NOVA PROPERTY (AUST) PTY LTD v BRIA CONSTRUCTIONS PTY LTD [2024] SASC 10

On Appeal from MAGISTRATES COURT OF SOUTH AUSTRALIA (MAGISTRATE VOZZO) [2023] SAMC 4 Appellant: NOVA PROPERTY (AUST) PTY LTD Counsel: MR B DOYLE KC WITH MR P ADAMS - Solicitor: FBR LAW Respondent: BRIA CONSTRUCTIONS PTY LTD Counsel: MR C MCCARTHY - Solicitor: VISINTIN LEGAL & ADVISORY Hearing Date/s: 07/06/2023, 08/06/2023 File No/s: CIV-23-002655 B SUPREME COURT OF SOUTH AUSTRALIA (Magistrates Appeal: Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment 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 in which it was generated. NOVA PROPERTY (AUST) PTY LTD v BRIA CONSTRUCTIONS PTY LTD [2024] SASC 10 Judgment of the Honourable Justice Stein 2 February 2024 MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - PERFORMANCE OF WORK CONTRACTS - BUILDING, ENGINEERING AND RELATED CONTRACTS - THE CONTRACT - CONSTRUCTION OF PARTICULAR CONTRACTS AND IMPLIED CONDITIONS - DISCHARGE OF CONTRACT ON DEFAULT AND LIKE GROUNDS Appeal against judgment entered by a Magistrate in favour of the respondent for $64,682.19 inclusive of pre-judgment interest, dismissal of the appellants cross claim, and costs. In early 2020, the appellant entered into a cost plus contract with the respondent to complete building works on a residential property owned by the appellant (“the contract”). The appellant paid seven progress claims (“PC1-7”) rendered by the respondent. The parties fell into dispute over the eighth progress claim (“PC8”). A formal letter of demand was issued by the respondent on 13 November 2020 and a letter of termination sent on 19 November 2020. A final -- 1 of 66 -- progress claim (“PC9”) was rendered on 26 November 2020 constituting costs said to be payable to the date of, and arising out of, the termination of the contract. The respondent instituted an action in the Magistrates Court against the appellant primarily seeking judgment for $67,069.53 as a debt due. The appellant denied the allegations and filed a cross claim asserting substantial defects in the work and breaches of contract by the respondent. The Magistrate concluded that the respondent was entitled to be paid the amount of $58,802.19 including the balance of a minimum builder’s fee in accordance with the contract. The Magistrate determined that the appellant’s cross claim failed in its entirety as it did not establish that the work was defective or that the respondent had breached the completion date under the contract. The appellant appeals against the judgment on four grounds: 1. The Magistrate erred in finding that it was open to the respondent to terminate the contract. 2. The Magistrate erred in finding that the respondent was entitled to succeed in a claim for amounts claimed in PC9 and/or by way of a minimum builder’s fee. 3. The Magistrate erred in her assessment of the respondent’s entitlements to items claimed in PC8 and PC9. 4. The Magistrate erred in dismissing the appellant’s cross claim. Held (allowing the appeal): 1. A component of PC8 was not payable by the appellant and accordingly included a demand for payment of an amount to which the respondent was not entitled. Non-payment by the appellant did not enliven the contractual termination provision for reasons including that the appellant did not fail to pay a “progress payment due” within the meaning of the contract. 2. The Magistrate erred in increasing the amount payable in PC9 to award the minimum builder’s fee. 3. The Magistrate did not err in the assessment of the respondent’s entitlements to specific items claimed in PC8 and PC9. 4. While termination by the respondent based on non-payment of amounts to which the respondent was not entitled was wrongful, no amount of damages are recoverable by the appellant. 5. Judgment was not entered until 20 February 2023 and an extension of time to appeal is not required but would have been granted if required. Building Work Contractors Act 1995 (SA) ss 29, 32, 34, 35; Magistrates Court Act 1991 (SA) s 40(1); Building Work Contractors Regulations 2011 (SA) reg 16; Uniform Civil Rules 2020 (SA) Part 7, referred to. Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd [1997] NSWSC 478; Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd (2009) 178 FCR 57; ASIC v Atlantic 3-Financial (Aust) Pty Ltd [2007] 2 Qd R 399; Australian Broadcasting Commission v Australian Performing Right Association Ltd (1973) 129 CLR 99; Burke and Riversdale Road Pty Ltd v Gemini Investments Pty Ltd [2003] VSC 33; Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402; Daysea Pty Ltd v Watpac Australia Pty Ltd (2001) 17 BCL 434; DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423; Etlis v New Age Constructions (NSW) Pty Ltd [2005] NSWCA 165; Fitzgerald v FJ Leonhart Pty Ltd (1997) 189 CLR 215; Fox v Percy (2003) 214 CLR 118; Green v Sommerville (1979) 141 CLR 594; H Lundbeck A/S v Sandoz Pty Ltd; CNS Pharma Pty Ltd v Sandoz Pty Ltd (2022) 399 ALR 184; Hadley v Baxendale (1854) 156 ER 145; Idameneo (No 123) Pty Ltd v Ticco Pty Ltd [2004] NSWCA 329; Jireh International Pty Ltd t/as Gloria Jean’s Coffee v Western Exports Services Inc [2011] NSWCA 137; JPA Finance Pty Ltd v Gordon Nominees Pty Ltd (2019) 58 VR 393; Lee v Lee (2019) 266 CLR 129; Leeda Projects Pty Ltd v Zeng (2020) 61 VR 384; Machado v Underwood [2016] SASCFC 65; Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd -- 2 of 66 -- [1997] AC 479; Minerology Pty Ltd v Sino Iron Pty Ltd (No 6) (2015) ALR 1; MLW Technology Pty Ltd v May [2005] VSCA 29; Modern Engineering (Bristol) Ltd v Gilbert-Ash (Northern) Ltd [1974] AC 689; Morgan Equipment Co v UMW Corp SDN BHD [2002] NSWCA 193; Morgan v S & S Constructions Pty Ltd [1967] VR 149; Pitt v Commissioner for Consumer Affairs [2021] SASCA 24; PJ Nash Pty Ltd v Food and Beverage Australia Ltd [2021] SASCA 86; Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2003] 1 Qd R 259; Re Media Entertainment & Arts Alliance; Ex parte Hoyts Corp Pty Ltd (No 1) (1993) 178 CLR 379; Salta Constructions Pty Ltd v St George Bank, a Division of Westpac Banking Co Ltd (2014) 45 VR 245; Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158, considered. -- 3 of 66 -- -- 4 of 66 -- NOVA PROPERTY (AUST) PTY LTD v BRIA CONSTRUCTIONS PTY LTD [2024] SASC 10 Magistrates Appeal: Civil STEIN J. Overview 1 Bria Constructions Pty Ltd succeeded at trial against Nova Property (Aust) Pty Ltd on a claim for payment of amounts relating to building works performed by Bria on a residential dwelling owned by Nova. 2 This appeal by Nova is concerned with the proper interpretation of the contract between the parties and factual findings made by the Magistrate. 3 While I agree with many conclusions reached by the Magistrate, I have formed different views on aspects of the interpretation of the Contract as a consequence of which the appeal must be allowed. Background 4 In early 2020, Nova entered into a cost plus contract (the “Contract”) with Bria to conduct remedial work and complete unfinished building work on a residential property owned by Nova. At the time the parties entered into the Contract the dwelling was partly complete and Nova had claimed that works performed by previous builders were defective. The Contract did not specify the works required to complete the dwelling. Bria engaged a number of subcontractors and work was performed to progress the dwelling towards completion. 5 Seven progress claims were rendered by Bria and paid by Nova. However, in some cases, Mr Charles Figallo, the managing director of Nova, expressed dissatisfaction at the time of payment. For example, Mr Figallo said he would pay progress claim 7, but complained about matters including delays, and stated he would not pay any further accounts until the work was complete and approved by Mr Giuseppe (Joe) Bria. In further correspondence, Mr Figallo reiterated that he would not pay progress payments unless subcontractors had completed their work.1 6 From August 2020, Bria sent Nova multiple requests for renewal of a bank guarantee. Bria also at various times sent to Nova written requests for decisions about specified matters in relation to the works, such as approval for kitchen cupboards and floors.2 1 Trial exhibit A1 – Joint Tender Book at 241. 2 For example, Trial exhibit A1 – Joint Tender Book at 397. -- 5 of 66 -- [2024] SASC 10 Stein J 2 7 On 31 October 2020, Bria issued progress claim 8 for a total amount of $45,363.74 with attached supporting invoices. On 5 November 2020,3 an amended version of progress claim 8 (“PC8”) was sent to Nova. Nova did not pay PC8. 8 On 2 November 2020, Mr Figallo sent an email to Mr Bria stating that no further payments would be made until the house was finished. He referred to being continually “ripped off” and complained that “hardly anything had happened” on the house.4 On 3 November 2020, Mr Figallo sent to Bria an email asking for explanations about PC8 and saying he would pay for scaffolding. Mr Figallo referred to the tiling having exceeded the quoted price; said the front door was not finished and that he was concerned about water and sand coming into the house. In the email Mr Figallo made other complaints and stated that he was not paying any more bills until the work was done and Bria had signed off on, and taken responsibility for, the works. The email stated that if Bria did not assure Mr Figallo that the house would be finished in 10 weeks, he would have lawyers terminate the contract and claim damages as Bria had exceeded a reasonable date of completion and work remained unfinished and unrectified.5 9 In early November 2020, Bria sent a number of emails to Mr Figallo to say, among other things, that the home would be complete in approximately 10 weeks once Bria had the kitchen. Bria said Mr Figallo had failed to sign joinery drawings necessary for the cabinet maker,6 and that since April, Mr Figallo had not signed off on the drawings for the cupboards, causing the practical completion date to be dramatically extended.7 Bria stated that the invoices included in the progress claim were in line with quotes and were as agreed.8 Mr Figallo responded by asserting that Bria was in breach of contract.9 Further email correspondence was sent between the parties in which Bria stated that Mr Figallo had failed to provide instructions and Mr Figallo reiterated that no more money would be paid until they could go through the work, Bria had assured him they could finish the job and Bria had explained why they were not doing the correct quotations.10 In further correspondence on 6, 9 and 10 November 2020, Mr Figallo made more assertions of failures by Bria, including assertions of defective work and failures to progress the works, lack of supervision, that quoting was not being done properly and he was being “blatantly ripped off”.11 Mr Figallo asserted many items of work could be finished off regardless of the state of the kitchen which he said was being used as a stalling tactic. Mr Figallo foreshadowed speaking to lawyers about terminating the contract and making claims for damages. Mr Figallo reiterated that no further payments would be made until a particular contractor had finished 3 Bria Constructions Pty Ltd v Nova Property (Aust) Pty Ltd [2023] SAMC 4 (“Magistrate’s reasons”) at [197]. 4 Trial exhibit A1 – Joint Tender Book at 278. 5 Trial exhibit A1 – Joint Tender Book at 279-280. 6 Trial exhibit A1 – Joint Tender Book at 405. 7 Trial exhibit A1 – Joint Tender Book at 406. 8 Trial exhibit A1 – Joint Tender Book at 281-282. 9 Trial exhibit A1 – Joint Tender Book at 281. 10 Trial exhibit A1 – Joint Tender Book at 281. 11 Trial exhibit A1 – Joint Tender Book at 299-305. -- 6 of 66 -- [2024] SASC 10 Stein J 3 all the work and it was signed off.12 Bria’s response referred to Mr Figallo’s failures to accept quotes or provide instructions and urgently needing Mr Figallo’s cooperation with decisions and selections when required to move forward and complete the home. 10 During this period of time Mr Figallo met with Mr Bria and Mr Hansford, Mr Bria’s grandson, to discuss the various issues.13 11 On 13 November 2020, Bria sent to Nova a letter (“letter of demand”) which stated as follows:14 We are writing to you in circumstances where: 1. You have stated by email dated 10 November 2020 that you are refusing to pay “1 more dollar until the house is finished”; 2. Progress Claim No. 8 dated 31 October 2020 in the sum of $44,202.62 is now overdue for payment; and 3. You have failed, despite request from us to provide replacement security (in the form of a bank guarantee) to us as required by the Special Conditions of the Contract. Each of the matters stated in points 1-3 above are in default of your obligations under the Contract. We now require that you fix those defaults within five (5) days of today (that is, on or before 18 November 2020), by: 1. Providing us with a bank guarantee or similar security with a face value of $60,000.00 (and no expiry date); and 2. Attending to payment in full of Progress Claim No. 8 in the sum of $44,202.62. If you do not attend to the above within the timeframe stated, we confirm our intention to either (at our discretion) cease work or cancel the Contract. We trust this will not be necessary and that you will fulfil your obligations in accordance with the Contract as executed. 12 Nova did not pay PC8, in part or in full, and did not provide the requested guarantee. 13 After receiving the letter of demand from Bria, Mr Figallo reiterated previous complaints, asked Bria not to enter the site without his permission until Bria could assure him it would finish the job and have it signed off in compliance and stated Mr Figallo would pay for work done satisfactorily. Mr Figallo stated that he considered Bria had removed itself from the job and Nova would be claiming 12 Trial exhibit A1 – Joint Tender Book at 299-305. 13 Trial exhibit A1 – Joint Tender Book at 308; 310; 315-319. 14 Trial exhibit A1 – Joint Tender Book at 307. -- 7 of 66 -- [2024] SASC 10 Stein J 4 damages.15 In a further email, among other things, Mr Figallo asked if Bria still wanted to resign and if so, requested a resignation in writing.16 Bria responded to say that it was more than able to complete the project and offered to meet to go through the issues.17 Mr Figallo stated he could not meet on the appointed day as he had another builder on site to see if that builder was able to take over.18 Bria reiterated that they were ready and willing to complete the project as long as Nova complied with its obligations under the Contract to make timely payments and provide security.19 Mr Figallo responded to assert that Bria was trying to force him to terminate so Nova would either be taking the project over or appointing a new builder and would be “coming after you for damages”.20 Mr Figallo’s email stated that he was giving Bria one more chance to get the job done or get off the site.21 14 A further meeting occurred on 18 November 2020. 15 On 18 November 2020, Mr Figallo wrote to Bria making further allegations about the failure to complete the job and asserting work was defective. Mr Figallo asserted he would have Bria’s sign removed from the fence and Bria was not to enter the premises. He gave a deadline of 23 November 2020 for Bria to provide an assurance it could complete the job within a reasonable timeframe and have completed work inspected and signed off. Mr Figallo’s letter stated that before allowing Bria back on site, Nova would require Bria to provide a number of things including a bank guarantee to the value of $100,000. Mr Figallo asserted that if the terms were not complied with within five days, “you can consider yourself terminated and I will be claiming damages”.22 16 On 19 November 2020, Fenwick Elliot Grace, solicitors for Bria, wrote to Nova referring to Bria’s letter of demand. The solicitor’s letter (“termination letter”) stated as follows: That notice required you to show cause as to why our client should not terminate its contract with you and requested that you remedy your breaches of the Contract, by: 1. Providing replacement security in the sum of $60,000; and 2. Paying the sum of $44,202.62 (comprising Progress Claim number 8), within five business days. That is, on or before 18 November 2020. You have failed or refused to do so. No payment has been forthcoming and no replacement security has been received. 15 Trial exhibit A1 – Joint Tender Book at 308. 16 Trial exhibit A1 – Joint Tender Book at 309. 17 Trial exhibit A1 – Joint Tender Book at 311. 18 Trial exhibit A1 – Joint Tender Book at 311. 19 Trial exhibit A1 – Joint Tender Book at 312. 20 Trial exhibit A1 – Joint Tender Book at 313. 21 Trial exhibit A1 – Joint Tender Book at 311-313. 22 Trial exhibit A1 – Joint Tender Book at 319. -- 8 of 66 -- [2024] SASC 10 Stein J 5 In light of your ongoing, fundamental breaches and failure to comply with your obligations under the relevant Contract, our client now exercises its rights pursuant to cl 18.3 and informs you that it is cancelling the Contract effective immediately. Your obligation to pay our client the outstanding sum of $44,202.62 together with any other costs incurred as a result of your wrongdoing continues. We will write to you shortly setting out what those costs are and note that in the absence of payment being received, our client intends to bring a claim against you in a court of competent jurisdiction. If that becomes necessary, our client will also be seeking interest and cost payments from you. 17 On 26 November 2020, Bria’s solicitor sent to Mr Figallo progress claim 9 (“PC9”), setting out the costs said to be payable to the date of, and arising out of, the termination of the Contract. The cover email noted that PC9 together with PC8 was payable within seven days. PC9, for a total of $22,866.91, was comprised of six individual items together with a builder’s fee $10,662.14 alongside which was a note “the contract authorised a minimum fee of $52,500 plus GST”. 18 On 9 December 2020, Bria registered a Worker’s Lien over the property. 19 On 21 December 2020, Bria issued proceedings in the Magistrates Court seeking, among other orders, judgment for $67,069.53 as a debt due. 20 Nova denied the allegations and filed a cross claim asserting substantial defects in the work and breaches of contract by Bria. 21 After a trial, the Magistrate entered judgment in favour of Bria in the sum of $64,682.19 inclusive of pre-judgment interest and dismissed Nova’s cross claim. Nova was ordered to pay Bria’s costs on a standard costs basis calculated on the cross claim value, nominally fixed at $184,207.50, with an uplift of 20 percent but without disturbing existing specific orders in Bria’s favour. Grounds of appeal 22 The grounds of appeal are as follows. First ground of appeal 23 The first ground of appeal is that the Magistrate erred by finding it was open to Bria to terminate pursuant to the contract in circumstances where: 1. The termination was based upon a failure to provide a further bank guarantee which was neither a contractual requirement nor a basis for termination under the contract. 2. PC8 was invalid in whole or in part as it claimed entitlements to which Bria was not entitled. 3. Bria was not ready, willing and able to perform its ongoing contractual obligations under the Contract and thereby was disabled from exercising any contractual right of termination in that: -- 9 of 66 -- [2024] SASC 10 Stein J 6 a. Bria was in breach of its obligations under the Contract including to hold compulsory insurance (and relatedly, the Magistrate erred by ruling that Nova was not entitled to elicit evidence directed to that matter at trial); and b. Bria evinced by its conduct an unpreparedness to perform unless Nova paid PC8 and complied with the demand for a replacement bank guarantee which demand it was not entitled to make. 4. Bria did not plead or establish an entitlement to terminate at common law. Second ground of appeal 24 The second ground of appeal is that the Magistrate erred in finding that Bria was entitled to succeed in a claim for amounts claimed in PC9 and/or by way of a minimum management fee in that: 1. The claim in respect of PC9 was a claim in debt and no claim in damages was properly pleaded or run. 2. Bria was not entitled to terminate and its purported termination was an act of renunciation or wrongful repudiation which disentitled it from making liquidated contractual claims. 3. Alternatively, if, contrary to ground 1, Bria was entitled to terminate, it was not entitled to pursue liquidated contractual claims, and, in any event, was not entitled to the minimum management fee in those circumstances. Third ground of appeal 25 The third ground of appeal is that the Magistrate erred in her assessment of Bria’s entitlements to items claims in PC8 and PC9 in that: 1. The Magistrate ought to have found that Bria was not entitled to recover for work affected by substantial (non-trivial) defects, or had not been the subject of quotations for approval as required by the Special Conditions of the Contract. 2. In assessing the evidence regarding the quality of the work, the Magistrate erred in giving weight to, and accepting certain evidence, and giving no or little weight to other evidence. However, this aspect of the third ground of appeal was not pursued. Fourth ground of appeal 26 The fourth ground of appeal is that the Magistrate erred in dismissing Nova’s cross claim in that: 1. The Magistrate ought to have proceeded on the basis Bria engaged in a wrongful repudiation of the Contract. -- 10 of 66 -- [2024] SASC 10 Stein J 7 2. The Magistrate ought to have found there were material breaches of contract by Bria. 3. The Magistrate ought to have proceeded to consider and make findings for Nova in respect of claims of loss in relation to wrongful termination, delay and defective work as pleaded in the cross claim. However, during the appeal, Nova pursued only specific aspects of loss associated with delay. Extension of time 27 The notice of appeal sought an extension of time insofar as one was needed in relation to the orders made on 19 January 2023 on the basis that the final orders and the quantum of judgment were pending and not made until 16 February 2023. Costs 28 Nova’s notice of appeal did not address costs. In submissions, Nova contends that if the Magistrate’s judgment is to be interfered with, the factual substratum upon which the Magistrate exercised the costs discretion will have changed, necessitating the discretion be revisited. Secondly, Nova contends there was a denial of procedural fairness to Nova in that no submissions were advanced by Bria that the Magistrate should proceed on the basis of fixing costs with reference to the nominal amount of the cross claim or with a 20 percent uplift. Principles on appeal 29 An appeal from a Magistrate to the Supreme Court in a civil matter is governed by s 40(1) of the Magistrates Court Act 1991 (SA) and Part 7 of the Uniform Civil Rules 2020 (SA) (“UCR”). An appeal pursuant to s 40 is an appeal by way of rehearing.23 In conducting an appeal by way of rehearing, the Court must conduct a real review of the evidence at trial and form its own view. While not shying away from the requirement to weigh conflicting evidence and draw inferences where appropriate, the Court should afford due weight to any advantage of the Magistrate in having observed the witnesses at trial.24 This advantage is relevant where factual findings are made which are likely to have been influenced by impressions formed by the Magistrate about the reliability or credibility of witnesses as a result of having seen and heard them give evidence.25 An appellate court may reach a different conclusion where a finding is contrary to incontrovertible facts or uncontested testimony or is otherwise glaringly improbable or contrary to compelling inference.26 23 Machado v Underwood [2016] SASCFC 65 at [90] (Kourakis CJ and Nicholson J). 24 Pitt v Commissioner for Consumer Affairs [2021] SASCA 24 at [114]-[118] (Doyle, Livesey and Bleby JJA); Machado v Underwood [2016] SASCFC 65 at [44] (Kourakis CJ and Nicholson J); Fox v Percy [2003] HCA 22 at [23]-[29]; (2003) 214 CLR 118 at [23]-[29] (Gleeson CJ, Gummow and Kirby JJ). 25 Pitt v Commissioner for Consumer Affairs [2021] SASCA 24 at [117] (Doyle, Livesey and Bleby JJA); Fox v Percy [2003] HCA 22 at [23]; (2003) 214 CLR 118 at [23] (Gleeson CJ, Gummow and Kirby JJ). 26 Pitt v Commissioner for Consumer Affairs [2021] SASCA 24 at [118] (Doyle, Livesey and Bleby JJA); Fox v Percy [2003] HCA 22 at [29]; (2003) 214 CLR 118 at [29] (Gleeson CJ, Gummow and Kirby JJ). -- 11 of 66 -- [2024] SASC 10 Stein J 8 Magistrate’s reasons and findings 30 On 19 January 2023, the Magistrate delivered reasons for her conclusion that Bria succeeded on its claim and Nova’s cross claim failed in its entirety. The Magistrate concluded that while Bria did not establish any contractual entitlement to a number of amounts claimed in PC8 and PC9, it was still entitled to the amount of $58,802.19. The Magistrate’s reasons stated that before judgment was entered, the Magistrate would hear the parties as to the calculations of the judgment amount and in respect of interest and costs. 31 The Magistrate determined that: 1. Bria was entitled to be paid the amount of $38,693.56 claimed in PC8. 2. Bria was entitled to cancel the Contract for non-payment of amounts due under PC8. 3. Bria was entitled to be paid a final amount of $20,108.63 in respect of PC9 including the balance of a minimum builder’s fee in accordance with the Contract. 4. Nova’s cross claim failed in its entirety as Nova did not establish that Bria’s work was defective or that Bria breached the completion date under the Contract. 32 The Magistrate largely accepted the reliability of the witnesses called by Bria. The Magistrate preferred the evidence of Mr Sutherland, a cabinet maker, in relation to issues concerning cabinets based on his responsibility for cabinetry works. The Magistrate considered she should approach Mr Figallo’s evidence with caution and concluded his evidence was generally unreliable. She described him as overly emotive and argumentative. The Magistrate stated that Mr Figallo’s behaviour at times was disruptive to the conduct of the trial and his evidence was plainly coloured by self-interest. The Magistrate also noted that aspects of Mr Figallo’s evidence appeared inconsistent with contemporaneous records. 33 The Magistrate considered what was meant by the expression “for work actually completed” in the Contract. The Magistrate stated:27 In my view, a reasonable person would understand the expression ‘for work actually completed’ to mean that there is no right to claim a payment for work where, objectively assessed, the work is so materially defective, that it could not be said that the work had, as a matter of fact, been done or completed. The rights and obligations of the parties under the contract in respect of payments must be read in a context that includes that: • the payment provisions link the Builder’s entitlement to make a progress claim to the value of work actually completed by the Builder; 27 Magistrate’s reasons at [77]-[78]. -- 12 of 66 -- [2024] SASC 10 Stein J 9 • the contract is for residential building work. It did not include independent certification provisions for a certifying architect or other building professional to review or certify the validity of progress claims or the quality of work completed as might be included in a contract for commercial building work; • there is scope for disputes arising in relation to allegedly incomplete and defective works and the contract provides a dispute resolution procedure; • the contract also provides for a maintenance period of 3 months commencing on the Date of Practical Completion during which the owner may require the Builder to rectify work they believe is defective; • there is no clause in the contract that says that the claim for a progress payment is only to be paid by the Owner after the resolution of any dispute about incomplete or defective works. Absent an express clause to that effect, it is unlikely to have been intended objectively by the parties. Nor is such an intention consistent with a commercial interpretation of the contract. Therefore, taking the contract as a whole, the obligation to pay a progress claim by the due date does not depend on the assent or agreement of the Owner that the works performed are ‘actually complete’ or without defect. 34 The Magistrate concluded that a reasonable person would understand that Bria was entitled to add the builder’s fee to the costs of any work performed by a subcontractor under its supervision irrespective of whether Bria paid those costs itself or was contractually liable to pay those costs to the subcontractor.28 35 The Magistrate addressed the question whether Bria’s contractual right to payment of a progress claim was conditional upon Bria having obtained a written quote for the work and Nova’s approval of the quote before the work was done. The Magistrate considered that a reasonable person would understand, among other things, that: 29 1. Before any particular work was carried out the scope was to be agreed between Mr Bria and Mr Figallo. 2. Bria was required to obtain quotes with sufficient detail of agreed works and cost for Nova’s approval. 3. Neither Special Condition 2 nor Special Condition 7 of the Contract required the agreed scope or quote to be in writing. 4. Whether a written quote was required in respect of any work verbally agreed with Mr Figallo depended upon the particular circumstances and an objective assessment of those circumstances to avoid making commercial nonsense or working commercial inconvenience. 28 Magistrate’s reasons at [86]. 29 Magistrate’s reasons at [92]. -- 13 of 66 -- [2024] SASC 10 Stein J 10 36 Among other matters, the Magistrate noted the objective surrounding circumstances at the time of the Contract included that there were defective works requiring remediation and an absence of an express contractual provision which made payment of the progress claim conditional on Nova’s receipt of a written quote for all of the work included in the claim and Nova’s approval of the quote. Accordingly, the Magistrate concluded:30 Therefore, I do not accept that the validity of a progress claim was contingent on each claimed item being the subject of a written quote approved by Mr Figallo. The nature of the Works required some flexibility to attend to the ‘bits and pieces’ and any additional, minor remedial work as it arose on an agreed charge-up basis. To find otherwise would mean that Mr Figallo would not have been able to efficiently request alterations to quoted works or summarily approve additional minor works without causing the subcontractors to stop work and prepare a revised quote (assuming they were prepared to do so). Nova’s construction of the contract would potentially result in an uncommercial outcome and be inconsistent with the purpose and object of the contract. 37 The Magistrate rejected Nova’s contention that Bria’s contractual right to payment of a progress claim was conditional upon all of the sums claimed being “legitimate” claims for payment under the Contract. In essence, Nova’s contention was that if the progress claim was invalid by reason of one illegitimate claim it was invalid as a claim for all sums included in it. In the absence of an express provision stating otherwise, the Magistrate considered a reasonable person would understand the payment provisions to mean that Nova would only be liable to pay the amounts included in the progress claim that were properly claimed by the builder in accordance with the Contract.31 The Magistrate considered that to construe the Contract otherwise would be inconsistent with the purpose and the object of the Contract, that is, for the building work to be carried out with reasonable diligence and for Bria and subcontractors to be paid for such work by progress payments as and when work was completed.32 38 The Magistrate noted that on Nova’s construction, even a minor discrepancy in amounts claimed would deprive Bria and subcontractors of substantial amounts otherwise payable and potentially adversely impact their cashflow.33 The Magistrate noted that if subcontractors were not paid on time, they would be unlikely to return to complete further works thereby causing construction delays.34 39 The Magistrate considered each of the disputed individual amounts in PC8. Nova asserted four amounts which totalled $30,350.88 were not properly claimed: • Tectonic Tiling - $19,003.60. • Tiana Joinery - $3,190.00. 30 Magistrate’s reasons at [94]. 31 Magistrate’s reasons at [109]. 32 Magistrate’s reasons at [110]. 33 Magistrate’s reasons at [111]. 34 Magistrate’s reasons at [111]. -- 14 of 66 -- [2024] SASC 10 Stein J 11 • Fifteen percent builder’s fee on the two items above - $3,329.04. • Fifteen percent builder’s fee on Sutherland Joinery 2019 invoice - $5,008.24. 40 The Magistrate observed that Nova did not expressly plead a failure to obtain quotes as part of its defence in relation to certain allegations. However, the Magistrate was satisfied Bria was on sufficient notice of the requirement to prove that quotes were submitted and approved for each amount claimed in accordance with the terms of the Contract in order to prove its own case at trial.35 41 In relation to the amounts concerning Tectonic Tiling, Bria accepted that Tectonic had not provided a separate written quote for seven items of additional works included in invoice 2110. Bria relied on Mr Figallo’s acceptance of a tiling quotation which provided that “all additional tiling repair and making good works to be at a charge up rate of $85 per hour plus GST plus materials”. Mr Figallo accepted he knew additional works would be charged at the hourly rate.36 The Magistrate accepted the evidence of the tiler, Mr Aaron Genesin, that each of the individual items in invoice 2110 were first discussed with Mr Figallo and Mr Figallo gave authority to go ahead and do the work.37 Mr Genesin’s evidence included that Mr Figallo did not ever complain about the hourly rate; he did not usually provide quotes for variations to the original scope of works; at no stage was Mr Genesin asked for separate quotes in respect of the additional works and he may not have known how many hours were required because of uncertainty about the exact nature and the extent of the work required.38 42 The Magistrate concluded that work the subject of Tectonic Tiling invoice 2110 was additional tiling repair and make good works approved by Mr Figallo at the agreed rate of $85 per hour.39 The Magistrate concluded there were no substantial defects and the amounts together with the builder’s fee on those costs were properly claimed in PC8.40 43 In relation to the Tiana Joinery invoice, the Magistrate found that the front door and frame was supplied as ordered; there was no evidence of any substantial defect and the issues which arose with the door arose after delivery and before the front door and frame were fully installed.41 The Magistrate preferred the evidence of Bria’s witnesses over Mr Figallo’s evidence. The Magistrate accepted the evidence of the Bria witnesses that Mr Figallo was present when the front door was delivered, he was satisfied with the door which he inspected while on the delivery truck and an issue arose a few days after the door was fitted when 35 Magistrate’s reasons at [117]. 36 Magistrate’s reasons at [149]. 37 Magistrate’s reasons at [151]. 38 Magistrate’s reasons at [151]. 39 Magistrate’s reasons at [163]. 40 Magistrate’s reasons at [163]. 41 Magistrate’s reasons at [168]. -- 15 of 66 -- [2024] SASC 10 Stein J 12 Mr Figallo expressed concerns to Mr Bria about sand sitting on the rebates between the horizontal slats of the front door.42 44 The Magistrate considered the evidence established that Tiana Joinery provided a detailed specification which Mr Figallo approved; he gave the go ahead for installing the front door by email dated 24 September 2020; Mr Figallo inspected the door at the time of delivery and did not object or raise any concerns about its design but changed his mind several days later.43 The Magistrate considered the issue about build up of sand and salt in the grooves between the horizontal slats of the door was a design issue which was separate to the seal requirements for the door.44 The Magistrate considered the front door was removed as a consequence of Mr Figallo changing his mind about the design.45 The Magistrate was not satisfied that there was a substantial defect and rather the completion of the installation of the front door and frame was overtaken as a consequence of Mr Figallo changing his mind about the design of the door.46 The Magistrate concluded that Tiana Joinery manufactured and supplied the joinery in the design and style approved by Mr Figallo and was entitled to be paid the sum of $3,190 which monies were properly claimed together with the builder’s fee on those costs in PC8.47 45 The Magistrate did not consider that the 15 percent builder’s fee amounting to $5008.24 on the invoice from Sutherland Joinery dated June 2019 was properly included in PC8.48 46 The Magistrate concluded that Bria was entitled to add the builder’s fee to the cost of any work performed by a subcontractor under its supervision and the issue was whether Bria supervised all of the works included in the Sutherland invoice. The Magistrate preferred Mr Sutherland’s evidence about when work was performed and concluded that Bria did not establish that it supervised all the work the subject of the invoice. The Magistrate considered the evidence did not permit her to fairly assess what work was supervised by Bria in respect of the invoice and accordingly that Bria did not establish it had a contractual right to payment of the amount $5,008.24. 47 Accordingly, of the PC8 amounts claimed, the Magistrate concluded that Bria had a contractual right to payment of $38,693.56.49 48 The Magistrate considered that Bria was entitled to cancel the Contract under cl 18 for the non-payment of amounts properly claimed in a progress claim based 42 Magistrate’s reasons at [169]-[170]. 43 Magistrate’s reasons at [175]. 44 Magistrate’s reasons at [175]. 45 Magistrate’s reasons at [175]. 46 Magistrate’s reasons at [180]. 47 Magistrate’s reasons at [181]-[182]. 48 Magistrate’s reasons at [194]. 49 Magistrate’s reasons at [195]. -- 16 of 66 -- [2024] SASC 10 Stein J 13 on the conclusion that Bria was entitled to be paid $38,693.56 claimed in PC8.50 The Magistrate observed that Nova did not pay any amount of PC8 and the Contract was cancelled upon Bria exercising its rights pursuant to cl 18.3 for non- payment of amounts due and payable and claimed in PC8.51 49 The Magistrate stated:52 In view of the above findings, it was not strictly necessary for me to determine whether Bria could have cancelled the contract by reason only that Nova declined to replace the original $60,000 bank guarantee that had expired. However, if I am wrong about Bria’s entitlement to cancel the contract for nonpayment of amounts claimed in PC8 that were due and payable, I do not consider that Bria was entitled to exercise its right under clause 18.3 to cancel the contract based on a breach of a term requiring Nova to replace the expired security. Failure to provide security was not a default identified in clause 18.1. 50 The Magistrate did not accept Nova’s submission there was no contractual basis for the issue of PC9.53 The Magistrate observed that pursuant to cl 19.2, Nova was obliged to pay Bria the actual costs of the works as at the date of cancellation, the costs of materials or goods ordered which Bria was obligated to accept, and the reasonable cost of removal of items from site. The Magistrate addressed each of the items included in PC9. The Magistrate allowed amounts on account of some invoices included in PC9 but did not accept that some amounts included in PC9 were amounts which Bria was entitled to charge.54 51 PC9 included an amount of $10,662.14 as the balance of the minimum fee of $52,500 plus GST. While cl 19.2 did not refer to the minimum fee, Bria relied on Special Condition 1 of the Contract as entitling it to receive the minimum fee. The Magistrate concluded:55 In my view, a reasonable person would have understood SC1 to mean that the minimum fee was payable upon cancellation of the contract by the Builder by reason of the Owner’s default. The parties agreed to a minimum contract Price in circumstances where the exact scope of works had not been agreed upon. To the extent of any inconsistency, Special Conditions were to take precedence over other agreed terms (clause 3.3 of Detailed Matters). Payment of the minimum fee was a reasonably foreseeable consequence of a default by Nova which entitled the Builder to cancel the contract under clause 18.3 before Practical Completion. I have therefore concluded that Bria is entitled to the balance of the minimum fee agreed in SC1 in the amount of $17,055.24 (GST inclusive) after adjustment based on my earlier findings on the total amount payable in respect of PC8 and in relation to the Builder’s Fee claimable on accepted items in PC9. 50 Magistrate’s reasons at [196]. 51 Magistrate’s reasons at [197]. 52 Magistrate’s reasons at [198]. 53 Magistrate’s reasons at [199]-[200]. 54 Magistrate’s reasons at [203]-[224]. 55 Magistrate’s reasons at [227]-[228]. -- 17 of 66 -- [2024] SASC 10 Stein J 14 52 For those reasons, the Magistrate concluded Nova was liable to pay $58,802.19 to Bria on account of PC8 and PC9. 53 The Magistrate considered Nova’s cross claim and concluded Nova did not establish on the balance of probabilities that the items of work carried out by Bria or subcontractors under its supervision was defective.56 54 The Magistrate considered whether there was an agreed date of completion in the Contract and, if so, whether Bria breached the completion term. The Magistrate said there was no express contractual provision that Bria bring the work to practical completion within four months.57 Item B.3 of the Schedule stipulated approximately four months as the period for completion. The Magistrate considered the evidence as a whole, including contemporaneous documents, did not establish that Bria was in breach of the completion term.58 The Magistrate considered the evidence demonstrated Mr Figallo was largely to blame for delays in completion including in failing to provide timely instructions, changing his mind about the scope of works and ongoing disputes with the previously contracted tradespeople about defective or incomplete works.59 The Magistrate accepted evidence to the effect that work needed to be completed in a particular sequence and stated that evidence remained essentially unchallenged.60 One significant example given of Mr Figallo’s failure to provide timely instructions related to the kitchen cabinets. The Magistrate preferred the evidence of Bria’s witnesses over that of Mr Figallo,61 including evidence to the effect that at no stage until the Contract was cancelled had Mr Figallo approved final drawings for the kitchen.62 The Magistrate accepted that Mr Figallo knew Mr Sutherland would not make the cabinets until Mr Figallo had signed off on the drawings and he had been informed it would take about 10 weeks after the kitchen cabinets were installed to reach practical completion.63 The Magistrate also noted that Mr Figallo acknowledged that in about June 2020, until he got the go ahead from engineers, he was telling Bria not to do any major work in case the foundations had to be re-made.64 The Magistrate concluded that Nova failed to establish Bria breached the completion term.65 Pleaded case 55 In order to understand and address the appeal grounds and submissions, it is necessary to understand the case which was pleaded and the case which was run at trial. 56 Magistrate’s reasons at [240]. 57 Magistrate’s reasons at [244]. 58 Magistrate’s reasons at [246]. 59 Magistrate’s reasons at [246]. 60 Magistrate’s reasons at [247]. 61 Magistrate’s reasons at [248]. 62 Magistrate’s reasons at [249]. 63 Magistrate’s reasons at [249]. 64 Magistrate’s reasons at [254]. 65 Magistrate’s reasons at [255]. -- 18 of 66 -- [2024] SASC 10 Stein J 15 56 Bria’s statement of claim, among other things, pleaded that Nova refused to pay Bria for work carried out, Bria had registered a lien and Bria sought to enforce the lien over Nova’s property. The statement of claim pleaded the issue of PC8, the failure by Nova to pay PC8, the giving of notice of intention to cancel the Contract and the termination of the Contract. The statement of claim pleaded that Bria terminated due to Nova’s failure to respond to the demand. The statement of claim pleaded that PC9 was not paid by the due date in default of the Contract. The statement of claim pleaded that the sum of $67,069.53 remained due and payable despite demand and sought an order enforcing the lien, judgment in the sum of $67,069.53 as a debt due, interest and costs. The statement of claim did not plead that Nova’s conduct constituted a repudiation of the Contract which was accepted by Bria. 57 Nova’s amended defence pleaded that Nova did not pay PC8 or PC9 because Bria had failed to rectify faulty workmanship, failed adequately to supervise works, failed to contract works out and failed to meet various contractual obligations. The defence, among other things, pleaded that it was a term of the Contract that Bria obtained detailed quotes of work to be carried out, the project was not completed by the agreed completion date nor extended dates for completion and works were not signed off prior to Bria abandoning the site. The defence pleaded that Bria failed to ensure defects were rectified. In relation to PC8, Nova pleaded expressly there were substantial defects requiring rectification and that Bria resigned without notice and did not allow an opportunity for the parties to go through defects and attempt to resolve all works requiring rectification. Nova pleaded that works were not substantially complete, Bria wrongfully terminated the Contract by resigning without notice and abandoning the site, failed to bring work to practical completion within four months or extended dates for completion, failed to rectify defective works within the three month maintenance period and breached various statutory obligations under s 32 of the Building Work Contractors Act 1995 (SA) (the “Building Act”). Nova pleaded that Bria abandoned the site because it was unable or unwilling to meet the terms of the Contract including the date of completion, standard of work and rectification of defects. Nova pleaded that Bria sought extensions of time to March 2021. 58 Nova issued a cross claim in which it repeated aspects of the defence. It pleaded that Bria’s work and the work of its subcontractors was substantially defective and required rectification and, as a consequence, Nova had incurred costs. In addition to specific costs alleged to be required for rectification of specific items of work, Nova pleaded that in breaching an essential term of the Contract, Bria caused its director Mr Figallo to incur costs associated with not being able to move into his home as a direct result of Bria breaching the Contract by failing to complete by the agreed date of completion. The cross claim pleaded hotel costs incurred personally by Mr Figallo as accommodation at Avani Hotels & Resorts of $20,437.74 and storage of personal effects and furnishings of $15,914.81 as a consequence of the asserted breaches of contract. -- 19 of 66 -- [2024] SASC 10 Stein J 16 Case at trial 59 At trial, Bria’s claim was prosecuted on the basis of a failure by Nova to pay an amount due under the Contract, with termination pursuant to the provisions of the Contract resulting in an amount payable as a debt due to Bria. In Bria’s summary written closing submissions at trial, the claim was described as a claim for the amounts due for PC8 and PC9 “as a debt due”. Bria relied on cl 18 of the Contract which sets out the builder’s right to terminate. The scope of the topics addressed in Bria’s written closing submissions included the contract terms and scope of the works, topics on which it was submitted there was no cross- examination, quotations, PC8 (including the Tiana Joinery invoice), the contract completion date, PC9, remoteness of damage claimed by Nova for storage and accommodation, and asserted defects. Bria’s submissions in a document entitled “Corrections to the Respondent’s submissions so the Court is not misled by the Respondent’s submissions” referred to fundamental breach of contract by Nova and no breach by Bria. 60 Nova’s written closing submissions addressed topics including whether PC8 was a valid payment claim (including by reason of asserted failure to obtain written quotes and for works which were incomplete and defective including the front door), whether Bria’s termination was valid, whether if the termination was wrongful, Bria was entitled to payment of PC8 and PC9, whether Bria proceeded with reasonable diligence in competing the works, whether works performed were defective, the cost of remediating any defects and what amounts were owed by one party to the other. 61 The Magistrate engaged with counsel during the trial concerning the issues to be addressed66 and addressed her reasons by reference to the issues for determination in the manner set out above. 62 The evidence included the communications between the parties to which I have referred above. This included Mr Figallo’s assertions to the effect that he would not pay any further amounts, referring to finding another builder and so on. However, it does not appear that the trial was conducted on the basis that the issues to be determined by the Magistrate included whether Mr Figallo repudiated the Contract or whether Bria and/or Nova was not ready, willing and able to perform its contractual obligations. Contract terms 63 The Contract dated 3 February 2020 stated that Nova wished to have building works performed on the property, namely, “to complete all remedial work and all unfinished work on the property according to the building inspection report dated 23 May 2019 by C&W Building Services Pty Ltd building consultants”. There were no drawings, schedules of finishes, specifications, footings or other documents attached to and incorporated in the Contract. The C & W building 66 Trial Transcipt (“TT”) 120-123. -- 20 of 66 -- [2024] SASC 10 Stein J 17 report related only to windows and doors. The scope of the intended works were not defined in, or able to be determined by, the terms of the Contract. 64 The parties agreed that Bria would carry out and finish the building work the subject of the Contract and Nova would pay Bria’s actual costs of the works as defined in the Contract plus an additional builder’s fee calculated at 15 percent of the actual cost as defined in cl 7. 65 The “Work” was defined to mean the house or other construction as shown and described by the Contract and the contract documents. However, there were no contract documents. 66 Practical Completion was defined as the date Practical Completion was, in Bria’s reasonable opinion, in fact achieved. 67 Among other obligations, Bria agreed to carry out the work in accordance with the Contract in a regular and workmanlike manner using suitable materials and to proceed to complete the work with reasonable diligence. Bria agreed to achieve practical completion by the date for practical completion subject to any extension of time. The date for practical completion was described in the Schedule as “approximately four months”, subject to any extension of time. Bria agreed to observe and comply with all relevant government regulations and law. 68 Nova agreed to pay the price for the work on the date set out in the contract, pay for any variations, respond quickly and in writing to any requests for directions or decisions and not to discuss any matters relating to the work with, or give any directions to, any of Bria’s subcontractors or suppliers. 69 Clause 3.3 of the Contract provided that, to the extent of any inconsistency, any special conditions took precedence over other terms. 70 The Contract enabled Bria to subcontract any part of the work. 71 Clause 7 provided that the actual costs of the Works would include only costs attributable to the Works and would include any or all of a number of itemised matters. Those itemised matters included the cost incurred in the performance of all subcontracts and item purchases associated with the works including any packaging, cartage and delivery to site expenses, goods and services, costs of insurance, and additional sums by way of the builder’s fees and any other expense incurred by Bria in carrying out the works and complying with the agreement not being an expense expressly disallowed by the contract. 72 If the work was held up for any of a number of specified reasons including Nova failing to give or delaying in giving instructions or any delay or disruption due to any act or omission of Nova, the Contract provided that Bria would notify Nova as soon as practicable and the completion date would be extended by a reasonable time. -- 21 of 66 -- [2024] SASC 10 Stein J 18 73 Clause 13 of the Contract provided that if Nova agreed to pay Bria by progress payments, Bria would ask Nova in writing for progress payments at the times stated in Schedule H. Schedule H provided that: The Builder shall submit to the Owner at intervals of …, a claim for a progress payment for work actually completed. The Owner shall pay the amount of the progress payment to the Builder within 7 days. 74 Clause 13.4 provided that a claim for payment must show the cost of the materials, labour and other expenses incurred by Bria and all other items claimed under cl 7 in respect of the period covered by the claim, together with the calculation of Bria’s fee. Clause 13.4.2 provided that Bria shall give such further information as Nova reasonably requires. Clause 13 enabled the Builder to charge interest on amounts not paid on time at the rate agreed in item I of the Schedule. However, no amount was specified in item I. 75 Clause 14 required Bria to pay workers and subcontractors regularly and on time. 76 Clause 16 of the Contract provided a mechanism for Bria to stop work if Nova did not pay at the times agreed. 77 Clause 17 set out the circumstances in which Nova could cancel the Contract. It contained a requirement for Nova first to write to Bria stating Nova’s intention to cancel if Bria did not fix the default and enabled cancellation if, within five days, Bria had not replied or taken reasonable steps to fix the default. Clause 17.4 provided that Nova could only do so as long as Nova was not also in breach of the Contract.67 78 Clause 18 provided that if Nova did not pay any “progress payment due” Bria could either stop work or cancel the Contract. However, if the default could be fixed, Bria had to first write to Nova and state the intention to cancel the Contract if Nova did not fix the default. Clause 18.3 of the Contract provided that if, after five days, Nova had not fixed the default, Bria could either stop work or cancel the Contract. In contradistinction to cl 17, there was no express limitation on the right to cancel if the Builder was in breach. 79 Clause 19 of the Contract provided that Nova shall pay Bria within 14 days from the date of cancellation the actual costs of the Works as at the date of cancellation, the cost of material or goods ordered for the Works and which Bria was obligated to accept and the reasonable cost of removal of items from site. 80 The Contract provided that Practical Completion would occur when the Work was largely finished and ready to use. Nova had the ability to give Bria notice of any defective or incomplete work if it thought the work was not practically complete. Bria was then required to assess any items identified by 67 While the Contract employs the terminology of “cancellation”, for ease of reference and consistency I will refer to “termination” in my reasons. -- 22 of 66 -- [2024] SASC 10 Stein J 19 Nova and to do all things reasonably necessary to bring the Work to Practical Completion. Once Bria had done so, Bria, acting reasonably, was entitled to make a final declaration as to Practical Completion being reached which would be binding on the parties. 81 The Contract provided a maintenance period of three months within which Nova, if it believed the work was defective, could require Bria to rectify defects following a procedure set out in the Contract. 82 The Contract contained dispute resolution clauses which related to disputes arising in connection with the Contract. 83 The Contract contained seven special conditions as follows: 1. Minimum fee for the Builder will be $52,500 + GST or cost plus 15% builder’s fee + GST, whichever is greater. 2. The scope of the Work is to be agreed by both the Builder and the Owner having regard (as a guide only) to the building inspection report dated 13/05/2019 by C&W Building Services Pty Ltd. The project is expected to cost approximately $400,000; this amount is a guide only. Any additional unforeseen cost’s [sic] will be discussed by the Builder and the Owner prior to work being completed. 3. The Builder has assessed this project as partially complete and the exact cost to complete cannot be determined. The Builder will take no responsibility for work completed up to this stage. 4. The Builder will require a bank guarantee for the amount of $60,000. 5. That any contracts undertaken in the Work will be for labour only (noting most materials have already been paid for by the Owner) unless agreed prior by both the Builder and the Owner. 6. The Builder maintain proper records for the Works and provide the Owner with all appropriate sign offs where required by law including Certificates of Completion. 7. The Builder to get quotes for approval by Owner for the Works (Quotes need to include detailed information of the Works to be carried out onsite). 84 The Schedule provided for a period of completion of works of approximately four months. Contract interpretation principles 85 The rights and liabilities of parties to a contract are determined objectively.68 The Court will consider the text, context and purpose of a contract in determining the meaning to be given to terms by reference to what a reasonable business person would have understood the terms to mean.69 The Court may consider the language 68 PJ Nash Pty Ltd v Food and Beverage Australia Ltd [2021] SASCA 86 at [41] (Lovell, Livesey and Bleby JJA). 69 PJ Nash Pty Ltd v Food and Beverage Australia Ltd [2021] SASCA 86 at [41] (Lovell, Livesey and Bleby JJA). -- 23 of 66 -- [2024] SASC 10 Stein J 20 used, the surrounding circumstances known to the parties and the commercial purpose to be secured by the contract.70 86 In Willis Australia Ltd v AMP Capital Investors Ltd, Ward P, Beech-Jones JA and Griffiths AJA referred to and summarised relevant principles of construction as follows:71 The principles are identified in cases such as Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd per French CJ, Nettle and Gordon JJ and Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd per Kiefel, Bell and Gordon JJ. They may be summarised as follows: (1) The rights and liabilities of the parties are determined objectively by reference to the contract’s text, context (as a whole) and purpose. (2) It is necessary to ask what a reasonable businessperson would have understood the terms of a commercial contract to mean, which requires consideration of the language used by the parties, the circumstances addressed by the contract and the commercial purpose or objects to be secured by it. (3) Ordinarily, this process of construction is possible by reference to the contract alone and, if an expression in the contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to alter its plain meaning. (4) Recourse to such events, circumstances and external things may be necessary to identify the commercial purpose or objects of the contract or where there is a constructional choice. (5) Each of the events, circumstances and external things to which recourse may be had is objective but those events, circumstances and external things need to be known to the parties or assist in establishing the purpose or object of the transaction, including its history, background and context and the market in which the parties were operating. (6) Evidence of the parties’ statements and actions reflecting their actual intentions and expectations are inadmissible. (7) Unless a contrary intention is indicated in the contract, a Court is entitled to approach the task of construction on the assumption that the parties intended to produce a commercial result, in the sense that a commercial contract should be construed so as to avoid it “making commercial nonsense or working commercial inconvenience” (citing Electricity Generation Corporation v Woodside Energy Ltd). (citations omitted) 70 PJ Nash Pty Ltd v Food and Beverage Australia Ltd [2021] SASCA 86 at [42] (Lovell, Livesey and Bleby JJA). 71 [2023] NSWCA 158 at [49] (Ward P, Beech-Jones JA and Griffiths AJA) (citations omitted). -- 24 of 66 -- [2024] SASC 10 Stein J 21 87 The Court quoted72 from H Lundbeck A/S v Sandoz Pty Ltd; CNS Pharma Pty Ltd v Sandoz Pty Ltd, where Edelman J stated:73 Whilst it will always be an important matter of context for the interpretation of a commercial agreement if an interpretation would be “commercial nonsense”, it will rarely assist for the interpretation of an agreement that the court considers that, from the perspective of one party, one or more clauses are not commercially wise or convenient. As Neuberger LJ said in Skanska Rashleigh Weatherfoil Ltd v Somerfield Stores Ltd: “[T]he court must be careful before departing from the natural meaning of the provision in the contract merely because it may conflict with its notions of commercial common sense of what the parties may must or should have thought or intended. Judges are not always the most commercially-minded, let alone the most commercially experienced, of people, and should, I think, avoid arrogating to themselves overconfidently the role of arbiter of commercial reasonableness or likelihood.” (citations omitted) 88 The Court also referred74 to the observations of Macfarlan JA (with whom Young JA and Tobias AJA agreed) in Jireh International Pty Ltd t/as Gloria Jean’s Coffee v Western Exports Services Inc in which his Honour stated:75 If after considering the contract as a whole and the background circumstances known to both parties, a court concludes that the language of a contract is unambiguous, the court must give effect to that language unless to do so would give the contract an absurd operation. In the case of absurdity, a court is able to conclude that the parties must have made a mistake in the language that they used and to correct that mistake. A court is not justified in disregarding unambiguous language simply because the contract would have a more commercial and businesslike operation if an interpretation different to that dictated by the language were adopted. First ground of appeal Appellant’s submissions 89 Nova challenges the Magistrate’s conclusion that Bria validly terminated the Contract because Nova did not pay PC8. 90 Nova submits that the contractual right of termination was expressed in terms of non-payment of any progress payment due and that cl 18 of the Contract, properly construed, does not contemplate the disaggregation of a claim for a progress payment into its constituent elements. Nova contends that if multiple claims for payments are included in a single progress claim, Bria will only be able to demonstrate there was a progress payment due and not paid in order to entitle cancellation if every item in the claim was properly included. Accordingly, as a 72 Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158 at [58] (Ward P, Beech-Jones JA, Griffiths AJA). 73 [2022] HCA 4 at [104]; (2022) 399 ALR 184 at [104] (Edelman J) (citations omitted). 74 Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158 at [57] (Ward P, Beech-Jones JA, Griffiths AJA). 75 [2011] NSWCA 137 at [55] (Macfarlan JA; Young JA and Tobias AJA agreeing). -- 25 of 66 -- [2024] SASC 10 Stein J 22 matter of construction, Nova contends there was no default entitling cancellation under cl 18 as the payment sought in PC8 was not due. Nova contends that on the Magistrate’s own findings, the progress claim of $44,202.62 was not due. 91 Nova submits that item H of the Schedule effectively adopts a milestone payment approach in providing that payments may be requested for work actually completed. Nova submits that for work to be actually completed in the relevant sense it had to be substantially free from defect. Nova submits that for a claim for payment to be made, the work must be complete but also Bria must comply with the requirements of cl 13.4 (that is, providing details of the cost of materials, labour and other expenses incurred, the calculation of the builder’s fee and other information the owner reasonably requires). 92 Nova submits there was no reason to give cl 18 a more expansive meaning and if there were a minor discrepancy, Nova would accept the application of the de minimis non curat lex principle. Further, Nova contends that if there were controversial items, Bria could re-issue a payment claim in respect of uncontroversial elements. Nova submits that the Magistrate’s construction of the cancellation clause overlooked the seriousness of a cancellation for Nova with the inevitable associated cost and expense. 93 Nova submits that the letter of demand stated that unless Nova both made full payment and provided the requested guarantee, Bria would at its discretion either cease work or cancel the Contract. Nova submits that cl 18.2 required an unequivocal warning that termination would follow. 94 Nova also contends that Bria could not terminate while engaged in conduct which could be characterised as repudiatory or as conduct in breach of Bria’s obligations if that conduct had a nexus with the failure by Nova to pay the part of PC8 found to be properly claimed. Nova does not put its position on the basis that any demonstrated breach by Bria or any indication of an absence of readiness, willingness and ability to perform would suffice to render the contractual power to terminate unavailable. Nova acknowledges a lack of clear authority supporting such limitation and points to authorities which refer to a nexus between the conduct of the party seeking to terminate and the alleged breach relied on by the other party, or where obligations are interdependent, or cases in which one party’s own breach has resulted in the other being placed in the situation which is claimed to show a repudiatory intention.76 Clause 17 of the Contract, which relates to the owner’s entitlement to terminate, expressly states that an owner cannot exercise the right of termination if the owner is also in breach of contract. Clause 18 does not contain any equivalent words. Nova submits that the limitation in cl 17 is wider than the common law limitation which properly qualifies cl 18. Nova contends that the absence of equivalent wording in cl 18 does not preclude the more qualified limitation contended for, especially when the triggers for termination in the two 76 See, eg, Idameneo (No 123) Pty Ltd v Ticco Pty Ltd [2004] NSWCA 329 at [79] (Santow JA; Mason P and Hodgson JA agreeing). -- 26 of 66 -- [2024] SASC 10 Stein J 23 clauses differ. Nova submits the Court should be guided by a commercial and business like construction and with regard to a general guiding principles that a contracting party should not be able to take advantage of his or her wrong to end a contract. 95 Nova submits that Bria’s breach or unwillingness to perform was manifested by Bria’s threat to terminate if Nova did not pay an amount which included amounts to which it had no entitlement. It is also said to be manifested in circumstances where Bria’s demand exceeded Bria’s contractual entitlement because Bria had no entitlement to a replacement guarantee and non-provision of a bank guarantee was not a default in respect of which the cancellation power arose.77 Nova submits that in circumstances in which Bria’s position amounted to an assertion that even if the amount found to be properly claimed in PC8 was paid there would have been a termination, there was a nexus between Bria’s wrongful assertion of position and Nova’s non-payment of the part of PC8 found to have been properly claimed. 96 Nova contends Bria was in breach of the obligation to complete within approximately four months and submits that the Magistrate erred by proceeding on the basis the reference to completion in four months was only an estimate. Nova submits the reasonable diligence obligation in cl 3 of the Main Obligations in the Contract augmented an express obligation to complete the works within approximately four months subject only to extensions sought and given or required to be given under cl 12. By the time PC8 was issued about nine months had passed and Nova submits Bria did not plead or prove any entitlement to extensions of time. 97 Nova also relies on Bria being in breach of its obligations in failing to procure and provide evidence of building indemnity insurance. Nova contends that counsel was wrongly precluded from eliciting confirmation by cross-examination that no indemnity insurance had been obtained. 98 Nova concedes it made statements to the effect it was not prepared to make further payment unless various assurances were given. However, it submits those statements were accompanied by expression of a desire to meet to work through unresolved issues and the question is not whether Nova was in all respects correct in its approach but rather whether Bria was entitled to terminate. 99 Nova contends that Bria did not plead that Nova’s conduct was repudiatory according to general law principles. 100 The contract was for the completion of residential property, was a cost plus contract, which carries a degree of vulnerability on the owner’s part, and the project had suffered delays and disputes. Nova submits these matters are relevant to the surrounding circumstances known to the parties and the purpose of the 77 Magistrate’s reasons at [198]. -- 27 of 66 -- [2024] SASC 10 Stein J 24 transaction and thus relevant to the construction of the special conditions which were designed to protect Nova from cost blow outs and unsubstantiated payment claims. Respondent’s submissions 101 Bria’s written submissions dispute that Bria entirely relied upon the express right of termination in the Contract and contend that evidence at trial, among other things, established that Mr Figallo refused to pay unless the entire house was finished, which conduct was described as a complete repudiation of the Contract. However, during oral submissions, I understood Bria’s counsel to accept that the case was not conducted at trial on the basis that Bria accepted Nova’s repudiatory conduct but rather that the case was run on the basis that Nova failed to pay, resulting in termination under cl 18 and the claim was a claim in debt.78 Accordingly, while evidence was given at trial concerning the conduct of Mr Figallo in refusing to pay any money for work unless the whole house was finished, that evidence was said to be relevant context to the circumstances in which Bria issued the letter of demand and the termination letter. 102 Bria submits there is no principle or authority for the position that Bria was not entitled to terminate due to its liquidated contractual claims being incorrect and submits such a position is inconsistent with the Contract. Bria contends the Magistrate did not find that any progress claim was not in compliance with the Contract. 103 Bria contends that Nova failed to give instructions to allow work to advance but it was not necessary for the Magistrate to consider that allegation in detail given Nova’s refusal to pay PC8. 104 Bria contends there was no pleaded issue or case at trial alleging Bria was not willing to perform and no witness for Bria was cross-examined on the basis that Bria was refusing or lacked a willingness to perform. 105 Bria contends that the first appeal ground is consistent with the findings made by the Magistrate79 in which she considered it unnecessary to deal with the bank guarantee. Bria contends that no specific error in the Magistrate’s findings is explained and the Magistrate’s analysis justified the findings. In relation to the issue of insurance, Bria contends the point was not pleaded and no discovery was made. Analysis Right to terminate 106 The right to terminate under cl 18 is relevantly triggered by Nova’s failure to pay “any progress payment due”. Bria is entitled to render progress payments in 78 Appeal Transcript (“AT”) 151.6-19. 79 Magistrate’s reasons at [198]. -- 28 of 66 -- [2024] SASC 10 Stein J 25 the circumstances set out in Schedule H, that is, for “work actually completed”. Accordingly, in order to address Nova’s submissions and to determine whether there has been a failure to pay a progress payment due, it is necessary to determine the proper contractual interpretation of “work actually completed”, determine what is a “progress payment” and determine what is “any progress payment due” under the provisions of the Contract. This includes considering whether a claim for a progress payment is a “progress payment due” if it contains any items which are not properly charged in conformity with the Contract. Actually completed 107 Schedule H allows Bria to submit to Nova at intervals (which are not specified) a claim for progress payment for “work actually completed”. 108 There is no definition of “completed” or “actually completed” and none of the contractual provisions assist in shedding light on what that phrase may mean. 109 In Morgan v S & S Constructions Pty Ltd (“Morgan”),80 Winneke CJ, Smith and Gowans JJ considered the meaning of the word “completion”. In that case the building contract required the builder to give notice of the completion of the works. One contention was that the owner could not deny completion of the works by reason of defects because they were capable of being remedied under the maintenance clause in the contract. 110 The Court stated:81 Prima facie, one would have thought that the work to be done under a contract was “completed” when everything required to be done had been done in accordance with the contract, both in respect of manner and materials. But when the subject-matter is the erection of a house, it is reasonable to think that if the building owner had gone into occupation, it would not be open to him thereafter to rely on the fact that there had been latent or unobserved departures from the contract to justify a contention that he had gone into occupation of a house which was not “completed”, at all events when relief against such departures was open to him through a “maintenance clause”. On the other hand, it would seem equally reasonable to think that, if, before the owner went into occupation, he was able to point out obvious departures from the contract, which were not merely trivial, he could not be required by the contractor to accept occupation of the house as “completed”, on the ground that it was thereafter open to him to give notice to have them remedied under a “maintenance clause”. The proper view would appear to be that, until the work to be done under the contract had been carried out in accordance with the contract, both in respect of manner and materials (except for departures from the contract which were either latent or undiscovered or merely trivial), it would not be “completed”. 111 In the case of this Contract, the maintenance period and the practical completion clause provided mechanisms for Nova to require Bria to address defective or incomplete work and Bria relied on the maintenance period in support of its submission that amounts should be paid even if work was defective. The question remains whether as a matter of the proper construction of the 80 [1967] VR 149. 81 Morgan v S & S Constructions Pty Ltd [1967] VR 149 at 154 (Winneke CJ, Smith and Gowans JJ). -- 29 of 66 -- [2024] SASC 10 Stein J 26 Contract, defective work would be ‘actually completed’ given the specific requirement that it be so for a payment claim to be rendered. I have taken into account the surrounding circumstances in which the parties entered into the Contract, in particular the history of asserted defects in work performed by previous builders, together with Nova’s express requirement for the insertion of the Special Conditions. I consider on a proper interpretation of the Contract, and in a similar manner to Morgan, that to be “actually completed” work, the work would need to be carried out in accordance with the Contract requirements other than in respect of undiscovered or trivial departures from the Contract. The primary purpose of the maintenance clause is to enable Bria, at its expense, to address latent and minor defects during the maintenance period. Progress payment due 112 The Magistrate considered that Nova’s interpretation, that is, that the inclusion in the payment claim of an invalid item would invalidate the payment claim, would be inconsistent with the purpose and object of the Contract as set out above. The Magistrate considered the purpose of the Contract to be for the building work to be carried out with reasonable diligence and for Bria and subcontractors to be paid for work by progress payments as and when work was completed and placed emphasis on the potential for adverse impacts on cash flows and disincentive for subcontractors to return to site leading to construction delays. However, the Magistrate did not address what is meant by “progress payment due” in cl 18 of the Contract. 113 The Contract does not define what amounts to a “progress payment due”. 114 There are a number of authorities dealing with payment certificates under contracts which contain mechanisms for certification of amounts payable after a builder renders a progress claim. Generally, such contracts set out the requirements for certification and require the certified amount to be paid. However, they contain various mechanisms to enable reconciliation at the end of the contract in the event of under or over payment based on certification. Progress payments are thus provisional and subject to final determination of indebtedness. In general terms, while each case turns on the particular contractual provisions, the authorities largely support the position that in such cases, including because there is an obligation to pay the certified amount without deduction or setoff, there must be strict compliance with the contractual provisions for the certified amounts to be valid and payable. For example, Rolfe J in Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd82 concluded that strict compliance with a payment certificate was required. Justice Rolfe said:83 Accordingly, the recipient of the certificate is required to pay money during the course of the contract which, at the end of the day, it may be found it does not owe. The requirement to pay money may lead to financial difficulties for the payer, just as the failure to receive 82 [1997] NSWSC 478. 83 Algons Engineering Pty Ltd v Abigroup Contractors Pty Ltd [1997] NSWSC 478 at 7 (Rolfe J). -- 30 of 66 -- [2024] SASC 10 Stein J 27 money during the course of the contract may cause financial difficulties to the payee. Also the payee may not be able, at the end of the day, to refund any overpayment. Considerations such as these lead me to the conclusion that a certificate must comply strictly with [the relevant clause] if it is to have the consequences specified. 115 In Daysea Pty Ltd v Watpac Australia Pty Ltd,84 Williams JA (with whom Davies JA and Mackenzie J agreed) assessed a number of authorities on payment claims and said that an owner is obliged to pay a certificate even if the amount may later be found to be incorrect.85 116 While the payment certificate cases are not directly applicable given the different and more complex contractual provisions in such cases, the underlying factors taken into account by the courts in such cases are instructive. On the one hand, the obligation to pay imposes a financial burden on the owner but the ability of an owner to refuse payment has the potential adversely to impact the builder and subcontractors and impact on progress of the works, including potentially putting performance of the contract at risk. 117 In this case, cl 18 of the Contract entitles Bria to cancel the Contract if Nova “does not pay any progress payment due”. The Contract does not expressly define what is a claim for a progress payment. Given the manner in which Schedule H is phrased, I consider a reasonable person in the position of the parties would understand a claim for a progress payment to mean a document which sets out claims for specific sums of money on account of specified pieces of actually completed work. 118 Clause 13 contains the requirements for a claim for payment and cross refers to cl 7. Clause 13 of the Contract provides that a claim for payment must show the cost of materials, labour and other expenses incurred by Bria and other items claimed under cl 7, together with the calculation of Bria’s fee. The clause obliges Bria to give such further information as Nova reasonably requires. Clause 7 addresses the costs which are payable by Nova. Clause 7 relevantly provides that the actual costs of the works will include the cost incurred in the performance of all subcontracts and any other expense incurred by Bria in carrying out the works and complying with the Contract, not being an expense expressly disallowed by the Contract. 119 Schedule H provides that Nova “shall” pay the amount of a progress claim in 7 days. The word “shall” suggests an obligation to pay a progress claim which has been rendered. The Contract requires the builder to pay subcontractors regularly and on time. This is consistent with an intention that progress claims are to be paid when rendered to ensure financial capability and ongoing work by subcontractors.86 If the owner does not pay the builder at the times agreed, the 84 Daysea Pty Ltd v Watpac Australia Pty Ltd [2001] QCA 49; (2001) 17 BCL 434. 85 Daysea Pty Ltd v Watpac Australia Pty Ltd [2001] QCA 49 at [21]; (2001) 17 BCL 434 at [21] (Williams JA; Davies JA and Mackenzie J agreeing). 86 I note the Building and Construction Industry Security of Payment Act 2009 (SA) does not apply to domestic building contracts. -- 31 of 66 -- [2024] SASC 10 Stein J 28 builder can stop work and the owner is obliged to pay the builder’s costs of stopping work. If the builder does not terminate, and the owner pays “all of the money due”, the builder will receive an extension of time for the time during which work ceased. Clause 21 of the Contract requires Nova to pay the final payment before it is entitled to possession. These provisions are consistent with an intention that progress payment claims must be paid when rendered. 120 The Contract does not contain any express provision entitling an owner to withhold amounts from the total claimed in a claim for a progress payment. The Contract does not contain any express entitlement to set off or to enable the owner to pay amounts on a provisional or without prejudice basis pending the determination of disputes or pending a reconciliation of what has been paid at the end of the Contract. While common law rights, such as to claim a set off, are generally preserved absent clear exclusionary words,87 the absence of such express contractual rights in this Contract are consistent with a contractual intention that claims for progress payments are to be paid in full, without deduction or set off, within 7 days of issue. While there is a dispute resolution process contained within the Contract, which could be invoked in the case of a dispute over a progress payment claim, there is no provision which addresses expressly the consequences of the commencement of dispute resolution on the parties’ contractual obligations. The Contract does not expressly hold in abeyance any obligation, such as to pay a disputed claim pending dispute resolution, or to preclude the exercise by a party of other entitlements in the Contract, such as to terminate, if dispute resolution has commenced. There is nothing in the Contract which indicates a contractual intention that an owner could refuse to pay a progress payment claim. If an owner were to pay amounts the subject of subcontractor claims, an owner may have difficulties in recovering amounts said to be wrongly charged and paid which have been on paid to subcontractors. 121 These observations about the manner in which the contractual provisions operate lead to a conclusion similar to the payment certificate authorities to which I have referred above. That conclusion is that a progress claim should comply strictly with the contractual provisions to be a “progress payment due”. If that were not the case, a builder could issue a progress payment including amounts which were not legitimately payable under the Contract, the owner would be obliged to pay the sum claimed and the owner would have no express contractual right to recover amounts wrongly claimed. The owner would be limited seeking recovery of sums paid relying on common law remedies. If the owner refused to pay, the builder could stop work or terminate based on that failure to pay and the owner would have to seek recourse in common law rights. The conclusion that strict compliance is required creates potential difficulties for a builder in the event of inadvertent errors in calculation amounts owing or in differing views about the proper interpretation of the contract. However, the dispute resolution clause 87 See, eg, Modern Engineering (Bristol) Ltd v Gilbert-Ash (Northern) Ltd [1974] AC 689; Queensland University of Technology v Project Constructions (Aust) Pty Ltd (in liq) [2002] QCA 224 at [24]; [2003] 1 Qd R 259 at [24] (Holmes J; Davies JA and Mullins J agreeing). -- 32 of 66 -- [2024] SASC 10 Stein J 29 provides a facility for addressing such problems. Further, if in doubt, a builder could issue multiple progress payment claims, reissue amended progress payment claims following complaint or issue a single progress payment claim making clear that the claim is comprised of separate and discrete progress payment claims which are separately payable. 122 Taking into account the language of this Contract, in particular cls 7, 13 and Schedule H, the surrounding circumstances and the purposes to be secured by the Contract, I consider that a progress payment claim must comply with cls 7, 13 and Schedule H of the Contract to constitute a “progress payment due” sufficient to enliven the right to terminate. A progress payment claim would not be a “progress payment due” unless it was for work actually completed, it complied with the contractual requirements and the required time for payment from provision of the progress payment claim had passed. If a progress payment claim does not constitute a “progress payment due” within the meaning of cl 18, the failure to pay such a progress payment claim would not properly found a right of termination pursuant to cl 18. 123 If a progress payment claim includes amounts to which the issuing party is not entitled or which do not properly comply with the contractual requirements, whether the progress payment claim would constitute a “progress payment due” will depend on the proper construction of the progress payment claim. In particular, it will require consideration of whether the separate components of the progress payment claim constitute separate, and potentially severable, claims or whether the progress payment claim is a single, indivisible claim for the total amount claimed. 124 I now turn to consider PC8. The principles of construction of contractual notices are not relevantly different from the principles employed in construing contracts.88 A notice issued under a contract is construed having regard to how a reasonable recipient would have understood the contents of the notice taking into account the relevant objective contextual background.89 I consider this conclusion extends to other documents issued pursuant to a contract in the nature of a notice, such as a claim for a progress payment.90 It is thus necessary to consider the language used and how that language would be understood by a reasonable 88 JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159 at [67]; (2019) 58 VR 393 at [67] (McLeish JA; Beach JA and Niall JA agreeing); Salta Constructions Pty Ltd v St George Bank, a Division of Westpac Banking Co Ltd [2014] VSCA 289 at [28]-[29]; (2014) 45 VR 245 at [28]-[29] (Warren CJ, Tate and Beach JJA). 89 Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 at 767 (Lord Steyn); Etlis v New Age Constructions (NSW) Pty Ltd [2005] NSWCA 165 at [39] (Handley JA; Hodgson JA and Brownie AJA agreeing); MLW Technology Pty Ltd v May [2005] VSCA 29 at [78]-[79] (Gillard AJA; Winneke P and Buchanan JA agreeing); Salta Constructions Pty Ltd v St George Bank, a Division of Westpac Banking Co Ltd [2014] VSCA 289 at [28]-[29]; (2014) 45 VR 245 at [28]-[29] (Warren CJ, Tate and Beach JJA). 90 See, eg, Salta Constructions Pty Ltd v St George Bank, a Division of Westpac Banking Co Ltd [2014] VSCA 289; (2014) 45 VR 245 which addressed whether a notice of default pursuant to a guarantee was a demand for payment. -- 33 of 66 -- [2024] SASC 10 Stein J 30 commercial person.91 The question whether a notice is valid requires consideration of both the contractual provisions and the notice itself.92 125 On 5 November 2020,93 Bria sent PC8 to Nova. The total amount claimed was $44,202.62 comprised of seven invoices rendered by subcontractors, a builder’s fee of 15 percent on an invoice rendered by Sutherland Shopfitters together with builder’s professional fees of 15 percent calculated on the value of the invoices (other than the Sutherland Shopfitters invoice). The subcontractors’ invoices in PC8 included an invoice from Tectonic Tiling for $19,003.60, an invoice from Tiana Joinery for $3,190 and the builder’s fee on the Sutherland Shopfitters which amounted to $5,008.24. The total of the individual subcontractors’ invoices (other than Sutherland Shopfitters) was $33,213.36. 126 PC8 described itself as “Progress Claim Number 8 – Amended” and set out a series of individual amounts together with a subtotal and total amount payable as described above. While a number of individual charges from subcontractors are separately listed in PC8, the builder’s fee of 15 percent is not calculated on each individually, but rather on a cumulative total. PC8 stated that payment was to be made within seven days from receiving any claim or Bria would stop work until payment or an agreement had been made. Approaching PC8 with the background context in mind, I consider PC8 was a claim for a singular progress payment of the total amount claimed in it. 127 The Magistrate found that one component of PC8 was not payable by Nova, being the 15 percent fee charged on the Sutherland Shopfitters invoice. Accordingly, PC8 contained demand for payment of an amount to which Bria was not entitled. PC8 therefore did not amount to a “progress payment due” sufficient to enliven the contractual termination provision. Builder in breach - Unwilling and unable to perform 128 My conclusion in relation to PC8 is sufficient basis upon which to allow the appeal. However, for completeness, and in case I am incorrect in my conclusion, I proceed to address Nova’s other submissions in support of the first appeal ground. 129 I have referred above to the correspondence between the parties. The amended defence pleaded that Bria abandoned the site as it was unable or unwilling to meet the terms of the Contract including the date of completion and standard of work. My review of the trial transcript suggests that Bria witnesses were not directly cross-examined about whether Bria was ready, willing and able to perform and that question was not one of the issues posed for or considered by 91 JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159 at [67]; (2019) 58 VR 393 at [67] (McLeish JA; Beach JA and Niall JA agreeing), quoting Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 479 at 767-771 (Lord Steyn). 92 JPA Finance Pty Ltd v Gordon Nominees Pty Ltd (2019) 58 VR 393 at [68] (McLeish JA; Beach JA and Niall JA agreeing). 93 Magistrate’s reasons at [197]. -- 34 of 66 -- [2024] SASC 10 Stein J 31 the Magistrate.94 While it is not clear that the issue was run at trial in the same way it is formulated in the appeal, I have proceeded to address the issue given the submissions made and the conclusions I have reached. 130 Nova submits that Bria was not entitled to terminate while in breach or while its conduct manifested unwillingness to perform. As set out above, Nova’s submissions were based on Bria’s threat to terminate based on amounts to which it was not entitled, the demand for the replacement guarantee, the failure to complete in time and breach of failure to obtain the required insurance. I address each of those matters below. I also address Nova’s submission that cl 18 required an unequivocal warning that termination would follow from the failure to comply with the demand. Threat to terminate 131 PC8 required payment of the full amount of PC8. The letter of demand required full payment of PC8 as well as the provision of the requested guarantee. Nova submitted that Bria’s insistence on payment of the full amount of PC8 was evidence of Bria not being ready, willing and able to perform its obligations. 132 Nova acknowledges there are differences in the authorities concerning the right of a party to terminate if that party is in breach or not ready, willing and able to perform. There is support for the proposition that a party is generally precluded from exercising a contractual termination power if the party is itself in breach or is engaged in repudiatory conduct provided there is a nexus between its breach or repudiatory conduct and the other party’s non-performance and the other party’s conduct does not amount to an election to affirm the contract.95 Some authorities suggest that the common law position can be dispensed with by the terms of the contract. In Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd96 (“Allphones”) the Court did not consider it necessary to reach a view on whether a party who has repudiated an agreement may take advantage of a breach by the other party of an essential term and thereupon terminate. The Court considered the outcome of that question had no impact on express powers of termination and stated that the parties could by their contract expressly provide that powers could be exercised even when a party seeking to do so had repudiated the agreement.97 In Minerology Pty Ltd v Sino Iron Pty Ltd (No 6),98 Edelman J, referring to Allphones, stated that there is much to be said for the view that whether termination is possible when there is a lack of readiness and ability to perform will depend on the construction of the particular contractual provision. 94 TT6-7, 120-123; Magistrate’s reasons at [24]-15]. 95 Idameneo (No 123) Pty Ltd v Ticco Pty Ltd [2004] NSWCA 329 at [97] (Santow JA; Mason P and Hodgson JA agreeing). 96 [2009] FCAFC 85 at [55]-[76]; (2009) 178 FCR 57 at [55]-[76] (Perram J; Goldberg and Jacobsen JJ agreeing on this issue). 97 [2009] FCAFC 85 at [55]; (2009) 178 FCR 57 at [55] (Perram J; Goldberg and Jacobsen JJ agreeing on this issue). 98 [2015] FCA 825 at [977]; (2015) 329 ALR 1 at [977] (Edelman J). -- 35 of 66 -- [2024] SASC 10 Stein J 32 133 Clause 17 of the Contract expressly precludes an owner from terminating if the owner is also in breach of contract whereas there is no equivalent wording in cl 18. A question of contract interpretation thus arises as to whether the parties intended, by the absence of words in cl 18, that Bria would retain the right to terminate even if Bria was in breach or not ready, willing and able to perform. 134 Some work must be given to the contrast in wording as between the two termination clauses. While it may seem surprising that the Contract would provide for termination by one party while in breach yet not by another, a comparison between the main obligations and basis for rights of termination of each party may shed light on the question. The builder’s main obligations in the Contract revolve around the builder carrying out the work in an appropriate and timely manner. Clause 17 enables an owner to terminate in a range of circumstances including the failure by the builder to start work without good reason, stopping the work without good reason, failure to carry out work with due diligence or competently, and refusing to fix bad work so the works are at risk. The owner’s main obligations centre around payment, access to the site and giving instructions. Clause 18 enables the builder to cancel if the owner does not give proof of ownership of the land and proof of the ability to pay the contract price, does not pay any progress payment due or commits an act of bankruptcy. The focus of the builder’s termination clause is thus upon the owner’s ability to pay and the owner making timely payments. The reasons which justify termination accordingly, in general terms, correspond with each party’s main obligations. The fact an owner is expressly precluded from terminating if the owner is in breach will prevent the owner terminating if the owner has failed to pay progress claims, evidencing support for the contractual intention that progress claims must be paid on time. That emphasis provides further support for the conclusion I have reached above that progress claims must strictly comply with the contractual requirements given the requirement to pay and the inability to terminate in the event of failure to pay. 135 The significance of the payment obligation may assist in explaining the differences between the termination clauses. An owner can only terminate if the owner is not in breach of payment obligations whereas a builder can terminate for non-payment by the owner even if there are non-payment related issues in the work, such as assertions about the quality or timeliness of work. I am thus inclined to the view that the provisions of the Contract do contemplate termination by a builder even if in the builder is in breach, and accordingly there is a reasonable argument that those provisions dispense with the usual common law position. However, it is not strictly necessary for me to determine that question because for the reasons set out below, I do not consider the evidence as a whole supports the conclusion that Bria was not ready, willing and able to perform or that the evidence establishes the necessary nexus between Nova’s failure to pay and any breach or repudiatory conduct by Bria as to enliven the common law principles. 136 While the letter of demand required the provision of a guarantee and payment of PC8 in full, Bria expressed its willingness to continue to perform the works and to meet to discuss the payment claim. Mr Bria and Mr Hansford took part in such -- 36 of 66 -- [2024] SASC 10 Stein J 33 meetings and reiterated their willingness to complete the works.99 Nova’s correspondence asserted multiple failures by Bria as set out above. In response to Bria’s written statement that it was willing to complete the project as long as Nova complied with its obligations in relation to timely payment and provision of security, Nova responded by asserting a failure by Bria to complete works, being ripped off, allegations of shoddy work, lack of proper quotations, specific assertions about aspects of the work, an intention to take over the project and appoint a new builder and so on.100 Mr Figallo was cross-examined about meetings with Bria seeking to resolve issues and the failure to pay progress claim 8. Mr Figallo generally alleged defects in work performed in answer to questions about the failure to pay, said he was so frustrated he was not prepared to keep paying, said monies were not outstanding because the work was faulty, said he told Bria he would pay if they fixed up the work and finished the job and asserted Bria abandoned the works.101 The correspondence from Mr Figallo demonstrates he refused to pay any part of PC8, other than a small component charged for scaffolding, for a range of reasons which did not relate to Bria’s demand for payment and request for a guarantee. It is apparent from the correspondence and from Mr Figallo’s evidence that Mr Figallo primarily refused to pay for works because he considered the works were defective and the Magistrate generally preferred the evidence of Bria witnesses over Mr Figallo. There is also no suggestion that Bria persisted in its demand in the face of a clear statement by Nova that it objected to Bria’s demand for both payment in full and the provision of a further guarantee because the terms of the Contract precluded such a demand.102 137 I now turn to Nova’s submission that cl 18 required an unequivocal warning that termination would follow from the failure to comply with the demand. The question whether strict compliance is required with a contractual notice provision for notice given to be effective is a question of construction.103 Clause 18.2 of the Contract provides that if a default can be fixed, the builder must first (before terminating) write to the owner stating the builder’s intention to terminate the contract if the owner does not fix the default. Clause 18.3 allows the builder to either stop work or terminate if the owner has not fixed the default after five days. The letter of demand states that if Nova does not attend to the matters specified, then “we confirm our intention to either (at our discretion) cease work or cancel the Contract”. The letter of demand clearly states the consequence of a failure by Nova to accede to the matters referred to in the letter. While the consequences are expressed as alternatives, the letter clearly states that Bria will determine which alternative will occur in the event of failure to comply and one such alternative is termination. Given cl 18.3 of the Contract enables the builder to either stop work 99 TT429-430. 100 Trial exhibit A1 – Joint Tender Book at 312-313. 101 See, eg, TT739, 748, 755-756, 758-761. 102 See, eg, DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12 at [19]-[22]; (1978) 138 CLR 423 at 431-432 (Stephen, Mason and Jacobs JJ). 103 JPA Finance Pty Ltd v Gordon Nominees Pty Ltd [2019] VSCA 159 at [55], [60], [67]; (2019) 58 VR 393 at [55], [60], [67] (McLeish JA; Niall and Beach JJA agreeing). -- 37 of 66 -- [2024] SASC 10 Stein J 34 or terminate the Contract in the event the owner fails to fix a default, I do not consider that the letter of demand failed to meet the requirement in cl 18.2 to state Bria’s intention to cancel the Contract because the notice of default specified alternatives of stopping work or cancelling the contract. In my view, it was sufficient for Bria to make clear that one potential consequence of the failure to address the matters referred to in the letter was termination of the Contract. I consider an objective reader of the correspondence would have understood that the letter of demand was warning the recipient that termination may occur if the default was not fixed. I therefore reject this aspect of the first ground of appeal. Guarantee 138 Special Condition 4 of the Contract states that Bria will require a bank guarantee for the amount of $60,000. Counsel for Nova submits that the obligation should be read as an obligation to provide a guarantee for a reasonable time, and it would not be consistent with commercial objectives to construe the Contract as requiring Nova to procure a further bank guarantee for the full face value approximately nine months after commencement. 139 Nova submits that while the requirement in Special Condition 4 to provide a bank guarantee for $60,000 was expressed generally, it must be construed commercially and taking into account the commercial purpose to be secured by the provision of that guarantee. Nova contends that obligation should be understood as an obligation to provide a guarantee for a reasonable time measured prospectively by reference to the expected duration of the Contract. The guarantee provided was current for about five months. Nova submits that obtaining a bank guarantee involves a cost and where, as performance progresses with progressive payment reducing the builder’s risk, it would not be consistent with commercial obligations to construe the Contract as requiring the owner to procure a further bank guarantee nine months after commencement for the full value originally stipulated of $60,000. 140 The Special Condition required Nova to provide a bank guarantee for the amount of $60,000 without any express qualification or limitation. The Special Condition did not contain any reference to the timeframe within which a guarantee was required. While the expected completion of the Contract was approximately four months, cl 12 provided that if work was held up for a number of specified reasons, Bria would notify Nova as soon as practicable and the completion date would be extended by a reasonable time. Further, certain specified causes of delay, including Nova’s failure to give, or delay in giving, instructions or any delays caused by Nova would entitle Bria to claim loss arising from the delay. In the context of those provisions, and in the absence of express words, I do not consider the Special Condition properly construed limited the period of time within which Bria was entitled to provision of a guarantee, nor that it ought to be read down to require a further guarantee to be for a sum less than $60,000. Accordingly, in circumstances where the first guarantee expired, I consider Bria was entitled to request a further guarantee for the sum of $60,000. Thus, I do not consider that -- 38 of 66 -- [2024] SASC 10 Stein J 35 the request for the provision of a further guarantee constituted a breach of contract by Bria. 141 Nonetheless, I agree with the Magistrate’s conclusion and Bria did not contend that the failure to provide a bank guarantee could properly found the basis for termination under cl 18 of the Contract. Clause 18 contained the limited and specific circumstances in which Bria was entitled to terminate which did not include failure to comply with Special Condition 4. Accordingly, insofar as the letter of termination relied upon the failure by Nova to provide the requested guarantee, it did not constitute a valid basis for termination. 142 In Green v Sommerville,104 Mason J held that a notice which required a party to rectify two alleged defaults under threat of rescission when only one of those defaults was valid, was not invalidated by the inclusion of the invalid ground of rescission. In Burke and Riversdale Road Pty Ltd v Gemini Investments Pty Ltd,105 a purchaser defaulted in payment of the purchase price and the vendor served a notice of rescission. The purchaser issued proceedings arguing that the notice was defective as it failed to specify with sufficient precision the amount the purchaser was required to pay to rectify its default. The vendor conceded that the notice may have been in error in some respects, but maintained it was effective in terms of the contract provisions because it specified the purchaser’s default in failing to pay the balance of the purchase price. Justice Nettle said:106 I accept the vendor's submission that a notice given under a contractual condition such as General Condition 6 can be effective, despite the inclusion in the notice of a requirement not authorised by the contract, if the notice sufficiently specifies at least one default of which rectification is required by the contract. 143 I do not consider that demanding a replacement guarantee would have invalidated the letter of demand or letter of termination. I therefore reject this aspect of the first ground of appeal. Time for completion 144 The Contract defines the Date for Practical Completion as the date set out in item B2 or B3 of the Schedule by which Practical Completion must be achieved. The Schedule to the Contract provided (in part) as follows: B.2 Date for Practical Completion OR B.3 Period for completion of Works: 104 Green v Sommerville [1979] HCA 60 at [30]; (1979) 141 CLR 594 at 611 (Mason J; Murphy and Aickin JJ agreeing at 612; Barwick CJ and Wilson J disagreeing on this point but agreeing with the outcome of the appeal at 600, 613). 105 [2003] VSC 33. 106 Burke and Riversdale Road Pty Ltd v Gemini Investments Pty Ltd [2003] VSC 33 at [18] (Nettle J). -- 39 of 66 -- [2024] SASC 10 Stein J 36 (If nothing entered, within a reasonable time) 145 Schedule B2 was left blank. Schedule B3 of the Contract provided for the period of completion of the works to be “approximately four months”. 146 Nova submits that Bria did not complete within approximately four months and did not plead or prove an entitlement to extensions within cl 12. It accordingly contends that Bria was in breach. By its amended defence, Nova pleaded that Bria failed to bring the work to practical completion within four months but also pleaded that Bria sought extensions in writing from Nova of the completion date to 3 June 2020, 1 September 2020, late October 2020, 25 December 2020 and 1 March 2021. The letter of termination was sent in November 2020. Nova submits that the better construction of the amended defence is that it amounted to an allegation that Bria had not completed the works within any extended time frame requested by it. Nova contends that at trial neither party treated the pleading as a concession or contention that the date for practical completion had been extended to March 2021 nor did the evidence suggest there was any agreement to that effect. Bria submits there was no date for practical completion and accordingly no need for an extension of time. Bria contends there were no written requests for an extension and no agreement for an extension and no issue about extension of time was raised at the trial. On a review of the trial transcript, it does not appear that any question of extensions of time was addressed at trial and Bria’s witnesses were not cross examined about any asserted failure to seek extensions. 147 Bria contends that Mr Figallo’s conduct resulted in the failures to complete on time, including failing to give instructions to allow work to progress. One such critical failure was said to be Mr Figallo’s failure to give instructions to allow the kitchen cabinets to be finalised and installed which was said to result in a cascading set of consequences for other work requiring completion. Reference was also made to other issues including whether rectification works would be required on the foundations and when certain work could be done relative to other works. 148 At trial, Mr Bria gave evidence about the work required to complete the kitchen, the inability to continue certain works, such as the electrician’s final fix, if the kitchen was not complete, and Mr Figallo’s failure to sign off the cupboards.107 Mr Figallo was cross-examined about whether the foundations were going to be adequate and potential impact on progress; and about a number of issues in relation to which instructions were sought including kitchen cabinets and the potential impact on progress of the works and that Bria was waiting on him to pick handles and locking systems.108 Among other things, Mr Figallo denied being told of the delay in the project arising from the kitchen cupboards and asserted there were major faults with the works. He accepted he did not approve the kitchen cabinetry but did not agree that when he did not approve the design he knew the 107 Examples appear at TT46-47, 66, 75-76, 154, 185. 108 Examples appear at TT627, 628, 630, 691-695, 709-710. -- 40 of 66 -- [2024] SASC 10 Stein J 37 kitchen would not be built and maintained that he did not get proper 3D drawings.109 149 The main obligations on Bria are to “proceed to complete the Work with reasonable diligence” and “achieve Practical Completion by the Date for Practical Completion subject to any extension of time…”. Clause 12 of the Contract enabled extensions of the completion date in the manner described above. Clause 12 simply provides for Bria to notify Nova as soon as practicable in which case “the completion date will be extended by a reasonable time”. There is no express contractual requirement for agreement by Nova to an extension. The Contract did not contain a precise date for practical completion but nevertheless the intended period of completion was stated to be approximately four months in item B3 of the Schedule. While I agree with the Magistrate that there was no express contractual provision requiring completion within four months, the definition of Practical Completion in the Contract cross references to item B3 of the Schedule which accordingly has contractual relevance. Nevertheless, the contractual timeframe is expressed as an estimate, presumably by reason of the lack of clarity of the works to be performed and the potential for defects to be identified in previously performed work. 150 While the Magistrate concluded there was no express contractual provision requiring Bria to complete within four months, the Magistrate concluded that the evidence as a whole, including contemporaneous documents, did not establish that Bria was in breach of the completion term but rather the evidence revealed that Mr Figallo was largely to blame for the delay. The Magistrate’s findings included accepting evidence of Bria’s witnesses about the need to complete work in a particular sequence, evidence that was not contradicted by any witnesses for Nova. The Magistrate accepted the evidence of certain Bria witnesses over that of Mr Figallo. The conclusions about the credit of witnesses factored in the Magistrate’s reasoning. Consequently, even though Nova has persuaded me there was an express contractual requirement to complete in approximately four months, the evidence does not support Nova’s assertions of breach of such a term. Nova has not demonstrated that the Magistrate’s factual findings were “incontrovertible”, “glaringly improbable” or “contrary to compelling inferences”.110 On my review of the evidence those findings were open and convincing. Insurance 151 Section 34 of the Building Work Contractors Act 1995 (SA) provides that a building work contractor must not perform building work to which the Division of the Act applies unless a complying policy of insurance is in force in relation to the building work. In the case of building work under a domestic building work 109 Examples appear at TT630, 695, 765. 110 Fox v Percy [2003] HCA 22 at [28]-[29]; (2003) 214 CLR 118 at [28]-[29] (Gleeson CJ, Gummow and Kirby JJ); Lee v Lee [2019] HCA 28 at [55]; (2019) 266 CLR 129 at [55] (Bell, Gageler, Nettle and Edelman JJ). -- 41 of 66 -- [2024] SASC 10 Stein J 38 contract, the building owner must be provided with a certificate that evidences the taking out of the relevant policy of insurance. Pursuant to s 35, a policy of insurance complies if it insures each person who may become entitled to the benefit of a statutory warranty in respect of the building work against the risk of being unable to enforce or recover under the statutory warranty by reason of the insolvency, death or disappearance of the building contractor. 152 During the trial, counsel for Nova sought to tender an email from Mr Hansford to Mr Figallo concerning building indemnity insurance and to cross- examine Mr Hansford about the topic of building indemnity insurance in order to establish a breach of contract by Bria. Counsel for Bria objected on the grounds of relevance and the Magistrate upheld the objection. 153 Nova contends that Bria was in breach of its obligation to procure and provide evidence of building indemnity insurance; Nova’s defence denied that Bria was willing and able to meet the terms of the Contract; counsel for Nova was wrongly precluded from eliciting confirmation there was no indemnity insurance in place; and, even if notice of the specific matter should have been raised earlier, the question was a short, simple one and Nova’s enquiries suggested there was no record of insurance. 154 I received de bene esse an affidavit of the solicitor for Nova in which the solicitor deposed to his view that Bria had not paid or claimed any costs for building indemnity insurance; his view that documents provided by Bria did not constitute certificates of such insurance and to enquiries made which tended to indicate that QBE, the insurer providing building indemnity insurance in SA, had not located a policy for the property in question. In view of my conclusion below, I have not further considered the affidavit. 155 Bria’s counsel informed the Court that he had not appreciated the issue or the way Nova sought to deploy the information until Nova’s counsel explained it during the appeal hearing. He submitted the topic of insurance was not pleaded, the document sought to be tendered was not discovered and Bria was taken by surprise. Counsel submitted that at trial, Bria had been ambushed by the production of relevant documents only when a witness, Mr Christopher Hansford, was already under cross-examination, and that counsel for Nova did not seek an adjournment or to amend its pleadings. 156 Nova’s amended defence pleaded specific alleged breaches of contract by Bria failing to obtain quotes, failing to complete work within the time provided and rendering defective work. Nova also pleaded failures by Bria in relation to the maintenance period and breaches of statutory obligations in s 32 of the Building Act by failing to provide adequate supervision. Nova pleaded that Bria wrongfully terminated by resigning without notice and abandoning the site and pleaded that Bria was unable or unwilling to meet the terms of the contract including, but not limited to, the date of completion, standard of work and rectification of defects. -- 42 of 66 -- [2024] SASC 10 Stein J 39 157 The purpose of pleadings is to put the other party on notice of what case it must meet. The fact that during examination in chief counsel for Bria asked some questions about insurance would not of itself render the topic relevant.111 Although the amended defence pleaded in general terms that Bria was unable or unwilling to perform the Contract, it pleaded a number of express failures. It did not plead any alleged breaches or failures in relation to insurance. I do not consider the amended defence, read broadly and without undue technicality, encompassed allegations that Bria failed to comply with the obligation to obtain building indemnity insurance. The amended defence did not refer to insurance or plead the provisions of s 34 of the Building Act. I do not consider the reference to Bria being unable and unwilling as “not limited to” the specific matters pleaded was sufficiently clear to encompass the allegations concerning insurance. 158 While Nova contends that the topic could easily be addressed, Nova did not apply at trial for leave to amend its pleadings. Counsel for Bria contended that further evidence would have been required to address the allegation. It is not clear whether the question would have been capable of being neatly addressed. Explanations may or may not have been able to be produced and those explanations may have had a potential impact on the Magistrate’s assessment of Mr Hansford’s credibility. 159 I do not consider the Magistrate erred in upholding the objection to the tender of the insurance document or cross examination on it. I therefore dismiss this aspect of the first appeal ground. 160 While I have rejected a number of the grounds relied upon by Nova, given I have accepted Nova’s argument concerning the wrongful inclusion of items in PC8, Nova succeeds on its first appeal ground. 161 A consequence of this conclusion is that Bria’s termination was wrongful. I am driven to this conclusion with some reluctance. I observe that such reasoning produces what may be seen as an outcome capable of working an injustice in the context of the background facts and the behaviour of Mr Figallo which resulted in Bria sending the letter of demand and notice of termination. However, the result, which may appear harsh, follows inevitably from what I consider to be the proper interpretation of the Contract and the basis upon which Bria terminated the Contract and then pleaded and ran its case. Second ground of appeal 162 The total claimed by Bria in PC9 was approximately $22,900 comprised of about $10,500 in amounts mostly said to be due to subcontractors, approximately $1,600 plus GST in builder’s fees for PC9, and approximately $10,700 to account for the shortfall in Bria’s minimum builder’s fee provided for by the Special Conditions of the Contract. The amount claimed for the builder’s fee was derived by taking from the minimum builder’s fee of $52,500 plus GST amounts 111 See, eg, Goldsmith v Sandilands [2002] HCA 31; (2002) 190 ALR 370. -- 43 of 66 -- [2024] SASC 10 Stein J 40 previously invoiced to, and paid by Nova on account of the builder’s 15 percent fee, totalling approximately $45,400 at the time PC9 was issued. 163 The Magistrate found several of the components of PC9 were not due or payable and that, before the builder’s fee, Bria only demonstrated an entitlement to approximately $2,300 of PC9. However, the Magistrate awarded Bria the sum of approximately $17,000 for the builder’s fee despite Bria only claiming only approximately $10,700 in PC9. The Magistrate rejected the argument that cl 19.2.1 limited Bria to actual costs of the works at the date of cancellation. Appellant’s submissions 164 Nova submits that even if Bria was entitled to a 15 percent margin on costs, that could not extend to a shortfall payment necessary to ensure the builder received the minimum sum of $52,500 plus GST referred to in Special Condition 1 of the Contract. 165 Nova contends it is uncommercial and penal to construe the Special Condition as an entitlement which can be triggered upon termination of the Contract before completion of the works. On the Magistrate’s construction, Bria could have terminated the Contract in the first month on failure to pay the first progress payment and earned a profit out of proportion to the work done. Nova contends that such a construction would allow the provision to work as a penalty, unjustly enrich Bria and consequently would not be a commercial or businesslike construction. Nova also submits there is doubt whether such a construction is possible without contravening s 29 of the Building Work Contractors Act 1995 (SA) which limits the maximum uplift on a cost plus contract to 15 percent.112 166 Nova contends the issue is not resolved by saying Special Condition 1 prevails over cl 19 because the meaning of Special Condition 1 is in issue, cl 19 is the more specific clause and the Contract should be construed harmoniously as a whole to avoid conflict between clauses. Nova submits the meaning to be given to Special Condition 1 is that, if at the completion of the Contract Bria has not reached a minimum payment of $52,500 plus GST, then there would be a further payment at that time. Nova submits that the Magistrate’s consideration of whether the loss of the minimum fee was reasonably foreseeable as a consequence of default is irrelevant as the relevant question is one of construction of the Contract. 167 Nova consequently submits that the Magistrate erred in awarding the sum of approximately $17,000 in relation to the builder’s fee even if the Magistrate’s findings on termination were not in error. Further, if Bria was not entitled to terminate the Contract on the basis it did, Bria was not entitled to sue upon PC9 and any rights consequent upon a wrongful termination lay in quantum meruit, but no such claim was pursued. 112 See s 29(5) of the Building Work Contractors Act 1995 (SA) and reg 16 of the Building Work Contractors Regulations 2011 (SA). -- 44 of 66 -- [2024] SASC 10 Stein J 41 Respondent’s submissions 168 Bria repeated its submissions in response to the first appeal ground. Analysis 169 Clause 19 of the Contract provides for the outcome following contractual termination by either party. Clause 19.2 requires Nova to pay Bria the actual cost of the works at the date of cancellation, the cost of materials or goods ordered for the works which Bria was obliged to accept and the reasonable cost of removal of items from site. The clause does not require Nova to pay the minimum fee provided for by Special Condition 1. 170 While cl 3.3 provides that special conditions take precedence over other agreed terms, the precedence depends on inconsistency. In my view, cl 19 and Special Condition 1 can be read together consistently, and such a construction is to be preferred.113 Clause 19 expressly addresses Bria’s entitlement to payment in the event of termination. That in turn requires consideration of cls 2.2 and 7 of the Contract which address the actual costs payable and provide for the 15 percent charge on cost, which is the maximum percentage charge which a builder is entitled to claim pursuant to the Building Act and regulations made under it. Special Condition 1 provides for Bria to be paid a minimum fee. If the contractual intention was that minimum fee would be paid even in the event of early determination of the Contract, the Special Condition could have been expressed accordingly, but would then potentially have resulted in breach of the legislative requirements if the minimum fee exceeded the allowable 15 percent on actual costs. Considering the language of the Contract as a whole, I consider a reasonable business person in the position of the parties would have intended the minimum fee to be payable in the event the scope of work provided for by the Contract was completed. I consider a reasonable business person in the position of the parties would not have had in contemplation that the minimum fee was payable in the event the Contract was terminated early for whatever reason. Such a construction would have enabled Bria to charge the minimum fee in circumstances such as Nova validly terminating under cl 17.1.4 because Bria did not start work on the commencement date for a reason within Bria’s control or Bria validly terminating based on Nova’s failure to pay the first payment claim. My conclusion is supported by Special Condition 2 of the Contract which refers to the expected cost of the project as $400,000, stated as an estimate. A 15 percent fee on that estimate would have resulted in a builder’s fee of $60,000, which is in the same order of magnitude as the stated minimum fee, suggesting the minimum fee was estimated on the quantum of the expected scope of the completed works. Further, those figures support the view the parties did not intend to agree a fee structure which would result in breach of the Building Act and regulations which cap the amount the builder is charged at 15 percent of cost. A construction which avoids the potential 113 See the approach to construing apparently inconsistent terms in Re Media Entertainment & Arts Alliance; Ex parte Hoyts Corp Pty Ltd (No 1) [1993] HCA 40 at [17]-[20]; (1993) 178 CLR 379 at 386- 387 (Mason CJ, Brennan, Dawson, Toohey, Gaudron and McHugh JJ); Morgan Equipment Co v UMW Corp SDN BHD [2002] NSWCA 193 at [11] (Meagher JA). -- 45 of 66 -- [2024] SASC 10 Stein J 42 for breach of the legislative requirement is to be preferred.114 I therefore conclude that construing the Contract as a whole, Bria was entitled to a minimum fee of $52,500 on completion of the works. 171 The Magistrate reviewed each of the items included in PC9 and disallowed some, or some components, of amounts included. The disallowance of particular costs meant the 15 percent builder’s fee applied to those specific costs had to be reduced. However, despite concluding that components of the 15 percent builder’s fee were not properly payable because they applied to costs which were not validly claimed, nevertheless by increasing the minimum builder’s fee, the Magistrate in effect added back the builder’s fee component. The consequence of concluding the minimum builder’s fee was payable was, in practical effect, to allow payment of the builder’s fee on amounts disallowed as they were not properly claimed by Bria. This inconsistency further supports the view I have reached. I note that the conclusion in relation to payment of the minimum builder’s fee may have been different if the claim had been brought as a claim for damages based on Bria accepting Nova’s wrongful repudiation of contract. However, as set out above, termination was based on cl 18 of the contract and the proceedings were commenced as a claim for a debt, not as a claim for damages based on repudiatory conduct. 172 Accordingly, I consider the Magistrate erred in increasing the amount payable by Nova from the amount of about $10,700 claimed by Bria to about $17,000 for the minimum builder’s fee. In my view Bria was only entitled to claim the 15 percent fee in respect of costs which were properly claimed pursuant to the Contract. Third ground of appeal Appellant’s submissions 173 Nova elected to pursue only particular elements of PC8 recognising the limitations applying to appellate review. Nova limited this appeal ground to a Tiana Joinery invoice and Tectonic Tiling invoice 2110. 174 In relation to the Tiana Joinery invoice, Nova submits that the Magistrate erred in finding that the door issue and removal was due to a change of mind about the design after installation. Nova submits that on 12 June 2020, when Bria provided the quote to Nova, a specific query was raised as to a possibility the grooves on the door could have an angle so water and sand ran off.115 Nova contends that Bria failed to address the expressed concern when placing the door order and the Magistrate erred in finding the issue only arose after the door was fitted in place. Nova contends the Magistrate erred in finding Bria was entitled to 114 Fitzgerald v FJ Leonhart Pty Ltd [1997] HCA 17 at [63]; (1997) 189 CLR 215 at 237 (Kirby J); ASIC v Atlantic 3-Financial (Aust) Pty Ltd [2006] QCA 540 at [66]; [2007] 2 Qd R 399 at [66] (McMurdo J). 115 Trial exhibit A1 – Joint Tender Book at 773. -- 46 of 66 -- [2024] SASC 10 Stein J 43 claim payment for a door which had been removed and thus was not supplied at the time of PC8 on the basis the work was not actually completed. 175 Nova contends that for actual costs to be payable, there was a requirement for compliance with Special Condition 7, requiring Bria to obtain detailed quotes for approval. Nova contends on a proper construction of the Contract, and in light of surrounding circumstances, it was a requirement that quotations be obtained in writing. While accepting the parties could by subsequent agreement depart from that requirement, Nova submits a desire for flexibility was not a basis to construe the express provisions as being subject to the qualifications suggested by the Magistrate. Nova contends the special conditions were intended to qualify the general provisions but as they were drafted by the parties, they were not grammatically elegant. Construing the special conditions involves considering the language used, the circumstances addressed and the objects the Contract is intended to secure. Nova submits that from the context and history known to both parties, one reason Nova wanted quotes was to justify a potential claim against a prior builder, and accordingly it would be more consistent with the context and object to understand the reference to quotes as entailing documented estimates. 176 In relation to the Tectonic Tiling invoice 2110, Nova submits that there were never any written quotes provided for additional work despite reminders and express written requests. The concerns about a lack of formal written quotes were raised in writing and Bria was put on notice that future additional tiling works claimed must be quoted and approved in writing.116 Nova submits the Magistrate erred in not having sufficient regard to the objective written evidence about the background in which the parties operated when interpreting the requirement of the Special Conditions to conclude that Bria was entitled to provide an additional invoice for additional tiling works for which no written quotations had been provided on the basis that compliance with the Special Condition requiring quotes was satisfied by casual conversations on site. Nova also submits that the Contract should not be construed as rendering practically ineffective any of the Special Conditions and, accordingly, costs incurred for work that had not been the subject of an approved quotation could not be treated as “actual cost of the Works” in cl 7. This result could be achieved either by treating cl 7 as impliedly premised upon the work being done in compliance with the Contract or by treating “Work” as limited to work approved pursuant to the Special Conditions. 177 Nova contends that the Magistrate ought to have excluded the Tiana Joinery and Tectonic Tiling invoice 2110 claims from the amounts payable under PC8. Respondent’s submissions 178 In relation to the Tiana Joinery quote, Bria submits that Mr Figallo accepted the quote dated 11 June 2020. Bria’s counsel referred to evidence of Mr Bria that Mr Figallo accepted the quote; Mr Figallo was present when the door was delivered and he accepted it, the door was hung but, a few days later, Mr Figallo said that he 116 Trial exhibit A1 – Joint Tender Book at 173. -- 47 of 66 -- [2024] SASC 10 Stein J 44 did not like the door and he wanted a brass strip.117 Bria submits it was open to the Magistrate to accept the evidence of Mr Hansford and Mr Bria and reject Mr Figallo’s evidence about the door. 179 In relation to the Tectonic Tiling invoice, Bria contends the complaint ignores the acceptance of the Tectonic Tiling quote, including a piece work rate of $85 per hour plus materials, which was quoted and accepted. 180 Bria contends it was open to the Magistrate to accept the evidence of Mr Genesin on the invoice, the Magistrate was entitled to prefer one witness over another and she had the advantage of hearing the witnesses give evidence and assessing who should or should not be preferred. Analysis Tiana Joinery invoice 181 On 11 June 2020, Tiana Joinery provided a quotation for the supply of the door with an attached design. The attached design referred to the door as a thick horizontal shiplapped matchboard door with horizontal shiplapped matchboard panel.118 On 12 June 2020, Mr Figallo emailed Bria saying he could not work the quote out and asked to discuss it. His email said:119 And if we can, because of the amount of sand blowing, the door must be sealed properly. I cannot see whether there are door handles, locks or security and also the timber panels on the face of the door is a possibility that the grooves can have an angle so the water and sand runs off. 182 Mr Hansford confirmed the door was ordered on 19 June 2020.120 On 24 September 2020, Mr Hansford forwarded to Mr Figallo a quote from South Pacific Windows with a request for confirmation that Mr Figallo was happy to proceed. Mr Figallo responded to say “please go ahead with the study window and front door”.121 On 27 October 2020, Mr Figallo replied to an email from Bria to respond to a request in Bria’s email for confirmation that the front door is to have brass strips installed flush with the face of the door to stop sand and salt building up. Mr Figallo wrote “brass strips was my suggestion because of the colour. However, something like that should be ok”.122 183 During cross-examination, counsel for Nova put the quote by Tiana Joinery for the door and frame dated 11 June 2020 to Mr Hansford. Mr Hansford confirmed he sent the quote to Mr Figallo. Counsel asked Mr Hansford whether he remembered Mr Figallo raising a concern in relation to the design after the quote was sent through. Mr Hansford agreed there was a discussion about the design. 117 Evidence of Mr Bria at TT97; Cross-examination of Mr Figallo at TT696-697. 118 Trial exhibit A1 – Joint Tender Book at 766-768. 119 Trial exhibit A1 – Joint Tender Book at 773. 120 Trial exhibit A1 – Joint Tender Book at 774. 121 Trial exhibit A1 – Joint Tender Book at 793-794. 122 Trial exhibit A1 – Joint Tender Book at 795. -- 48 of 66 -- [2024] SASC 10 Stein J 45 Counsel asked whether the discussions included a concern that it appeared to Mr Figallo from the drawings that the door as designed would catch sand and when the door was open sand would blow into the house. Mr Hansford answered that Mr Figallo advised to have a slight slope on the joins.123 Mr Hansford’s recollection was that Mr Figallo wanted a slight slope on the groove as there was a concern of sand entering into the house when the door was opened. Mr Hansford said he mentioned to Mr Bria that was one of the queries Mr Figallo had and they were to address it as best they could. Mr Hansford said it was not just left to Mr Bria and that Tiana Joinery had to look at how they made the door. In response to asking whether it was left to either Mr Bria or Mr Hansford to sort the issue out, Mr Hansford responded “there would be a query raised, yes”.124 In answer to the question whether or not there was confirmation from Mr Bria that the issue was sorted out, Mr Hansford responded “No. No confirmation was required”.125 Mr Hansford said the deposit was paid in June and the door was ordered on the basis of the quote and the documents provided on 11 June 2020.126 184 Nova’s counsel also put to Mr Hansford documents from South Pacific Windows to Bria and an email from Bria to Mr Figallo attaching the quote from South Pacific Windows.127 Mr Hansford said at the same time they were requesting approval for the study window, they were requesting approval for the front door so they sent a single email.128 Mr Hansford said that when the door arrived it was looked at while on the back of the truck and then installed. Counsel for Nova put to Mr Hansford that when it was installed, Mr Figallo notified the concern that he had raised had not been addressed, in particular, the nature of the door was such that he was concerned it would pick up dust and water and carry it inside. Mr Hansford responded that it was confirmed on the truck before it was removed and installed, and the concerns were raised multiple days later. Counsel for Nova put to Mr Hansford that the concerns raised were the very concerns raised by Mr Figallo in June. Mr Hansford responded that his concern in June was that there was not enough slope because there was a minor amount of slope. In responding to the question whether or not the concern was that it (the grooves) were going to trap or capture the sand and water and carry it inside, Mr Hansford responded that it could have been identified on the truck before it was installed and the door had not changed since it was installed. Mr Hansford maintained that the concern that water and dust would be caught in the door was raised three or four days after installation and an idea was then raised which might address the concern. Counsel for Nova put to Mr Hansford “and so that idea was addressing the original issue that Mr Figallo had raised back in June; that’s correct isn’t it?”.129 Mr Hansford responded “not entirely, no”.130 Counsel for Nova put to Mr Hansford that it was 123 TT431. 124 TT433. 125 TT433. 126 TT432-433. 127 Trial exhibit A1 – Joint Tender Book at 793-794. 128 TT433-434. 129 TT436.28-29. 130 TT436.30. -- 49 of 66 -- [2024] SASC 10 Stein J 46 an attempt to achieve the outcome or address the concern Mr Figallo had originally raised. Mr Hansford responded:131 It was changing the design of the door. He asked for there to be fall in the grooves, which there was a minor amount. There was no mention of exactly how much he required. Even with fall, you’re still going to – sand and debris get caught there. A bit of slope isn’t going to stop that, or a bit of additional slope isn’t going to stop that. 185 Mr Hansford continued to say that his concern was to enable there to be some fall “which is what we did”.132 When asked whether Mr Hansford accepted it was not adequate to address the concern Mr Figallo had raised, Mr Hansford responded that it was not adequate to Mr Figallo three days later. When asked whether the agreement to take the door away and remedy it was to address the concern raised by Mr Figallo, Mr Hansford said it was removed to look at solutions. Counsel for Nova put to Mr Hansford that the solutions were directed towards fixing the problem Mr Figallo raised in June. Mr Hansford answered:133 What the solution was to resolve was completely filling in the joints. That was never requested in June. It was requested to have a slope, which was what happened. Counsel for Nova put to Mr Hansford again that removing the door to look at a solution involving installing brass strips was to address the original concern Mr Figallo raised in June. Mr Hansford said:134 I can’t quite answer that. I mean, we’re not the – the manufacturer of the door. There’s a very small amount of – of – of – within the front door where you’ve got the groove, there’s only a very small amount of – of lip that you’ve got. So to achieve a fall of much more than what was there and – which was approved, it couldn’t – it couldn’t be done. 186 Mr Hansford confirmed that he was not a party to whatever Mr Bria did to address the concern raised in June. Counsel for Nova put to Mr Hansford that whatever Mr Bria did, it had not addressed the concern when the door was installed. Mr Hansford said it was enough to address the concern for Mr Figallo to approve the door on site before it was installed and he could have potentially changed his mind from then.135 Mr Hansford reiterated that taking the door away to address the brass strips was to address the concern raised after installation. 187 In re-examination, Mr Hansford was asked to explain the long gap between the go ahead in the email dated 24 September and an early email saying the door was ordered in June. Mr Hansford believed until then they had not received a written approval.136 Mr Hansford could not remember when the change in design occurred. During re-examination, Mr Hansford said that each panel in the door had a rebate with a protruding lip which was less than 5 millimetres which was a 131 TT436.33-36. 132 TT437.3. 133 TT437.18-20. 134 TT438.8-12. 135 TT438.28-30. 136 TT453. -- 50 of 66 -- [2024] SASC 10 Stein J 47 minor amount of fall. He said that was a separate issue from the raven seal for the bottom of the door to stop any ingress of rainwater blowing against the door.137 In re-examination, Mr Hansford was also taken to an email dated 13 August which related to a meeting with Tino from Tiana Joinery.138 Mr Hansford said that meeting was about glazing and there was no specific meeting about the issue of the fall.139 Mr Hansford confirmed Mr Figallo’s attention was drawn to the actual door at the time of delivery and there was no complaint about the fall of the panels on the door. 188 Mr Bria gave evidence that Tiana Joinery gave the quote for the door and it was accepted by Mr Figallo and then the door was delivered.140 Mr Bria said that Mr Figallo was present when the door was delivered and he accepted it. Mr Bria said a few days later that Mr Figallo said he did not like the door and he wanted a brass strip in the joins. Mr Bria asked Tiana Joinery if they could put in brass strips but they said they could not. Mr Bria said he still had the door and he had not been able to find anyone to do what Mr Figallo wanted.141 Mr Bria confirmed the door was Mr Figallo’s door as long as he paid for it. Counsel for Nova did not cross-examine Mr Bria in relation to the Tiana Joinery quote and issues associated with the quote. 189 Mr Figallo was not sure if he was present when the door arrived but said he did roll up while the door was there. He denied being asked to approve the door before it was taken off the truck and denied he said he was happy with the door.142 190 It appears likely from its content that the email correspondence of 24 September 2020 related to the quote for glazing of the front door rather than the quote to order the front door itself. This conclusion follows from Mr Hansford’s email dated 19 June 2020 confirming the door had been ordered and the fact the 24 September 2020 email correspondence related to a quotation from South Pacific Windows for glass. 191 It is also apparent that two issues were raised by Mr Figallo in his email dated 20 June 2020. The first questioned the need for the door to be properly sealed. The second questioned the possibility of the grooves in the door having an angle so water and sand could run off them. 192 The state of the evidence is such that there is a lack of certainty as to the manner in which Bria addressed the query raised by Mr Figallo in his email dated 12 June 2020. Mr Bria was not cross-examined in relation to the quote or about issues associated with the quote. Mr Bria’s evidence was that Mr Figallo accepted the quote and Mr Figallo was present when the door was delivered and he accepted 137 TT455. 138 Trial exhibit A1 – Joint Tender Book at 785. 139 TT457. 140 TT97. 141 TT98. 142 TT696- 697. -- 51 of 66 -- [2024] SASC 10 Stein J 48 it. Mr Hansford said “there would be a query raised, yes”.143 It is unclear whether that evidence meant that Mr Figallo’s request was raised with Tiana Joinery. It is not clear whether or not Mr Figallo’s initial query was simply missed or whether in fact some steps were taken to address the question of the slope on the grooves but the degree of slope that was then provided was not considered satisfactory by Mr Figallo several days after his acceptance of the door. Mr Hansford said that Mr Figallo’s concern was for there to be fall in the grooves and “that is what they did”. This may suggest some steps were in fact taken to address Mr Figallo’s concerns but Mr Figallo, after delivery, considered the level of slope on the grooves inadequate. While ambiguous, Mr Hansford’s evidence appears to be to the effect that when the door was delivered, Mr Figallo did not raise a concern that his previous request about the angle on the grooves had not been addressed. Mr Hansford confirmed the concern that water and dust would be caught in the door was raised three or four days after installation. 193 The Magistrate concluded that the use of a raven door seal at the bottom of the door was a suitable seal and that was a separate issue from the question of the design avoiding build up of sand and salt in the grooves. The Magistrate preferred the evidence of the Bria witnesses to Mr Figallo about the delivery of the door.144 The Magistrate accepted the evidence that Mr Figallo was present, inspected the front door and appeared satisfied with what Mr Bria described as a “beautiful door”. While the Magistrate referred to Mr Figallo giving a go ahead for the installation of the front door by email dated 24 September 2020, there is no indication that the Magistrate overlooked the earlier correspondence in June 2020 in relation to the quotation for the door. The Magistrate’s reference to the installation of the front door related to the 24 September 2020 correspondence about installation. 194 The Magistrate preferred the evidence of the Bria witnesses to that of Mr Figallo.145 The documentary evidence and in particular the email dated 12 June 2020 are to be considered together with the oral evidence. Mr Hansford’s evidence, although in some respects ambiguous, does not lead to the inevitable conclusion that the Magistrate erred in finding that the front door was removed several days after installation because Mr Figallo changed his mind about the design. Even if the issue raised by Mr Figallo on 12 June 2020 concerning the horizontal grooves on the door was not in fact addressed by Bria, Mr Figallo was present when the door was delivered and the Magistrate accepted the evidence that Mr Figallo accepted the door and concluded he was free to accept it despite his previous stated concern not being addressed. While this Court is not excused from the task of weighing conflicting evidence and drawing its own inferences and conclusions, I must bear in mind that I have neither seen nor heard the witnesses and must make due allowance in this respect.146 I do not consider there to be 143 TT433. 144 Magistrate’s reasons at [169]. 145 Fox v Percy [2003] HCA 22 at [28]; (2003) 214 CLR 118 at [28] (Gleeson CJ, Gummow and Kirby JJ). 146 Fox v Percy [2003] HCA 22 at [25]; (2003) 214 CLR 118 at [25] (Gleeson CJ, Gummow and Kirby JJ). -- 52 of 66 -- [2024] SASC 10 Stein J 49 incontrovertible facts demonstrating that the Magistrate’s conclusions are erroneous or that the conclusions are glaringly improbable or contrary to compelling inferences.147 195 Consequently, I reject this aspect of appeal ground 3. Tectonic Tiling 196 Invoice 2110 totalling $9,615.10 issued by Tectonic Tiling contained amounts claimed for eight items described as “scope of additional works to date”. These included materials and labour charged at $85 per hour. On 10 March 2020, Tectonic Tiling issued its first quote for tiling works.148 That quote included a reference to additional tiling repair and making good works to be at a charge up rate of $85 per hour plus GST plus materials. Mr Figallo by email stated that the quote seemed okay, but he wanted everything covered and requested a meeting the next day.149 197 A number of progress claims issued by Bria prior to PC8 included invoices from Tectonic Tiling which contained items charged by reference to the $85 per hour additional works rate. While those invoices were paid, Mr Figallo reiterated in writing on more than one occasion including 1 May 2020 that extras had to be quoted in writing first.150 198 Mr Bria gave evidence that he met with Mr Genesin, the tiler, on site to discuss what needed to be done. There were some aspects of the job which he could price, which he did, and some bits which had to be done on an hourly rate because it was “all bits and pieces here and there”.151 Mr Bria said he told Mr Figallo that things like tiles missing under the staircase had to be done on an hourly rate. Mr Bria said Mr Figallo agreed.152 In cross-examination, Mr Bria agreed it was necessary to get quotes but said that in a job such as this where someone has already made a mess or the workmanship was poor, one finds more problems after starting work and the job drags on. Mr Bria said nobody would give a written quote on that site and, for instance, you could not ask a carpenter to quote for a couple of bits of skirting or putting up a door.153 Mr Bria accepted Mr Figallo was concerned only to be charged for what was required to be spent on the work but Mr Bria said that was why he made himself clear because some people could not give a quote for bits and pieces where they have to work an hourly rate. Mr Bria said that where they could get a quote, they did. Where they could not, they had to charge an hourly rate.154 147 Fox v Percy [2003] HCA 22 at [29]; (2003) 214 CLR 118 at [29] (Gleeson CJ, Gummow and Kirby JJ). 148 Trial exhibit A1 – Joint Tender Book at 462. 149 Trial exhibit A1 – Joint Tender Book at 464. 150 Trial exhibit A1 – Joint Tender Book at 175-176, 240-241. 151 TT55. 152 TT59. 153 TT110. 154 TT115. -- 53 of 66 -- [2024] SASC 10 Stein J 50 199 Mr Bria accepted that Mr Figallo required as a condition of the Contract that they would obtain quotes for his approval and said that was done whenever they could do so. Mr Bria said they would get a quote whenever they could, and Mr Figallo was informed of everything that was done.155 Mr Bria said if the job was big enough, they would get a quote but if that was say cutting tiles along a wall and wasting hours and hours it would go on an hourly rate. Mr Bria accepted that Mr Figallo wanted to be informed about how much things were going to cost before they were done but said that the tiler quoted for everything except cutting around and under the staircase and in the front near a door which was charged at an hourly rate and Mr Figallo was informed of that. Mr Bria accepted that from 1 May onwards, after receiving an email from Mr Figallo, he knew Mr Figallo wanted any extra work quoted in writing but said he did so when he could.156 200 Mr Hansford agreed that he was made aware during the contract stage that Mr Figallo wanted quotations and to get approval prior to works. Mr Hansford said quotes needed to be accepted but it was not necessarily written quotes only. Mr Hansford agreed it was a condition of the Contract that Bria was to get quotes for approval for the works. Mr Hansford accepted the requirement in the Special Conditions of the Contract for quotes to include detailed information about the works to be carried out was because Mr Figallo wanted to ensure work was approved by him and so he could audit what they were claiming money for.157 Mr Hansford understood that Mr Figallo wanted a defined scope of work outlined to him with which he was comfortable and with which he would agree. Mr Hansford said there were works which gained approval in writing but there were works which gained approval verbally as well.158 Mr Hansford was taken to an email from Mr Figallo to Bria dated 1 May 2020 which included a note that Mr Figallo agreed to pay the account in full based on specific conditions. In answer to the question “you were aware, having received this email, that Mr Figallo was insistent on requiring additional tiling works to be quoted in writing; that’s right, isn’t it”,159 Mr Hansford answered “it says ‘they’ll need to be quoted in writing’, but there was a clear – there was a clear allowance for additional work which was requested”.160 Mr Hansford later accepted that Mr Figallo, by the correspondence, was requiring that future additional works be properly quoted in writing, saying “that’s what he was wanting, yes”.161 Mr Hansford was not aware why items in the additional quote no. 3 were not included in the original quote. Mr Hansford said additional works were always requested by Mr Figallo on site and additional work was approved. Mr Hansford thought that some works required quotes whereas things which were approved or requested on site were different and there was a provision for hourly rate plus materials for minor items to keep the 155 TT117. 156 TT153. 157 TT321. 158 TT404. 159 TT410.30-32. 160 TT410.33-34. 161 TT411.16. -- 54 of 66 -- [2024] SASC 10 Stein J 51 project moving efficiently.162 Mr Hansford agreed that when he asked for a quote from Tectonic Tiling he was given one including for relatively minor items like replacing some tiles.163 Mr Hansford said some items were requested directly by Mr Figallo to the tilers and not all requests came through Bria. Mr Hansford accepted that they would need to know that additional work had been requested but when asked whether it was a requirement that a quote be obtained in relation to those works, Mr Hansford said they had an approved quotation and a request for works to be done which was priced at the agreed amount.164 He said he did not feel the need to write to Tectonic Tiling and get a quote in respect of additional works.165 During re-examination, Mr Hansford said it would take about 14 days for contractors to provide a quote. Mr Hansford confirmed that if every item of work required a written quote, they would have had to wait for an approval from Mr Figallo to then start the work again and the contractors would have had to return to site again.166 Mr Hansford said matters being dealt with on site were between Mr Figallo and the trades doing the jobs.167 201 Mr Genesin said when he commenced on site there was a fair amount of unfinished work. When he attended a site meeting not all work required of him was identified. He said Mr Figallo would come along and they would discuss progress and Mr Figallo would point out other little bits and pieces that needed to be undertaken. Mr Genesin was prepared to do those bits and pieces and the initial discussion was that all additional works would be covered under the $85 per hour quote on the original quote. Mr Figallo never complained about the rate and never said he should not be charging on an hourly basis. Mr Genesin said for each of the pieces of work that were done on an hourly rate, Mr Figallo knew those were being done.168 Mr Genesin said that the original quote contained an hourly rate and Mr Genesin was notified the quote had been accepted. Mr Genesin said additional works was anything not included in the quotation. Mr Genesin said in respect of items 1 to 8 on invoice 2110, each item was discussed with Mr Figallo and he gave the authorisation to go ahead.169 Mr Genesin said additional works claim no. 2 was work charged on an hourly rate which was approved by Mr Figallo.170 Mr Genesin said additional works claim no. 3 covered items of work which were discussed with Mr Figallo and he gave the authority to go ahead and do the work.171 Mr Genesin gave evidence of the nature of each of the pieces of work invoiced in additional works claim no. 3. Mr Genesin said payment to him of outstanding amounts had been delayed on the basis of a gentleman’s agreement to await the outcome of the trial. 162 TT425. 163 TT426. 164 TT428. 165 TT428. 166 TT461. 167 TT462. 168 TT328. 169 TT338. 170 TT344. 171 TT345. -- 55 of 66 -- [2024] SASC 10 Stein J 52 202 In cross-examination, Mr Genesin said he was not told that any extra work needed to be quoted in writing. He understood each additional works item needed to be itemised but not that it needed to be in writing and approved.172 Mr Genesin said the scope of additional works mostly would be discussed between the three of them, being Mr Bria, Mr Figallo and himself. He said he was not requested by Mr Bria to give a written quote.173 In cross-examination, Mr Genesin said they definitely discussed onsite use of a charge up rate given how many fix ups and bits and pieces there were and the rate used was the rate he used across all of his jobs. However, he confirmed in relation to additional works he was not asked by Mr Bria to give an estimate of the hours and extra materials required for each of the additional works.174 Mr Genesin said it was standard practice for additional works to be done on rates without a quote for the actual scope of those works. Mr Genesin said the tiling trade was a finishing trade, normally at the “pointy end” of the project, and he could not think of any job that had been quoted prior to a variation moving forward.175 Mr Genesin operated on that basis but was not told there was a need to get quotes. Mr Genesin was taken to an email dated 2 October from Bria to Mr Genesin. He confirmed he was asked for a quote for fixing a row of tiles in the ensuite and Mr Genesin provided that quote which was for a relatively small sum.176 Mr Genesin said he gave the quote because he was asked to give it. 203 In cross-examination Mr Figallo said he was partly involved with the tilers.177 When taken to the Tectonic Tiling Quote which quoted an hourly rate for additional works, he said that what was written on there was correct, but that did not excuse faulty workmanship. When it was put to Mr Figallo that at the time he received the quote and accepted it he knew that any additional works would be at the charge up rate of $85 per hour plus GST, he said “that’s correct, and I left it up to Bria to make sure he was doing the right thing”.178 Mr Figallo accepted that Mr Genesin or his staff would sometimes talk to him about how they would do parts of the job.179 When it was put to him that he understood that certain works were not part of the quoted items, Mr Figallo agreed that was correct but said he was under the impression Mr Bria had things under control and he later found out he was being ripped off.180 Mr Figallo denied understanding that an invoice was for additional works not part of the initial quote, said he placed his faith in the builder who was supposed to get quotes but agreed that the amount charged was consistent with the additional works quote.181 172 TT358. 173 TT360. 174 TT361. 175 TT364. 176 TT372. 177 TT653. 178 TT656 L12-15. 179 TT657. 180 TT666. 181 TT666-667. -- 56 of 66 -- [2024] SASC 10 Stein J 53 204 Mr Figallo consistently in writing requested written quotes. Mr Hansford accepted that Mr Figallo required future additional works to be properly quoted.182 Given the position Mr Figallo put in writing, I do not consider that his prior acceptance of, and payment of, progress claims including amounts charged for which there were no specific quote suggested that he did not require any written quotes in the future. However, Mr Figallo could in the course of discussions with Mr Genesin have agreed to forego the requirement for a written quote for a particular piece of work or agreed to amounts for addition work being charged at the $85 per hour charge up rate. 205 In its defence to a paragraph of the statement of claim referring to the estimated cost of the works, Nova pleaded that it was a term of the Contract that Bria would obtain detailed quotes. Nova did not expressly put in issue in its pleadings a failure to obtain quotes. The Magistrate was, however, satisfied that Bria was on sufficient notice of the requirement to prove that quotes were submitted and approved in order to prove its case at trial. Accordingly, despite the absence of reference in the pleadings, the case was run on the basis that written quotes were required. 206 The Magistrate rejected Nova’s contention that Bria’s contractual right to payment of a progress claim was conditional on Bria having obtained a written quote and Nova having approved the quote for the reasons set out above including avoiding making commercial nonsense or working commercial inconvenience and that the nature of the works required flexibility, Mr Figallo would not have been able efficiently to request alterations to works or approve additional minor works, and Nova’s construction would result in an uncommercial outcome inconsistent with the purpose of the Contract. The Magistrate concluded that neither Special Condition 2 nor Special Condition 7 required the agreed scope or quote to be in writing and whether a written quote was required in respect of any scope of work verbally agreed was dependent on the particular circumstances.183 207 In considering the items invoiced in invoice 2110, the Magistrate preferred the evidence of Mr Genesin to that of Mr Figallo.184 The Magistrate observed that Mr Figallo agreed that he knew at the time he received the wall and floor tiling quotation that any additional works would be charged by Tectonic at the hourly rate of $85 plus GST plus materials. The Magistrate found Mr Figallo’s evidence in respect of works the subject of invoice 2110 not easy to understand. It was not clear from his evidence exactly what parts of the job he gave instructions about. The Magistrate accepted the evidence of the Bria witnesses and Mr Genesin to the effect that Mr Figallo was directly involved in identifying and approving additional works. The Magistrate did not accept Mr Figallo’s evidence about who was in control of the job. The Magistrate concluded the work the subject of invoice 2110 was additional tiling repair and making good works approved by Mr Figallo at the 182 TT411. 183 Magistrate’s reasons at [92]. 184 Magistrate’s reasons at [151]. -- 57 of 66 -- [2024] SASC 10 Stein J 54 charge-up rate, Tectonic did what they agreed to do, there was no substantial defect in those works and the costs were properly claimed. 208 In addressing this ground of appeal, the primary issue for consideration is the proper construction of the Contract, in particular, whether the Contract required quotes in writing, and if so, what consequences follow from a failure to comply with that requirement. 209 Special Condition 7 contains the requirement for Bria to obtain quotes and refers to quotes including detailed information of the works to be carried out. Special Condition 7 does not include a reference to quotes containing pricing. However, the notion of a quote is to provide an estimate of the cost of a service and accordingly it must have been intended that quotes would relate to cost. The Special Condition does not expressly require quotes to be in writing. This contrasts with other clauses of the Contract which contain express requirements for writing. For example, the main obligations include Nova responding quickly and in writing to requests for directions or decisions. Clause 10 which addresses the supply by the owner for materials provides for the builder, if the materials are considered unsuitable, to tell the owner why in writing. Clause 12 refers to the builder giving the owner notification of certain matters, without any reference to a requirement to notify in writing. Clause 13.4 requires progress payment claims to be in writing. The clauses which address stopping work and termination require notice to be given in writing and practical completion must be notified in writing. Notification of defects during the maintenance period is required to be in writing. Clause 23 provides that all notices must be in writing. Notification of disputes is to be in writing. That said, the Special Conditions were drafted by the parties. 210 Special Condition 2 provides that the scope of the work is to be agreed and additional unforeseen cost will be discussed by Bria and Nova prior to work being completed. Thus, Special Condition 2 envisages agreement about scope of works, but does not contain any reference to any requirement for the scope to be confirmed in writing. It expressly refers to discussion in relation to unforeseen costs. The language used is consistent with an intention that the scope of works and at least some aspects of cost can be agreed in discussion and that intention is consistent with the commercial purpose of the Contract in the context of the background known to the parties. While Special Condition 7 does not expressly refer to quotes being in writing, the reference to quotes containing detailed information suggests an intention for written quotes. I agree with the submissions by Nova that the context of the background circumstances known to the parties and the commercial purposes of the Contract support an intention that quotes would be in writing. If that is so, there is potentially some tension between the two special conditions. Where possible, contracts should be construed as a whole and harmoniously to avoid conflict.185 The Court will strain against interpreting a 185 Australian Broadcasting Commission v Australian Performing Right Association Ltd [1973] HCA 36 at [3]; (1973) 129 CLR 99 at 109 (Gibbs J). -- 58 of 66 -- [2024] SASC 10 Stein J 55 clause in a way which renders the clause ineffective especially if meaning can be given to a clause which is consonant with another provision in a contract.186 211 I have considered whether the Contract provisions and Special Conditions can consistently be read together. 212 I consider the distinction between the references in the Contract to requirements for writing, in contradistinction to the Special Conditions and the potential differences between Special Conditions 2 and 7 are capable of reconciliation on the following basis. The scope of works are not defined by the Contract and consequently it must have been expected that discussions between Mr Figallo, Mr Bria and subcontractors would occur during which the scope of the works would be discussed and potentially agreed in person. The meetings during which Mr Figallo requested specific works to be conducted were consistent with finalising the scope of works in a context in which Bria commenced work on a partly completed house with issues of pre-existing defects. However, the fact that the scope of works conceivably could be verbally agreed within the framework of the Contract does not necessarily lead to the conclusion that quotes could be provided orally given the wording of Special Condition 7. The reference in Special Condition 7 to quotes including detailed information of the works to be carried out on site implies an intention that quotes would be obtained in writing. This is consistent with a need to protect the owner in the case of a cost plus contract in which the owner is required pay for the work performed by the builder or subcontractors together with the mark up for the builder’s fee. It is also explicable given the special conditions were drafted by the parties. However, the parties nonetheless appear to have intended that they would retain an ability to agree scope of works and discuss additional costs in person prior to completion of work. This construction allows for both written quotes (Special Condition 7) and verbal discussions about costs (Special Condition 2). This conclusion is consistent with the language of the Contract and the commercial purposes against the background context of Bria taking over partly completed and potentially defective works. There were no written specifications or contract documents addressing the work to be performed to rectify existing defects and complete the dwelling. The extent of work required for that purpose was unknown and it was readily conceivable that further issues may be discovered during the works. Bria was stepping on to the site of a partly completed construction, containing defects, with a lack of clear scope and instructions, and accordingly an inability to provide a definite cost to complete. However, the cost plus contract exposed Nova to cost risk, rendering explicable the requirement for quotes to contain detailed information. It is apparent from the Contract terms that the intention was for the work to progress with diligence and with a view to completion by the estimated completion date, subject to extensions. These considerations support a construction which encompass both written quotes and an ability for scope and additional cost to be discussed and agreed in person, consistent with the intention to finalise scope and move the project forward to completion in a timely manner. I also note for the 186 Chapmans Ltd v Australian Stock Exchange Ltd (1996) 67 FCR 402 at 411 (Lockhart and Hill JJ). -- 59 of 66 -- [2024] SASC 10 Stein J 56 sake of completion that there were no express contract terms which precluded Mr Figallo from agreeing from time to time to Bria performing work on the basis of a quoted hourly charge out rate.187 On this interpretation, the failure to obtain written quotes for each and every additional item would not constitute a breach. It allows for the eventuality of Nova agreeing a written quote based on an agreed hourly rate for additional items of work, as occurred. This interpretation disposes of the submission that costs which are not the subject of an approved quotation cannot be treated as actual costs of the works within the meaning of cl 7. Given the conclusions I have reached, it is not necessary to address further questions of waiver of contractual requirements. 213 The Magistrate’s factual findings in relation to the Tectonic Tiling invoice were made on the basis of the Magistrate preferring the Bria witnesses over the evidence of Mr Figallo. I do not consider there to be incontrovertible facts demonstrating that the Magistrate’s conclusions are erroneous or glaringly improbable or contrary to compelling inferences.188 While I take a different view of the proper interpretation of the Contract in relation to the question of quotes from that of the Magistrate, the same conclusion follows from the factual findings in the context of the interpretation I prefer. That is, the Magistrate did not err in concluding that Bria was entitled to payment of the Tectonic Invoice 2110. I therefore reject this aspect of Nova’s third ground of appeal. Fourth ground of appeal Appellant’s submissions 214 The fourth appeal ground depends on Nova succeeding on the first ground and establishing that Bria’s termination was invalid. 215 Nova contends that if Bria’s purported termination was invalid, Bria wrongfully repudiated the Contract and was accordingly liable for damages. Nova contends it ought to be entitled to damages for delay and inconvenience for which it provided evidence substantiating a claim for approximately $36,300. On appeal, Nova limits its claim to damages for wrongful termination to the costs of removal, storage and accommodation resulting from the delay in completion. Nova submits that if the work had been completed by March 2021, Mr Figallo would have been able to move into the dwelling. Nova seeks what it describes as a conservative assessment of loss of use of around $3,400 per month. Nova submits that after Mr Figallo sold his house, the costs of his alternative accommodation were paid by Nova and constituted foreseeable manifestations of the loss of enjoyment of the asset, being the completed dwelling. Nova submits the head of loss in the form of alternative accommodation and storage of furniture is reasonably foreseeable and 187 See Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158 at [101]-[103] (Ward P, Beech-Jones JA and Griffiths AJA). 188 Fox v Percy [2003] HCA 22 at [29]; (2003) 214 CLR 118 at [29] (Gleeson CJ, Gummow and Kirby JJ). -- 60 of 66 -- [2024] SASC 10 Stein J 57 if Mr Figallo had not sold the house there still would have been a loss of use of the house which is in principle compensable.189 216 I understood Nova’s position to be that in light of the way the trial was conducted, I could not consider the characterisation of Nova’s conduct or any consequences that may otherwise have been said to follow from it, in particular, that it disentitled Nova to damages consequent on Bria’s wrongful repudiation. Nova submits that if Bria’s termination was wrongful, while Bria could have asserted that Nova was not entitled to accept Bria’s wrongful termination as repudiation on the basis that Nova itself was not ready, willing and able to perform, that position was not pleaded or run and Bria did not distinctly plead or make submissions in response to Nova’s cross claim that the claim should fail because it could not have done so because Nova was disabled by its own conduct from terminating. There was no cross appeal or notice of contention filed by Bria. Had the point been run, Nova submits the result may have been properly characterised as an abandonment rather than a valid termination. Nova submits that Bria’s reliance on questions in cross-examination concerning Mr Figallo’s attitude at a particular time does not provide a sufficient foundation to contend on appeal that Nova was disentitled from accepting any wrongful repudiation. The question whether Nova’s conduct disentitled it from accepting the wrongful termination at the time Bria purported to terminate would have required consideration of Nova’s conduct in context and in the light of the assertions being made by Bria. Nova submits the effect in context of relevant communications was not explored in the way it would have been if the issue had been raised squarely and this is not simply a point of law which, if taken, could not have led to the case being conducted differently. Nova also submits that its conduct is to be understood in light of the letter of demand. Respondent’s submissions 217 Bria submits that no error was established and that no basis was explained as to why the finding there was a breach of contract was incorrect. Bria submits that there was no pleading of material breaches of contract alleged against Bria. Bria submits it was ready and willing to perform and that was part of the factual matrix relevant to Nova’s breach. Bria submits that Nova had no intention of complying with the terms of the Contract, was in breach of payment obligations, and was insisting on a unilateral change to an entire contract. Bria contends the question of whether Nova was ready, willing and able to perform was addressed at trial and that the cross-examination of Mr Figallo concerning Nova’s position related to Nova’s damages claim. Bria submits that the costs of accommodation and storage were not costs of Nova and that the costs were too remote to be recoverable. During oral submissions, counsel for Bria pointed to items claimed for removal and storage which he submits were not incurred in consequence of the termination of the Contract as there was always going to be a move by Mr Figallo out of his house. Counsel referred to transcript of his cross examination of Mr Figallo in 189 TT184. -- 61 of 66 -- [2024] SASC 10 Stein J 58 which Mr Figallo accepted he would always have to have cartons for a move190 and asserted that some of the charges were not correct as, for example, he discarded mattresses and consequently charges for cleaning were not correct and televisions were disposed of prior to moving.191 Mr Figallo said he stored some items at his workshop and there could have been room to store a container at his warehouse but he preferred the items to be in the storage provider’s warehouse for security. Mr Figallo during cross examination said he did not believe Nova should pay for food and beverages or for transport from home to storage and probably from storage to home.192 218 Following Bria’s submissions, Nova agreed that certain concessions made by Mr Figallo in cross examination to the effect that at least one of the two charges for transport should not be paid by Bria and that a charge for boxes and cleaning should be excluded were reasonable. Nova contends that the evidence did not establish it was unreasonable for Mr Figallo to not store his belongings at his workshop and Mr Figallo gave evidence he did not consider it safe to store everything in that location. Mr Figallo did not accept he could have moved into the house when Bria left the site and the mere fact he ultimately moved back into the house in an unfinished state does not deny the additional period in which the dwelling was not available and in respect of which compensation may be awarded. 219 The parties agreed that I should address this ground on a broad brush basis rather than remitting it to the Magistrate’s Court for findings to be made. Analysis 220 While I have concluded that the completion term was not breached, nevertheless termination based on Bria’s insistence on payment of amounts to which Bria was not entitled was wrongful. In determining whether Nova is entitled to damages several issues arise for consideration including whether the losses claimed are properly losses of Nova, whether they are too remote, whether Nova is precluded from pressing a claim for damages on the basis it was not ready, willing and able to perform its obligations, and whether that issue was relevantly put at trial. 221 Where a construction of a residential dwelling in which the owner intends to reside is delayed, there may be a basis for compensation for delay comprised of alternative accommodation and the cost of storage of goods.193 Whether a corporate entity is entitled to recover loss upon delay of construction will depend on whether it establishes an entitlement to compensable loss arising naturally from the breach of contract or as may be reasonably supposed to have been in the contemplation of both parties at the time of entry into the contract as the probable result of breach.194 In this case, Nova’s pleading was framed as seeking recovery 190 TT792. 191 TT792-793. 192 TT797. 193 Leeda Projects Pty Ltd v Zeng (2020) 61 VR 384. 194 Hadley v Baxendale (1854) 9 Ex. 145 at 354; (1854) 156 ER 145 at 151. -- 62 of 66 -- [2024] SASC 10 Stein J 59 of personal loss of the director of Nova. Nova’s closing submissions referred to Mr Figallo being put to expense in finding and remaining in accommodation for longer than he otherwise would have been as well as incurring moving and storage costs. The Magistrate referred to the claims as being for “Mr Figallo’s personal storage and accommodation costs”.195 The relationship between Mr Figallo’s accommodation and storage costs, which were paid by Nova, after he sold his personal residence and the loss of Nova as the corporate applicant was not clearly explored at trial. The causal impacts of each of the wrongful termination and Mr Figallo’s conduct which produced delay upon the asserted loss was not explored. However, for the reasons I explain below, I do not consider it necessary further to address these difficulties. 222 The question of whether Nova was ready, willing and able to perform was not raised as an issue or referred to as an issue for determination by the Magistrate. The correspondence which demonstrates Mr Figallo’s refusal to pay any further amounts until the dwelling was completed was tendered. Mr Figallo was taken to some of the correspondence during examination in chief and he was cross- examined about some correspondence which he sent at the time of PC8, the letter of demand, and termination by Bria.196 The cross-examination included putting to Mr Figallo that he was refusing to pay any money unless all the work was finished; to which he responded by saying “that is totally correct”.197 Mr Figallo was cross- examined about the failure to pay PC8; saying in correspondence that Bria would not get one more dollar until the house was finished and Bria signed off;198 and asserting he would have Bria’s sign removed and refusing permission to enter the premises.199 Mr Figallo asserted Bria abandoned the site.200 The evidence relevant to the question whether Nova was ready, willing and able was thus to some extent canvassed at trial. However, it does not appear this occurred on the basis of Bria clearly contending in the context of the cross claim that Nova was not ready, willing and able to perform and accordingly, if Bria’s termination was wrongful, that Nova’s claim for damages should fail. 223 Nova asserted that Bria failed to engage in alternative dispute resolution in breach of cl 25 of the Contract. In addressing that assertion, the Magistrate observed that Nova did not plead a breach of cl 25 and it was not an issue of which Bria had fair notice. The Magistrate then stated as follows.201 Mr Figallo repeatedly stated that he was not going to pay any more bills until Bria had signed off on the completion of all the Works. This stance was contrary to the express terms of the contract. 195 Magistrate's reasons at [257]. 196 TT755-762. 197 TT755.28-31 198 TT758.22-759.1. 199 TT761. 200 TT762. 201 Magistrate’s reasons at [102]-[107]. -- 63 of 66 -- [2024] SASC 10 Stein J 60 In his email of 10 November 2020,202 Mr Figallo concluded by stating: As I told you before you will not get 1 more dollar until the house is finished and you sign off on the work. On 13 November 2020, Mr Figallo requested that Bria not enter the site anymore without his permission. On 16 November 2020, he also threatened to remove Bria from site and terminate the contract himself if Bria did not agree to return to complete works or resign. By email dated 18 November 2020,203 and before Bria cancelled the contract, Mr Figallo gave Bria an ultimatum. He stated that he would only allow Bria to come back on site if it agreed to the following terms: 1. A bank guarantee to the value of $100,000 until completion of the job. 2. Assurance in writing that BRIA Constructions will cover the delays on the hired plant equipment. 3. Assurance in writing that BRIA Constructions will cover the costs of repair work required by your sub-contractors. 4. Assurance in writing that BRIA Constructions will cover the ongoing insurance until completion of the job. Mr Figallo concluded by stating: If you do not agree to comply with these terms within a five (5) day period, you can consider yourself terminated and I will be claiming damages. In these circumstances I do not consider it appropriate to make any determination on the issue of compliance with clause 27.5. 224 While these statements are synonymous with acceptance that Nova was not ready, willing and able to perform its contractual obligations, they were not expressed in the context of a clearly articulated issue as to whether Nova was unable to claim damages because it was not ready, willing and able to perform. For the reasons below, I do not consider it necessary to determine whether Bria ought to be given the opportunity to raise that question on appeal or otherwise further address the issue. 225 Assuming Nova was entitled to claim loss in the form of accommodation and storage costs and those costs flowed from the wrongful termination, taking a broad brush approach and considering the concessions made by Nova, I would assess damages consequential on the wrongful termination in an amount of $24,177.69. That figure includes the cost of accommodation at Avani totalling $21,122.69, but not the cost of food and beverage. The amount does not include the cost of removal to storage, the cartons, the specialised TV carton and the cost of mattress cleaning and protection. It includes $3,055 representing the cost of moving items from 202 Trial Exhibit A1 – Joint Tender Book at 305. 203 Trial Exhibit A1 – Joint Tender Book at 319. -- 64 of 66 -- [2024] SASC 10 Stein J 61 storage to the dwelling, which costs would have been avoided had items been moved directly from the previous dwelling to the new dwelling. 226 Nova concedes that in the event it is entitled to damages, allowance has to made for the items properly claimed by Bria pursuant to the Contract and the outstanding contract balance will be taken into account.204 It follows from my conclusions on the second and third appeal grounds that the amount of PC8 which would have been due was $38,693.56. The amount in PC9 which would have been due was $3,038.54 comprising the amounts the Magistrate allowed in respect of PC9 ($1,376 plus 15 percent builder’s fee of $227.04 for the Costanzo invoice, $297 for the builder’s fee on the Pannett invoice, the SA Marble and Granite invoice of $990 and builder’s fee of 15 percent comprising $148.50). The total which would have been due by Nova to Bria on PC8 and PC9 was thus $41,732.10. That amount exceeds my assessment of Nova’s damages of $24,177.69. 227 It follows that if Nova is entitled to damages following Bria’s wrongful termination, Nova will not recover any amount allowing for the (larger) amount properly claimed by Bria. Alternatively, if Nova is not entitled to claim damages on any of the bases that the losses were not relevantly its losses, the losses were too remote or Nova was not relevantly ready, willing and able to perform, Nova will recover nothing. The outcome will thus be the same. Accordingly, it is not necessary for me to reach a final view on the matters to which I have referred above. Extension of time 228 Nova’s primary submission was that time did not run from the delivery of judgment in light of the statement in the reasons for judgment that before judgment was entered, the Magistrate would hear the parties in relation to the calculation of the judgment amount and interest and costs. However, Nova sought an extension of time, if one was required, on the basis that there was no prejudice and the delay was very short. 229 Judgment was delivered on 19 January 2023 and orders were entered on 20 February 2023 after the quantification of the judgment sum and interest. On 19 January a record of outcome recorded judgment for Bria. Nova appealed within the time frame from the February orders. 230 Bria opposed the extension on the basis that during the conduct of the matter the Court had granted Nova a number of indulgences and a further indulgence ought not be granted absent proper explanation. Bria contended that the Court should not allow the extension of time on the basis that final reasons were published in January, the quantum of the judgment was known, it was obvious what the final quantum would be and the only remaining issue was interest and 204 See Damien Cremean et al, Brooking on Building Contracts (LexisNexis, 6th ed, 2020) at 11.8. -- 65 of 66 -- [2024] SASC 10 Stein J 62 costs. Bria contends Nova made a tactical decision in relation to the appeal concerning an argument that costs should await the outcome of an appeal. 231 In my view, despite the notation of judgment entry in the record of outcome, the statement205 in the Magistrate’s reasons that the Magistrate would hear the parties before judgment was entered is sufficient basis to conclude that time started to run from 20 February 2023. In any event, I would have granted an extension of time on the basis the short delay in commencing the appeal did not give rise to any prejudice. Costs 232 As a result of my decision on the appeal grounds, the question of costs will need to be re-assessed. It is therefore not necessary for me to consider the procedural fairness argument put by Nova. Orders 233 I will hear the parties in relation to the orders required to give effect to my reasons and in relation to the question of costs. 205 Magistrate’s reasons at [261]. -- 66 of 66 --