have a licence, there was no need for Maalouf to falsely record the contrary in the checklist. 55What was astounding about the way he gave all this evidence was the apparent calm manner in which he gave the evidence. He was not discomforted when admitting the untruths. Clearly he was a practiced liar. 56Mr Maalouf was prepared to and did deliberately bring into existence a set of falsified invoices and statements which incorporated the builder's licence number dated at a time when no licence was in fact held. His excuse that Carbone advised him to bring into existence false documents was rejected by Carbone as a lie and having heard his cross examination, I agree. 57Mr Maalouf's diaries, Exhibits C5 and C6, are not authentic documents. Normally a diary would bear some signs of use but these diaries are pristine. The diaries do not record a number of major events, as you would expect of a genuine document; for example, they do not record the sale of the property for $1.6 million or any other events relating to Mr & Mrs Azzi. They do not record information on other jobs. I am satisfied that Mr Maalouf concocted them for the purpose of supporting his case. 58Mr Maalouf conceded that he deliberately kept secret from Mr Despot the fact that he had found a purchaser for the property at $1.6m and had proceeded to exchange contracts on 16 May 2008. This is not the behaviour of an honest man - even if he did hold a valid power of attorney and he was entitled to sell the property in order to pay Sky for the work that had been done. 59There were also Mr Maalouf's extraordinary denials of documents when he was taken to the circumstances surrounding his knowledge of the sale of Mr Despot's properties, for which Mr Despot stood to receive a purchase price in excess of $5,000,000. One example of such documents is solicitors' costings of uncontroversial conveyancing transactions. These were very unlikely to have been fabricated, as Mr Maalouf claimed. Mr Maalouf just wanted to distance himself from the knowledge. 60I will not accept Mr Maalouf as a credible or truthful witness on any contested factual matter. The building contract 61I return to the question of the 16 July 2007 building contract. 62Mr Maalouf called another witness, Mr Jonathon Clarke, who was present on 16 July 2007. Mr Clarke gave evidence that there were a number of meetings that Mr Despot attended. The first meeting was said to be on 28 June 2007, when there were discussions on the standard of finishes for the unit. He said there was another meeting on 14 July 2007, when a display of finishes was shown to Mr Despot. Mr Clarke said the meeting on 16 July 2007 was their third meeting. 63Mr Clarke gave affidavit evidence in these terms: "11. A further meeting (the second meeting) took place between RM and Ranko Despot at my office on 14 July 2007 at 12.00 pm. At that meeting I gave a comprehensive display of the finishes that would be used in the renovation of the property. Ranko said words to the effects "I am very happy with your proposal I am looking forward to when this apartment will be finished" . At this meeting RM said, 'I want you to provide me with a room by room description of finishes for the apartment'. I said, 'Ok I can have that prepared by midday Monday so we can meet at my office at 6.00pm Monday". I recall RM saying to Ranko Despot words to the effect that "Now that you have finalised the finishes we can finalise the contract'. 12. There was a further meeting (the Third meeting) at my offices on Monday 16 July 2007 at 6.00pm. At that meeting Ranko Despot was present as was RM. 13. At the Third meeting RM, myself and Ranko Despot sat down at my meeting table. I placed on the table my schedule of finishes and I explained to Ranko Despot each finish on a room by room basis. When I had finished the explanation I said, ' Are you happy with that' He said ' Yes very happy I am looking forward to the project start and finish'. I then got up from the table took the schedule to the photocopier to make a copy for RM and Ranko Despot. Annexed hereto and marked "A" is a copy of the schedule of finishes prepared by me. 14 . The photocopier is less than one metre from the meeting table where Ranko Despot and RM were sitting. As I was photocopying the schedule I looked at RM and Ranko Despot sitting at the meeting table. They had a document on the table and they were looking at it. RM was talking to Ranko Despot he said words to the effect that, 'This is standard Department of Fair Trading contract that you will need to sign '. I recall Ranko Despot saying, 'Yes that fine '. 15 . When I competed the photocopying I sat back at the table and RM and Ranko were looking at a document and discussing its contents. I saw Mr Ranko Despot sign the document that was on the table. That document was a generic Department of Fair Trading Home Building Contract. The cover of the contract was partly orange. I have seen many of these contracts." 64There are also problems with Mr Clarke's evidence, to which I will return, not the least of these is that on 28 June 2007, Mr Despot, according to his passport, was overseas in Indonesia. 65One of the more critical documents in the case, which helps to solve this problem, is a typed memo created 17 August 2007. According to Mr Carbone's evidence, Mr Carbone received a memo that was from Mr Maalouf on 21 August 2007. The memo addressed to Mr Jay Tyler, the contact manager for Sky Constructions and it was in these terms: "Attention Jay Tyler The following are the details for my Double Bay site: 1. Ranko Despot 1/300 Victoria Street Darlinghurst NSW 2010 (client) 2. Sky Constructions Pty Ltd 7 Ruby Street Guildford NSW 2161 (my company) 3. Strata conditions are working hours Monday to Friday from 8am to 5:30pm and Saturday 8am to 1pm no work Sunday. 4. Development address unit 7/539 New South Head Road Double Bay 2028 5. Special conditions are as follows... once contract signed by both parties within 7 days the sum of $40,000 due to be payed, and the balance divided over the following 3 months. The balance to be paid end of every month from date of starting work. If work starts and deposit not paid a further 7 days will be given to pay the deposit if required, if this attempt fails the full amount will be due of $275000 plus gst within 30 days. If these payments are not paid sky constructions can put caveats or writs on any property Ranko Despot owns. These include any costs taken by the company or persons involved with the company to have money paid. A 4% default rate monthly will take into affect as well, with failure to pay the money due until full amount is due including legal costs and any other costs. This default rate will continue until full amount paid no matter how long time takes in recovery of money. Roy Maalouf" 66The note refers to the prospect of a contract yet to be signed and it refers to a deposit of $40,000 yet to be paid. 67There are handwritten notes on the document that are important in establishing a number of matters. 68Mr Maalouf was the only director of Sky Constructions, although the only shareholder was his wife. It will be noted that the word caveats is spelt "caviets". This is Mr Maalouf's unique spelling of the word. He used the same spelling when he reconstructed his diary. It was apparent from cross-examination that he did not know the correct spelling of the word "caveat". 69The handwriting on the document shows the words "dated August 27 bldg Agt" which is Mr Carbone's handwriting. According to Mr Carbone, he wrote those words on the document when Mr Maalouf told him that Sky Constructions had entered into a building contract with Ranko Despot, dated 27 August 2007. This date is in the deed of security and indemnity (it is dated 5 September 2007) as the contract date in respect of which that document operates. Importantly, there is no reference to $1.485 million in the memo to Mr Tyler dated 17 August 2007. 70There are a number of entries in the building contract that militate against it having been signed on 16 July 2007. The first of these is that it contains the contractor's licence number under "Owner and Contractor details". This number that could not have been included in the contract on that date. Mr Maalouf only applied for the licence at the end of January 2008 and the licence was issued on 11 March 2008. 71Mr Maalouf denied that he prepared the memo and he denied it was prepared in order to inform Mr Tyler what the contract was going to contain. There are a number of reasons for preferring Mr Carbone's evidence to Mr Maalouf's. The note itself is in existence and has been produced to the Court. There is no rational reason to suppose that Mr Carbone would make up any of the facts about which he gave evidence in relation to the memo. If in fact a building contract had been brought into existence on 16 July 2007, there would be no need for the note, instead a copy of the contract could have been given to Mr Carbone when he prepared the security and indemnity deed in August 2007. 72Another matter about the home building contract is that a three page document prepared by Urban Interior Design and described as specification, dated 17 July 2007, that was referred to in the contract, was not in existence as at 16 July 2007. There was a scope of works document that was signed and dated 16 July 2007. This is a one page document signed by Mr Despot and Mr Maalouf. It was most likely to have been signed on that day. 73There is also documentary evidence from Brendan Randall, Mr Despot's previous architect, which records that his file with the plan that had been used for the earlier quotations was collected on 30 July 2007. This is some two weeks after the home building contract was allegedly signed. How the works could be estimated without any plans is hard to understand. The other matter, which only occurred on 16 July 2007, was an agreement about the nature of the fixtures. This would also make it impossible to estimate the costs of the works on the same day. 74It could be that Mr Clarke was mistaken in precisely what he observed and it may even have been possible that on 16 July 2007, when Mr Despot and Mr Maalouf sat down to discuss documents, that Mr Maalouf had the Office of Fair Trading Home building contract with him. Mr Clarke may just have a problem with his recollection. For example, he could not remember Mr Despot's name when he was giving evidence before me. However, it is plain that the contract was not entered into on that day. Mr Maalouf has constructed the contract at some later date. This is more likely to have been after some of Mr Despot's signatures were obtained on the document probably without the price having been inserted at that stage. 75Unfortunately, after Mr Despot's signatures were proved to be genuine, further evidence from him about what he might have signed and when was not forthcoming. 76I am satisfied that the home building contract, dated 16 July 2007, was not signed on that day. It is clear it has been signed at some later stage, although the time and circumstances in which that occurred cannot be determined. The signing of the deed and the power of attorney 77Before turning to the nature of what agreement did exist for the construction work, I will first deal with the events of 5 September 2007. Mr Maalouf and his witnesses, Mr Tyler and Mr Larry have sworn there was a meeting that happened at 5.30pm on 5 September 2007 at Mr Despot's restaurant, The Bay. Mr Despot and his friends, Mr Ciric and Mr Juric, say there was no meeting at the restaurant, let alone one in which the deed and the power of attorney were signed. 78It seems clear that the documents were prepared in the morning of 5 September 2007 by Mr Carbone. No person has suggested that Mr Maalouf did not hand the documents back to Mr Carbone. Mr Carbone deposed that he received the executed documents that were witnessed by Mr Tyler on 6 September 2007. There cannot be any suggestion that Mr Despot was tricked into signing them on some other occasion, perhaps in May 2008. 79Due to the fact that the deed and power and attorney were prepared on 5 September 2007 and returned signed on 6 September 2007, the possibility of the execution of the documents by Mr Despot is overwhelmingly likely. He does not deny that it is his signature on the documents. 80There are a number of other events that indicate the likelihood that the deed and power of attorney were signed on 5 September 2007. These events would not have occurred if the documents had been signed some time in May 2008, as Mr Despot suggested. The first of these events is a conversation that Mr Carbone had with someone on the telephone after he asked Mr Maalouf to phone Mr Despot to enable him, Mr Carbone, to confirm the signature on the power of attorney. It would be highly unlikely that Mr Maalouf would be that prescient to appreciate that Mr Carbone might make such a request and line up someone in advance to pretend to be Despot at the end of the telephone. The telephone call to Mr Despot's number was short and occupied one minute 37 seconds. It was made just before Mr Despot left for the airport. Notwithstanding Mr Carbone's recollection about the length of the call, what needed to be said and responded to in that conversation, could have been accommodated in the call. I am satisfied it occurred with Mr Despot in the terms recounted by Mr Carbone. 81Although Mr Despot has denied having the conversation, I am satisfied that the conversation did occur. 82Another matter is that Mr Clarke gave evidence that at a site meeting on 28 November 2007 Mr Despot said: "Roy is my power of attorney and you will be paid by him." 83Mr Clarke was not cross-examined on that conversation. However, it is more than likely that he recalled it because at that time he had not been paid and he felt Mr Despot was dismissing him. 84There is unchallenged expert evidence concerning text messages that were sent from Mr Despot's mobile telephone on 17 December 2007 to Mr Maalouf's mobile telephone. The message was: "Keep working. I promise to give you $750,000 by the end of the week." 85There were also two SMS messages from the same phone, dated 29 January 2008, which were as follows: "Roy please continue work. You are my power of attorney. If I don't pay your money do what you want our contract is $1,485,000. It is not that much money." 86The next SMS message immediately thereafter was as follows: "You know I won't rip you off. Please keep working." 87Thereafter Mr Maalouf handed this particular mobile phone to Mr Carbone to keep it as evidence. This is somewhat unlikely since a mobile phone is a builder's lifeline. 88According to Mr Despot, Mr Maalouf must have sent the later text messages in January 2008, when he was in a restaurant toilet. Mr Despot says he had left his own mobile phone on the table where Mr Maalouf was sitting. There is an inherent improbability in assertion that the last two SMS messages were sent by Mr Despot. 89Mr Despot's says he never knowingly signed such a contract and I have found that in fact that he did not sign the contract as alleged by Mr Maalouf on 16 July 2007. Mr Despot denied that any contract documents were signed in September 2007, but the evidence does not give any other occasion, other than May 2008, when such a document could have been executed. There is absolutely no reason why Mr Despot would possibly concede to Mr Maalouf that they had a contract for $1,485,000. In my view Mr Maalouf sent the text messages using Mr Despot's phone. The text messages do not assist on this aspect. 90The text message of 17 December 2007 might have been genuine if Mr Despot was in a situation where he was endeavouring to keep Mr Maalouf working on the renovation and pay him as little as possible in the hope of winning the final battle. However, it does not contemplate or refer to the power of attorney. 91Mr Ciric's evidence was that on 5 September 2007, he was with Mr Despot at Darlinghurst. He was Mr Despot's driver and a long time friend. According to him between 4pm and 5pm, he drove Mr Despot to Park Street in the City. He then he drove him from Park Street to Darlinghurst at about 6pm. Mr Ciric also gave evidence that he took Mr Despot to the airport the following day. Mr Ciric's evidence revealed a hesitation under cross-examination when answering questions about these matters and he appeared to have little recollection of other events of that day. He also suggested in his evidence that he and Mr Despot might have left Darlinghurst at 4.30pm, rather than 4pm, to look for luggage in the city. 92Mr Juric gave evidence that he managed the restaurant for Mr Despot at the relevant times. He normally opened the restaurant six or seven days a week and he worked until about 5pm. He says he recalls the events of 5 September 2007 because he knew Mr Despot was going overseas the following day. He gave evidence that on the day he was supposed to finish at 5pm but Mr Despot had not returned to the restaurant so he kept telephoning him to see when he would back. Mr Juric was obliged to meet some of his sports clients after 5pm and he was anxious to leave. Ultimately, he says Mr Despot prevailed upon him and he agreed to stay until 10.30pm when Despot returned. In cross-examination, Mr Juric did remember that there had been a conversation about buying luggage but he was not sure whether it had occurred that day or the next. 93Mr Tyler's evidence was straightforward. He stated that he attended a meeting at the restaurant with Mr Despot and Mr Maalouf for an hour and eventually he witnessed the signing of the deed of indemnity and the power of attorney. Mr Tyler had difficulty in recalling the precise date of this meeting and he may have been told of the date to insert in his affidavit. This is not critical given the only opportunity on the evidence for this event to have occurred was 5 September 2007. 94Mr Larry's evidence was that some time in September 2007, he sat down with his friend Mr Maalouf, with Mr Tyler and with Mr Despot at the restaurant. He recalled the questions about securing the money and the need for security and he also recalled Mr Despot saying something like, "This is not the first power of attorney I have given". He said he could not identify the documents because he was merely there at the time and he was not paying attention to them. However, Mr Larry said he did see documents being signed. 95There was nothing extraordinary about his cross-examination and his testimony was not questioned. 96Given the limited time frame and Mr Despot's admission that he signed the documents, in my view they were signed on 5 September 2007, notwithstanding the evidence of Mr Ciric and Mr Juric. What was the arrangement between the parties for the construction work performed? 97I return to the question of what the parties' had mutually arranged for the building work. I have set out the conversations that Mr Maalouf alleged occurred. The first conversation does not lead to any agreement, firstly because Mr Despot did not accept the offer and secondly, the work that actually had to be done had not been determined at that stage - further plans were to be obtained. 98There are no other conversations that would go to any final contractual arrangement between the parties. The work went ahead and Mr Despot was expecting to receive quotes from various sub-contractors. The proposed work was no doubt defined by the plans obtained and approved by Woollahra Council. 99As will become apparent, the contract was intended to be for cash payments or for payments made by cash cheques. 100Mr Carbone's submissions suggest to the Court a scenario in which two experienced participants in the cash economy were proceeding on a do and charge basis, with the intention, when push came to shove, of trying to get away with as much as possible. It is not possible to determine the parties' relationship with more detail or precision because the relevant parties are not able or not willing to put the true situation before the Court. For example, the evidence is bereft when it comes to discussions between Mr Maalouf and Mr Despot about quotations for particular aspects of the work, the latter of whom, seems to have gone overseas leaving Mr Maalouf to proceed at times without sufficient funds to pay sub-contractors. 101Mr Despot was experienced in buying and selling properties, a number of which he had renovated and resold. His arrangements were always oral. He had never executed a contract in respect of the renovations of these properties. It is clear that Mr Despot was quite capable of looking after his own interests and he was probably familiar with the process he embarked upon with Mr Maalouf. 102I am satisfied that there was no concluded contract at an agreed price of $250,000. There was an agreement for the work to proceed on a do and charge basis, with some representations having been made about the estimated future cost. However, misrepresentation is not the subject of any claim in the proceedings. The contract for sale and the deed of settlement 103It is useful to address the question as to whether or not the contract for sale of the property that Mr Maalouf and Steli ultimately entered into was a sham, thus giving credence to the plaintiff's theory of a fraudulent enterprise by Mr Maalouf. Mr Despot pleaded in his first amended statement of claim was that "the entire transaction between Maalouf and/or Stelli and/or Azzi and/or Sky Constructions as the sole director of Stelli was a sham designed to defraud Despot and the St George Bank". 104The evidence shows that in respect of the purchase of the property, the vendor provided finance of some $480,000 in favour of the purchaser to enable Stelli to complete the purchase. According to the evidence, this vendor finance was anticipated at the time the contract was being discussed and then entered into. This may explain why the deed of settlement was dated four days before the dated of the contract of sale, which is 16 May 2008. 105If the deed of settlement was executed to secure the vendor finance, this proposal raises some surprising considerations. Firstly, it would seem more appropriate and more common for the financier to take an unregistered second mortgage supported by a caveat. There is no apparent explanation as to why a deed of settlement in a common form of discretionary trust was used. There is also no reference in the deed of settlement that its purpose was to support a loan by way of vendor finance. 106Mr Maalouf was the appointor under the deed of settlement. Clause 19 provides: "The appointor may at any time and from time to time by Deed or by notice in writing deliver to the trustee, remove any trustee hereof in its absolute and unfettered discretion and the right to remove any trustee hereof, and to appoint new or additional trustees hereof by Deed or notice in writing, is hereby vested in the appointor provided that the settler shall not be eligible to be appointed trustee. Such removal of appointment shall take effect from the date of such notice..." 107The powers of the trustee under clause 21 gives power to pay to pay the whole of the trust fund at the direction of the appointor to a beneficiary. 108Clause 4.1 provides: "The Trustee stands possessed that part of the capital of the trust fund that represents the amount of capital paid on a unit by a registered holder, plus an amount up to but not exceeding the indexed amount in trust for the registered holders in accordance with the rights attached to and in proportion to the number of units held by them and that part of the balance of the trust fund in trust for those of the general and remainder beneficiaries and/or for those charitable purposes for those interests and in those proportions and for one to the exclusion of the other as the trustee may, in its absolute discretion, appoint on or before the vesting day irrevocable at any time earlier than the vesting day, unless expressed to be otherwise." 109The general beneficiaries under the trust are Roy Maalouf and his wife and their children. 110It is worth noting Cypjayne Pty Ltd v Sverre Rodskog [2009] NSWSC 301 at [40]-[41] per Brereton J in relation to the nature of the interest of a beneficiary under this type of trust : "[40] First, in principle, a member of a class of persons in whose favour a trustee may exercise a discretion to appoint trust property is not strictly speaking a beneficiary, and even though it is common drafting practice to describe such persons as "beneficiaries" in the trust deed, this cannot change their true character as objects of a trust power into beneficiaries properly so-called. A "discretionary trust" such as those in question here is a trust coupled with a special power of appointment: the beneficiaries are not determined at the moment of creation of the trust - either as to identity or quantum of interest - and the choice of beneficiary, or determination of the extent of his or her interest, or both, is left to the trustee to decide [ Jacob's Law of Trusts in Australia , 5th ed, 736 [2916]]. In Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226 ; (1998) 151 ALR 1 ; [1998] HCA 4, the High Court explained (at [8]) that the meaning of the term "discretionary trust" was a matter of usage rather than of doctrine, and the usage was descriptive rather than normative; a "discretionary trust" is not a component of the doctrinal divisions by which there is determined the formal and essential validity of trusts. This reflected what had been written by Gummow J in the Federal Court in FCT v Vegners (1989) 90 ALR 547, where his Honour wrote (at 551-2): 'There was some discussion by counsel of the term "discretionary trust" and related terms. A fixed trust is used to describe a species of express trust where all the beneficiaries are ascertainable and their beneficial interest are fixed, there being no discretion in the trustee or any other person to vary the group of beneficiaries or the quantum of their interests. The expression "discretionary trust" is used to identify another species of express trust, one where the entitlement of beneficiaries to income, or to corpus, or both, is not immediately ascertainable. Rather, the beneficiaries are selected from a nominated class by the trustee or some other person and this power may be exercisable once or from time to time. The power of selection is a special or hybrid power; a power exercisable in favour of any person including the donee of the power would be a general power and thus would be tantamount to ownership of the property concerned, whilst the objects of a special power would be limited to some class, and the objects of a hybrid power would be such that the donee might appoint to anyone except designated classes or groups. ... It will be apparent that, unlike the division of trusts between purpose trusts and non-purpose trusts, and between express trusts, implied or resulting trusts and constructive trusts, and the classification of powers between general, special and hybrid powers, and between trust and bare powers, the usage of the term "discretionary trust" is essentially descriptive rather than normative. The meaning of the term is primarily a matter of usage, not doctrine.' [41] Thus a discretionary trust does not have beneficiaries in the traditional sense, whose interests together aggregate the beneficial ownership of the trust property. Instead, there is a class of persons, usually described in wide terms, who are the objects of a trust power to appoint either income or corpus or both to selected members of the class. The members of the class are objects of a trust power, rather than beneficiaries in the strict sense. They do not have a proprietary legal or equitable interest in the trust fund, though they have a right to due administration of the trust [ Re Smith [1928] Ch 915; Gartside v IRC [1968] AC 553; Jacob's Law of Trusts in Australia , 5th ed, 649 [2315]]. They have no beneficial interest in the trust property; they are not persons for whose benefit the trust property is held by the trustee; at the highest they are members of a class of persons for the benefit of some one or more of whom the trustee may in due course hold property if it so determines. At best, they are potential beneficiaries, not beneficiaries." 111As I have said earlier, on the face of the trust deed, Mr Maalouf, as the appointor, has the power to achieve his way by removing the trustee if the trustee does not comply with his directions. However, if the circumstances were that the deed of settlement was in an ill suited form, adopted to create a security interest over the property to support the vendor finance, then it is clear that any such course of action by Mr Maalouf could be opposed by Stelli and those controlling that company. 112The cross-examination of Mrs Azzi needs to be considered in relation to the fraud alleged in the pleading. The cross-examination was usefully described in Mr Carbone's submissions: "38. At t652.28-653.10 it was positively put to Mrs Azzi that the purchase of the property was an investment for herself and her husband and they thought it was a good buy at $1.6 million. That is inconsistent with any suggestion that the whole transaction was a fraud. The evidence was as follows: Q. By May 2008 the global financial crisis had arrived unfortunately? A. Yes. I can't remember, probably. Q. But nevertheless there was a situation so far as you were concerned that the bank valuation was the price that you were prepared to pay? A. Yes. Q. Mr Maalouf, for instance, didn't suggest it was worth more than that? A. He said about $2 million at the start. He said, "It's worth roughly about $2 million." Q. And on the basis of what it was worth at the start you thought 1.6 was pretty-- A. Yes. Q. And it was an investment property for you and your husband ? A. Yes, we never intended to live in it. Q. So at 1.6 - A. We thought it was a good buy and then we looked up - thought the rental was pretty good, thought we'd keep it for a couple of years and sell it. Q. At a profit? A. At a profit, of course. Q. And that's what you were intending to do, make a capital gain? A. Capital gain, yes. Q. And that was dependent on paying a reasonable cost at the start? A. Yes. Q. So you were prepared to pay the 1.6 which you thought was a good price? A. After seeing the unit, yes. 39. At t655 evidence was elicited from Mrs Azzi to the effect that buying the property in the name of a company was suggested by Mr Carbone. Despot has now said there is no allegation that he was fraudulent or a party to any fraud: Despot's Submissions [187]. That evidence together with that concession logically eclipses any suggestion that there was a fraud afoot which involved the use of Stelli as the purchaser. The evidence is: Q. And is it the case that you then, for the purpose of buying this property, agree to set up a company? A. Yes. Q. And was that at the suggestion of anybody? A. Mr Carbone, and my husband agreed on it. Q. Was Mr Maalouf involved in doing that - A. No. Q. - that you know of? A. No. Q. And so far as setting up the company is concerned-- A. Yes. Q. - that was left by you to Mr Carbone? A. Yes. 40. The fact that the Deed of Settlement was signed a few days before the Contract for Sale came into existence is precisely what you would expect if the intention of a purchaser was to buy the subject property in the name of a company as trustee of a trust. It would be interesting if the sequence of events were the other way around but no sinister inference is available from the bare fact that the trust was constituted before contracts were exchanged. 41. At t668.5 it was positively put to Mrs Azzi that "Up to the week before settlement, you were always of the belief that settlement would occur using funds from the bank and funds coming from resources available to you and your husband?" and she said, "Yes". That is not consistent with any grand scheme of fraud being afoot. It is consistent with Mr & Mrs Azzi buying the property for their own benefit. 42. At t668.15 there are two questions and answers as follows: Q. I suggest to you that the purpose of buying this property in the name of Stelli Pty Ltd and the purpose of signing a deed was so that Stelli Pty Ltd would buy the property as trustee for Mr Maalouf? A. What do you mean exactly? Q. I suggest to you that the purpose of this whole transaction was to get the property back into the name - or back into the benefit of Mr Maalouf? A. No. 43. Those questions are not sufficient to call into question the veracity of the evidence that was given by Mrs Azzi concerning the purchase of the property as an investment for her husband and herself, or the intention to pay for it themselves, or to lay the foundation for a submission that Stelli was a party to a grand fraud to enable Maalouf to take the property. Similarly, there was no challenge to the bottom line answer "No" to the proposition that the purpose was to get the property back into the name of or to benefit Maalouf. If allegations as serious as those which are now sought to be made against Mrs Azzi are to be made, her evidence should have been squarely challenged. A formal suggestion without any real attempt to challenge the veracity of the evidence of a witness who is to be accused of fraud is not good enough." 113The cross examination of Mr Azzi was put this way: "45. At t688.36-40 it was positively put to Mr Azzi that the reason 'he' bought the property was that it was a good deal - not that it was all part of a grand scheme to allow Maalouf to take the property. The relevant passage is: Q. And the reason you bought it was because it was a good deal? A. That is correct. Q. When I say a good deal, the price was a very good one? A. Obviously. 46. At t690 it was positively put to Mr Azzi that he was intending to use his own funds to make the purchase until shortly before the settlement. The evidence is: Q. Shortly before 3 July 2008 you were in a position where you thought you were going to be able to fund the whole of this acquisition, weren't you? A. That is right. Q. Until about a week before 3 July 2008 you were firmly of the belief you were going to be able to use your own funds and the funds at the St George bank to complete the purchase? A. That is correct. 47. It was not put to Mr Azzi, even formally, that he was a party to a scheme to defraud Despot, even though he was the person who freely conceded that he reached a "private" agreement with Maalouf about not cashing the deposit cheque and obtaining short term 'vendor finance'. " 114As the case developed at trial, nothing was proved that either Mr or Mrs Azzi, as the principals behind Stelli, were party to a sham transaction designed to defraud Mr Despot and the St George Bank. It appears they innocently thought they were onto a good deal, being an inside chance to buy a property. 115It was probably for this reason that in final submissions it was merely suggested that the proximity resulting from Mr Maalouf's accommodation of Stelli, combined with the power to appoint would suggest that there was a fraud. 116In my view this is not sufficient and I accept, notwithstanding some of the strange aspects of the transaction, that the deed of security was intended to secure the outstanding vendor finance. Were the arrangements between the parties vitiated by fraud? 117I return to the question of the general claim that Mr Despot was the subject of a fraudulent scheme by Mr Maalouf. I have no doubt that Mr Maalouf saw an opportunity to deal with Mr Despot, whom he had reason to believe would have substantial funds available to him to renovate the unit in question. Mr Maalouf was prepared to do whatever was necessary to secure a favourable outcome for himself in respect of the renovation work and he did this by getting Mr Despot sign documents such as the building contract. It is clear that Mr Despot signed the power of attorney and the deed of indemnity on 5 September 2007, notwithstanding his protestations to the contrary. 118It is also apparent from what I have said about the contract for sale and the deed of settlement, that those circumstances would not give rise to fraud perpetrated on Mr Despot. There may well be breaches of duty by Mr Maalouf, but that of itself does not prove an over-arching fraud in order to deceive Mr Despot. In my view, what happened is the result of the arrangements that I have already described, which was that the work would be carried out on a do and charge basis. 2. Are the building contract, the deed of security and/or the power of attorney and/or the contract for sale, or any of them, unenforceable by operation of sections 4, 5, 10, 92 and 94 of the Home Building Act 1989? 119Mr Despot makes this inelegantly expressed alternative claim, however, I think the case has been conducted on the basis that by reason of the contraventions of the Home Building Act , the deed of security and the power of attorney are void and in consequence the contract of sale is void. It is to be noted that the pleadings refer to sections 4, 5, 10 or 92 of the Act. 120Section 94 deals with uninsured work. This issue was only raised during the trial when it became apparent during cross-examination that no home warranty insurance had been issued. The parties were happy to continue the hearing on the basis that the lack of insurance was one of the allegations. By the conclusion of submissions and the reservation of my judgment this was still the position. Accordingly, I give leave to amend to include an allegation of breach of section 94 of the Home Building Act . 121There was an application to reopen the case on 7 December 2010, after I had reserved my judgment. I gave leave to reopen and evidence was given that the insurance was issued on 12 November 2010. 122It is common ground that Sky Constructions did not have a builder's licence when work commenced. Sky Constructions made an application for a licence in January 2008 and the licence was eventually issued on 11 March 2008. 123Section 4 of the Home Building Act says "A person must not contract to do (a) any residential building work, or (b) any specialist work, except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work." 124Section 5 legislates against seeking work by or for unlicensed person, partnership or corporation in relation to any residential building work or any specialist work if the individual, partnership or corporation in question does not hold a contractor licence authorising its holder to contract to do that work. 125Section 10 says: "(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts: (a) In contravention of section 4 (Unlicensed Contracting), or (b) Under a contract to which the requirement of section 7 apply, that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entity to in circumstances described in section 6(2)), or (c) In contravention of any other provisions of this Act or the regulations that is prescribed for the purposes of this paragraph, is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person." 126Section 92(1) says: "A person must not do residential building work under a contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name of the person who contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract. and section 92(2), "A person must not demand or receive a payment under a contract for residential building work (whether as a deposit or other payment and whether or not work under the contract has commenced) from any other party to the contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name of the person who contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract." 127Section 94(1) says: "If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the "uninsured work"), the contractor who did the work: (a) is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and (b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit)." and 94(1A), "Despite section 92 (2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis." 128The effect of section 10 of the Home Building Act on Sky Constructions' unlicensed building work is that Sky cannot enforce the contract and it is not entitled to damages or to any other remedy in respect of a breach of the contract committed by any other party to the contract. The prohibited "contracting" in this case covers the building works that were done before 11 March 2008 and probably most of the subsequent works. 129The effect of sections 92 and 94, in the absence of insurance, is that Sky is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to the work or even a quantum meruit without first obtaining a favourable exercise of discretion by the Court under section 94(1A). 130Mr Carbone's submissions at paragraphs 42 and 43 detail the result that flows: "42 So far as the Power of Attorney is concerned, it is unenforceable by Maalouf in respect of any entitlement to be paid money for the subject building work because the words "enforce any other remedy in respect of a breach of the contract" in sections 10 and 94 of the Act are wide enough to catch non-curial remedies. In Elkateb v Lawindi (1997) 42 NSWLR 396 at 406 Giles CJ Comm D as his Honour then was said the distinction between a procedure for establishing rights and the rights "or their enforcement" was now more fully recognised than it was at the time of the decision in Edwards v J E Bignell Pty Limited (1985) 2 NSWLR 392, which in turn preceded Pavey & Matthews (1987) 162 CLR 221. The exercise of a power of attorney for the purpose of selling a property in order to effect payment of moneys due under an unenforceable contract is the enforcement of another "remedy" within the meaning of section 10 is equivalent to the exercise of a power of sale by a mortgagee in possession. The Power of Attorney was granted in aid of enforcement of the Deed. The Deed was made in aid of enforcement of any right to be paid for the building work. There is no call to read down the wide words of sections 10 and 94 in order to enable an unlicensed builder to obtain payment for unlicensed building work by an indirect means when the plain intention of the Legislature is to prohibit the recovery of that payment. 43 Once it is established that the Power of Attorney is not enforceable in respect of any right to payment Sky may otherwise have had but for the fact it was unlicensed and/or uninsured, it follows that, as against Despot, the Contract for Sale cannot be maintained by Maalouf. Moreover (subject to one exception), the Contract for Sale cannot be maintained by Stelli in accordance with its terms because it was, on its face, entered into by an agent for Despot who had no actual authority to sell." 131The one exception referred to in paragraph 43 is whether there was an ostensible authority to sell. That has now been pleaded by amendment to Stelli's cross claim. 132Before the application to reopen the proceedings was made last December, Mr Despot accepted the effect of the provisions of the Act on the contract for sale. Sky conceded that the building contract was unenforceable. It simply relies on its quantum meruit claim and seeks leave under s 94(1)(A). Stelli and the Azzis conceded in their submissions that the Act would prohibit enforcing a remedy by implementing a power of sale under the charge. However, they maintained that the effect of the Act did not impede their claim that Mr Maalouf had an apparent authority to sell the property. 133My decision on 10 December 2010 allowed the case to be reopened, which meant that evidence of home warranty insurance, which was issued on 12 November 2010, some 18 months after the cessation of work on the premises, was available. This raises squarely the effect of s 94 (3) of the Home Building Act , which is in these terms. "(3) Residential building work that is uninsured work at the time the work is done ceases to be uninsured work for the purposes of this section if the required contract of insurance for the work is subsequently obtained." 134The subsection has a retrospective operation so far as the application of the prohibition in s 94(1). To avoid this effect, submissions were made which concentrated on the words "the required contract of insurance" in subsection (3). 135The contract of insurance that is required by sections 92 of the Act is a contract of insurance that is specified by section 99 and by the Home Building Regulation 2004. Section 99 of the Home Building Act relevantly provides: "99 Requirements for insurance for residential building work (1) A contract of insurance in relation to residential building work required by section 92 must insure: (a) a person on whose behalf the work is being done against the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor, and (b) a person on whose behalf the work is being done and the person's successors in title against the risk of being unable, because of the insolvency, death or disappearance of the contractor: (i) to recover compensation from the contractor for a breach of a statutory warranty in respect of the work, or (ii) to have the contractor rectify any such breach." 136Regulation 66 provides that "66 Certificates evidencing insurance (1) For the purposes of section 92 of the Act, the prescribed form of the certificate of insurance is the form set out in Form 1. (2) (Repealed) (3) For the purposes of section 95 of the Act, the prescribed form of the certificate of insurance is the form set out in Form 3. (4) For the purposes of section 96 of the Act, the prescribed form of the certificate of insurance is the form set out in Form 1. (5) For the purposes of section 96A of the Act, the prescribed form of the certificate of insurance is the form set out in Form 1." 137Form 1 may be found in Schedule 1 to the Regulations. 138It was submitted that the certificate was not sufficient to invoke section 94(3) of the Act for three reasons: (a) The contract of insurance contained in the policy and the schedule does not fulfil the requirement of section 99(1)(a) that it insures "a person on whose behalf the work is being done (namely, Mr Despot) against the risk of loss resulting from non-completion of the work because of the insolvency, death or disappearance of the contractor . (b) The contract of insurance does not fulfil the requirement of section 99(1)(b)(i) that it insures "a person on whose behalf the work is being done and the person's successors in against the risk of being unable, because of the insolvency, death or disappearance of the contractor to recover the relevant remedy. (c) The certificate does not conform to the requirements of Regulation 66. 139A fourth submission, that the policy was liable to be avoided by fraudulent non-disclosure, was properly abandoned having regard to clause 5.1(a) of the policy and the fact that the Insurance Contracts Act 1984 (Cth) does not apply to this insurer. 140The submissions on the first point were as follows: "11 The reason the contract of insurance does not fulfil the requirement that it insures Mr Despot against the risk of loss resulting from non-completion of the work is: (a) Clause 2.1 of the policy provides insurance in respect of loss or damage arising from non-completion of the work "for a period of 12 months after ... cessation of the work"; (b) The work ceased before the issue of the Final Occupation Certificate issued on 14 August 2008; (c) Twelve months from that date elapsed no later than 14 August 2009; (d) That being so, the policy does not provide any insurance to Mr Despot in relation to non-completion of the work because the relevant period of the insurance had elapsed before the insurance was provided; (e) As a matter of construction, the words "must insure" in section 99 of the Act mean must provide actual, real, effective insurance for the subject risk; they are not met and satisfied by a document which in truth provides no insurance at all for that risk by containing a promise in terms which had already expired and leave the person who is required to be insured with no cover at all for the risk. 12 The provisions of Part 6 of the Act are remedial and should be construed in a manner which serves the purpose of protecting persons who contract for the performance of residential building work, not builders who flout their obligation to obtain insurance. Moreover, the operative words of section 94(3), namely, 'if the required insurance is subsequently obtained' predicate that insurance is in fact obtained, not an empty promise to insure or a promise which has already expired. 13 In that way, section 94(3) is to be read subject to section 99, not vice versa. 14 In the present case (although it is not necessary to determine the point) there is a significant item of incomplete work. The air-conditioning unit has not been installed and commissioned. Mr Maalouf thought he would put it in the roof but the Body Corporate would not permit that course. The unit has a northerly aspect. It faces a noisy main road, New South Head Road, Double Bay. Heavy glazing has been built into the balcony to block out the noise. In summer, such a unit becomes extremely hot. Without air-conditioning, the amenity of the property is severely diminished. The policy does not provide cover for Mr Despot for the loss he has suffered by reason of the air-conditioning not having been completed. 141The evidence supports the factual matters referred to in the submissions. 142How to correctly construe these sections is in issue. The countervailing argument was that although the policy may not answer a particular claim, this does not mean that the required insurance policy was not taken out. In other words there is no requirement to take out a policy that will ensure payment in every eventuality regardless of time frame or other events. This submission was supported by reference to the generic provisions of section 102 of the Home Building Act . It was suggested that the contrary proposition would make nonsense of the retrospectivity provisions of s 94 (3). 143It is useful to note the terms of s 103BA: "103BA Limitations on policy coverage-claims made and notified policy (1) A contract of insurance provides insurance cover in respect of loss only if: (a) in the case of cover for loss arising from non-completion of work-the loss becomes apparent and is notified to the insurer within the period of insurance, or (b) in any other case: (i) the loss becomes apparent and is notified to the insurer within the period of insurance, or (ii) the loss becomes apparent during the last 6 months of the period of insurance and is notified to the insurer within 6 months after the loss becomes apparent. (2) A loss becomes apparent when a beneficiary under the contract first becomes aware (or ought reasonably have become aware) of the loss. (3) In this section: loss means loss indemnified by a contract of insurance. period of insurance means the period for which a contract of insurance provides cover." 144This section seems to indicate that one is dealing with real, effective cover and it limits remedies to being within the period of cover. 145The submission in support of taking a substantive approach to interpreting the legislative requirements were simple and in this form: "This is a piece of remedial legislation. In our respectful submission, your Honour will not construe the words 'must insure' so that all that ever had to be done in order to fulfil that requirement is to produce insurance which is incapable of operating. It's a question of form or substance. We're for substance my learned friend is for form. If, for example, Mr Maalouf had eventually gone along and got a certificate seven years after the event, when every single period of insurance the subject of the certificate had expired, could one ever attribute rationally to a legislature an intention to defeat the provisions of s 92 in such a trite and convenient manner? Our opponents' arguments reduce to absurdity if the words "must insure" elevate form over substance. The various sections and regulations to which my learned friend has already taken your Honour are each properly construed in terms that they require substance, not mere window-dressing. For example, s 102, which your Honour raised earlier in the debate, makes the distinction between form and substance patent on its face. For example, s 102(2) says: "The insurance must be of a kind approved by the Minister." That's where matters of formality and generality and generic identification become important. In the subsection which follows, 102(3): "The contract of insurance must provide for cover." "Must provide for cover." That means actual cover as proceeding from the form or general type into the reality. "Must provide cover of not less than $200,000." That means 200,000 real dollars. It doesn't mean $200,000 written on a piece of paper which is worth nothing, because then the last thing that one is doing is providing cover at all. So that the matter for decision for your Honour is whether in construing the words "must insure" in 99, your Honour is persuaded to elevate form over substance. In our respectful submission, your Honour will not do so. On that basis, this insurance falls at the first hurdle because nothing said on the other side of the bar table derogates from the proposition that the first of the closed periods, the 12 months, cover for indemnity in relation to incomplete work. It has well and truly come and gone. Cover for that was never provided. So too has the second period of two years for the non-structural area of cover. It too has come and gone. It's only if one elevates form over substance that this certificate goes anywhere at all. That, in the ultimate analysis, is not something that your Honour will do." 146Leaving aside the question of real dollars, the factual situation here is not addressed by the sections. The example postulated of the easy way to defeat the operation of s 92 has some merit. 147It is perhaps also useful at this stage to look at the second matter raised as it also raises the same matter of construction. The submissions on this aspect were as follows: "The reason the contract of insurance does not fulfil the requirement that it insures Mr Despot and Stelli and its successors in title against the risk of loss resulting from being unable, because of the insolvency, death or disappearance of the contractor to recover compensation from the contractor for a breach of a statutory warranty in respect of the work is: (a) Although insuring clause 1.1(a)(i) of the policy provides cover for loss or damage arising from a breach of statutory warranty, being loss or damage in respect of which Mr Despot (and any successor in title) cannot recover compensation from the builder or have Sky rectify, because of the insolvency of Sky, two provisions in the policy constrain the operation of the contract of insurance in such a way that it in fact provides no insurance in relation to that risk. (b) The first constraint is the time limit of two years from the date of completion in clause 2.3 of the policy in respect of non-structural defects, which expired no later than 14 August 2010, with the result that there is no insurance in relation to that risk, even though it is required by section 99 of the Act. (c) The second constraint is the period of cover of one day from 9 November 2010 to 10 November 2010 in the Schedule, which creates a token 24 hour period of insurance under Policy No. NSWDHIBH/082950 in relation to the unexpired portions of the risk, such as structural loss and damage. If the policy is read subject to the schedule rather than vice versa, that means the only insurance that was provided under the contract of insurance expired two days before the certificate was issued (ie at 4pm on 10 November 2010). Accordingly, no insurance was in existence at all when the certificate issued. (d) For the reasons earlier given, section 99 is fulfilled only by a real insurance contract. A token will not suffice. Nor will an empty or expired promise. (e) Latent defects in the property, such as any problem which yet reveal itself in relation to the removal of supporting walls or the installation of the waterproof membrane, may well manifest themselves in the future. Clause 2.2 allows a period of 6 years in which that may happen and cover will be provided. But endorsement reduces that 6 years to a 24 hour period which has already expired. 148Once again the factual matters referred to in this submission are demonstrated in the evidence. It is plain that there was no real attempt to negotiate to obtain a cover that would provide real protection for the person having the benefit of the insurance. I do not think the matters in (c) above, correctly analyse of the effect of the insurance. The policy and the certificate have to be read together and in doing so, construe the one day cover as a reference to the expired two year period. 149In my view, the proper construction of the sections requires a substantive approach. Given the nature of the legislation and in the circumstances of this case, the required insurance was not obtained. Accordingly, there is no room for the operation of s 94 (3) of the Home Building Act . 150The argument on non-compliance with regulation 66 was put in this way: "The certificate does not comply with the requirement of regulation 66(1) because it does not comply with the requirements of the statutory form. In particular: (a) The certificate purports to be a certificate under section 96A of the Act, as well as section 92, when section 96A has no application to the work, and the result of the reference to section 96A, does not unequivocally say that cover will be provided to "a beneficiary described in the contract and successors in title to the beneficiariy" but says cover will be provided to a beneficiary described in the contract and successors in title to the beneficiary "OR the immediate successor in title to the contractor or developer who did the work and subsequent successors in title". Neither Mr Despot, Stelli or any successor in title necessarily obtains any cover if there is alternative cover in favour of Sky. (b) The certificate purports to identify the work by reference to work carried out for a price $1,485,000.00 when (subject to the determination of other issues in the proceedings) no work was carried out for any such price. The scope of the work determines the scope of the cover. The delineation of that work by reference to a false figure, falsifies the subject matter of the cover. In addition, work was done on the common property for an additional price to Mr Despot). That work has not been insured at all. 151Neither of the above matters are persuasive and I would prefer to base my decision on the other two aspects of this part of the case, to which I have already referred. 152This makes otiose the alternative claims made on the grounds of breaches of s 12 of the Powers of Attorney Act 2003. However, for completeness I will briefly refer to them and it is necessary to consider whether the power of attorney was irrevocable at common law. Breach of the Powers of Attorney Act 153The power of attorney executed by Mr Despot in favour of Mr Maalouf is a general prescribed power of attorney with no restriction or any other notation. It was in a form set out in the Powers of Attorney Act and it is a prescribed power under the Act. Section 8 provides: "8 Creation of prescribed power of attorney An instrument (whether or not under seal) that is in or to the effect of the form set out in Schedule 2 (the prescribed form ) and is duly executed creates a prescribed power of attorney for the purposes of this Act." 154Mr Despot's arguments depend upon a number of provisions of the Act that prevent the attorney receiving a benefit from the exercise of the power. Relevantly, sections 12, 13, and 15 of the Powers of Attorney Act provide: " 12 Prescribed power of attorney does not generally confer authority to confer benefits on attorneys (1) A prescribed power of attorney does not authorise an attorney to execute an assurance or other document, or to do any other act, as a result of which a benefit would be conferred on the attorney unless the instrument creating the power expressly authorises the conferral of the benefit. (2) Without limiting subsection (1), a prescribed power of attorney that includes the prescribed expression for the purposes of this subsection set out in Schedule 3 authorises an attorney to confer on the attorney the kinds of benefits that are specified by that Schedule for that expression." "13 Prescribed power of attorney does not generally confer authority to confer benefits on third parties (1) A prescribed power of attorney does not authorise an attorney to execute an assurance or other document, or to do any other act, as a result of which a benefit would be conferred on a third party unless the instrument creating the power expressly authorises the conferral of the benefit. (2) Without limiting subsection (1), a prescribed power of attorney that includes the prescribed expression for the purposes of this subsection set out in Schedule 3 authorises an attorney to confer on a third party the kinds of benefits that are specified by that Schedule for that expression." "15 Irrevocable powers of attorney An instrument that creates a power of attorney creates an irrevocable power of attorney for the purposes of this Act if: (a) the instrument is expressed to be irrevocable, and (b) the instrument is given for valuable consideration or is expressed to be given for valuable consideration." 155Mr Despot relied on the general proposition that a power of attorney does not authorise an attorney to deal with the principal's property for his or her benefit: Tobin v Broadbent (1947) 75 CLR 378 at 401 per Dixon JA; Spina v Conran Associates Pty Limited; Spina v M&V Endurance Pty Limited [2008] NSWSC 326 at [77] per Austin J. A benefit has been conferred where there is a direct link between the exercise of the power and the benefit; that is, the act of the attorney must be the cause of the benefit: Orr v Slender [2005] NSWSC 1175 at [30] per Nicholas J. Even when the attorney has the power to confer benefits on themselves, this is limited by their fiduciary duty to the principal: Spina v Conran Associates Pty Limited; Spina v M&V Endurance Pty Limited at [83] per Austin J. 156Stelli submitted that a distinction must be drawn between revocable and irrevocable powers of attorney. To be irrevocable at common law, the power of attorney must be coupled with an interest as against the donor. Such an agreement does not impose fiduciary obligations on the attorney. Griffin v Clark (1940) 40 SR (NSW) 409 at 413-414 per Williams J; Walsh v Whitcomb (1797) 2 Esp 565; Smart v Sandars (1848) 5 CB 895. 157In Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd [2005] NSWSC 1005; (2005) 194 FLR 322, there were issues as to (a) whether an irrevocable power of attorney fulfilled the requirements of a proxy form (b) whether the irrevocable power of attorney allowed the donee to act independently of and even contrary to the directions of the donor, and (c) whether the donee's actions were valid and binding on third parties. Palmer J stated: "[152] Third - and of decisive importance - an irrevocable power of attorney, by its very nature, is very different from a revocable power of attorney whereunder the donee is constituted the agent of the donor and has fiduciary duties of loyalty to the donor: see eg Midland Bank Ltd v Reckitt [1933] AC 1 , at 14; Saad v Doumeny Holdings Pty Ltd [2005] NSWSC 893 , at para [24]. A power of attorney, to be irrevocable at common law, must be coupled with an interest so that it is given for the better securing of that interest as against the donor. Statute has long recognised the irrevocable power of attorney as a special creature which, although constituting the donee as the donor's agent, does not fasten upon the donee the usual fiduciary obligations of an agent: see eg Powers of Attorney Act 2003 (NSW) s 15 and s 16 and its precursors. [153] Indeed, it has been suggested that an irrevocable power of attorney confers on the donee the right to act independently of the donor so that the donee need not consult, or confer with, the donor and, indeed, may ignore any direction given by the donor: PW Young Annotated Conveyancing and Real Property Legislation (NSW) 3rd Ed Butterworths, para 33410.5. The principal authority cited for this proposition is Tingley v Mller [1917] 2 Ch 144." 158His Honour then proceeded to quote from the judgments of Lord Cozens-Hardy MR and Warrington LJ in Tingley v Muller [1917] 2 Ch 144 and s 16(1) of the Powers of Attorney Act , and then continued: " [157] Tingley v Mller was considered by Nicholas CJ in Eq in Perpetual Trustee Co Ltd v Aroney (1944) 44 SR(NSW) 313. There, an irrevocable power of attorney contained a clause, similar to cl 6 in the Power of Attorney given by Cordiant, whereby the principal ratified all acts done and to be done under the power of attorney. At p 318, Nicholas CJ in Eq held that such a clause made the attorney independent of his principal. His Honour observed that doubts had been expressed as to whether Tingley v Mller was good law, but his Honour was of the view that the decision had not been overruled and that the decision, reinforced by the ratification clause in the power of attorney, resulted in the attorney in the case before him being independent of the principal. [158] In my opinion, it should now be accepted that, subject to any contractual provision to the contrary, as between donor and donee an irrevocable power of attorney confers on the donee the right to act within the terms of the authority conferred independently of, and even contrary to, the directions of the donor. As between the donee and a third party, the acts of the donee within the terms of the authority conferred are valid and binding by virtue of s 16(1)(a) Powers of Attorney Act regardless of whether the donee has disregarded the directions of the donor. [159] In the present case, there is no requirement in the Power of Attorney that TCGH's nominees shall comply with Cordiant's directions. It follows that the nominees of TCGH are not obliged to exercise the votes attaching to the Attorney Shares at the direction of Cordiant." 159In Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 at [68], Ward J held: " [68] The distinction at common law between a revocable power of attorney and an irrevocable power of attorney, as noted by Young JA, writing extra-curially in Annotated Conveyancing and Real Property Legislation (NSW) 3 rd ed, Butterworths, at [33410.5], is that the holder of the latter owes no fiduciary duty to the donor and may act independently of and contrary to the directions and wishes of the donor. The rationale of such a power is that it secures the interest of the donee against the donor (and it would seem that a sufficient interest is an interest in the performance of obligations under a contract between the parties, at least where that involves a proprietary interest ( James v Nesbitt (1954) 28 ALR 482))." 160Her Honour went on to say at [83] that in determining whether a power has been coupled with an interest, one must focus on the purpose for which the power or authority is granted, and whether it is for the purpose of protecting or securing some benefit to the principal. There must be sufficient consideration for the power to be irrevocable. 161As the power of attorney was given to Mr Maalouf and the money was owed to Sky Constructions there is a question as to whether the power of attorney was coupled with an interest. Stelli approached it in this way in their submissions in paragraphs 31 to 35: "31. The Power of Attorney in the present case is expressed as a "General Power of Attorney". This is its heading. Clause 1 confers on the attorney a general power, which is expressed as "to do on my behalf anything I may lawfully authorise an attorney to do" (CB7:1386). 32. Paragraph (1) under the heading "Important Information for Principals and Attorneys" states, inter alia: "A power of attorney it is an important and powerful legal document. You should get legal advice before you sign it. A power of attorney gives the attorney the authority to buy and sell real estate, shares and other assets for the principal, to operate the principal's bank accounts, to spend the principal's money on behalf of the principal and to exercise many other powers..." (CB7:1387) (emphasis added)" 33. The Deed of Security and Indemnity, between Mr Despot (as "the Owner") and Sky Constructions Pty Ltd (as "the builder") has a number of clauses which have the effect, it is submitted of marrying the Deed of Security and Indemnity with the Power of Attorney so that they are inextricably coupled together, and so that the two instruments, namely the power of attorney and the Deed of Security and Indemnity must be read together, or else treated as a combined instrument: (a) Clause 1.1 defines "Security" to mean "each and every document, agreement or other security provided or entered into from time to time which secures the payment of the Money Secured or the performance obligations of the Security Provided in favour of the Builder which may be executed or provided by the Security Provider or any other person (including this Deed)." (at CB7:1424) (b) Clause 1.1 defines "Security Provider" to mean "each and every party to, or provider of, the Security including the Owner, but not including the Builder. (CB7:1424)" (c) Clause 1.2 provides that in the Deed unless the context indicates otherwise: "(h) references to this Deed and any deed, agreement or instrument shall be deemed to include references to this Deed or such other deed, agreement or instrument as amended, novated, supplemented, varied or replaced from time to time." (at CB7:1425) (d) Clause 21 under the heading "COLLATERAL AGREEMENT" provides: "The parties hereto agreed: (a) [not relevant]; (b) The money secured is secured by the Security (c) The Security shall be read and construed and be enforceable as if the covenants, conditions and provisions of this Deed with necessary changes, are read into and form part of the Security; and (d) [not relevant]; and vice versa." (CB7:1431-1432) 34. The Deed of Security and Indemnity operates in relation to 'The Debt', which in clause 1.1 is defined to mean 'all monies payable by the Owner to the Builder under Building Agreement between the Owner and the Builder ("the Building Agreement")'. Similarly, under clause 1.1, the 'Money Secured' includes '(a) the debt; (b) all money now or hereafter owing or payable to the Builder by the Owner...' (CB7:1423). Therefore the power of sale under the Deed of Security and Indemnity are not made dependent upon Sky Constructions Pty Ltd establishing beforehand the extent of the debt. This is also made clear by clause 2.4, which provides: "The obligations of the Owner hereunder applies whether or not any of such debts sound in damages only or are liquidated, prospective, contingent (and whether or not any contingency has or has not occurred), presently accrued or due." (CB7:1426) 36. It is notable that Mr Despot's signature on the Power of Attorney (CB7:1386) is made at a location on the page where he must have seen that he was signing a Power of Attorney, because of the printing which appears above. Further Mr Despot's signature at the bottom of the first page of the Deed of Security and Indemnity (CB7:1423) is immediately under, and partly passes through, the description "Building Contract between the Owner and the Builder dated 27 August 2007 ('BC')". 41. The Power of Attorney and the Deed of Security and Indemnity must, for the reasons already given, be read as being a combined instrument. Section 3 of the Powers of Attorney Act (NSW) does not define "instrument" other than to state in the definition clause in s.3 of the Act that "instrument" includes a deed. Both the Power of Attorney and the Deed of Security and Indemnity are instruments. But, for the reasons already given, they are to be read together as a single instrument because of the definitions and other clauses of the Deed of Security and Indemnity which require that the Power of Attorney and the Deed of Security and indemnity be read together as one combined instrument. 42. Section 8 of the Interpretation Act 1987 (NSW) provides that "in any Act or instrument... (b) a reference to a word or expression in the singular form includes a reference to the word or expression in the plural form." The Power of Attorney and the Deed of Security and Indemnity either operate together as a combined instrument or else the provisions of each are incorporated by reference into the other. The combined documents constituted a "prescribed power of attorney" under ss 8 and 9 of the Powers of Attorney Act (NSW)." 162Mr Despot also submitted that the Deed of Security and Indemnity only provided that Sky Constructions could receive payment on a quantum meruit basis. As this was an unascertained amount, there was no debt. Therefore, there is no interest to be coupled with the authority, so the power of attorney is not irrevocable. Therefore, benefits have been conferred on Mr Maalouf and Sky Constructions in breach of Mr Maalouf's fiduciary duty as principal. 163Stelli submitted that the power of attorney is irrevocable as it is coupled with an interest for valuable consideration. When read together with the deed of security and indemnity (which charged all property owned by Mr Despot in favour of Sky), the purpose of the exercise of the power was to secure the debt payable to Sky Constructions under the building contract. Thus, it gave Mr Maalouf the power to protect the rights of Sky Constructions and enabled him to act in a manner contrary to the directions of Mr Despot, as long as it was within the ambit of the instrument. 164Having regard to the terms of the deed of security and the circumstances of its execution with the power of attorney, I think it is clear that it should be read with the power of attorney as a power coupled with an interest, which is irrevocable at common law. As it was given for consideration, namely the provision of financial accommodation, it would also be irrevocable under section 15 of the Power of Attorney Act. 165Mr Despot submitted that the power of attorney does not authorise Mr Maalouf to confer benefits on himself. He submitted that Mr Maalouf conferred two benefits that were not authorised by the power: (a) A direct benefit on Sky Constructions. $464,932 was paid on settlement and a further $480,000 at a later date in reduction of a debt which they had no right to claim at the time as they were unlicensed; and, (b) A direct benefit (although on a discretionary basis) by the creation of the deed of settlement. 166These submissions are to be contrasted with Stelli's submissions that: (a) The exercise of the power did not confer a benefit on the attorney (being Mr Maalouf) or any third party (being Sky Constructions); and (b) The Deed of Trust was simply entered into for the purposes of providing security for the postponed payment of part of the purchase price. The mere fact that the Deed of Trust could make Mr Maalouf or anyone else a beneficiary is not conferral of a benefit. 167The sale of the property led to the provision of funds that were secured by the deed of indemnity and payable to Sky Constructions. 168Mr Maalouf was only a director of Sky Constructions but no doubt he treated it as his company. The deed of security and indemnity secured: "All moneys payable by the owner to the builder under the building agreement between the owner and the builder." 169I would have thought that this would include any moneys payable on a quantum meruit claim arising from the building contract. However, I have now determined the amount of that claim. As a result, it is clear that Sky Constructions has received more than its entitlement. To this extent there is a benefit conferred on Sky Constructions. Given the fact that Mr Maalouf exercises control over Sky Constructions as a director, I would have thought a benefit was also conferred on Mr Maalouf. In any event, it is a benefit conferred upon a third party. 170Given my conclusions about the operation of the deed of trust, I do not think that there is any benefit conferred on Mr Maalouf in that respect. 3. Is Stelli entitled to an order for specific performance of the contract for sale? 171Stelli has amended its claim to plead Mr Maalouf had ostensible authority. In such a case, where the principal clothes the agent with apparent authority, the actions of the agent will bind the principal unless the purchaser can be shown to have been on actual or constructive notice of the agent's lack of authority. As Mr Carbone's submissions pointed out, sections 10 and 94 of the Home Building Act do not affect that authority because the claim for specific performance is not made by an uninsured builder enforcing the contract, but by the purchaser. 172It is clear that Mr and Mrs Azzi and by extension, Stelli, were aware that Mr Maalouf was selling the property as Mr Despot's attorney. The solicitor at the time of the contracts were entered into was Mr Carbone, although this situation changed during the course of the transaction. Therefore, through their engagement of Mr Carbone, Stelli knew Mr Maalouf was selling the property under an executed power of attorney. They also had knowledge of this because both Mr Carbone and Mr Maalouf had told them. I accept Mr Carbone's evidence that he did not know that Sky Constructions was unlicensed and there is no evidence to suggest that he knew that the property was uninsured. 173In the absence of any findings of fraud in relation to the deed of settlement, there does not seem to be any reason why apparent authority is not available to Stelli. 174There is also the question of whether Stelli can rely on s 48 of the Powers of Attorney Act , which is as follows: "48 Certain third parties entitled to rely on acts done under terminated or suspended powers of attorney (1) If a power of attorney is terminated or suspended, a third party who deals or otherwise transacts in good faith with the attorney without knowing of the termination or suspension is entitled to rely on the power of attorney in relation to that dealing or transaction in the same manner and to the same extent as if the power had not been terminated or suspended. (2) Subsection (1) does not entitle an attorney to rely on a power in support of an act within the scope of the power done by the attorney with notice of the termination or suspension of the power to the extent that it concerns authority to do that act." 175Mr Maalouf purportedly revoked the power of attorney on 21 July 2008, but such revocation would not be effective if the power of attorney was irrevocable at common law. It was a power of attorney coupled with an interest. While the interest subsisted, such a power of attorney cannot be terminated, except with the consent of the donee. As the interest was given for consideration, it was irrevocable under the Powers of Attorney Act. 176There is no reason why Stelli should not have the benefit of s48 of the Powers of Attorney Act . The use of the power of attorney has been suspended by operation of the provisions of the Home Building Act. However, there is no suggestion that Mr and Mrs Azzi had any knowledge of the lack of licence or insurance. 177Mr Despot and Mr Carbone made submissions as to why there should not be specific performance of the contract. 178The submission was that Stelli has never been ready, willing and able to perform the contact for sale in accordance with its terms as it: (a) had not paid the shortfall of $91,000 due at settlement; (b) did not pay the deposit of $160,000 and instead it came to a private arrangement with Mr Maalouf to cover the deposit with vendor's finance. They included an agreement that, if Despot paid all the moneys Sky claimed, the contract for sale would be terminated. (c) Stelli paid the balance of $480,000 to Sky after the proceedings were commenced, pursuant to its private arrangement with Mr Maalouf rather than paying the balance to Mr Despot or interpleading; and (d) Mrs Azzi, a director of Stelli, in her evidence made it perfectly clear that, if the building work was not insured under the Act and the work was done without there being a licensed builder, Stelli would withdraw its offer to complete the transaction. 179Mr Despot submitted that specific performance of the contract would impose undue hardship against him. Whereas it was suggested on behalf of Stelli that a balancing of hardship factors favoured granting specific performance. 180The non-payment of the final amount due at settlement is an amount of $91,086. This arose because of deductions from the St George Bank loan for mortgage costs, stamp duty and legal costs. Mrs Azzi gave evidence that she only became aware of the $91,086 recently. She gave affidavit evidence to the Court offering to pay the shortfall and settle if the vendor would give her title. Her offer was not the subject of any cross-examination or criticism and it would seem that Stelli is willing to pay the $91,086 as a condition of relief. 181As far as the deposit of $160,000 is concerned, this is involved in the arrangement made for vendor finance for the balance of the purchase price other than the amount provided by St George Bank. 182The payment of $480,000 was by cheques for varying amounts given between 6 August 2008 and 16 October 2008. These proceedings were commenced on 22 July 2008 and an appearance was entered on 11 August 2008. It is clear that by 30 July 2008, Stelli was aware of the nature of the claim made in the proceedings. Notwithstanding this, Stelli continued to make payments in respect of the vendor finance direct to Mr Maalouf or Sky Constructions rather than adopting a sensible course and making payments into court. 183There is no suggestion from Mr Maalouf or Sky that the repayment of vendor finance was not made in accordance with the arrangements or that there is some complaint about delay. In these circumstances it is difficult to see how Stelli has not continued to perform the contract in accordance with its terms. Indeed, given that settlement has taken place it could also be said that there has been payment of the purchase price in accordance with its terms, which included the provision of vendor finance after settlement. 184Reference was made to the private arrangement whereby the contract for sale would be terminated if Mr Despot were to pay all the moneys to Sky. This did not eventuate and of itself does not indicate a failure to perform the contract in accordance with its terms. A more important matter on this aspect is Stelli's withdrawal of the offer to complete the transaction, which was made in the course of Mrs Azzi's evidence in cross-examination: "Q. If you were to assume right now that the building work in this unit isn't insured under the Home Building Act and that the work was done without there being a licensed builder with an enforceable building contract, may I take it that you don't really want to go ahead and buy this thing? A. Yes. Q. I mean, if this building work has not been insured, may I take it that you really would withdraw, on behalf of Stelli, its offer to go ahead and complete the transaction? A. Yes. Q. You'd be wanting your money back from Mr Maalouf? A. Yes." 185Although the following evidence goes to the claim Stelli may have against Mr Maalouf under section 42 of the Fair Trading Act 1987, it also supports Mrs Azzi's reluctance in the earlier cross-examination: "Q. It's not often that customers buying cups of coffee at this cafe come forward and present investment opportunities, I suggest? A. No, we don't get one every day. Q. It really was a special sort of a day, this one, wasn't it? A. Yeah, sort of. Q. This man came in and he says he's got the power to sell somebody else's property and he's prepared to sell it to you. A. He sort of asked if we were interested, and we thought we'd look at it and see how-- Q. Sure. And he sold you this opportunity in very glowing terms? A. Yes. Q. And you were relying upon what he was saying to you when he was saying things like he was owed money? A. Yes. Q. You believed him? A. Yes. Q. If he'd said, "Sorry. All of my renovation works were in fact done unlawfully and I'm not entitled to be paid a cent for this uninsured work unless a court exercises a power," you wouldn't have wasted another minute of your time with this bloke, would you? A. That's right. That's right. Q. He would have presented to you as a complete crook if he'd passed on to you those elementary truths, and you wouldn't have dealt with him for a minute? A. Of course. Q. Correct? A. Yes. Q. Did he tell you, when he took you over to inspect the property, that Mr Despot was aware that he was taking you over there to inspect as a potential purchaser? A. No. Q. Did he tell you that he'd actually been keeping a secret from Mr Despot in that he didn't tell Mr Despot that you were interested in buying at 1.6 million? A. No, he didn't. Q. Had he said to you at that point, after you'd decided that at 1.6 million this was a good buy, "Mrs Azzi, I'm keeping this a secret from Mr Despot because if I tell him, he's going to take some proceedings to stop me going ahead," you wouldn't have dealt with him-- A. No. Q. - for another second? A. That's right. Q. You would have perceived him to be a complete crook? A. That's right." 186This evidence makes it clear that when she was cross-examined, Mrs Azzi was not prepared to continue with the purchase of the property under those circumstances. However, it is to be noted that after this evidence was given, Stelli's has continued to press its claim for specific performance. No doubt Mrs Azzi, as sole shareholder and director of Stelli, has given these instructions after advice. In these circumstances, it is clear that the purchaser is ready, willing and able to complete. 187Mr Despot suggested that he would suffer hardship because: (a) He would lose the benefit of ownership. (b) Stelli had ignored a number of factors that would have alerted them to the fraud. 188The relevant discretionary factors said to deal with hardship are contained in paragraph 27 of Stelli's submissions which are in these terms: "27. The balance of personal equities, and the respective hardship to Despot and Stelli Pty Ltd require the conclusion that specific performance in favour of Stelli Pty Ltd against Despot should be granted. The features of respective personal equities and comparative hardship as between Despot and Stelli Pty Ltd show the balance as clearly being in favour of Stelli Pty Ltd having its remedy of specific performance: (a) Despot signed a Power of Attorney and Deed of Security, together with, at some stage, the Building Contract, and as the text messages from Despot to Maalouf dated 17 December 2007 and 29 January 2008 indicated, was well aware of Maalouf's intentions, what money was owing, and the powers of sale which Maaouf had under the Power of Attorney, and communicated by those text messages his consent to the property being sold by Maalouf; (b) If Despot had disputes with Maalouf as to how much was payable by Despot to Sky Constructions Pty Ltd, he refrained over a long period from notifying any disputes or communicating with Maalouf and, later, Carbone, as to his contentions as to whether any monies were owed, and how much, in relation to the building work, this delay not being satisfactorily explained; (c) There is ample evidence that Despot simply ignored repeated requests by Maalouf, both orally and through invoices, to have the outstanding monies paid, but also to communicate with Maalouf any dissatisfaction he had with the amount charged, or any dispute as to what had been paid and what was owing; (d) Carbone took no steps to revoke the Power of Attorney or to attempt to persuade Maalouf not to rely on it alternatively to act upon without due notice of intention to do so; (e) Despot by alleging initially a series of forged signatures, and then having been forced to recant such allegations, by maintaining falsely that he did not send the text messages and that he was duped into signing documents which he did not understand [at] the time to be either a Building Contract, a Power of Attorney and the Deed of Security, has given dishonest evidence, whereas Mr & Mrs Azzi have given honest evidence; (f) Mr & Mrs Azzi are innocent parties who simply agreed to purchase the property as it seemed like a good investment, as contrasted with Despot, whose acts and omissions throughout the entire history of the litigation, and his evidence, have been dishonest; (g) Stelli Pty Ltd, Mr & Mrs Azzi, regardless of what costs orders are made in favour of Stelli Pty Ltd and Azzi but particularly if Despot or Maalouf are unwilling or unable to pay any costs orders made against them in favour of Stelli Pty Ltd or Mrs Azzi, will be substantially out-of-pocket not merely because of the history of Despot's behaviour in relation to the dispute between the parties, but also the extent, complexity and length of the court proceedings which have been unnecessarily increased by the false accusations which Despot has brought, and the complexity of the issues which he has necessarily created. (h) The sale transaction was sufficiently completed so that Stelli Pty Ltd and Mr & Mrs Azzi became bound to financial obligations in paying St George Bank in respect of the mortgage, they have suffered additional losses which involve a significant financial hardship. Because Despot joined the St George Bank as a Defendant in the proceedings, St George Bank under the terms of its loan agreement with Stelli Pty Ltd and Mr & Mrs Azzi, were entitled to be indemnified by them for all costs which they incurred in the subject proceedings. The St George Bank is a secured creditor for its costs, having security not only over the subject property but other assets of Mr & Mrs Azzi. This is a hardship which Mr & Mrs Azzi have had to endure, by reason of the acts and omissions of Despot. (i) If the matter is viewed as one where discretionary considerations as to granting of an equitable remedy focus upon whether the Court should grant Despot an injunction, rather than whether the Court should grant specific performance in favour of Stelli Pty Ltd and Mrs Azzi, the same considerations, as set out above, which are relevant to respective personal equities and comparative hardship, would require refusal of injunctive relief, and, if Despot succeeds, awarding damages instead as against other parties (but not against Stelli Pty Ltd or Mrs Azzi, who have done no wrong). But then as it is an inevitable outcome of the proceedings that the subject property must end up with the owner being either Despot or Stelli Pty Ltd, it is important to recognise that refusal of specific performance to Stelli Pty Ltd in effect requires that Despot be granted an injunction, and that granting of specific performance to Stelli Pty Ltd requires refusal to grant an injunction in favour of Despot. If the matter is viewed from the point of view of the conduct of Despot, he has not come to Equity with clean hands, whereas no such criticism can be made against Stelli Pty Ltd or Mrs Azzi. Therefore an order for specific performance should be granted to Stelli Pty Ltd, as that is a necessary consequence of refusing to grant Despot an injunction. (j) The longstanding failure by Despot to take proper steps to protect his position, while knowing that he had signed a Power of Attorney and that Maalouf was in a position to sell the property under the Power of Attorney, constitutes delay which itself is another discretionary factor which operates against Despot, whereas no such discretionary factor operates in respect of the conduct of Stelli Pty Ltd or Mr and Mrs Azzi. Therefore the comparison of the delays by Despot, on the one hand, and Stelli Pty Ltd and Mr and Mrs Azzi on the other hand, requires that Despot be refused an injunction and that Stelli Pty Ltd have an order for specific performance in its favour." 189I do not think that the submissions that refer to the conduct of the parties during the trial as to whether they gave honest or dishonest evidence are relevant to the questions of hardship. As far as the liability of St George Bank is concerned, whoever continues to own the property after the litigation will still have a liability to St George Bank. 190One matter of substance is my finding that Mr Despot had signed the power of attorney and deed of security and that he continued on with the arrangement with Mr Maalouf and Sky to carry out work. Clearly there were disputes about the amount owing and Mr Despot made no effort to resolve these disputes or terminate the power of attorney. His failure in this regard is probably explained by his desire to manipulate Mr Maalouf in order to get him to finish the apartment and to pay him as little as possible. Terminating the power of attorney would have frustrated that desire. He thus had clothed Mr Maalouf with the ability to sell the property. He took no steps to resolve his differences with Mr Maalouf, which would have enabled him to terminate the power of attorney. 191On the other hand, Mr Maalouf's secret efforts of concealing the sale mean that Mr Despot stands to lose his property. Such concealment may not have been unlawful given the absence of any fiduciary duty between them but the actions of Mr Maalouf were quite deliberate. 192The financial ramifications for Mr and Mrs Azzi have some importance. The factors in paragraph 27(g) and (h) of Stelli's submissions are very real. 193There is authority suggesting that hardship may apply in favour of a defendant where a plaintiff has purchased a property for investment purposes and the defendant has some personal attachment to the property (see Madden v Kevereski (1982) 2 BPR 9645 - a case in which the defendant was elderly, had lived in the house for ten years and would substantially suffer from having to move house). In this case, Stelli was purchasing the unit as an investment but Mr Despot was renovating the unit with a view to a resale. Thus these aspects do not affect the balance of hardship. 194A resulting loss of the difference between the resale price and current value of the land is not a matter of hardship: Broulee Developments Pty Limited v Mackay [2008] NSWSC 32 and Wollondilly Shire Council v Picton Power Lines Pty Limited (1994) 33 NSWLR 551. Handley JA (with whom Clarke and Meagher JJA agreed said, at 557 D: "In general an unearned increase in the value of land can never, in itself, be a basis for refusing specific performance on the ground of hardship: see Fitzgerald v Masters (1956) 95 CLR 420. This is because under a contract which is capable of specific performance any such increase accrues to the purchaser. The vendor's equitable entitlement under such a contract is not to the land but to the balance of the purchase money: see Lysaght v Edwards (1876) 2 ChD 499. For similar reasons an order for specific performance in this case will not operate against the respondent as a forfeiture." 195In any event, the difference in this case will accrue to the benefit of Mr Despot as a result of my decision on the accounting. 196If no order for specific performance is made, then the Azzis will be left to their remedies at law, which will involve them in claiming back the sale proceeds from Mr Maalouf because there would have been a total failure of consideration. This raises the consideration as to whether specific performance would the most appropriate remedy in this situation. 197In this case, contracts for the sale of the property have been exchanged, the majority of the purchase price has been paid, Mr Despot's mortgage to St George Bank has been paid out, as have been the outstanding rates and the purchase has been settled. It is clear the Azzis are ready, willing and able to complete if that is the correct analysis of the situation. 198If Mr Maalouf has no assets, then apart from receiving some of the monies that Mr Despot might owe to Sky Constructions, the Azzis will be out of pocket. The Azzis most unwisely paid a sum of $480,000 to Mr Maalouf after settlement and it seems after notice of the proceedings were available to them. In these circumstances this cannot be considered to be a hardship that can be taken into account. However, Stelli is an innocent purchaser, entitled to rely on the power of attorney. 199On 22 July 2008, Mr Despot obtained an injunction restraining the registration of any dealings over all his properties. At present, there is no actual breach of the contract for sale by Mr Maalouf. However, the vendor is Mr Despot and the sale has been settled, in the conveyancing sense of that word. It is the registration of the transfer that has been restrained. 200The question that arises is whether the contract has merged in the transfer on completion of the contract. If it was Old System land, a contract is completed by payment of the purchase money by the purchaser, the execution and delivery at the same time of a conveyance by the vendor and the handing over of such deeds as relate wholly to the property conveyed. It is at that point that the contract merges in the conveyance and all the purchaser is left with is his or her rights on the implied or s 78 Conveyancing Act 1919 covenants for title including the covenant for further assurance. Such a covenant is specifically enforceable : see Otter v Lord Vaux (1856) 6 De GM & G 638; (1856) 43 ER 1381; Bankes v Small ( 1887) 36 Ch D 716 ; Repington, In re ; Wodehouse v Scobell [1904] 1 Ch 811; Daniels v Pynbland Pty Ltd (Nos 1 & 2) (1985) 4 BPR 9716. 201In respect of land subject to the Real Property Act , the situation is different. The difference was carefully analysed by Speight J in Montgomery and Rennie v Continental Bags (NZ) Limited [1972] NZLR 884. The case concerned a misdescription of the land conveyed and a purported recision. After settlement, which had included a handing over of the transfer, the mistake was discovered before registration. A question arose as to whether the contract could then be rescinded. After referring inter alia to the position in respect of Old System Title in Australia he said at pages 892 to 893: "Under a deeds system completion of the contract means "the complete conveyance of the estate and final settlement of the business"; Killner v France [1946] 2 All ER 83, 86. Under a Torrens system, however, vesting of legal estate does not occur until registration ( Land Transfer Act , s 41 (supra)). Registration is completion and not the payment of money and delivery of documents at any time prior. In West v Read (1913) 13 SR (NSW) 575, the matter at issue related to warranty of title and is not directly relevant, but there are certain remarks by members of the New South Wales Full Court which are helpful. Cullen CJ at p 579 said: 'In order to displace the prima facie liability for breach of contract which existed prior to the registration of this document, the defendants rely upon the unquestionable rule of law that where a contract to sell has been effectuated by a conveyance, then, apart from mere collateral provisions in the contract of sale - such, for instance, as some of those which appear in the present agreement, about the adjustment of rates and taxes - the purchaser who has taken the conveyance has no remedy on the contract to sell. There are, of course, exceptions to that rule, but exceptions which would not apply to this case. But the rule itself presupposes that the obligation to convey created by the contract has merged in, and become satisfied by, the actual conveyancing operation of the deed. A deed effectuating a contract to sell is a conveyance. If it turns out that there was no title to convey, it is none the less a deed of conveyance, though it may prove inoperative. It carries out the contract to convey so far as that part of the bargain can be effectuated, and thus has the effect of merging the contractual obligation to convey. If the title of the vendor is merely defective, the deed still has a conveyancing operation, although it may not carry the whole fee simple.' But under the Real Property Act there is no conveyance until a document in statutory form has been registered." And Gordon J (although dissenting on the main question) said at p 582: "The right of action which undoubtedly existed prior to the registration of the transfer for breach of the original contract - upon registration of the transfer became merged in the deed." Stonham on Vendor & Purchaser 910, para 1974A, says that merger of the earlier contract takes place with the conveyance upon settlement under the old system but under the Torrens system it is the duty of the transferor to procure registration as until registration he has not completed his obligations. The footnote cites several authorities which I have read and they are ample to support this conclusion even though the transferee might, as a matter of convenience, undertake the physical act of lodging the documents for registration. Stronger support can be found in Knight Sugar Co Ltd v Alberta Railway & Irrigation Co (supra). The contest there was as to the reservation of mining rights - there was disparity between the reservations in the contract and those in the memorandum of transfer which was subsequently registered. The editorial Note at p 266 adequately summarises the effect of their Lordships' opinions: 'It is well known that for practically all purposes the agreement for sale cannot be looked at after the execution of a conveyance, since the agreement is merged in the conveyance. In the case of registered land, there is, properly speaking, no document which is a conveyance of the property, but a transfer is executed, and the registration of the purchaser as the owner of the property, in accordance with the terms of the transfer, operates to vest the property in him. Upon these grounds, it was argued that the doctrine of merger did not apply as between the agreement and the transfer, but their Lordships have decided that it does.' In particular the judgment is based on ss 50 and 51 of the Alberta Land Titles Act 1906. Section 50 is word for word with s 41 of the New Zealand Act. Having quoted the sections their Lordships' judgment continues: 'From the language used in these sections it seems clear that each of the transfers was a document prepared (and prepared, it cannot be doubted, in a form approved by both transferor and transferee) in order that, when registered, it should become operative according to the tenor and intent thereof, and should thereupon transfer the land mentioned therein. It is the transfer which, when registered, passes the estate or interest in the land, and it appears, for the purpose of the application of the doctrine in question, to differ in no relevant respect from an ordinary conveyance of unregistered land.' I have had by attention drawn to Cousins & Cousins v Freeman (1957) 58 WALR 79, a case very similar to the present but where registration had been effected in the Titles Office. With respect I agree with the conclusion reached by the learned Judge but it seems that it could have been reached more directly on the wording of s 58 of the West Australian Transfer of Land Act , as in the Alberta Railway case . I feel that in following Svanosio v McNamara (supra) the learned Judge may not have noted that that was not a Torrens title and there was no requirement of registration. I conclude that title of the land remains with the vendor until registration, that the commonly described practice of 'settlement' viz, the exchange of memorandum to enable registration to be effected, does not amount to a completion of the transaction or conveyance and the contract of sale still governs the relationship of the parties until registration." 202Section 41 of the New Zealand Act is almost identical in terms to s 41 of the Real Property Act. His approach is consistent with what was said by the High Court in Chan v Cresdon Pty Ltd (1989) 168 CLR 242 Mason CJ, Brennan, Deane and McHugh JJ said at 257: "...it has been said from time to time that unregistered instruments may confer equitable estates and interests: see Boyd , at 81-82; York House , at 435-436; Progressive Mailing House , at 26-27. These statements need to be read in conjunction with the remarks of Isaacs J in Barry v Heider (1914) 19 CLR 197. His Honour, in the context of s41 of the Real Property Act 1900 (NSW), the counterpart of s43 of the Act, said (at 216): "[S]ec.41, in denying effect to an instrument until registration, does not touch whatever rights are behind it. Parties may have a right to have such an instrument executed and registered; and that right, according to accepted rules of equity, is an estate or interest in the land. Until that instrument is executed, sec.41 cannot affect the matter, and if the instrument is executed it is plain its inefficacy until registered - that is, until statutory completion as an instrument of title - cannot cut down or merge the preexisting right which led to its execution." The point made in this passage is that, though the unregistered instrument is itself ineffective to create a legal or equitable estate or interest in the land, before registration, the section does not avoid contracts or render them inoperative. So an antecedent agreement will be effective, in accordance with the principles of equity, to bring into existence an equitable estate or interest in the land. But it is that antecedent agreement, evidenced by the unregistered instrument, not the instrument itself, which creates the equitable estate or interest. In this way no violence is done to the statutory command in s43." 203In my view, his Honour's conclusions in Montgomery and Rennie v Continental Bags are right, so that in this case there has not been a completion of the transaction and the contract is still available for an order of specific performance. 204Two questions arise from this approach. Firstly, should the injunction obtained by Mr Maalouf be dissolved? Secondly, should there be an order for specific performance against Mr Despot? 205On the first question, an overall consideration of the hardship matters inclines me to the view that the injunction should be dissolved. 206On the second question, the orders sought by Stelli are as follows: 1. A declaration that the contract dated 16 May 2008 between the plaintiff as vendor and the third defendant as purchaser for the sale of the land referred to in folio identifiers 7/SP4542, 24/SP4542 and 25/SP4542 is valid and binding upon those parties. 2. A declaration that the transfer of that land executed on 3 July 2008 by the second defendant on behalf of the plaintiff is valid and registrable. 3. An order against the plaintiff that he execute any further forms required to register the transfer of that land. 207Given my findings as to the power of attorney not being revocable, the second declaration should be made. This and the other findings I have made are sufficient to make the first declaration. 208The third order requires consideration of the matters that would normally arise on the making of an order for specific performance such as "ready and willing" and hardship, I am satisfied that a consideration of those matters leads me to the view that an appropriate order securing the registration of the transfer should be made. The form of the order can be dealt with in short minutes. Consequential Issues 1. Whether Sky is entitled to a quantum meruit under section 94(1A) of the Act and the amount of that quantum meruit. 209Section 94(1A) of the Home Building Act provides: "Despite section 92 (2) and subsection (1), if a court or tribunal considers it just and equitable, the contractor, despite the absence of the required contract of insurance, is entitled to recover money in respect of that work on a quantum meruit basis." 210Given the terms of section 94(1), it is clear that the Court does not give effect to an existing right but the section empowers the Court to create a right to a quantum meruit for recovery of money for that work if the Court considers it just and equitable. 211The concept of "just and equitable" in relation to section 94(1A) was addressed by Barrett J in Eddy Lau Constructions Pty Limited v Transdevelopment Enterprise Pty Limited [2004] NSWSC 273, at [48] - [49] as follows: "[48] Section 94(1A) of the Home Building Act must therefore be seen as conferring a discretion that is wide but must be exercised judicially in the light of the whole of the circumstances surrounding the relevant subject matter. Lord Wilberforce explained this exercise in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at p 379: "It [the phrase 'just and equitable'] does, as equity always does, enable the court to subject the exercise of legal rights to equitable considerations; considerations, that is, of a personal character arising between one individual and another, which may make it unjust, or inequitable, to insist on legal rights, or to exercise them in a particular way." [49] The present context is one in which the court is called upon to say whether it is "just and equitable" that a quantum meruit sum be awarded for work done. The quantum meruit sum itself will, of its nature, reflect a fair remuneration, having regard to the extent of the work actually done. That is of the essence of a quantum meruit: see Pavey & Matthews Ltd v Paul (1987) 162 CLR 221 at p 262 per Deane J. The inquiry directed by the statute is therefore, in effect, whether the surrounding circumstances are such as to justify the creation of a right and an obligation as to the payment of the sum separately determined to represent fair remuneration. The Act, as I see it, does not attempt to control quantification. That is left to the general principle imported by the expression "quantum meruit". The Act is concerned with factors influencing a decision whether, in the particular circumstances in which the court finds the parties, it is fair that one receive the quantum meruit sum and the other pay it. It is to those circumstances that I now turn." 212The principal reason that stands in the way of the Court finding that it is appropriate to give a right to recovery in a quantum meruit is the question of insurance. A similar matter arose in the Eddy Lau case. In paragraphs 62 to 64, his Honour addressed the actual default of some seventeen days in that case in these terms: " Conclusion on the "just and equitable" question [62] The policy behind s 94(1A) is, clearly enough, that the statutory disentitlement under s 94(1) to sue for damages under or otherwise to enforce the contract made in contravention of s 92(1) may be offset by the court's allowing recovery on a quantum meruit basis, provided that it is satisfied, according to the "just and equitable" criteria, that the builder is deserving of such recovery. [63] Having regard to the whole of the considerations I have mentioned as relevant to that question in this particular case, I consider the most telling factor to be that, if the plaintiff is not granted relief under s 94(1A), the defendant will have the benefit of the work without having to pay for it. In the absence of conduct of the plaintiff (over and above the default that gave rise to the contravention of s 92) operating in a relevant way to the detriment of the defendant, the plaintiff should not be denied the quantum meruit recovery. The only additional criticism levelled at the plaintiff is that it did not act with sufficient diligence in attempting to remedy the insurance default. I do not consider that criticism to be sufficient to deny recovery upon the quantum meruit. I would add that there is no apparent reason why the defendant, if it was as concerned as it professed to be about obtaining the relevant insurance protection, should not have made attempts of its own, in consultation with the plaintiff and at the plaintiff's cost, to negotiate an appropriate contract with an insurer. It seems that the defendant was more interested in bringing the contract to an end than it was in working with the plaintiff to address the insurance deficiency. [64] I am satisfied that the conduct of the plaintiff, viewed in the whole of the surrounding circumstances, did not exhibit blameworthiness such as to make it inappropriate to provide a reasonable reward for work actually done by it and that it is therefore just and equitable for the plaintiff to recover a quantum meruit sum for that work under s 94(1A)." 213In the present case there is still no effective insurance. It is obvious that Mr Maalouf was aware of the requirement fo r insurance from the outset. Instead of obtaining that insurance and providing Mr Despot with a copy of it, Mr Maalouf falsified the checklist provided n the Building Contract. When Mr Maalouf was cross-examined he gave the following evidence: "Q. You did read and understand the question, "Do you understand that the contractor must have a policy of home insurance and provide a certificate of-- A. That's correct. Q. You ticked that yes, when in truth you knew that you had no such insurance and Mr Despot had no such understanding, didn't you? A. No such? Q. No such understanding. A. What do you mean by "no such understanding"? Q. Well, you've just given a version of events in which you say you said to Mr Despot sufficient to make him believe he didn't need a policy. A. That's correct. Q. Yes. The truthful answer, if that is so, would be no, would it not? A. Correct. Q. So the answer you've given there, "yes," was known to you at the point that you ticked "yes" to be false. A. Correct. Q. And it was intended by you to deceive any reader of this document into believing that Mr Despot understood that you must have a policy and provide Mr Despot with a certificate before you received any deposit or did any work? A. That's correct. Q. So if, for example, an inspector had come along from the Department of Fair Trading or WorkCover or anybody else who went out there regulating things, or the Council, and called for a copy of the contract, you could put this in front of them and deceive them? A. That's correct. Q. And that's what you were intending to do by providing these very false answers to these questions? A. That's correct. Q. Do you have a contract of insurance to this day covering this work? A. Sorry? Q. Do you have a contract of insurance, home warranty insurance under the Home Building Act , to this day covering this work? A. No. What I've done is I have got an approval from an insurance company relating to this date that is awaiting a signature from the right owner. Q. So this work has been uninsured for three years? A. That's correct. Q. Work that you say involves costs of - and valued well in excess of a million dollars? A. That's correct. " 214Mr Maalouf's excuse that he was waiting for the signature from the correct owner is disingenuous. The relevant owner was the one for whom the work was done, namely, Mr Despot. 215Mr Maalouf has wilfully disregarded the requirements of the Act in respect of insurance. His recent attempts after the close of addresses has been unsuccessful. 216The matters put forward in Sky Constructions' submissions as to why the court should exercise its discretion in favour of awarding quantum meruit are as follows: "(a) That the property was sold at above Despot's valuation. (b) That Despot was a regular visitor to the premises and knew of the works being undertaken at the premises. (c) That Despot in fact wishes to retain the premises. (d) That Despot wanted works that were of the highest quality and having obtained such works it is fair that he pay for same. (e) That Despot misled Maalouf into continuing work by sending him text messages to the effect that the full contract price would be paid. Whilst Despot denies this fact, his denial should be rejected. On this point it is important to note that Despot originally denied that the message were sent from his phone and sought an adjournment to obtain evidence on this point (see transcript of hearing of 8 March 2010 page 25 para 35) he said that he would provide expert "evidence on the location" and that 'source documents would be sought from the carrier" (8 3 10 T page 25 para 45). No expert evidence was ever adduced. (f) Despot agreed that he allowed the works to continue and never asked Maaiouf to stop (T page 87 Para 10). (g) Despot knew that the works were becoming very expensive and claims he told Maalouf "You're going over the limit" but allowed the works to continue (T page 10-8 Para 25). (h) That Despot was pleased to take the benefit of the work and was happy about the nature of the works (See evidence of his driver Cine at T 257). (i) There is no evidence of defects (j) The evidence of Juric, Ciric, Clarke & Maalouf that Despot often visited the site and proudly spoke of the works being done. (k) That Stelli still wishes to proceed with the purchase (at $1,600,000 00) even armed with the knowledge of the lack of insurance. This is evidence that the lack of insurance has not impacted on the sale price." 217The decision to find that the contract for sale is valid and will be enforced means that the property will pass to Stelli. There still has to be an accounting between Mr Despot, Mr Maalouf and Sky Constructions in respect of the sale proceeds and their application. That means that Mr Despot will receive the benefit of the increased purchase price of $1.6 million that was consequent upon the renovations carried out by Sky Constructions. In the absence of the renovations, the valuation evidence demonstrates that the property was only worth $1.1 million. 218It is clear Mr Despot will receive a benefit for the work and I think that justice requires that I allow a quantum meruit. 219I will now consider the amount of any quantum meruit claim. 220The plaintiff relied on the evidence of Mr Beencke, a quantity surveyor who measured the work and determined the rates used to price the work. He estimated the value of the work at $418,311 including GST. He noted that the cost of residential renovations could vary considerably (by 20 per cent or more) on the basis of a number of different factors. He expected there to be a range of prices between $400,000 and $480,000, depending on how the matter was tendered and the builder's approach. The summary of the categories which Mr Beencke addressed in his report are as follows: Demolition $24,385.00 Upper floors $10,680.00 Windows $25,300.00 Internal walls, doors & wall finishes $37,020.00 Floor finishes $32,105.00 Ceiling finishes $21,150.00 Fitments $100,285.00 Hydraulic services $20,150.00 Mechanical services $20,150.00 Electrical services $13,000.00 Estimated net trade cost $304,225.00 Builders preliminaries & margin (allow 25%) $76,056.25 Estimated building cost (excl.GST 10%) $380,281.25 GST 10% $38,028.13 TOTAL AMOUNT TO FORM OF TENDER $418,309.38 221In a joint report prepared after both experts' reports had been served, Mr Beencke conceded a need to reduce his tiling estimate by $2,600 and his appliance estimate by $3,563. 222Mr Maalouf relied upon the evidence of Mr Heymann, a quantity surveyor and the actual costs that he alleged were paid to various subcontractors who carried out work on the project. Mr Heymann did not follow the same process as Mr Beencke. He adopted a process of ascertaining the veracity of the documents and invoices produced by Mr Maalouf and determining whether the actual costs were reasonable in terms of estimating a value for the work. 223Apart from six identified suppliers, Mr Heymann was satisfied with the invoices but thought that, in respect of those six suppliers, the trades' prices were 10% to 25% higher than he would have expected. He made some enquiries from the suppliers in question and determined that that the amounts were appropriate. 224I will not deal with Mr Heymann's methodology at this stage but for the purpose of comparison the costs that he ultimately accepted, his price of $1,398,600.46 was ascertained as follows: 1 Demolition $115,200 2 Waterproofing $3,400 3 Structural steel $14,810 4 Windows and glazing $113,603 5 Balustrades $8,500 6 Masonry work $41,950 7 Plasterboard $122,403 8 Shower screens and mirrors $12,750 9 Doors and frames (included in carpentry and joinery) 10 Hardware (included in carpentry and joinery) 11 Carpentry and joinery $164,400 12 Timber floor $32,650 13 Carpet $7,289 14 Tiling $41,300 15 Ceilings (included in plasterboard) 16 Cement render and painting $48,500 17 Bathroom, kitchen and laundry fixtures $9,657 18 Appliances $23,263 19 Electrical installation $102,096 20 Light fittings (included in electical installation) 21 Smart home installation (included in electrical installation) 22 Audio system (included in electrical installation) 23 Fire protection (included in electrical installation) 24 Hydraulic installation $32,200 25 Mechanical installation $68,674 26 Scaffolding $71,404 27 Others $12,645 28 Site supervision $54,167 29 Preliminaries (5%) $55,044 30 Margin (10%) $115,591 31 Subtotal $1,271,496 32 GST (10%) $127,150 Subtotal $1,398,646 225The joint report conceded that Mr Heymann's estimates for showers, screens and mirrors should be reduced by $350 and his estimate for hydraulic installations should be reduced by $7,250. 226It will be noted that both Mr Haymann and Mr Benncke made an allowance for overhead and profit. In Sopov v Kane Constructions Pty Ltd (No2) [2009] VSCA 141 at 33 to 37 the Victorian Full Court held that an appropriate allowance in a quantum meruit included an amount representing overhead and profit. 227It is also clear that the value of work done can be proved by the evidence of costs actually incurred see D Cremean, M Whitten, B Shnookal, Brooking on Building Contracts , 4th ed (2004) [8.6]; S Furst and V Ramsay, Keating on Construction Contracts , 8th ed (2006) 4-020; Renard v Constructions (ME) Pty Ltd v The Minister (1992) 26 NSWLR 234 at 276; ABB Engineering Construction Pty Ltd v Abigroup Contractors Pty Ltd [ 2003] NSWSC 665; Brenner v First Artists' Management Pty Ltd [1993] 2 VR 221 at 263. In the last case Byrne J said: "Third, where the parties have agreed upon a price for certain services to be performed and those services have in fact been performed, but for some reason their agreement is ineffective or is no longer on foot, the agreed price is evidence of the value that the parties themselves put on the services performed and may be received as evidence of the appropriate remuneration, but is not determinative of it: Pavey's Case , at 257; Horton v Jones [No 1] (1934) 34 SR (NSW) 359, at 368. These cases are concerned with contracts which have been performed by the plaintiff, but there seems no reason in principle why the court should not equally have regard to the agreed price in assessing the benefit of services where they are not totally performed. In such a case, however, there may be in particular circumstances difficulties in applying a pro rata basis for the agreed price to incomplete works: see Jennings' Case . Where the court has regard to the agreed remuneration or the agreed mode of calculating remuneration, it is entitled to modify this to determine what is in all the circumstances a fair recompense. See, for example, Hansen v Mayfair Trading Co Pty Ltd [1962] WAR 148." 228Sky Constructions relied on the invoices as evidence of the reasonableness of the claims. 229I note that not all the suppliers have been paid, but this is not relevant to the enquiry with which I am concerned. 230Mr Heymann's methodology in checking invoices and the usefulness of that approach was explained by him in the following way (transcript 756): "The skill necessary to recognize that by merely measuring and valuing the work at customary rates off the drawings would not tell the whole story in this case, and that the actual costs that the contractor expended told the whole story, provided that the invoices that were presented to me as true, were true. They told a better truth than any other measurement or application of customer rates that I could apply because those are estimates. They are approximations of the real world. Whereas these invoices are real. I was told that they were real. I spoke to real people, who told me they really did this work, they really charged this amount of money and they were paid it. There is nothing more real than assumptions and estimates." 231In forming his view that the amounts which had been charged were reasonable, it is clear that Mr Heymann did not do so by applying traditional quantity surveying methods such as measurements and by pricing according to known pricing guides. It also seems the whole basis of his opinion, to extent to which his verification is put forward, is not in evidence. He has referred to statutory declarations from Mr Maalouf that he relied upon but these are not in evidence. 232There is little in Mr Heymann's evidence that adds weight to his opinion in respect of the actual costs charged. The matter should be approached in the manner set out in the authorities to which I have referred. 233I will now consider the specific aspects of the work where there was a difference between Mr Beencke's quantity surveyor estimates that prima facie I accept and Mr Heymann's claimed costs on behalf of Sky Constructions. Demolition 234Mr Heymann accepted what he had been told by Mr Maalouf, that two men were employed for six days per week for the period from 17 July 2007 to 8 May 2008, at a daily rate of $240. Allowing for holidays, this equates to 40 weeks, six days per week, for two men at $240 per day, creating a total of $115,200. 235In contrast, Mr Beencke allowed $24,385 after a detailed breakdown of the demolition works required. 236Mr Heymann said he would rely on a statutory declaration from Mr Maalouf to establish the actual fact of hiring labour. That turned out to be an affidavit of Mr Maalouf, dated 27 May 2010, in which he swore they engaged two labourers at $240 per day for most of the 40 weeks project. He claimed in his affidavit that on most occasions the wages were paid in cash but he did have cheque butts showing wages paid totalling $6,850. 237As was pointed out by Mr Beencke this claim is somewhat extraordinary in that it ignores the amounts claimed by other trades for demolition work in Sky Constructions claims which include: * JMC Bricklaying * Structural Systems * Highlife Kitchens * Proline Aluminium * Water Works Plumbing 238The other extraordinary aspect of this claim is that it is alleged that all the internal brick walls, including the inner skin of the outer walls, were demolished and new bricks were carried up to the apartment by hand. Mr Maalouf says there were 12,000 bricks involved and that this was a result of a conversation he had with Mr Despot when he suggested that the internal walls were of a poor quality. He said he spoke to Mr Despot and suggested that the bricks needed to be replaced and that Mr Despot agreed. Mr Despot denies this claim and it should be analysed. 239The brick walls are load bearing. They support the building, including the two floors of apartments above. There is no evidence of any structural approval to temporarily support the building in order to allow the internal walls to be removed and replaced. The only structural drawings produced show minor removal of brick walls and certainly no demolition of all internal brick walls. 240The quantity surveyors make it clear that if the internal walls were replaced, as well as the internal skin of the external walls, there would be approximately 237 square metres of bricks used. That amounts to 12,000 bricks. The architect's floor plan showed there were to be about 8 lineal metres of new internal brick walls. This equates to 24 square metres of bricks, which requires 1,200 actual bricks. 241The bricklayer involved was impossible to contact and did not give evidence. The internal surfaces are plasterboard finished and it seems inconceivable that there was a need to replace brick walls that were being covered up for the purpose of finishing. 242Mr Benncke gave evidence that an inspection of the area behind the cabinet in the ensuite bathroom, where the hot water unit is located, clearly showed that the masonry walls existed and some walls still contained the original render and remains of wall tiles. 243For these reasons, I find it inconceivable that 12,000 bricks would have been supplied and the whole of the internal brickwork demolished. I do note that the simple one page handwritten tax invoice given by the bricklayer includes an amount for demolition for internal walls and supply of props. However, without his evidence, it has little weight. 244I would not normally be satisfied on the sole basis of Mr Maalouf's word as to the cash payment of any of the labourers said to be involved in demolition work. However, it seems to me that an appropriate allowance for demolition would be that given by Mr Beencke and I will allow that amount. Structural Steel 245Mr Heymann's allowance of $14,810 included the cost of the installation of a carbon fibre strengthening system plus a substantial part of the supply of steel for steel beams provided by Abdallah Wrought Iron. It appears that in response to questions from Mr Beencke, Abdallah Wrought Iron replied that they had only supplied one of the two steel beams quoted, for which they were paid $1,969. I will allow $13,310 for the structural beams. 246This is an increase in Mr Beencke's costs of $2,630. Windows and Glazing 247Mr Heymann's allowance is $113,603 and Mr Beencke's allowance on a measured basis is $43,750. Mr Heymann's allowance was based upon an invoice from Proline Aluminium. When Mr Heymann reviewed the invoice he thought the invoice was high but having discussed it with Proline, it was thought that because of site difficulties the amount was probably satisfactory. 248The invoice is for $97,376 excluding GST. The measurement of the items indicates a total of 42m2 for windows and sliding doors. Using the invoice this equate to an average of $2,318.48 per square metre. Rawlinsons Construction Cost Guide 2008 rate for commercial quality double-glazed vertically pivoted windows is $604 per square metre. The rate of the invoice is four times the rate provided in Rawlinsons . 249The quotation shows that the work was priced on the basis that it included the cost of cherry picker and crane hire for the removal and installation of the windows and sliding doors. There was no allowance for scaffolding. Mr Beencke's allowance provided for a cherry picker. 250The extraordinary difference in the costs of the work illustrates the problem that may be endemic in the way the matter has been conducted by Sky Constructions. There is no evidence that Sky Constructions obtained several quotes for each of the different trades. There seems to be only one supplier and no other quotations. Here the allowance is so extraordinarily removed from what is the standard allowance for non-contentious matters that it is hard to adopt it. 251Accordingly, I prefer Mr Beencke's evidence and I will allow his amount. Balustrades 252Mr Heymann's allowance is $8,500 and Mr Beencke's allowance is nil. Mr Heymann has simply taken and used the price provided by Proline Aluminium for the balustrades. Mr Beencke made no allowance on the basis that he was uncertain that the work had been done. He was not able to inspect the balustrade properly so he was unable to determine whether the work had been undertaken. Accordingly, the state of the evidence is such that it has been charged for and I will allow $8,500 for the balustrades. Masonry work 253I have dealt with this earlier and it seems that there is no appropriate claim for replacing the internal walls with new masonry walls. I have earlier indicated the plans did require some demolition and additional walls for a small additional area. 254I will allow $4,195 for the 1,200 bricks. Plasterboard 255Mr Beencke's allowance is $38,660. Mr Heymann's allowance of $122,403 was based upon documents from the two sub-contractors employed on the site. Dansa Services purported to charge $30,143 in respect of which they have not been fully paid and they left the site. Instyle Plastering charged $95,000 plus GST. Mr Heymann has not measured the area to check the invoices. I do note that the invoice from Instyle Plastering states 13 mm impact plasterboard to all walls and ceilings. Mr Beencke did not allow for this type of plasterboard and an additional allowance for this upgrade should be made. 256I will allow an additional $10,000. Shower Screens and Mirrors 257Mr Heymann's allowance is $12,750 and Mr Beencke's allowance is $3,200 for these items. 258Mr Heymann's allowance is based on an invoice from Proline Aluminium and includes $9,450 for installation of kitchen splashbacks with a special safety glass. Mr Beencke has not allowed for this as he did not know about this particular glass. Mr Beencke has allowed the allowance adopted by Mr Heymann in other areas. In my view given that there may be some special glass involved I will allow an additional $6,250 for shower screen and mirrors. Carpentry and Joinery 259Mr Heymann's allowance is $164,400 and Mr Beencke's allowance is $45,320. 260There are three items in Mr Heymann's allowance. One is $16,420 for installation of internal bevelled edge mirrors and toughened safety glass to the wardrobes. Mr Beencke does not seem to have considered this and the amount should be allowed. The second item is $142,000 (excluding GST) for the kitchen and the third item is $5,980 for the supply of glass handles for kitchen joinery. The $5,980 appears to be charged twice and the main dispute concerns the kitchen installation. 261The problem with the quotation from Highlife Kitchens is that Pierre Maalouf of Highlife Kitchens is the father of Roy Maalouf and they both operate their businesses from the same premises. In these circumstances there is a real possibility that the invoice may not be an arm's length transaction. In these circumstances it is prudent to use Mr Beencke's allowance together with the additional amount I have indicated above. 262I will allow an additional $16,420. Timber Floor 263Mr Heymann's allowance is $32,650 and Mr Beencke's allowance is $5,060. Mr Heymann's allowance was based on a contract price, which was no more than a quotation by Stanton Flooring. The timber flooring amounts to an area of 15 square metres plus a narrow border to carpeted areas totalling 74 lineal metres. Mr Beencke took issue with the Regupol sound proofing to the entire floor of the apartment and the common area corridor on level 3. Sound proofing for the common area corridor would not be part of the apartment and it seems clear that it was not needed for carpeted floor and wet area floors. The quote therefore is inappropriate. However, it was conceded in cross-examination that there may have been an requirement by the body corporate for the Regupol sound proofing to be installed elsewhere under carpets and accordingly I think there should be some increase to allow for sound proofing under the carpets and stone flooring. 264In these circumstances I allow another $10,000. Carpet 265Mr Heymann's allowance is $7,289 and Mr Bencke's allowance is $10,920. Mr Bencke's allowance is more than Mr Heymann's. The question of who paid for the carpet is discussed later in this judgment in relation to payments on account of the contract. Tiling 266Mr Heymann's allowance is $41,300 and Mr Beencke's allowance is $23,560. Mr Heymann and Mr Beencke measured and priced the tiling works. The only criticism of Mr Heymann's allowance was of $3,000, which appeared to be excessive. Given the absence of other evidence, I will increase this allowance. 267I will allow an additional $14,740. Cement Ren d er and Painting 268Mr Heymann's allowance is $48,500 and Mr Beencke's allowance is $5,355. Mr Heymanns' allowance is based on an invoice by Wizards Painters and Decorations, which included common areas of the building. Apparently the strata management required these areas to be repaired. This does not seem to be an appropriate charge. It should be noted the suggestion from the painter that there was a lot of preparation work needed is unlikely given that the works to be painted were new and should have been in good condition. 269I will accept Mr Beencke's allowance of $5,355. Bathroom Kitchen and Laundry Fixtures 270Mr Heymann's allowance is $9,657 is lower than Mr Beencke's allowance of $15,644. Their allowances for appliances are similar. 271I will adopt Mr Beencke's allowance. Electrical Installation 272Mr Heymann's allowance is $102,096 and Mr Beencke's allowance is $15,300. Mr Heymann has based his allowance on two amounts. The first is a document from Electropro Electrical for $94,000. The other is an amount said to be paid to SNM Services of $8,095.36 (excluding GST). There is no documentation to confirm what these works were or whether they had been undertaken. Some items in the quotation were not there. Only four of the eight Bose surround sound speakers were sighted, there were only two automated window blinds, there was no TV antenna on the rooftop, no home automation and the alarm system did not appear to be connected. 273One item that was included was the replacement of the main switchboard. Mr Beencke has not allowed for this item. Given the age of the building, it is likely that the switchboard would have been replaced. For this reason there should be some increase. 274I increase Mr Beeneck's allowance by $20,000 to cover the switchboard. Hydraulic Installation 275Mr Heymann's allowance is $32,200 and Mr Beencke's allowance is $20,150. Mr Beencke's only comment is that Mr Heymann's allowance appears excessive. He has allowance for the installation of an electric hot water unit was also included in the electrical works included above by Electropro Electrical. The amount cannot be determined. 276As I have not allowed the whole of Electropro Electrical I will increase Mr Beencke's allowance by $1,500. Mechanical Installation 277Mr Heymann's allowance is $68,674 and Mr Beencke's allowance is $20,150. The mechanical installation included work to the bathrooms and the kitchen but the main item is for air conditioning system. The allowance by Mr Heymann is based on a quotation from Pro-Vent and no invoices have been produced in respect of the payments. Pro-Vent has only been paid $9,642.73, so far as documentation is concerned. Once again the evidence did not address why the quote should be so high compared with an estimate from Mr Beencke. 278In the circumstances I will not allow any additional amount. Scaffolding 279Mr Heymann's allowance is $71,404 and Mr Beencke's allowance is nil. Mr Heymann's allowance is based on an invoice for scaffold erection. Mr Beencke allowed nothing on the basis that he thought that there was no scaffolding. It seems clear that there was scaffolding erected and accordingly I will accept Mr Heymann's allowance. 280I will allow an additional $71,404. Others 281Mr Heymann's allowance is $12,645 and Mr Beencke's allowance is nil. I agree with Mr Beencke that payment of strata levies would not be a cost. The payments to the engineer of $3,500 and to the architect of $1,681.82 are appropriate and should be allowed. 282I will allow an additional $5,181.82. Site Supervision, Preliminaries & Margin 283Mr Heymann's allowance is $224,802 and Mr Beencke's allowance is $76,057. Mr Heymann's allowance equates to approximately 21.5 per cent of his trade costs. Mr Beencke's is 25 per cent of his trade costs. Accordingly, I will allow Mr Beencke's rate on the total trade costs. 284The additional amounts I have allowed total $170,820.82 and this figure should be added to Mr Beencke's estimated net trade cost of $304,225. This results in an amount of $475,045.82. From this figure, concessions of $2,600 and $3,563 should be deducted giving a figure of $468,882.82. 285The builder's margin of 25 per cent is $117,220.70. 286The estimated building cost excluding GST is $586,103.52and including GST is $644,713.87. 2. The amount Sky has been paid in respect of the work 287Mr Despot alleges that he paid the sum of $324,000 in cash or by cash cheques and by the purchase of appliances that were to be supplied by Sky Constructions for $44,139 a total of $368,139. Sky Constructions acknowledges the receipt of payments amounting to $207,725.95. 288I find little assistance in the documents being the invoices and statements prepared by Sky Constructions in determining this aspect. They were concocted by Mr Maalouf and re-created once his builder licence number became available. They do not record the extra $10,000, which according to the evidence of Mr Tyler, was received on 28 February 2008. There were two documents that recorded totals to date and receipts given. One was the receipt of 28 February 2008, which included a statement obviously written on the document separately to when the document was originally prepared stating, "Total sum received up to date $255,000". 289According to Mr Tyler, these and some other words were not written on the document when he signed it. 290The next document is a receipt dated 14 March 2008 and it records, "Total up to date $270,000". Mr Ranko Despot and Mr Richard Maalouf, the brother of Mr Maalouf, signed it. Although the total up to that date was written in different coloured ink there was no suggestion in cross-examination of Mr Despot that the document was falsified. Additionally, Mr Richard Maalouf was not called to disprove his signature or his receipt of the monies and certification of the amount. I am satisfied that by 14 March 2009, Mr Despot had paid $270,000. 291The payments Mr Despot and Mr Maalouf claimed they made after 14 March 2008 and the supporting documentation are referred to in the following table. Schedule of payments Date Source Mr Maalouf Mr Despot 14-Mar-2008 Cash $10,000.00 $10,000.00 28-Mar-2008 Cash $15,000.00 4-Apr-2008 Cash cheque 001528 $15,000.00 $10,000.00 8-Apr-2008 Cash cheque 001 531 $3,000.00 8-Apr-2008 Cash cheque 001 532 $3,000.00 29-Apr-2008 Cash cheque 001 536 $3,000.00 7-May-2008 Vodafone by AMEX $2,700.00 $2,700.00 7-May-2008 Direct payment to Miele Australia $22,989.00 $20,289.00 8-May-2008 Deposit for Carpets $5,800.00 13-May-2008 Direct payment to Miele Aus by AMEX $300.00 15-May-2008 Paid to cleaners (by Ray Maalouf) $500.00 $5,000.00 17-May-2008 Carpets finish $8,000.00 $2,000.00 19-May-2008 $380.00 19-May-2008 $156.95 2-Jun-2008 Cheque 001 543 for keys $100.00 12-Jun-2008 Cheque 001564 for Occupational Certificate $3,450.00 8-Aug-2008 Cheque and cash for alarm and video cameras $4,500.00 $59,725.95 $88,139.00 292Cash cheques support the items on 4, 8 and 29 April 2008. I accept that Mr Despot has paid those additional amounts after 14 March 2008. I am not satisfied as to the payment of $15,000 on 28 March 2008. Mr Despot and Mr Maalouf agree on the $2,700 paid on 7 May 2008, accordingly that is an additional amount. I accept the payment to Miele by Mr Despot to be added of $20,289. It is also apparent that another $7,800 has to be added for carpet finishing. The remaining amounts of $100, $3,450 and $4,500 are supported by cheques and should be allowed and added to the amount outstanding at 14 May 2008. 293Taking these figures into account the amount that has been paid by Mr Despot to Sky Constructions is $327,839. The amount, which remains due in respect of any allowance for a quantum meruit, is $316,874.87. Accounting 294On the sale of the property Mr Despot's mortgage to the St George Bank was paid out and outstanding rates were also paid. The proceeds of the sale received by Mr Maalouf, which he applied in payment to Sky Constructions, was the sum of $464,932. Mr Maalouf also received the extra payment of $480,000, making a total of $944,932. 295Given my determination on the quantum meruit, Sky Constructions was only entitled to be paid $316,874.87. Accordingly, Mr Maalouf has to account to Mr Despot for the sum of $628,057.13 and Mr Despot is entitled to judgment accordingly against Mr Maalouf. Mr Despot should have the benefit of a direct payment from Stelli of $91,086, being the outstanding part of the purchase price. Claim by Mr Despot against Mr Carbone. 296This claim was initially predicated on the assumption that Mr Despot was Mr Carbone's true client by reason of him being the principal under the power of attorney to Mr Maalouf. Alternatively, it was put that Mr Despot and Mr Carbone were in an indirect relationship of such proximity that there was a duty of care owed by Mr Carbone to Mr Despot. There is also a claim for breach of s 42 of the Fair Trading Act 1987. 297As I have already held that the power of attorney was coupled with an interest and that it was irrevocable, it is clear that there are no fiduciary duties owed to the grantor and the donee "may act independently of and contrary to the directions and wishes of the donor". The power of attorney secures the interests of the donee against the donor. 298In the circumstances of this case, when acting on the sale pursuant to the power of attorney, the true client was the donee of the power of attorney. 299In the alternative claim for a duty of care, Mr Despot made reference to well-known authorities in these terms: "If the Court is not minded to find that Mr Despot was Mr Carbone's direct client, then it would find that Mr Carbone owed Mr Despot a duty of care: In Hawkins v Clayton & Ors (1988) 164 CLR 539, Deane J held 'the relationship of solicitor and client is a relationship of proximity which would involve the combination of those elements with respect to foreseeable loss which may be caused to the client by the performance of professional work. It is a relationship of proximity of a kind which may well give rise to a duty of care on the part of the solicitor which requires the taking of positive steps beyond the specifically agreed professional task or function, to avoid a real and foreseeable risk of economic loss being sustained by the client. Whether the solicitor/client relationship does give rise to a duty of care requiring the taking of such positive steps will depend upon the nature of the particular professional task or function which is involved and the circumstances of the case.' Further in Beach Petroleum ML v Abbott Tout Russell Kennedy & Ors [1999] NSWCA 408, it was held by the Court that a duty of care of solicitor in the absence of a retainer (at 359-360) "in order to show that advice or the failure to give advice or warn amounted to a breach of duty of care owed by ATRK to it, for reasons which the High Court restated in Esanda Finance Corporation Limited v Peat Marwick Hungerfords (1997) 188 CLR, Beach had to establish that a relationship of proximity between the parties existed, that is to say had to identify a factor or factors of special significance in addition to the foreseeability of harm, when ATRK acted or failed to act in the manner alleged. Goreseeability of harm alone was not enough to give rise to the necessary assumption of responsibility by ATRK." 300The facts said to give rise to the duty of care were said to be the following: "492. It was easily foreseeable so far as Mr Carbone was concerned, that the unit could be sold by Mr Maalouf in circumstances where there was, at the very least, a dispute as to: Whether there was any money due to Sky by Mr Despot; or The amount due by Mr Despot to Sky. 493. Mr Carbone was squarely on notice that there was a dispute. The conversation which Mr Maalouf had with the finance broker, Jamal, demonstrated that Mr Despot contended that Mr Maalouf had been paid in full and was not intending to pay Sky any more money. At that point Mr Carbone concluded that there were ongoing issues. Further Mr Carbone accepted: The purpose of the Deed was to secure a debt which was due by Mr Despot to Sky or may have become due as the building work continued and the money secured was defined in the Deed, included money due under the building contract between the owner and the builder dated 27 August 2007. The date 27 August 2007 was an important date for the document it being the date upon which the building contract which gave rise to the present or future indebtedness came into existence. The existence of the building contract dated 27 August 2007 underpinned the whole document. Pivotal to the operation of the deed was the existence of a debt due under the Contract dated 27 August 2007. 494. Accordingly, as at the date upon which Mr Carbone drafted the Contract for Sale, albeit on the instructions of Mr Maalouf, he was on notice that: There were 'issues' to use Mr Carbone's words, about the existence of a debt or at the very least, the amount of the debt; There was no power of sale given to Sky under the Deed of Security and; The Power of Attorney was not expressed to be contiguous with the Deed of Security nor vice versa; The entitlement of Sky to sell the unit depended upon the existence of a building contract dated 27 August 2007, which he had never seen. In the circumstances, it was foreseeable that the property could well have been sold without there being in existence: A debt or alternatively that there was a significant dispute about the amount of the debt; or A Building Contract dated 27 August 2007." 301Where a solicitor acts for the donee of a power in the circumstances of a power of attorney coupled with an interest there is no room for the imposition of a duty of care to the donor. The solicitor is not acting for the donor. To impose a duty when he is not so acting, especially in circumstances where the donee is not bound to act on the donor's directions or in accordance with his wishes is to create a position of actual or potential conflict that does not otherwise exist. For this reason no duty of care arises. 302The Fair Trading Act claim by Mr Despot against Mr Carbone fails as there is no suggestion that Mr Despot thought for one minute that Mr Carbone was acting for him, as distinct from Mr Maalouf and Sky Constructions. There is no basis to conclude that Mr Despot relied upon Mr Carbone to give any advice or take any step in connection with the exercise of the power of attorney and no reason to think that Mr Carbone, as agent for Mr Maalouf and Sky Constructions, occasioned any loss to Mr Despot by reason of any conduct. 3. The first cross-claim in the proceedings by Sky Constructions. The amount, if any, to which Maalouf or Sky or both are liable to account to Stelli or Despot or both for moneys had and received. 303This is a claim by Mr Despot against Mr Maalouf and Sky Constructions. 304Given my decision above this only concerns the proper accounting for the proceeds of the sale. The amended third cross-claim by Mr Maalouf against Mr Despot and Mr Carbone 305The claim against Mr Despot is a claim under s 42 of the Fair Trading Act. Following my rulings, the only claim remaining is a claim that Mr Despot should pay Sky Constructions the sum payable under the building contract, despite the building contract being unenforceable by reason of Sky Constructions lack of a contractor's licence or otherwise. 306Apart from not accepting Mr Maalouf's evidence at paras 8 and 9 of his 19 January 2010 affidavit, Sky Constructions has been paid its entitlement notwithstanding it is not insured. There is no need to deal with this claim. 307Mr Maalouf's claim against Mr Carbone is that Mr Carbone advised Mr Maalouf that Sky Constructions was not lawfully required to be the holder of a builder's contractor licence at the time Sky Constructions contracted with Mr Despot to undertake the building works. This depended on the following evidence from Mr Maalouf. "33. About one week prior to entering into the building contract I attending on the offices of DC seeking general advice in relation to the building contract and the works the subject of the contract: During this meeting a conversation to the following effect took place: Me: I think I have secured this job at Double Bay, it is a big job for me, what do I need to organise before I start this job. Here is the DA DC: Has a constructions Certificate issued Me: The client says it has: DC: OK well that is OK Me: As you know, I only have a shop fitters licence, I am going to get Sky to apply for a building licence, should I get that before I start work: DC: I don't see it a problem starting the job and getting the licence later so long as you get it before the job is finished, but make sure you only use licensed subbies, and also the client provides its consent". 308Mr Carbone denies he gave Mr Maalouf any advice about builder's licences. 309Mr Carbone's submissions on this aspect were as follows: "76. There is no truth in Maalouf's claim that Carbone advised him "Sky was not lawfully required to be the holder of a Builders contractor licence at the time Sky contracted with Despot to undertake the Building works at the property", as alleged in paragraph 6(c) of the Amended Third Cross Claim at 13A CB 68, or any of the other breaches alleged in that paragraph. In that regard, the evidence of Carbone should be preferred to that of Maalouf. Carbone's retainer did not include advising Sky on any aspect of statutory compliance. Sky was an experienced builder. Absent instructions to advise in relation to statutory compliance, Carbone had no duty to advise in relation to the need for a licence or the effect of Sky carrying out unlicensed and uninsured building work, including the effect of any non-compliance on the enforceability of the Deed, the Power of Attorney and the Contract for Sale. 77. Moreover, the evidence of Carbone that Maalouf instructed him that the building agreement was dated 27 August 2007, as distinct from 16 July 2007, strongly points to the fact that the Maalouf's falsification of the Building Contract was yet to happen as at 5 September 2007 and negatives the probability that any occasion had arisen, prior to that date, when anything was said and done as between Maalouf and Carbone about licensing requirements. By then, of course, the work had commenced: Despot attended the property on 3 September 2007 and saw that demolition work had started. All relevant breaches of the law by Sky had therefore taken place before Carbone was asked to do anything. 78. In any event, the difference between Maalouf and Carbone on the question of licensing is causally irrelevant. There is no suggestion that Carbone was asked to advise Sky in relation to insurance. The effect of section 94(1) when it comes to prohibition of recovery for uninsured work is co-extensive with the effect of section 10 when it comes to unlicensed work. The thing which makes the difference is section 94(1A), which limits any entitlement to a quantum meruit to a court created right, as distinct from the general law. 310Although some aspects of Mr Carbone's procedures in this matter (such as using a pro forma discretionary trust as security for vendor's finance) are somewhat strange, I am prepared to accept his evidence in preference to Mr Maalouf evidence. This ends the claim, however the matter mentioned at paragraph 77 of Mr Carbone's submissions above would also be relevant. The additional further amended second cross-claim 311This cross-claim was brought by Stelli and Mrs Azzi against Mr Despot, Mr Maalouf and Sky Constructions. Upon payment by Stelli of the outstanding $91,086, Stelli will be entitled to a declaration in terms of paragraphs one and two of its claim for relief, with consequential orders to effectuate registration of the transfer. It should be a condition of relief that the sum of $91, 086 be paid direct to Mr Despot by Stelli. 312There are also consequential claims for contribution and indemnity. On my findings they do not arise except perhaps the claim for an indemnity against Mr Carbone for costs. This matter can be dealt with on the costs' argument. 313I direct the parties to bring in short minutes to reflect my decision and argue any outstanding matters and costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 08 April 2011