Supreme Court New South Wales Medium Neutral Citation: ACN 057 690 034 Pty Ltd v Mick Wykrota [2019] NSWSC 197 Hearing dates: 28 February 2019 Date of orders: 28 February 2019 Decision date: 28 February 2019 Jurisdiction: Equity Before: Emmett AJA Decision: 1. I direct the entry of judgment for the sum of $244,896.85 against Mr Wykrota. 2. I order Mr Wykrota to pay the plaintiff's costs in the proceedings. 3. I order that the proceedings be dismissed as against the second and third defendants. Catchwords: Contract – Breach of building contract – No appearance by the defendant – failure by defendant to provide certificates necessary for certification of building works – quantum of loss Legislation Cited: Environmental Planning and Assessment Act 1979 (NSW), Div 6.2, s 6.9 Cases Cited: Nil Texts Cited: Nil Category: Principal judgment Parties: ACN 057 690 034 Pty Ltd (Plaintiff) Mick Wykrota (First Defendant) Arrowfab Pty Limited (Second Defendant) Arrowcon Construction Pty Limited (Third Defendant) Representation: Counsel: Ms E Cohen (Plaintiff) Solicitors: K R Hewlett & Co (Plaintiff) File Number(s): 2017/337742 EX TEMPORE Judgment 1. EMMETT AJA: The plaintiff seeks damages from the first defendant, Mr Mick Wykrota, alleging that Mr Wykrota committed breaches of a building contract entered into between the plaintiff and Mr Wykrota. There are two other defendants, each of which is a limited liability company associated with Mr Wykrota. However, the plaintiff does not seek to proceed further against the second and third defendants. 2. The proceedings were commenced by a Statement of Claim filed on 8 November 2017. The address of Mr Wykrota shown in the Statement of Claim is in Cammeray. I have evidence in the form of an Affidavit of Service of Nick Tsioukanis sworn 13 January 2018 that the Statement of Claim was served on Mr Wykrota on 28 December 2017 at a different address in Cammeray (the Service Address). 3. On 7 November 2018, an order was made by a Registrar that the proceedings against Mr Wykrota be listed for hearing on 28 February 2019 before me. By letter from the Principal Registrar dated 7 November 2018 addressed to him at the Cammeray address shown in the statement of claim Mr Wykrota was informed of the hearing date. One of the defendants was informed of the hearing by letter of the same date addressed to the Service Address. The other defendant was also informed of the hearing date at an address in Croydon. 4. On 28 November 2018, I conducted a directions hearing at which Mr Wykrota appeared in person. At that stage, no appearance had been filed on behalf of any of the defendants. At that directions hearing, I raised the question of the quantum of the claim being made by the plaintiff against Mr Wykrota since the damages were not particularised in the Statement of Claim. Counsel for the plaintiff was unable to indicate the total amount claimed. 5. On 7 December 2018, the plaintiff served or caused to be served on Mr Wykrota, at the Service Address, a Schedule of Damages particularising the amount claimed in the proceedings. There are some 20 items in that schedule to which I shall refer shortly. On same day, Mr Wykrota filed a Notice of Appearance, giving an address in Wheeler Heights. The Notice of Appearance was not served on the plaintiff. There has been no explanation for the disparity in addresses for Mr Wykrota. 6. At a further directions hearing on 13 December 2018, Mr Wykrota had still not retained lawyers. He was informed that the rules require that an appearance be served on the plaintiff. I also made it clear to Mr Wykrota that the case had been fixed for hearing on 28 February 2019. 7. A further directions hearing was conducted on 6 February 2019. There was no appearance for Mr Wykrota. 8. At 12.56pm on 27 February 2019, my Associate sent an email to the parties confirming the listing on 28 February 2019 and indicating that the hearing would commence at 11am in Court 7F. At 4.14pm on 27 February 2019, my Associate received an email communication from Mr Wykrota saying that he would not appear on 28 February 2019. The email attached a Doctor's Certificate dated 27 February 2019 from a Medical Centre in Ashfield to the effect that Mr Wykrota would be "unfit for work" from 28 February to 15 March 2019 because of "acute viral illness". The certificate made no reference to any incapacity to attend Court. The parties were informed by email at 4:33pm on 27 February 2019 that they should not assume that the case would not proceed on 28 February 2019. 9. When the matter was called on this morning, there was no appearance for Mr Wykrota. It is clear that Mr Wykrota was aware of the hearing fixed for today but has elected not to attend. In the circumstances, I consider that it is appropriate to proceed with the hearing in his absence. He will no doubt have a right under the rules to apply to have any order set aside that was made in his absence. That will be a matter for him if he is so advised. If he wishes to have any order that I make set aside, he will be required to indicate precisely why he was not in attendance today when the matter was called on for hearing. 10. The claims made in the Statement of Claim may be summarised as follows. I have retained the numbering from the Statement of Claim: 1. The plaintiff was the registered proprietor of a property situated on the Hume Highway in Lansvale (the premises). 2. In November 2010, the plaintiff and Mr Wykrota agreed that Mr Wykrota would carry out building work comprising alterations and additions to the premises (the building contract). 6. It was a term and condition of the building contract that Mr Wykrota and the other defendants would, upon completion of the building work and as part of the work, do all things necessary to obtain a certificate of occupation so that the plaintiff could occupy the premises. 7. Between 2010 and 2012, the plaintiff performed its promises made pursuant to the building contract by making payments for the fixed price component of the agreed price of $806,300 inclusive of GST to the second and third defendants when directed to do so by Mr Wykrota. 9. The plaintiff has performed the building contract. 11. Since 2012, the plaintiff has requested the defendants to do all things necessary and deliver all documents to the plaintiff's certifier so that an occupation certificate can be issued by Fairfield City Council. 12. Since 2012, the plaintiff has requested that the defendant deliver to the plaintiff's certifier outstanding certificates relating to the building works. 13. The defendants have failed to perform the building contract. 14. In breach of the building contract, the defendants have, since 2012, failed to provide the certificates necessary to enable the plaintiff's certifier to certify the building works so that an occupation certificate can be issued to the plaintiff. 15. By reason of the breaches, the plaintiff has suffered damage. The particulars of damage furnished in the statement of claim were as follows: 1. The plaintiff has been unable to lease the premises without an occupation certificate; 2. The plaintiff has been unable to occupy the premises other than for its existing use; 3. The plaintiff is unable to resell the premises without an occupation certificate; and 4. No further development application can be made to change the use of the premises without an occupation certificate. 1. No defence has been filed to the statement of claim. It follows in effect that the allegations made in the statement of claim are admitted. Nevertheless, having regard to the amounts claimed and the absence of Mr Wykrota, I have given some attention to the quantum of the plaintiff's claim for damages. Counsel for the plaintiff relied on affidavit evidence served on Mr Wykrota, being the affidavit of Mr Tuan Le sworn on 6 November 2018, and two affidavits of Mr Kevin Kwok sworn on 3 November 2018 and 26 November 2018. 2. The Schedule of Damages which was served on Mr Wykrota contains some twenty items. Each item is supported by detailed material contained in the affidavit of Mr Tuan Le, together with an exhibit to Mr Tuan Le's affidavit consisting of invoices, receipts and other evidence relating to payments made by the plaintiff. I am satisfied from that evidence that the expenses referred to in the Schedule of Damages have in fact been incurred by the plaintiff as a consequence of breach of the building contract by Mr Wykrota. 3. I should say that it may well be that some of the material in the affidavit may have been rejected if an objection were taken. However, there was no objection and, in the absence of any defence, it is difficult to see what issue there might be. 4. There are four items in the schedule about which I have some reservation. The first is item 10, which is a claim for the cost of time taken by Mr Tuan Le to attend to the matters resulting from the failure to produce the occupation certificate. Mr Tuan Le simply says that he would have been able to spend his time doing other things without in any way being explicit as to what other things he would have engaged in, and certainly gives no evidence as to actual loss being incurred by reason of having to devote time to the matters raised by the absence of the occupation certificate. I am not persuaded, in the absence of any further evidence, that there is in fact an actual loss. 5. I also have concerns regarding items 13 and 16. The amount claimed in item 13 is "$200-300", for the costs of an inspection and report by a building inspection consultant. The amount claimed in item 16 is "About $200 on each occasion", for costs arising from the unblocking of toilets, made necessary from alleged defective work. In the course of the hearing, I indicated to Counsel for the plaintiff that I was not disposed to allow the claims under those items without further evidence. Nothing was put before me in response that alters my disposition. 6. The final matter of significance concerns item 20, which is for lost rent by reason of the plaintiff's inability to let levels 2 and 3 of the premises. The schedule served on Mr Wykrota claimed the sum of $171,375 for a period from 10 October 2014 to 30 October 2018. It is unclear how that figure was arrived at. The claim is based on the evidence of Mr Kwok who is a Valuer. Mr Kwok prepared a report giving his opinion as to the market rent of the premises on the basis that the work under the building contract had been completed as at October 2014. 7. Mr Kwok's opinion is that the market rent would have been $83,850 per annum. In the course of oral address, counsel for the plaintiff said that the claim set out in the schedule of damages was mistaken, and that the claim should have been for $339,994.52, representing the loss of rent for four years and 20 days, at the rate of $83,850 per annum. 8. There are two difficulties with the claim. One is that Mr Wykrota was informed that the claim was for $171,375 and has had no forewarning that the claim would be for $339,994. The second concern that I had was that it is by no means certain, in the absence of any evidence, that there was in fact a tenant, or there were tenants, who would have been able to take tenancies of the relevant parts of the premises for the period in question. The ordinary vagaries of the market would suggest that the premises would not necessarily have been let for the whole of the period. I, therefore, indicated my view that the claim should rather be for the loss of the opportunity, which involves making a judgment as to how that opportunity should be valued. Having regard to the amount claimed in the schedule of damages, while that is certainly a substantial discount from the full amount of the claim, I consider that that is an appropriate measure of the loss of opportunity in the present circumstances. 9. The basis of the claim in relation to the loss of rent is that the absence of an occupation certificate resulted in any change in use of the premises being prohibited under Div 6.2 of the Environmental Planning and Assessment Act 1979 (NSW). Under s 6.9, an occupational certificate is required at the commencement of a change of building use, for the whole or any part of an existing building. 10. The complaint in the statement of claim is that, although there was an obligation to do so, Mr Wykrota failed to produce an occupation certificate pursuant to his obligation. I am satisfied that that was a breach of contract, and that there is a causal connection between that breach and a loss of the opportunity to let the premises. 11. In those circumstances, I am disposed to enter judgment for the plaintiff against Mr Wykrota in a sum equal to the aggregate of the items in the schedule of damages, apart from item 10 for $15,000, and items 13 and 16. That would give rise to a judgment of $244,896.85. I will direct the entry of judgment for that amount against Mr Wykrota. Mr Wykrota should pay the plaintiff's costs of the proceedings. 12. There having been no appearance for the second and third defendants, and there being some question as to whether or not the second and third defendants continue to exist, I propose to order that the proceedings be dismissed as against the second and third defendants, and I make that order as well. ********** 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: 04 March 2019