B & W Windows (Residential) Pty Ltd v Sibilia [2021] NSWCATAP 271

Andrew Hales, Maciej Getta, Jonathan Molina

Key takeouts

An owner of a defective building (assuming liability is established) is generally entitled to recover as damages the cost of rectifying the defective work.  The onus of proving the measure of damages lies upon the party seeking to recover damages.  Proof requires more than submitting an invoice from a third party builder.  Proof is required to demonstrate that all of the rectification work performed was required to ‘bring the work into conformity with the contract’.

Facts

B & W Windows (Residential) Pty Ltd (contractor) entered into a contract with Sibilia (owner) on 29 January 2018.  The contractor agreed to manufacture, supply and install windows, doors and screens at the owner’s principal place of residence.

A dispute arose over an allegation by the owner that three windows leaked through the frames and sills.  The contractor agreed in a Deed of Settlement and Release that ‘without admission of liability’ to perform and complete rectification work , which included the removal of three windows from site and the re-fabrication and re-installation of those windows.

When the re-installed, windows were tested with a hose the owner asserted that all three still leaked.  The contractor conceded that, at the time of the test, two of the windows leaked.

By a decision delivered on 2 October 2020, the Tribunal concluded that all three windows were leaking and defective because the contractor had not utilised small joint sealer in the re-fabrication.  The Tribunal found the contractor liable for the reasonable cost of rectification of the leaking windows and awarded:

• the amount of an invoice for the supply and installation of the replacement windows from a different manufacturer;
• $29,601.69 in respect of ‘loss and damage in connection with the removal and replacement of the windows’ reflecting three invoices issued by the builder; and
• $9,420 for the supply of scaffolding.

The contractor filed a notice of appeal on a number of grounds, one of which was that the Tribunal erred in law by awarding $29,601.69 in respect of loss and damage for the removal and replacement of the windows reflecting three invoices issued by the builder.

Regarding this amount the Tribunal had found:

‘[the owner’s expert] provided a breakdown of costs, and I have received no breakdown of costs to the contrary and he was not cross-examined in a way that causes me to reject his evidence. In the absence of any expert building evidence to the contrary, I make orders in accordance with the total contained therein.’

The contractor asserted that this did not establish that the work the subject of those invoices was required in consequence of any breach of warranty on the part of the contractor.

Decision

The Appeal Tribunal allowed the appeal as the invoices relied on by the owner were not clear enough to establish that the work referred to in the invoices was work required in order to bring the work into conformity with the contract or to establish the value of the work.

The Appeal Tribunal considered the leading case of Bellgrove v Eldridge (1954) 90 CLR 613 for the principles of assessment of damages for defective building work.  In Bellgrove, the High Court of Australia found that damages for breach of the obligation to construct in accordance with the contract and specifications are measured by the cost of rectification, where it is necessary to undertake that rectification to produce conformity and where it is reasonable to adopt that course.

The Tribunal made an error of law in finding the contractor liable for the amount of the builder’s invoices because they did not acknowledge that the onus of proving that the invoices reflected costs incurred by reason of the contractor’s breach of statutory warranties was the responsibility of the owner. There was no requirement on the contractor to cross-examine the builder in order to clarify the extent to which the invoices reflected work that was necessary to bring the work into conformity with the contract.  This obligation lay on the owner.  By not directly clarifying the contents of the invoices that related to the removal and replacement of the windows, this led the Appeal Tribunal to infer that the evidence on that topic (from the owner’s builder) would not have assisted the owner