DRYLAND and TANGENT NOMINEES PTY LTD [2025] WASAT 31

Catchwords:
Building Services (Complaint Resolution and Administration) Act 2011 (WA) – Home Building Contracts Act 1991 (WA) – Home Building Works Contract complaint – Authority of agent to bind principal – Proposed works not commenced – Breach of contract – Termination of contract – Damages for breach of contract – Doctrine of mitigation of loss – Quantum of compensation

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JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT : BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION : DRYLAND and TANGENT NOMINEES PTY LTD [2025] WASAT 31
MEMBER : MR E CADE, MEMBER
MR R AFFLECK, SENIOR SESSIONAL MEMBER
HEARD : 6, 7 AND 8 AUGUST AND 27 NOVEMBER 2024
DELIVERED : 11 APRIL 2025
FILE NO/S : CC 974 of 2023
BETWEEN : GAVIN DRYLAND
First Applicant
KASEY DRYLAND
Second Applicant
AND
TANGENT NOMINEES PTY LTD
Respondent
Catchwords:
Building Services (Complaint Resolution and Administration) Act 2011 (WA) – Home Building Contracts Act 1991 (WA) – Home Building Works Contract complaint – Authority of agent to bind principal – Proposed works not commenced – Breach of contract – Termination of contract – Damages for breach of contract – Doctrine of mitigation of loss – Quantum of compensation
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Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 5(2), s 6(3)(b), s 11(1)(d), s 41(2)(d)(i), s 43, s 43(1), s 43(1)(a)
Home Building Contracts Act 1991 (WA), s 7, s 7(1), s 17(a)(i), s 27(1)
State Administrative Tribunal Act 2004 (WA)
State Administrative Tribunal Rules 2004 (WA), r 39B, r 39B(5)
Result:
Application successful
Category: B
Representation:
Counsel:
First Applicant
:
Mr S Mintz & Mr W Vogt
Second Applicant
:
Mr S Mintz & Mr W Vogt
Respondent
:
Mr C Taylor-Burch
Solicitors:
First Applicant
:
Vogt Legal
Second Applicant
:
Vogt Legal
Respondent
:
Morgan Alteruthemeyer Legal Group
Case(s) referred to in decision(s):
Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38
Clark v Macourt [2013] HCA 56
Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 15 Electricity Generation Corporation t/a Verve Energy v Woodside Energy Ltd [2014] HCA 7
Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145
Hippydayze Pty Ltd and Mener Group Pty Ltd [2019] WASAT 92
Luxer Holding Pty Ltd v Glentham Pty Ltd (2007) 35 WAR 254
Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451
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REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
1
On 20 July 2020 the first and second applicants (first and second owners, together the owners) bought a lot known as 49B Halls Head Parade, Halls Head, in the City of Mandurah (the site).1
2
Significantly in this proceeding:
(a) the site is a vacant ‘battle-axe’ site surrounded by developed lots;
(b) the effective site area is situated on a rise elevated above both the nearest access road and surrounding lots;
(c) the access leg is approximately 33.5 metres of rising length which is surfaced in concrete;
(d) the southern side of the access leg of the site is contiguous with the southern side of the effective site area;
(e) the southern side of the access leg is bordered by a lot known as 50A Halls Head Parade, and the southern side of the effective site area is bordered by a lot known as 50B Halls Head Parade; 2
(f) a boundary wall built of brick runs along the full length of the southern boundary of the site. This wall, which is built both above and below ground level, separates the southern boundary of the site from the northern boundaries of 50A and 50B Halls Head Parade; and
(g) on or shortly after 12 April 2022 Structerre Consulting gave to the owners a report which stated that the southern boundary wall is ‘not considered to be structurally adequate … due to the lack of backing mass behind the wall to support the existing soil loads and vehicle surcharge loads from the proposed driveway …’.3
3
On 24 November 2021 the parties entered into a home building contract in the form of a Housing Industry Association (HIA) standard lump sum home building contract (the building contract) pursuant to
1 Hearing Book (HB), page 16.
2 HB, page 32.
3 HB, page 152.
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which the
respondent (the builder) was to build a single storey dwelling on the site (the proposed works) for the price of $425,041.00. 4 5
4
It is not in dispute in this proceeding that the builder did not commence the proposed works and that the contract came to an end on or about 7 March 2023.
5
For the reasons we will now give, we find that the builder is in breach of the building contract by not commencing the proposed works, that the owners did suffer a loss due to the breach and we will order the builder is to pay $179,132.00 as compensation to the owners.
The owners’ position
6
The owners contend:
(a) the building contract is amended by four documents, being a contract variation, dated 23 November 2021, a contract variation dated 8 December 2021, a contract variation dated 6 October 2022 and an amendment to the addenda dated 6 October 2022;
(b) the builder, by not commencing the proposed works, is in breach of the building contract;
(c) on 7 March 2023, the owners in reliance of the breach by the builder lawfully terminated the building contract; and
(d) the owners have suffered loss due to the builder’s breach of the building contract and they ought to be compensated for this by payment of ‘loss of bargain’ damages in the amount of $225,931.92 and ‘delay’ damages in the amount of their rental payments from the expected completion date of the proposed works to the date of this decision at the rate of $340.00 per week.
7
The owners seek orders from the Tribunal, under s 43(1)(a) and s 41(2)(d)(i) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BSCRA Act), that the builder pay compensation to the owners.
The builder’s position
8
The builder contends:
4 HB, pages 35 – 67.
5 HB, pages 35 – 79.
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(a) the owners were required under the building contract to provide access to the effective site area by way of a structurally sound driveway on the access leg, as well as to ensure that the effective site area would support the proposed works;
(b) the southern boundary wall of the site was at all material times not structurally sound with the consequence that the driveway on the access leg will not support the passage of machinery or materials to the effective site area, and the southern boundary wall of the effective site area will not support the proposed works;
(c) because the owners did not provide a structurally sound means of accessing the site and nor did they provide a site which would support the proposed works, it never became reasonably practicable for the builder to commence the proposed works; and
(d) while two documents dated 23 November 2021 and 8 December 2021 were negotiated by its employee Mr McManus, that these two documents were not signed by or on behalf of the builder, with the result that they do not amend the building contract. Also, while it accepts Mr McManus did sign the two 6 October 2022 documents it says this is contrary to an express instruction he is not to sign such documents on its behalf. The builder says, in effect, that Mr McManus is not its agent under the building contract with the consequence that these documents do not amend the building contract.
9
The builder contends, for these reasons, it is not in breach of the building contract.
10
The builder says the consequence of this is that the owners in purporting to terminate the building contract on 7 March 2023, when the builder was ready, willing and able to perform the proposed works as originally contracted, has repudiated the contract. The builder says it accepts the owners’ repudiation of the building contract and so consequently the builder is not required to pay the owners compensation.
11
In the alternative, the builder contends that if it had breached the building contract by failing to commence the proposed works so that the owners did lawfully terminate the contract and are entitled to be paid compensation, that the owners are entitled to less compensation than they have claimed.
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The Final Hearing
12
On 25 July 2024, pursuant to orders of the Tribunal made under r 39B of the State Administrative Tribunal Rules 2004 (WA), the parties costing experts conferred with one another in the absence of the parties and their representatives before a Member of the Tribunal. On 1 August 2024 the parties filed the joint statement of the costing experts dated 31 July 2024 (joint costing statement).
13
In accordance with orders made by the Tribunal, the parties lodged with the Tribunal bundles of documents containing the documents to be relied upon by the parties at the final hearing. The parties’ bundles were then, prior to the final hearing, compiled into a hearing book.
14
The proceeding was heard by us as a final hearing over four days on 6, 7 and 8 August 2024 and 27 November 2024.
15
The hearing book, with the consent of the parties, was admitted into evidence on 6 August 2024. The joint costing statement was on this day also admitted into evidence under r 39B(5). Other documents were also admitted into evidence during the course of the final hearing. In total, the following documents were admitted into evidence and marked as exhibits:
Number
Type
Description
1
Exhibit
Joint Costing Statement including spreadsheet
2
Exhibit
Hearing Book
3
Exhibit
Amended Witness Statement of Gavin Dryland filed 6 February 2024
4
Exhibit
Witness Statement of Gavin Dryland dated 15 July 2024
5
Exhibit
Witness Statement of Kasey Dryland dated 5 February 2024
6
Exhibit
Supplementary Witness Statement of Sharon Bergamaschi dated 25 June 2024
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7
Exhibit
Witness Statement of Sharon Bergamaschi dated 15 April 2024
8
Exhibit
Supplementary Witness Statement of David Hunt dated 15 April 2024
9
Exhibit
Witness Outline for David Hunt dated 15 April 2024
10
Exhibit
Second Supplementary Witness Statement of Sharon Bergamaschi dated 19 November 2024 (paragraphs 1 – 8 and annexures 6 9 – folio 84
16
The following persons gave evidence at the final hearing:
(a) Mr Gavin Dryland (first owner);
(b) Ms Kasey Dryland (second owner);
(c) Ms Sharon Bergamaschi (for the builder); and
(d) Mr David Hunt (for the builder).
17
The witness statement(s) of each witness was adopted at the final hearing as their evidence-in-chief, with any corrections to those statements being addressed in their evidence at the final hearing. Each witness was cross-examined at length.
18
Both parties chose to file written closing submissions, the last of which was filed on 14 January 2025. On 16 January 2025 we reserved our decision.
Jurisdiction
19
On 27 April 2023 the owners gave notice to the builder of their intention to make a complaint to the Building Commissioner under s 11(1)(d) of the BSCRA Act.
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20
On 23 May 2023, the owners lodged a building complaint under s 11(1)(d) of the BSCRA Act with the Building Commissioner. The owners’ complaint consisted of the following single item:6
The Builder repudiated the Building Contract for the reasons set out in the Breach Notice dated 6 February 2023 and in the Termination Notice dated 3 March 2023 annexed with this Notice of Proposed Complaint.7
21
The owners’ complaint is made pursuant to s 5(2) of the BSCRA Act.
22
Under s 17(a)(i) of the Home Building Contracts Act 1991 (WA) (HBC Act) an owner may make a complaint pursuant to s 5(2) of the BSCRA Act only if the complaint alleges a breach of contract which is not a breach in respect of which a building remedy order may be made.
23
Under s 11(1)(d) of the BSCRA Act the Building Commissioner may refer a home building work contract complaint to the Tribunal for it to deal with pursuant to s 43 of the BSCRA Act. On 3 July 2023 the Building Commissioner referred the owners’ home building work contract complaint to the Tribunal.8
24
We are satisfied and we find that the owners’ complaint is not a complaint about which a building remedy order could be made, but rather it is a complaint about which a home building work contract remedy order might be made. We also find that the complaint is made within the time required by s 6(3)(b) of the BSCRA Act.
25
For these reasons we are satisfied and we find that this home building work contract complaint is within the original jurisdiction of the Tribunal under the State Administrative Tribunal Act 2004 (WA), and that we are to resolve the complaint in accordance with the relevant enabling Acts, which are the BSCRA Act and HBC Act.
The issues
26
The primary issues to be determined by us in this proceeding are:
Issue 1: Was the builder required to commence the proposed works, and if so, does the builder’s failure to commence the works constitute either a substantial breach or the suspension of
6 HB. page 92.
7 The termination notice is dated 3 March 2023 but was served on 7 March 2023.
8 HB, page 12.
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the works without reasonable cause under the building contract?9
Issue 2: Do any of the four disputed documents amend the building contract?
Issue 3: Was the building contract lawfully terminated by the owners on 7 March 2023?
Issue 4: Is the builder required to pay compensation to the applicants and, if so, what is the appropriate quantum of this compensation?
Issue 1: Was the builder required to commence the proposed works, and if so, does the builder’s failure to commence the works constitute either a substantial breach or the suspension of works without reasonable cause under the building contract?
27
The builder accepts that the preconditions to the builder’s obligation to commence the proposed works set out in clause 2 (necessary approvals), clause 3(c) (owner to provide to the builder’s satisfaction of written evidence of finance) and clause 3(d) (owner to provide to the builder’s satisfaction of written evidence of their ability to pay the contract price) of the building contract were met by the time the building permit was issued by the City of Mandurah on 27 January 2022.10
28
The builder consequently accepts it was obliged to commence the proposed works on a date within 45 working days from 27 January 2022, or, as soon after that date when reasonably practicable to do so. In ordinary circumstances, this would have required the builder to commence the proposed works by no later than 45 working days after 27 January 2022, that is, by no later than 1 April 2022.11
29
The builder, however, contends that it was never reasonably practicable for it commence the proposed works.12 This is for three reasons.
30
First, the builder says that it could not physically access the site due to the condition of the southern boundary wall alongside the site’s access leg. That is, the builder says it could not ‘effectively access and cause
9 Section 17(a) and s 17(c) of the building contract.
10 Respondent’s Outline of Opening Submissions para 50.
11 Respondent’s Outline of Opening Submissions, paras 49 – 103.
12 Supra, para 52.
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vehicles to be driven onto the Site for the purposes of commencing the
Works without risking the further collapse of the Boundary Wall’.13
31
Second, the builder says that it would have interfered with the health and safety of people on or next to the site if it had attempted to access the site or if it had commenced works on the site before the owners had repaired or replaced the full depth and length of the southern boundary wall.
32
Third, the builder says due to the condition of the southern boundary wall alongside the effective site area the site could not support the proposed works, which were to be built up to the southern boundary wall.
33
Consequently, the builder says that as the owners never did repair or replace the full depth and length of the southern boundary wall it never became reasonably practicable under clause 9(a) of the building contract for it to commence the proposed works, and so it was never obliged under the building contract to commence the works.
34
The builder says that the owners were required under the building contract to repair or replace the full depth and length of the southern boundary wall due to their knowledge the southern boundary wall was not structurally sound prior to entering into the building contract, in combination with the owners warranties under clause 3(a)(iii) of the building contract to give the builder access to the site and clause 3(a)(v) of the building contract that the site would support the proposed works.
35
The builder says that the first owners’ email to Mr McManus on 26 May 2021 demonstrates that the owners knew, well before they entered the building contract, that the full depth and length of the southern boundary wall is ‘severely unstable’ and needed to be replaced.
36
The builder also says the ordinary meaning of addenda item 43, which provides that ‘Client to liaise with the adjoining property owner to remove/rectify partially collapsed wall to Engineers details. Note: client to clear any debris prior to construction’, required the owners to repair or replace the full depth and length of the southern boundary wall.
37
The owners dispute that they knew the southern boundary wall was not structurally sound prior to entering into the building contract, and so they dispute that were obliged under the building contract to repair or replace the southern boundary wall so as to make the full depth and
13 Supra, para 75.
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length of the wall structurally sound before it was reasonably practicable
for the builder to commence the proposed works.
38
The owners do accept, however, that before the builder could commence the proposed works that the owners were required under the building contract to repair or replace a length of wall situated above ground on the southern boundary of the effective site area which had collapsed in a storm on 27 July 2021, and that they were required to instal some additional sections of retaining wall on the site as shown in the site plan. The owners say that they did, in fact, do both of these things prior to 27 January 2022.14 We accept the owners’ evidence on these matters.
39
The owners say, in response to the builder’s contentions, that the email from the first owner to Mr McManus on 26 May 2021 asserts only that an area of brickwork, being the area which collapsed on 27 July 2021, was ‘severely unstable’. That is, the owners say that prior to entering into the building contract they only knew that a length of brickwork above the ground on the southern boundary of the effective lot area was not structurally sound, but that they did not know that the full depth and length of the wall was not structurally sound. The first owner said in his evidence that the issue of the condition of the southern boundary wall was in fact first raised with him by Mr McManus in about February 2022, and that he did not know the actual condition of the wall until he was provided with the Structerre Engineering report on or about 12 April 2022.15 We accept the first owners evidence on these matters.
40
The owners also say, on its ordinary meaning, addenda item 43 required the repair or replacement of only that portion of brickwork on the southern boundary wall which collapsed on 27 July 2021. Consequently, they say that they were not required under clause 3(a)(iii) or clause 3(a)(v) of the building contract to repair or replace the full depth and length of the boundary wall before it then became reasonably practicable for the builder to commence the proposed works.
41
When considering this issue, we have accepted as correct the owners’ submission that the building contract is to be understood in the context of the matrix of facts mutually known to the parties at the time they entered into the contract. That is, we accept the Tribunal is to
14 Evidence of the first owner, ts 106, 6 August 2024.
15 ts 100, 6 August 2024.
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give effect to the
objective terms of the contract as these were understood by the parties at the time they entered into the contract.16
42
After considering the issue we are satisfied and we find that neither the owners nor the builder knew, prior to signing the building contract, that the full depth and length of the southern boundary wall was not capable of supporting access to the site or was not capable of supporting the proposed works on the site. This is for the following reasons.
43
First, the language used by the first owner in his email to Mr McManus on 26 May 2021 – ‘boundary brick wall’, ‘unstable’ and ‘will need to come down’ is, in context, more consistent with an intention to refer only to a portion of above ground brickwork than it is with an intention to refer to the full depth and length of the boundary wall. This is because:
(a) the photographs attached to this email show only that part of the wall which is above ground and which bounds the effective site area, but they do they not show the part of the wall on the southern boundary of the access leg;17 and
(b) the evidence shows that the first homeowner believed (whether correctly or not is immaterial) that the wall along the southern boundary of the site are in fact two separate walls, so that when he refers to these walls he speaks about them as two distinct walls and not as one continuous wall. These walls are first, a wall that was built along the boundary between the 50A Halls Head Parade and the site and second, a wall that was built at a different time between 50B Halls Head Parade and the site. The first owner in cross-examination said:18
CADE MR: Perhaps we can hear from him. I think you were talking about context, Mr Dryland?—
DRYLAND, MR: Yes, context around the opening submissions. And I wanted to provide that context as it relates to my statement and the relevant submissions, highlight the fact that there are indeed two separate walls, and they are separate issues. I just 16 Electricity Generation Corporation t/a Verve Energy v Woodside Energy Ltd [2014] HCA 7 at para 35.
17 HB, pages 923 – 925.
18 ts 86, 6 August 2024.
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wanted to make that clear. That was all.
TAYLOR-BURCH, MR: You don’t know when the front portion of the boundary wall was built, do you?-
DRYLAND, MR: I recall having a vague conversation with the City of Mandurah about it. But I don’t recall the specific details. They – I know they told me that both properties and both walls weren’t built at the same time …19
44
Second, the first owner, when cross-examined by counsel for the builder about his email of 26 May 2021, confirmed this was his intention:20
TAYLOR-BURCH, MR: Okay. You inspected the boundary wall on about 26 May 2021, didn’t you?—
DRYLAND, MR: Which part of the boundary wall?
TAYLOR-BURCH, MR: Well, the southern boundary wall on the property. You inspected that, didn’t you?—
DRYLAND, MR: Can you be more specific about inspect?— I went to the block a lot of times over those years. You probably need to be a bit more specific.
TAYLOR-BURCH, MR: You had a look at it, and after looking at it, you sent an email to Mr McManus saying that the wall was severely unstable, didn’t you?—
DRYLAND, MR: Yes. So, like I said, that’s the fence that acts as the dividing fence between – well, for 50B. It’s not a retaining wall, and it was obvious to a lot of people, to anyone really, that it wasn’t stable, and it was a matter of time before the wind blew it over and that was
19 This intention is also consistent with the quote for repairs to the southern boundary brick wall which the first owner obtained on 15 September 2021 for the removal and replacement of ‘33.6 meters of brick work … blown down in storms’, and not for the removal and replacement of the full depth and length of the southern boundary wall, HB, page 943.
20 ts 92, 6 August 2024.
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communicated to David and to Simon, yes.
TAYLOR-BURCH, MR: You didn’t qualify it by saying it was only the back half, did you?—
DRYLAND, MR: No. It was explicit and it was clear, and I think there’s even photos that highlight that section of the wall only …
45
Third, in November 2021, the builder’s own survey team attended the site and re-pegged it without reporting to the owners or to the builder that there was anything that would indicate to a lay person that any part of the southern boundary wall was structurally unsound.21
46
Fourth, on its ordinary meaning, the language of item 43 of the addenda dated 24 November 2021 required the repair or replacement of only that portion of brickwork on the southern boundary wall which collapsed on 27 July 2021, and not the repair or replacement of the full depth and length of the southern boundary wall. This is shown by the reference in this item to only a single adjoining property owner rather than to the two property owners who adjoin the full length of the southern boundary wall, as well as by the reference to the ‘partially collapsed brick wall’ rather than to the full length and depth of the southern boundary wall. Additionally, the inclusion of the words ‘to structural engineers details’ in item 43 of the addenda could not be a reference to the Structerre report dated 12 April 2022 which required the replacement or remediation of the full boundary wall to structural engineers details, as that report did not exist at that date. Finally, this meaning is also consistent with the text box in the engineer approved plans for the proposed works dated 20 September 2021 and 17 January 2022, which includes an arrow pointing to the area of wall on the southern boundary of the effective site area which had collapsed on 27 July 2021 which stated: [‘n]ote: owner to liaise with neighbour (#50b Halls Head Parade) to remove/rectify partially collapsed brick wall to structural engineers details. Owner to clear any debris prior to construction’.22
47
Sixth, the site plan dated 20 July 2021 and addenda item 59 show that the builder understood the site needed the construction of lengths of retaining wall on the south-east corner and the northern side of the effective site area, and that these works were to be undertaken by
21 HB, pages 1366 – 1367, Second statement of Mr Dryland, paras 26 – 30.
22 HB, pages 1883 and 1886.
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the
owners prior to the builder commencing the proposed works. However, it is clear that the site plan and addenda item 59 required the owners to construct only the lengths of retaining wall specified by the builder in the site plan, and that they do not require the owners to repair and replace the full depth and length of the southern boundary wall.23 24 25
48
Seventh, the ‘Compaction Test Certificate’ of Structerre Consulting dated 21 January 2022, which was given to the first owner on the same day and then almost immediately given by the owners to Mr McManus, certifies that ‘the site is considered adequately compacted for a single/double storey domestic structure in accordance with Structerre Consulting Engineers standard drawings’.26 This certificate gives no indication that there was at that time anything visible on site that would indicate to a lay person that the southern boundary wall was structurally unsound.
49
Eighth, it was only on 6 July 2022 that Mr McManus advised the builder’s Contract Administrator ‘I have a problem with the retaining wall/Boundary wall to the entry of the property which has been deemed unsafe …’.
50
This has the consequence that we are satisfied and we find that the owners were not obliged under the building contract to repair or replace the full depth and length of the boundary wall so as to make it structurally sound before it was reasonably practicable for the builder to commence the proposed works.
51
The owners further say that clause 4(b) and clause 5(b) of the building contract are ‘facilitative’ in that on their proper construction they require the builder, if it encounters a relevant circumstance, to take certain steps to ensure the proposed works progress. The owners consequently contend:
(a) The builder was obliged under clause 4(b) of the building contract to perform the proposed works in compliance with ‘all relevant statutes, codes, ordinances, rules, regulations,
23 The owners say, and the builder through item 2 in the contract variation dated 6 October 2022 accepts, the owners did instal those retaining walls prior to 27 January 2022.
24 Addenda item 59: ‘Retaining walls as indicated on site plan’ ‘Debit’ ‘11,100.00’ and ‘item 61 ‘Engineer inspection due to construction of boundary/perimeter walls adjacent to existing retaining walls’ ‘Debit’ ‘590’, HB, page 76.
25 Site Plan 20 July 2021 contains a ‘retaining contractor note’ which states ‘Retaining by client prior to construction’, HB, page 387.
26 HB, page 88.
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proclamations or orders of any officer of body lawfully empowered to make or issue the same’, which includes all health and safety statutes, and that if the builder required a variation so as to be able perform the proposed works in compliance with those statutes then it should issue a variation to the owners in accordance with clause 12(b) or (d) of the building contract; and
(b) If the builder believed on reasonable grounds that the site may not support access to the site or that the site may not support the proposed works, then it is the builder who is required under clause 5(b) of the building contract to engage a practicing structural engineer to inspect and certify that the site is capable of supporting the proposed works, with the cost for any additional supporting proposed works to be deal with in accordance with clause 12(b) or (d) of the building contract.
52
On considering this issue, we accept that on proper construction that clause 4(b) and clause 5(b) are intended, if the builder encounters the relevant circumstances, to require the builder to take steps to ensure the proposed works do not stall but that they progress. This has the consequence that we are also satisfied and we find that:
(a) if the builder did believe that it could not commence the proposed works in compliance with the health and safety statutes, that it was required under clause 4(b) of the building contract to issue the owner with a variation ‘necessary to enable the builder to comply’ with those statutes, and that it did not ever issue the owners with such a variation; and
(b) when the first owner sent Mr McManus a copy of the Structure report on 21 April 2022 the builder became aware on reasonable grounds that the site may not support the proposed works with the consequence it is then required under clause 5(b) of the Building Contract to engage a practicing structural engineer to inspect and certify the site, and that it did not ever engage a practicing structural engineer to inspect and certify the site.27
53
On reviewing the documents in the hearing book, we are also satisfied and we find that the builder did not ever give to the owners a notice of extension of time under clause 9(c) of the building contract.
27 Further, on 6 July 2022 Mr McManus advised the builder’s Contract Administrator, by an email copied to the builder’s General Manager, ‘I have a problem with the retaining wall/Boundary wall to the entry of the property which has been deemed unsafe …’, HB, page 1572.
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54
We are therefore satisfied and we find that the builder was obliged to commence the proposed works from 1 April 2022 and, because it did not do this, it was in breach of clause 9(a) of the building contract. Further, we are satisfied and we find that the builder’s breach was an ongoing breach of clause 9(a) of the building contract, as it neither gave to the owners a notice of extension of time and nor did it ever commence the proposed works.
55
The builder, in the alternative, contends that if it was required to commence the proposed works from 1 April 2022, that from the time the parties entered into the building contract on 24 November 2021 to 6 October 2022 the owners were engaged in negotiations with the builder for variations to the proposed works on the basis that the works would not commence until the variations were finalised. Consequently, the builder says the owners have ‘affirmed the contract and waived any ability they had to rely on any breach by the [builder] of its obligations to commence the Works’.28
56
We are satisfied and we find that both the owners and the builder did, despite clause 9 of the building contract, intend to resolve all the owner’s proposed variations before the builder commenced the proposed works, that is, both parties did during the period 24 November 2021 to 6 October 2022 elect to affirm the building contract. This is because of the following communications which passed between the owners and the builder during this time.
57
First, the builder sent a draft contract in the form of a Housing Industry Association standard lump sum home building contract to the owners under a covering letter dated 8 October 2021.29 The covering letter stated:30
…
Enclosed are your Contract Documents for your new home, as you read through the plans and specifications you will realise how important it is that you check them carefully. Although our Building consultants have endeavoured to guide you, the final responsibility rests with you in recognising whether or not all of the requests and intended changes and selections are included within your Contract Documents. Any further alterations to the Contract will be subject to the issue of a post
28 Respondent’s Outline of Opening Submissions, paras 79 – 91 citing Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38 at paras 38 – 39 and 49 – 50.
29 HB, pages 399 – 452.
30 HB, page 398.
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contract variation order requiring your signature in authorisation, prior to any work being commenced.
….
(Emphasis added)
58
Second, on 18 January 2024 Mikayla Donohue, an employee of the builder, emailed the owners and said:31
It was great to meet you both yesterday and I hope the Prestart went well for you both.
I have some further clarification around some of the items we discussed yesterday, so apologies for the lengthy email to come.
Cladding to Elevation – The construction method that has been costed as $8594.00 includes the internal brick, cavity insulation, timber stud frame & then cladding on top as the final finish. This construction method requires 3-4 different trades to attend site to complete the job, and then a return visit for the carpenter to complete the roof.
When a house is costed with brick and render, there is less involvement of other trades. The rates for timber at the moment have gone up 50% due to the high demand we are currently facing. This feature to the home is generally a discussion had when designing the home so it can be included from the start. This price is only for the rear of the home, the front is still to be priced. This elevation change will require all approvals to be amended (Engineers, energy efficiency, private certification and potentially planning approval (I am getting confirmation from our Town Planner RE: amended planning approval) all of which you will need to cover the costs of. By applying for amended approvals, this will create delays to your 45 day contract price.
The only outstanding approval to your file now is the Building Permit. If your approvals are not met within the fixed term period, you may be subject to a price increase. Any such increase would reflect actual costs incurred due to the above mentioned delays. If this is the case, you will receive a variation for a price increase before proceeding to construction. We are unable to maintain historic pricing if we exceed these timeframes.
…
(emphasis added)
31 HB, pages 997 – 998.
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59
Third, on 26 March 2022 the second owner emailed Mr McManus and said:32
Please see attached a copy of the updated draft variation as requested.
As per our conversation yesterday, we intend to make further changes to our selections once we have a consolidated document that contains all our our [sic] debits and credits. I gave an example from the addenda where the single phase power run was quoted as $2000, however we were actually charged $3700 which was incorrect. There is a contract variation that states that we are entitled to the $1700 credit but no credit amount has actually been issued anywhere. There are so many more examples like this over the various documents. Once we have a consolidated document we feel we will have a better understanding of the overall cost. There are some items on the draft variation that we would like to proceed with but we aren’t sure if we can afford them, so just need to be clear about the cost.
We know that you would agree that this part of the process has been very disorganised and stressful for us, and yourself. You have worked hard to assist us as best you can, but it is disappointing that Summits resources and systems have fallen short on delivering the service we expect from such a reputable builder. With this in mind, we would like the cost of the kitchen appliance upgrade to be worn by Summit and at no cost to us.
(emphasis added)
60
Fourth, on 27 July 2022 Mr McManus emailed the owners a sketch and costing for the placement of dropped footings to the Master Suite at a cost to the owners of $11,700.33 On 29 July 2022 the first owner emailed Mr McManus and said:34
As discussed, we maintain that the issue with the Drop footing Detail is an internal Summit issue. We have a Contract+ Addenda + Variation document with everything agreed to, quoted & costed within the Contract Price. If Summit have made a mistake, then it is Summits mistake, not ours. Summit have had in excess of 9+ months to complete their due diligence regarding the Footing Detail, so this cannot be deemed as an unforeseen issue.
We have in writing that Summit would have this merged document, Contract + Addenda + Variation (which already includes the Drop Footing Detail) to us by COB on the 27/07/22. It is now the 29/07/22 and Summit have not produced this document.
32 HB, page 541.
33 HB, page 91.
34 HB, page 93.
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In an effort to progress this project, Summit have the option of installing the pool PRIOR to the build commencing. It is my understanding that this would negate the requirement to have a Drop Footing Detail. (subject to engineering approvals/confirmation from the pool builder).
…
(emphasis added)
61
Fifth, on 12 September 2022 the first owner emailed Mr McManus and said:35
Could you please provide an update in regards to our addenda.
When I spoke to you on Friday you had received the margins and confirmed Summit were making money.
It’s my expectation, as there should be nothing left to cause any more delays or issues, that we have the addenda finalised and we progress to completing the Working Drawings.
(emphasis added)
62
Sixth, on 4 October 2022 the first owner emailed Mr McManus and said:36
As discussed today, Kasey and I agree that the latest revision of the Draft Variation (addenda), along with the changes made to the Contract Variation sheet (see attached), include everything that has been previously agreed to.
If you can have them amended to include the attached changes then we are happy to sign them and progress to drafting the final working drawings.
…
(emphasis added)
63
That is, we are satisfied and we find that because of these communications both the owners and the builder did intend, contrary to clause 9(a) of the building contract, to resolve all outstanding variations before the builder was to commence the proposed works, and that both parties did elect during the period 24 November 2021 to 6 October 2022 to affirm the building contract on this basis.
35 HB, page 691.
36 HB, page 1073.
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Issue 2: Are either of the four documents negotiated by Mr McManus binding on the builder?
64
Mr McManus, on behalf of the builder, negotiated four documents which purport to be amendments to the building contract. These are:
(a) A ‘post contract variation’ dated 23 November 2021 (the 23 November 2021 contract variation);37
(b) A ‘post contract variation’ dated 8 December 2021 (the 8 December 2021 contract variation);38
(c) A ‘contract variation’ dated 6 October 2022 (the 6 October 2022 contract variation); 39and
(d) An ‘addenda’ dated Mr McManus on 6 October 2022 (the 6 October 2022 amended addenda).40
65
The owners contend that these documents amend the home building contract.
66
The builder contends that Mr McManus was not authorised to commit the builder to any of these variations, and so they do not amend the building contract.
Does the 23 November 2021 contract variation amend the building contract?
67
The 23 November 2021 contract variation bears the title ‘Post Contract Variation’ along with the builder’s logo and business name. Notably, while it is signed by both owners it is not signed by or on behalf of the builder.
68
The owners in their evidence say that the items set out in the 23 November 2021 contract variation were items which they had wished to be addressed in the draft building contract, but which had either been incorrectly included in the draft or incorrectly omitted from that draft.41
69
The 23 November 2021 contract variation contains a schedule of 13 items (numbered 1 to 13). To the right of each item is a column headed ‘Cost’ and another column headed ‘Credit’. None of the items has
37 HB, page 33.
38 HB, page 80.
39 HB, pages 766 – 768.
40 HB, pages 770 – 783.
41 Witness Statement of Gavin Dryland dated 2 February 2024 at paras 83 – 309 and Witness Statement of Kasey Dryland dated 5 February 2024 at paras 75 – 204.
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an entry in the
‘Cost’ column and only 5 of the items has an entry in the ‘Credit’ column. At the foot of the schedule the total credits are summed at ‘-$33,220’.
70
Section 7(1) of the HBC Act provides that:
(1) A variation of a contract —
(a) must be in writing —
(i) setting out all of the terms of, and the cost of, the variation;
(ii) showing the date of the variation;
and
(b) must be signed by the builder and the owner or their respective agents.
71
Clause 12 of the building contract states that if an owner ‘wishes to make any variation to the Works … the owner shall give the Builder a written request for such variation’, and that if the builder accepts the requested variation that the variation document shall be signed by both the owners and the builder.
72
On reviewing the 23 November 2021 contract variation, we are satisfied and we find the document is in writing, it is correctly dated and it is signed by both owners. However, we also find it is not signed by or on behalf of the builder.42
73
While the owners do accept the 23 November 2021 contract variation is not signed by or on behalf of the builder, they contend that as both the owners and the builder conducted themselves in accordance with the variation, the builder has affirmed the contract and waived any ability it had to rely on its failure to sign the variation. The owners point to s 27(1) of the HBC Act which qualifies the requirement in s 7(1) by providing that, except for some exceptions not relevant to this matter, ‘a contract or a provision of a contract is not illegal, void or unenforceable only because a requirement of this Act is not complied with’.
74
The builder contends that as 23 November 2021 contract variation is not signed by the builder or on the builder’s behalf by its agent, it does
42 HB, page 33.
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not comply with either s 7(1) of the HBC Act or cl
ause 12 of the building contract and so it does not amend the building contract.
75
After considering this matter we are satisfied and we find that even though the 23 November 2021 contract variation is not signed by the builder and so is contrary to both s 7(1) of the HBC Act and clause 12 of the building contract, that it does have the effect of amending the building contract. This is because both the owners and the builder (through Mr McManus) relied on this variation as if it was a valid variation (for example, with respect to item 4, that the owners completed the required earthworks), with the consequence that the builder has elected to affirm the contract and so it has waived any ability it had to rely on the requirement of s 7(1) of the HBC Act and clause 12 of the building contract.
76
We are also satisfied and we find that those items in the variation which do not have a sum in either the ‘cost’ or the ‘credit’ column are items which the owners believed were to be provided by the builder at no cost to them, while Mr McManus (and therefore builder) believed they were items to be provided by the builder at a cost to the owners which the builder was yet to determine.
77
However, for the reasons we give later in this decision, that as we find the 6 October 2022 contract variation has the effect of revoking and replacing the 23 November 2021 contract variation there is little significance in our findings that the 23 November 2021 contract variation is a valid variation under the building contract or that there is a difference in understanding between owners and the builder as to whether any items were yet to be costed by the builder.
Does the 8 December 2021 contract variation amend the building contract?
78
The 8 December 2021 contract variation, like the 23 November 2021 contract variation, bears the title ‘Post Contract Variation’ along with the builder’s logo and business name. Like the 23 November 2021 contract variation, the 8 December 2021 contract variation is signed by both owners, but it is not signed by or on behalf of the builder.
79
The 8 December 2021 contract variation contains a schedule consisting of a single item which is numbered item 14, that is, the item is consecutive to the items in the 23 November 2021 contract variation. To the right of the item is a column headed ‘Cost’ and another column headed ‘Credit’. There is only one entry in the schedule which is in the ‘Credit’ column in the amount of $4,320 and the total at the foot of
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the
schedule is stated to increase the total credits under both variations to ‘-$37,540’.
80
We are satisfied and we find that the 8 December 2021 contract variation is intended to clarify that the provisional sum in item 8 in the 23 November 2021 is reduced by $4,320 because the owners have chosen to select single glazed sliding doors to the alfresco and veranda areas, rather than the specified double-glazed doors.
81
For the reasons we have given above with respect to the 23 November 2021 contract variation, we are also satisfied and we find the 8 December 2021 contract variation has the effect of a valid variation under the building contract.
82
However, as we are satisfied that the 8 December 2021 contract variation, like the 23 November 2021 contract variation, is revoked and replaced by the 6 October 2022 contract variation our findings with respect to the 8 December 2021 contract variation are also of little significance in this matter.
Does the 6 October 2022 contract variation amend the building contract?
83
The 6 October 2022 variation was drafted by Mr McManus after extensive discussion over many months with the owners both in person and by telephone, and by exchange of emails with them.
84
The owners in their evidence say that 6 October 2022 variation contains items which they had wished to be addressed in the building contract, but which had either been incorrectly included in the building contract or incorrectly omitted from it.43
85
On reviewing the 6 October 2022 contract variation, we are satisfied and we find that it complies with s 7 of the HBC Act and clause 12 of the building contract to the extent it is in writing, it is correctly dated and it is signed by the owners. We are also satisfied and we find that it is signed by Mr McManus purportedly on behalf of the builder.
86
The owners contend that Mr McManus did sign the variation as the builder’s agent and so his signature on the variation does bind the builder, while the builder contends that as Mr McManus was not the builder’s authorised agent that his signature on the document does not bind it.
43 Witness Statement of Gavin Dryland dated 2 February 2024 at paras 83 – 309 and Witness Statement of Kasey Dryland dated 5 February 2024 at paras 75 – 204.
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87
Both parties accept that at law an agent may have authority to bind his or her principal through:
(a) Actual authority: being an authority which is expressly given by the principal to the agent enter into certain contracts on behalf of the principal;
(b) Implied authority: being an authority which may be fairly inferred from the parties relationship and which is incidental to the express authority given by the principal to the agent; and
(c) Apparent authority: which is the authority that appears to a third party under the circumstances to have been given by the principal to the agent.
88
We will now consider whether Mr McManus, when signing the 6 October 2022, did so as an agent for the builder with authority to bind the builder to the document.
Did the builder give to Mr McManus actual authority to bind the builder to a variation of the building contract?
89
The evidence shows that Mr McManus’s supervisors had expressly directed him not to sign any type of building contract, including a variation of a building contract.44
90
The evidence also shows that the builder did not ever expressly inform the owners that Mr McManus is authorised to act as its agent with authority to bind it to variations of the building contract.
91
Consequently, for these reasons, we are satisfied and find that Mr McManus did not have actual authority to bind the builder through his signature to either the 6 October 2022 contract variation or the 6 October 2022 addenda.
Did Mr McManus have an implied authority to bind the builder to a variation of the building contract?
92
The owners observe that on 24 May 2021, the parties entered into a ‘Preparation of Plans Agreement’ (PPA)45 by which the builder was to prepare plans and estimates in connection with a proposed dwelling for
44 Witness outline of David Hunt dated 15 April 2024 at para 11; Witness Outline for Sharon Bergamaschi dated 15 April 2024 at para 12; Supplementary Witness Statement of Sharon Bergamaschi dated 25 June 2024 at paras 15 and 23.
45 HB, pages 19 – 24 (incomplete) and pages 347 – 353.
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the owners on the site.
46 The owners signed the PPA on 24 May 2021. The PPA was also signed on behalf of the builder by Mr McManus on 24 May 2021.47 Both parties then relied upon the PPA and performed their respective obligations under it.
93
The owners contend that the builder did actually authorise Mr McManus to be its agent so as to bind it to the PPA.48 The owners contend that from this actual authority they fairly inferred that Mr McManus did possess authority to bind the builder to other documents, such as to bind the builder to variations under the building contract.
94
While the builder accepts Mr McManus did have its actual authority to bind the builder to the PPA, it contends this does not give rise to an implied authority to bind the builder to a variation under the building contract. This is for the following reasons.
95
First, the builder says clause 3 of the PPA, that ‘[t]he client acknowledges that this agreement is an agreement in respect of the preparation of plans and associated work as set out herein and is not a building contract within the meaning of the Home Building Contract Act 1991’, makes clear that the authority given by the builder to Mr McManus to enter into the PPA is limited to the PPA.49
96
Second, Mr McManus signed the substantive page of the PPA as ‘Sales Consultant’ and not as ‘the builder’, that he signed the plans on the signature line provided for a ‘witness’ and on the sketch plan attached to the PPA he did not sign on the signature line for the builder (nor did anyone sign on this line).50 This, the builder says, clearly puts the owners on notice that the authority that Mr McManus held was not an authority to sign at large on behalf of the builder but was limited to the PPA.51
97
Third, as the building contract was signed on behalf of the builder by Ms Norgate and not Mr McManus, that the owners ought to have known that the authority held Mr McManus under the PPA did not extend to matters relating to the building contract.
98
We heard evidence from Mr Hunt that the usual practice of the builder was that from the date the builder entered into a building contract
46 Supra.
47 Supra.
48 HB, page 22.
49 HB, page 22.
50 HB, page 22.
51 HB, page 23.
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with an owner
that a contract administrator would take over responsibility for contact with owners from its sales consultants, and its sales consultants would then have no or very little further contact with an owner.52
99
Mr Hunt’s evidence on this issue is corroborated by the standard covering letter to the draft building contract the builder sent to the owners on 8 October 2021.53 This letter ended with the following three paragraphs:
If you wish to discuss the Contract in more detail, please do not hesitate to contact your Sales Consultant, David McManus on 0436 [XXX XXX].54
In the meantime, we look forward to receiving the enclosed documents duly signed and approved.
Finally, after we have received your signed Contract, your Contract Administrator will contact you to arrange a day and time for your pre-start meeting.
100
Had in fact the builder followed its usual procedures with the result that the builder’s contract administrator from 24 November 2021 replaced Mr McManus as its sole contact person with the owners, we would have found little substance to the owners’ contention that it could be fairly inferred that Mr McManus did possess an implied authority to bind the builder to other documents, such as to variations under the building contract.
101
In this case, however, the builder’s usual procedures were not followed.55 Rather, what did happen is that when Ms Donohue, an employee of the builder with the title Client Administrator, corresponded by email with the owners in December 2021, Mr McManus nonetheless continued to engage in extensive contact with the owners about matters relating to the building contract, including negotiating variations.
102
When Ms Donohue then resigned her position in February 2022, the builder allocated responsibility for the owners to another Client
52 Supplementary Witness Statement of David Hunt dated 25 June 2024 at para 24.
53 HB, pages 399 – 452.
54 The Tribunal has redacted part of Mr McManus’ telephone number.
55 The builder, however, accepts that at around this time it did not always follow its usual practices. The explanation given by Mr Hunt as to why the builder’s usual practices were not followed in this matter was that in 2021 and 2022 it was ‘not unusual for sales consultants to remain involved as the person who the client communicated with at Summit because of the relationship they had developed’, Supplementary Witness Statement of David Hunt dated 25 June 2024 at para 25.
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Administrator
. However, importantly, this Client Administrator did not contact the owners herself but rather she engaged with them only through Mr McManus. This had the consequence that from late February 2022 Mr McManus became the builder’s sole point of contact with the owners in respect of all discussions about the building contract, including negotiating variations on behalf of the builder.56
103
Indeed, so central was Mr McManus to the negotiations over the 6 October 2022 variations that:
(1) when on 16 June 2022 the second owner telephoned the builder to ask ‘to be put through to the estimator who was working on my file’ she was connected to Mr McManus;57 and
(2) when the second owner in September 2022, in frustration over her dealings with Mr McManus about the progress of the contract and addenda negotiations contacted the builder and attempted to deal with someone other than Mr McManus, she was instead referred back to Mr McManus.58
104
On considering this matter we are satisfied and we find that the owners could and did fairly infer that Mr McManus possessed the builder’s authority to bind the builder to documents other than the PPA, such as to variations under the building contract. That is, we are satisfied and we find that Mr McManus did have the builder’s implied authority incidental to the actual authority he held under the PPA to bind the builder to a variation of the building contract. This is for the following reasons:
105
First, the builder in its letter to the owners dated 8 October 2021 stated that Mr McManus could be contacted by the owners if they wished ‘to discuss the Contract in more detail’, which we find both could and did fairly permit the owners to infer that Mr McManus’ authority was not limited to the PPA but did extend to the building contract.59
106
Second, from the date of the building contract the builder permitted Mr McManus to engage in negotiations about variations with the owners, and more significantly from late February 2022 the builder delegated
56 HB, pages 1532 and 1564.
57 Witness Statement of Kasey Dryland dated 5 February 2024 at para 406, HB, page 299.
58 HB, page 693.
59 HB, page 398.
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sole responsibility for negotiating all variations, including the 6 October
2022 variations, to Mr McManus.
107
Third, during the period of time when Mr McManus was the builder’s sole point of contact with the owners, the builder rebuffed the second owners attempt to speak to someone at the builder other than Mr McManus.
108
Fourth, the builder informed the owners on 23 November 2023 that its DocuSign platform is ‘safe, secure, and legally binding’.60 Mr Hunt gave evidence that during the COVID-19 emergency the builder authorised Mr McManus to access its DocuSign platform without safeguards and by doing so it permitted him to send the variation to the owners on that platform, and then for the owners to electronically sign the variation and return it to him on that platform.61 By permitting Mr McManus to use the DocuSign platform we are satisfied and we find that the builder ‘armed [Mr McManus] with a document which, when he signed it, would bear the hallmark of authenticity’.62
109
In the alternative, the builder contends that even if the owners could fairly infer that Mr McManus held the builder’s authority to bind it to variations, that they should have become suspicious when Mr McManus hand signed the variations rather than signing them electronically on the DocuSign platform. However, we are not satisfied and we do not find that the owners should have become suspicious of Mr McManus’ authority to act as the owner’s agent due to this, as to do so would ignore the plausible explanation given by Mr McManus to the first owner on 5 October 2022 that there were difficulties with the DocuSign platform which prevented him from signing on that platform.63
110
Next, we are satisfied and we find that those items in the 6 October 2022 contract variation which do not have an amount of money in either the ‘cost’ or the ‘credit’ column are items which the owners understood were to be provided by the builder at no cost to them, and that Mr McManus (and therefore builder) also understood this to be case.
111
This is because item 10 clearly states that the items in the addenda are included in the contract price. Item 10 states:
60 HB, page 394.
61 ts, 399 – 400, 27 November 2024.
62 Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [38].
63 Supra.
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Items in the Addenda, Draft VO and Draft Construction VO have been agreed to by all parties and are inclusive of the contract price of $425,041. Summit confirm there will be no further increases to the contract price for any reason, throughout the duration of the construction and therefore after.
(emphasis added)
112
Finally, we are also satisfied and we find that the 6 October 2022 contract variation revokes and replaces the 23 November 2021 and 8 December 2021 contract variations.
113
This is because the 6 October 2022 contract variation is a consolidation or amendment of the 23 November 2021 contract variation items and the 8 December 2021 contract variation item.
114
Most significantly:
(a) Item 1 duplicates item 4 in the 23 November 2021 contract variation;
(b) Item 2 duplicates item 6 in the 23 November 2021 contract variation;
(c) Item 3 duplicates item 9 in the 23 November 2021 contract variation;
(d) Item 4 duplicates item 8 in the 23 November 2021 contract variation and the single item in the 8 December 2021 contract variation; and
(e) Item 7 alters the responsibilities set out in item 6 in the 23 November 2021 contract variation by requiring the builder to complete the work of constructing a structurally sound retaining wall on the site.
Did Mr McManus have an apparent authority that reasonably appeared to the owners under the circumstances to have been given him by the builder?
115
While we understand the distinction between implied and apparent authority, we are satisfied and we find that in this case for the same reasons that persuaded us that the owners could fairly infer that Mr McManus held an implied authority to bind the builder as its agent, that Mr McManus also held an apparent authority to bind the builder as its agent.
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116
That is, we are satisfied and we find from the totality of the conduct by the builder we discussed above, that it did reasonably appear to the owners that Mr McManus was authorised by the builder to both negotiate variations of the building contract on behalf of the builder and to act as the builder’s agent so as to bind the builder to these variations through his signature on them.
Does the 6 October 2022 addenda amend the building contract?
117
Like the 6 October 2022 variation, the 6 October 2022 addenda was drafted by Mr McManus after extensive discussions with the owners. Similarly, it is in writing, it is correctly dated, it was sent to the owners by Mr McManus on the builder’s DocuSign platform, it is electronically signed by the owners on that platform and it is signed by hand by Mr McManus.
118
For the reasons we gave above with respect to the 6 October 2022 contract variation we are satisfied and we find that the 6 October 2022 addenda amends the building contract.
119
Finally, we are also satisfied and we find that due to item 10 in the 6 October 2022 contract variation that the items in 6 October 2022 addenda which do not have a sum in either the ‘cost’ or the ‘credit’ column are items which the owners understood were to be provided by the builder at no cost to them, and that Mr McManus (and therefore builder) also understood this to be case.
Issue 3: Did the owners lawfully terminate the building contract on 7 March 2023?
120
For the reasons set out above, we are satisfied and we find that the builder was in ongoing breach of the building contract and so, in reliance on either or both clause 17(a) and clause 17(c) of the building contract, the owners were entitled to lawfully terminate the building contract on 7 March 2023.
121
We are also satisfied and we find that the owners termination of the building contract on 7 March 2023 complied with the formalities required under clause 15 and clause 17 of the building contract.
122
We are therefore satisfied and we find that the owners, on 7 March 2023, did lawfully terminate the building contract.
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Issue 4: Is the builder required to pay compensation to the applicants and, if so, what is the appropriate quantum of this compensation?
123
Section 43(1) of the BSCRA Act provides:
(1) If the Building Commissioner refers a HBWC complaint to the State Administrative Tribunal, the Tribunal may —
(a) if satisfied that the order is justified, make a HBWC remedy order; or
(b) otherwise, decline to make the order[.]
124
The Tribunal (when constituted by a Senior Member) considered the proper construction of the discretion conferred by s 43(1) of the BSCRA Act in Deshmukh and Distinctive Building Services Pty Ltd [2024] WASAT 15 (Deshmukh). The Senior Member in that decision said at [59] – [60]:

59. In my view the considerations concerning whether a HBWC remedy order is justified to resolve a HBWC complaint that a respondent has breached a home building work contract are:
    (1) Is there a valid home building work contract between the applicant and the respondent to the proceeding?
    (2) What are the relevant terms of the contract?
    (3) Has the respondent breached the relevant terms of the contract?
    (4) Has the applicant suffered loss, damage, or detriment which can be addressed by a HBWC remedy order?
60. In my view, if the Tribunal is satisfied that there is a valid home building work contract between the applicant and the respondent, and that the respondent has breached a relevant term of the contract which can be addressed by way of a HBWC remedy order then the Tribunal is required to make a HBWC remedy order. It then has a discretion regarding the HBWC remedy order it will make under the provisions of s 41(2) of the BSCRA Act.
    125
    With the respect to considerations 1, 2 and 3 referred to in Deshmukh:
    (a) It is not in dispute in this proceeding that the building contract as executed on 24 November 2022 is a valid home building work contract which is binding on the parties. For the reasons given above, we find that the building contract is amended by the
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    6 October 2022 contract variation and the 6 October 2022 addenda;
    (b) It is not in dispute in this proceeding that the relevant terms of the building contract are clauses 9(a), 17(a) and 17(c); and
    (c) For the reasons given above, we find that the builder did breach clause 9(a), that this breach is an ongoing breach that justified the lawful termination of the building contract by the owners on 7 March 2023 in reliance of either or both clause 17(a) and clause 17(c) of the building contract, but the owners had waived their right to rely on these breaches up to 6 October 2022.
    126
    With respect to consideration 4, the owners contend that they have suffered loss due to the builder’s breach of the building contract and ought to be compensated for this by payment for ‘loss of bargain’ damages in the amount of $225,931.92 and for ‘delay’ damages in the amount of their rental payments up to the date of decision.
    127
    The owners contend that the time for the builder to bring the proposed works to practical completion under item 9(b) of the Schedule to the building contract (as amended by the 6 October 2022 documents) is the date 300 working days from the date on which work should have commenced, which is 1 April 2022. The owners contend that the date on which the builder therefore ought to have brought the proposed works to practical completion is 8 June 2023.
    128
    The owners therefore calculate their loss of bargain damages as the difference between the cost to engage a substitute builder to construct the proposed home in 2024 as found by their costing expert ($650,972.92), and the contract price ($425,041.00), being the amount of $225,931.92.
    129
    Alternatively, the owners contend that if the Tribunal accepts as correct the costs set out in the joint costs statement, then they calculate their loss as the difference between the cost to construct the proposed home in 2024 ($596,410.75) and the contract price ($425,041.00), being the amount of $171,369.75.
    130
    The builder contends that if the owners lawfully terminated the building contract that the owners were then under a duty to mitigate both their loss of bargain and their delay losses by entering into a building contract with a substitute builder shortly after the date on which they terminated the building contract, that is, they should have done so in April 2023. The builder says the consequence of this is that the owners’
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    loss of bargain
    damages are to be properly calculated on the basis of the cost of building an equivalent home in April 2023, and not on the cost of doing so in 2024, and that the owners delay damages should be similarly calculated.
    131
    The builder also contends that if the Tribunal finds that the building contract is amended by the 6 October 2022 contract variation and the 6 October 2022 addenda, that it was not reasonably practicable for it to commence the proposed works until such time as it could obtain an amended building permit, and that it should be allowed 45 working days to do this. The builder then says, in accordance with item 9(b) of the Schedule to this building contract, as it is allowed 300 working days to bring the proposed works to practical completion that this would place the proper date for practical completion of the amended proposed works to be mid-February 2024.6465
    132
    The builder relies on the joint costing statement in support of its claim as to the cost of building an equivalent home in 2023.
    133
    The owners claim delay damages on the basis of payments they made to rent a home over and above the rent which they would have paid had the builder caused the proposed works to reach practical completion by the completion date under item 9(b) of the Schedule to the building contract.
    134
    The owners contend that the date on which the builder therefore ought to have brought the amended proposed works to practical completion under item 9(b) of the Schedule to the building contract is 300 working days from 1 April 2022, which is 8 June 2023, with the consequence that they say this is the commencement date for the calculation of their delay damages
    135
    In support of their claim for delay damages the owners have provided copies of their rental agreements which show that they have been required to pay rent in the amount of $340.00 per week.66
    64 HB, page 59.
    65 Under clause 26 of the building contract ‘Working Days’ means ‘Monday to Friday but excluding any day that is a public holiday’.
    66 HB, pages 167 – 192.
    [2025] WASAT 31
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    136
    The owners therefore claim the cost to them of renting a home from 8 June 2023 to the date of this decision on 11 April 2025 at a rate of $340.00 per week, which is an amount of $32,640.67
    137
    The builder again contends that if the Tribunal finds that the building contract is validly amended by the 6 October 2022 documents, that the date on which the builder should have brought the home to practical completion is mid-February 2024, with the consequence that it says this is the proper commencement date for the calculation of the owners delay damages
    138
    The builder again also contends that the owners were required to mitigate their loss by engaging a substitute builder shortly after the date when they terminated the building contract, that is, they should have engaged a substitute builder in April 2023. The builder says that had the owners done this they could have expected their home to be completed and ready to occupy 345 working days later, which would be in midAugust 2024.
    139
    Consequently, the builder says that the owners are entitled to claim delay damages only with respect to the rent they paid between midFebruary 2024 and mid -August 2024, which is an amount of $8,840.68
    140
    In order to determine the proper amount of loss of bargain damages and delay damages suffered by the owners we must therefore first determine whether the owners were required to mitigate their loss by entering into a building contract with a substitute builder in April 2023.
    Were the owners required to mitigate their loss by entering into a building contract with a substitute builder in April 2023?
    141
    The builder contends the Tribunal should find the owners had finance approval sufficient to permit them to enter into a contract with a substitute builder for the construction of an equivalent home in April 2023. That is, the builder contends the owners were under a duty to mitigate their losses by entering into a building contract at the earliest reasonable time after they terminated the building contract. The builder contends that as a consequence the proper date to use for the calculation of cost to the owners to construct an equivalent home, for the purpose of
    67 96 weeks * $340 p/w = $32,640.
    68 26 weeks * $340 p/w = $8,840.
    [2025] WASAT 31
    Page 36
    determining the owners
    ‘ loss of bargain damages, is the cost of the proposed works in April 2023 as found in the joint costs report.
    142
    The owners correctly contend that the onus is on the party in breach (here the builder) to prove how and to what extent the owners should have reasonably mitigated their losses. The owners contend that if the builder does not discharge this onus, that the Tribunal should not find that they were under a duty to mitigate their losses.69
    143
    The owners say that the builder has assumed, without evidence, that the owners were in a financial position to engage an alternative builder in April 2023. The owners say that simply because they had obtained finance approval in the sum of $598,705.45 in November 2021 does not mean that they would be able to finance a home in the sum of $580,448.42 in April 2023.
    144
    The owners also contend that even if they were under a duty to mitigate their losses, that it is unreasonable to expect that they could have entered into a contract with a substitute builder in April 2023. They say that this is because the builder holds the copyright in the building plans and so a substitute builder must engage in the process of drawing up new building plans and costing those plans before it would consider entering into a building contract with the owners.
    145
    On considering this issue we are satisfied and we find that the owners were aware, as Ms Donohue had informed them of this on 18 April 2022, that home construction prices were rising. Consequently, we are satisfied and we find that the owners, if they were in the financial position to do so, were duty bound to mitigate their loss by entering into contract with a substitute builder at the earliest reasonable opportunity for them to do so after 7 March 2023.
    146
    That is, we are satisfied and we do find that the builder has discharged the onus on it to show how and to what extent the owners should have mitigated their losses, as they have demonstrated that the owners were aware that building costs were rising and that they had sufficient finance approval for the expected contract price of the proposed works at or around April 2023. Further, on the evidence of the first owner, the owners’ financial position had substantially improved in around early 2023, as the first owner at that time received a substantial
    69 The owners in support of this proposition refer to Luxer Holding Pty Ltd v Glentham Pty Ltd (2007) 35 WAR 254 at [41]. See also Hippydayze Pty Ltd and Mener Group Pty Ltd [2019] WASAT 92 at [159] – [161].
    [2025] WASAT 31
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    increase in salary
    , and so the owners could expect to have obtained finance approval for an even larger amount if this was required.70
    147
    However, we also accept the owners submission that even if they attempted to enter into a new building contract with a substitute builder in April 2023 that it would not be reasonable to expect them to immediately enter into a building contract, and that some reasonable time would be needed to engage in negotiations with a substitute builder and for the builder to prepare new plans and estimates in connection with the proposed works before it would enter into a building contract with them.
    148
    Evidence for the time that this process would require is found in the evidence of the second owner, which is that the owners began discussions with the builder’s sales representative on 31 January 2021, they entered into the PPA on 24 May 2021 and the draft building contract was sent to them on 8 October 2021.71
    149
    While we do accept that if the owners had engaged in a similar process with a substitute builder in April 2023 that some parts of the process would proceed faster than this, as the owners were by then certain about the design and details of the home they wanted. However, we do not accept that this process could be completed in a matter of weeks but rather we are satisfied and we find that it would take many months.
    150
    This is because the owners would first need to find a builder willing to accept the project, and even once they had done this, they would need to provide the substitute builder with their design intentions. Next, the builder would need to draft a building sketch and construction plans and given the history of this matter, the builder would need to engage an engineer to determine a solution to make the southern boundary wall structurally sound.
    151
    After taking all these matters into account we find that a reasonable time to allow the owners to enter into a building contract is a period of time somewhat less than it took the owners to begin discussions and enter into a building contract with this builder. We are satisfied and we find that if the owners had commenced this process on 1 April 2023 that they would have entered into a building contract with a substitute builder six months later, on or around 1 October 2023, with practical completion
    70 ts 83 – 84, 6 August 2024.
    71 HB, page 261.
    [2025] WASAT 31
    Page 38
    being achieved 345 working days later,
    being on or around 7 February 2025.
    152
    We are therefore satisfied, and we find that that the cost to the owners of building a substitute home is the cost of an equivalent home to the proposed works as this is costed on 1 October 2023. We are also satisfied and we find that given that the owners should have engaged a builder on 1 October 2023 that the owners are entitled to delay damages for the period mid-February 2024 (being the date on which this builder was to have brought the amended proposed works to practical completion) to 7 February 2025 (being the date on which a substitute builder should have brought an equivalent home to practical completion), which is $17,340.72
    153
    However, in order to determine the quantum of the loss of bargain damages claimed by the owners must now determine the cost to the owners of building an equivalent home on 1 October 2023.
    What is the cost to the owners of building an equivalent home on 1 October 2023?
    154
    As the joint costing statement is admitted into evidence, under r 39B(6) ‘no party can adduce any evidence inconsistent with any matters on which the statement says the experts agree, without the Tribunal’s leave’.
    155
    Subject to one qualification, the joint costing statement states the cost to construct the proposed works (as amended by both the 6 October 2022 documents) at 7 March is 2023 $580,448.42 and at 1 August 2024 is $596,410.75.
    156
    The qualification given in the joint costing statement is that the stated costs of construction are the costs for this builder, which are lower than market rates due to the ‘financial stability, reputation, amount of works and supplier agreements’ of the builder. The joint costing statement stated that ‘other builders may not have the same rates’.
    157
    The owners contend that as they cannot engage this builder to construct their home for them, they will need to go to the market and engage a substitute builder to construct an equivalent house for them at market rates.
    72 A period of 51 weeks and 2 days. The calculation (rounded down to whole weeks) is 51 weeks * $340 p/w = $17,340.
    [2025] WASAT 31
    Page 39
    158
    The owners say that the cost of engaging a substitute builder at market rates is the cost set out in their expert’s report, which is $650,972.92. The owners say that the Tribunal can accept their expert’s costing in preference to the costs in the joint costing statement without offending r 39B(6), due to the qualification given in the statement.
    159
    If the owners had provided us with evidence that there are no substitute builders who through ‘financial stability, reputation, amount of works and supplier agreements’ can obtain the rates equivalent to this builder, we would have found the owners argument on this issue both persuasive and consistent with r 39B(6). However, the owners did not provide us with evidence about this issue, with the consequence that we are satisfied and we find that the builders should be required to engage a builder to construct an equivalent home at the cost set out in the joint costing report.
    160
    The joint costing statement does not, however, provide the experts opinion as to the contract price of an equivalent home by this builder on 1 October 2023, only the cost on 7 March 2023 and 1 August 2024.
    161
    Consequently, we have considered whether it is possible to determine what this cost will be on the basis of the joint costing statement. On considering this issue we are satisfied and we find that it is both fair and proper for us to assume that the price increases between 7 March 2023 and 1 August 2024 are equally distributed over time, with the result that the price at 1 October 2023 is the 7 March 2023 price plus 40% of the price increase as at 1 August 2024. This is an amount of $580,448.42 plus $6,384.93, which is $586,833.35.73
    162
    Therefore, we are satisfied and we find the loss of bargain damages the builder should pay to the owners is $586,833.35 – $425,041, which is $161,792.35.
    163
    Finally, we are satisfied and we find that the owners claim for loss of bargain damages and delay damages are claims losses in fact suffered by the owners due to the builders breach of the building contract, and that an order for compensation s 43 and s 41(2)(d)(i) of the BSCRA Act will put the owners, so far as money can do it, in the same situation as if the contract had been performed. We are also satisfied and we find that the owners losses due loss of bargain and loss due to delay are losses which are sufficiently likely to result from the breach of contract to make it proper to hold that they flowed naturally from the breach, and that
    73 0.4 * $15,962.33 = $6,384.93.
    [2025] WASAT 31
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    losses of this kind were within the contemplation of the builder at the
    time it entered into the building contract.74
    Conclusion
    164
    For the reasons given above, we are satisfied and we find that the owners did suffer a loss due to the breach of the building contract by the builder which can be addressed by a HBWC compensation order, and that we are therefore required to make such an order.
    165
    For the reasons we have also given above, we are satisfied and we find that the appropriate order to make is an order under s 43 and s 41(2)(d)(i) of the BSCRA Act that the builder pay the owners the sum of $161,792.35 in compensation for their loss of bargain and the sum of $17,340 due to the builder’s delay, being a total (rounded to the nearest dollar) of $179,132.00, and that because of the builder’s financial stability a reasonable time to allow the builder to pay compensation to the owners is 28 days.
    Orders
    The Tribunal orders:
    Pursuant to a home building work contract the parties entered on 24 November 2021 the Tribunal, under s 43 and s 41(2)(d)(i) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA):
61. That by no later than 9 May 2025 the respondent must pay compensation to the applicants in the amount of $179,132.00.
62. The application is otherwise dismissed.
    I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
    MR E Cade, MEMBER
    11 APRIL 2025
    74 Clark v Macourt [2013] HCA 56 (18 December 2013) at [60] – [62]; Hadley v Baxendale (1854) 9 Ex 341; 156 ER 145.