Builder Failed to Comply with Statutory Warranties and Contractual Obligations

The court ruled that the builder failed to comply with statutory warranties and contractual obligations under the Home Building Act 1989 (NSW), leading to defects in the construction of a residential home.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] v [COMPANY] [2022] NSWSC 941 Hearing dates: 7 – 9 and 14, 17 June 2022 Decision date: 15 July 2022 Jurisdiction: Equity - Technology and Construction List Before: Black J Decision: Parties to be allowed opportunity to reach agreement as to costs of rectification as to limited issues where liability established, or make further submissions. Parties also to make submissions as to costs of the proceedings. Catchwords: BUILDING AND CONSTRUCTION — Contract — Damages — Defects — Where plaintiff homeowners initially contracted with the defendant builder for the construction of a residential home — Where parties entered into a [NAME] by which the [NAME] took responsibility for the payment of subcontractors and materials, and the [NAME] undertook to carry out all the work reasonably necessary to manage and supervise the completion of the works — Where the [NAME] also included a mutual release — Where plaintiff alleges there are defects with the construction of the home —Whether defects arose from work done prior to or after the [NAME] defects arising from work done after the [NAME] resulted from a failure by the defendant to carry out all the work reasonably necessary to manage and supervise the completion of the works — Whether any statutory warranties under the Home Building Act 1989 (NSW) were breached by the [NAME]: - Civil Procedure Act 2005 (NSW), ss 58-58, s 60, s 64. - Home Building Act 1989 (NSW), s 18B, s 18E, s 18G. Cases Cited: - [COMPANY] formerly known as James Hardie & Coy Pty Ltd v CSR Ltd [2001] NSWSC 324 - Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; (2009) 258 ALR 14; [2009] HCA 27 - [COMPANY] v [NAME] No 65111 [2021] NSWCA 162 - [COMPANY] (in liq) v [NAME] [No 1] [2002] 1 AC 251 - Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 - Cappello v Hammond and Simonds NSW Pty Ltd [2020] NSWSC 1021 - Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) [COMPANY] (2000) 201 CLR 520; [2000] HCA 35 - [COMPANY] v Church Commissioners for England [1989] 1 AC 177 - Dymocks Book Arcade Pty Ltd v Capral Ltd [2011] NSWSC 1423 - Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 - Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46 - Florida Hotels Pty Ltd v Mayo (1965) 113 CLR 588 - Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112 - Hampton Court Ltd v Crookes (1957) 97 CLR 367; [1957] HCA 28 - [COMPANY] v [NAME] No. 97315 [2022] NSWCA 114 - Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336; [1973] HCA 23 - Metropolitan Fire and Emergency Services Board v Yarra City Council (2015) 214 LGERA 1; [2015] VSC 773 - Oikos Constructions Pty Ltd v Oston [2020] NSWCA 358 - [NAME] v [COMPANY] (No 2) [2012] NSWSC 322 - P Ward Civil Engineering Pty Ltd v Civil and Civic Pty Ltd [1999] NSWSC 727 - Re [COMPANY] [2021] NSWSC 1680 - Roberts v Jandson Pty Ltd (Homebuilding) [2011] NSWCTT 105 - Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 - Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26 - SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132 - Sheldon v McBeath (1993) Aust Torts Reports 81-209 - Sutcliffe v Chippendale & Edmonson (A Firm) [1971] 18 BLR 149 - [NAME] 6511 v [COMPANY] [2016] NSWSC 909 - [NAME] 62930 v Kell & [COMPANY] [2010] NSWSC 612 - Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 - [NAME] v [NAME] as Trustee of the [COMPANY] (2018) 265 CLR 77; [2018] HCA 45 Category: Principal judgment Parties: [NAME] (First Plaintiff/First Cross-Defendant) [NAME] (Second Plaintiff/Second Cross-Defendant) [COMPANY] (First Defendant/Cross-Claimant) [NAME] (Second Defendant) Representation: Counsel: [redacted] [NAME]/[NAME] ([NAME]/Cross-Claimant)

Solicitors: [redacted] [NAME] ([NAME]/Cross-Claimant) File Number(s): 2019/191970

Judgment

Nature of the proceedings, factual background and chronology 1. By Amended Statement of Claim filed on 28 October 2021 ("ASC"), the [NAME] ("[NAME]") and [NAME] ("[NAME]") claim damages against the First Defendant, [COMPANY] ("[NAME]") and further relief, including rectification of an agreement dated 27 February 2017 ("[NAME]") by altering cl 6.2 of that agreement to delete specified words. [NAME] did not press a further pleaded claim against the Second Defendant, [NAME], at the hearing.

2. By a First Cross-Claim Statement of Cross-Claim filed on 22 October 2019, [NAME] in turn claims specified amounts against [NAME]. It now only presses a narrower claim for $12,222.23, said to be an unpaid part of the amount of $110,000 payable to [NAME] under the [NAME]. Alternatively, they claim an amount alleged to be payable if the Contract remained on foot after February 2017. By their Defence to the Cross-Claim filed on 19 December 2019, [NAME] do not admit [NAME]'s entitlement to the amounts claimed in paragraphs 9 and 10 of the Cross-Claim, deny [NAME]'s entitlement to payment of $12,222.23 as claimed in paragraph 11 of the Cross-Claim, and contend that they are liable to set-off the damages and other amounts claimed by them against the payment of that amount. The parties reached agreement as to that matter.

3. Turning now to the factual background to the proceedings, it is common ground that [NAME] are registered proprietors of a property situated in Mosman, NSW (ASC [1]; Defence [1]). The residential building works at the property were the subject of a development application approved under the Environmental Planning and Assessment Act 1979 (NSW) ("EPA Act") dated 19 September 2012, given by Mosman Council as the relevant statutory authority which, relevantly, required installation of an on-site rainwater re-use system for on-site detention and that all works be carried out in accordance with the requirements of the Building Code of Australia ("BCA").

4. On 23 September 2015, [NAME] submitted a tender for proposed demolition and construction works at the property with two alternative options with pricings of $3.5 or $4.9 million ([NAME] 6.8.20 [7], [NAME] 2006 – 2020).

5. On 30 October 2015, [NAME] and [NAME] entered into a written costs plus contract ("Contract") for [NAME] to undertake building work comprising the demolition of an existing dwelling and the construction of a new residence at that property ("project") for a then estimated value of $3,500,000 (ASC [5]; Defence [5]; [NAME] 6.8.20 [15]; [NAME] 2031-2069). It is common ground that the relevant building work was residential building work for the purposes of the Home Building Act 1989 (NSW) ("HBA") (ASC [6]; Defence [6]).

6. The Contract provided for an estimated cost of works of $3,500,000 ([NAME], 2033) but identified a number of matters that would give rise to adjustments in that amount, including any discrepancy in drawings and specifications, and whether the work actually done was different to the work contemplated at the time of signing the Contract, for example, because of details provided or choices made after the Contract. The Contract incorporated a specification dated 26 August 2015 prepared by [NAME], an architect then engaged by [NAME], and development consent plans. [NAME] was required to provide a certificate of insurance under the Home Building Compensation Fund, which remained in place after entry into the [NAME], and schedule 1 of the Contract set out costs payable by the Owner and provided for a builder's [NAME]-up of 9% of the costs of the work. Clause 1 of the Conditions of Contract set out [NAME]'s responsibilities and cl 1(b) contained warranties that substantially correspond to those contained in s 18B of the HBA. By contrast with the position which I will find below in respect of the [NAME], those warranties plainly applied to the work then being undertaken by [NAME], namely to complete the construction work in accordance with the drawings and as described in the specification, as adjusted under the Contract. The Contract also required, by cl 1(d) of the Conditions of Contract, that work under the Contract comply with the BCA to the extent required under the EPA Act, including any regulation or instrument made under that Act; all other relevant codes, standards and specifications, with which the work was required to comply under any law; and the conditions of any relevant development consent or complying development consent. Clause 2 dealt with the owner's responsibilities. Under cl 9 of the Contract, [NAME] was required to obtain and use materials which complied with the requirements of the Contract. Clause 17 provided for payment by the owner to the builder of the costs of works and schedule 3 listed a number of documents identifying the scope of the work. Plainly, [NAME]'s obligations under the Contract were later narrowed by the [NAME], which I address below, so far as many of them were directed to work undertaken by a builder, as distinct from the narrower obligation of management and supervision of the project assumed by [NAME] under cl 2.1 of the [NAME], which I address below.

7. On 11 November 2015, [NAME] obtained a contract of insurance for works at the contract price ([NAME] 6.8.20 [17]; [NAME], 2078) and, on 13 November 2015, an amended development application approval was issued and a construction certificate was issued ([NAME] 6.8.20, [19]; [NAME], 2079). [NAME] commenced carrying out the building works in about December 2015 (ASC [7]; Defence [7]).

8. Areas of disagreement then arose between the parties, although there is a contest between the parties as to the outer scope of that disagreement (ASC [8]; Defence [8]). The then architect and contract administrator, [NAME], gave notice that he would no longer act as contract administrator on 24 June 2016 ([NAME], 2283-2284).

9. In mid-August 2016, [NAME] made inquiries with [NAME] about product warranties for windows and insurance required under the HBA ([NAME], additional tender). I will address [NAME]'s reliance on that matter below. 10. [NAME] engaged [NAME] as a consultant in respect of the project in early September 2016 ([NAME] 6.820 [79]; [NAME] 1.9.20 [4]-[5]; [NAME] 2488-2491) and, by his email dated 11 September 2016 ([NAME], 2488), [NAME] advised [NAME] that: "In order to improve the administration of the project from our end, to reduce our stress levels and to hopefully see a smoother process, we have appointed [NAME] from [COMPANY] to administer the contact pursuant to the 'Special Conditions to Enable Architect Administration of BC4 Contract', clause 4(c)." That clause provided for an architect to administer the Contract as "the disclosed agent of the Owner" and authorised that architect to provide instructions to the builder concerning variations to the work and undertake other steps in respect of the project ([NAME], 2051). None of the parties then raised any concern that [NAME] was not an architect for the purposes of that clause.

1. By an email dated 13 September 2016 ([NAME], 2490), [NAME] advised [NAME] that he had been "appointed to administer the contract between the parties" and requested that he be referred to as the "superintendent" replacing the previous administrator, [NAME], who was then the architect on the project. By an email dated 27 September 2016 ([NAME], 2637), [NAME] objected to [NAME] contacting suppliers engaged by [NAME] without his permission and advised [NAME]'s employee to "ensure you seek permission from me in the future if you need to contact any of the client suppliers etc".

2. On 21 September 2016, [NAME] made an inquiry with [NAME] about efflorescence on an area of brickwork ([NAME], 2633). I will address [NAME]'s reliance on that email below.

3. On 10 October 2016, [NAME] advised [NAME] that he was concerned about "construction on the run and decision-making on the run", observed that this is a "recipe for disaster and significant cost blowouts in the future" and recommended that the job be suspended for a month to obtain fixed price quotations from suppliers and contractors and to assess claims made to date ([NAME], additional tender). That did not occur. By an email dated 11 October 2016 ([NAME], additional tender), [NAME], the architect then engaged on the project for [NAME], sought to set a process for any further design changes in respect of the project. [NAME] subsequently withdrew from the project.

4. By an email dated 25 November 2016, [NAME] requested [NAME] to make an advance payment of $110,000 to assist [NAME] in meeting its financial obligations ([NAME], 3461), which they made ([NAME], 3465). [NAME] responded ([NAME], 3466) to the advance payment stating that "We won't let you down I promise thx [NAME]". That was a generous approach on [NAME]'s part, which regrettably can have no impact on the outcome of the legal issues in these proceedings.

5. By an email dated 7 December 2016, [NAME] emailed [NAME] ([NAME], 3467) that: "… I hope it is apparent to everybody that we are committed to the [NAME], you and the outcome … Happy to sit down and talk dollars when I spoke to the client I think the bill was circa $40k but id [sic] also like to chat about how we move forward, I would like to discuss a fixed fee with you taking into account your fees etc as I think [[NAME]] will want to pay many of the trades direct, we may be able to get her some better deals if we get her to pay direct and more frequently than builders." [NAME] submit, in closing submissions, that there is no suggestion here that the arrangement would change the obligations of [NAME] in relation to completion of the work. While that is so, the effect of the [NAME] must be determined on its proper construction, where there is no application for rectification of it, other than in respect of a release which I address below.

1. On 14 December 2016, by its payment claim 12, [NAME] acknowledged and identified a substantial credit due to [NAME] ([NAME] 3474-3476)

2. In early February 2017, a meeting took place between [NAME] and the [NAME] at which, inter alia, reconciliation issues were discussed ([NAME] 6.8.20 [140]; [NAME] 29.9.21 [55]). On [NAME]'s account, [NAME] there suggested that: "Moving forward I think it would work better that you pay the trades direct. Also if they are paid earlier we can get you a discount and I can approach trades and ask for this. We are committed to finishing the job and maybe we can agree then on a fixed fee for [NAME] to finish the job and you pay the trades direct." He also indicated that: "Ok, we will come back to you with a formal proposal. We will pay for [NAME]'s cost. From a cash flow perspective, it would assist us if you could pay the trades directly and we can then finish everything off. At present, we are not in a position to fund everything up front." 1. [NAME] submits, in closing submissions, that there was no suggestion at this meeting that [NAME] would become "owner/builders" or that the existing arrangements for performance of the works would be changed. That may be a fair characterisation of the meeting, but it also contemplated that [NAME] would put a "formal proposal;" and the effect of the [NAME] must be determined on its proper construction, as I have noted above, and it plainly redefined the scope of [NAME]'s obligations by cl 2.1 of the [NAME] which I address below.

2. By an email dated 4 February 2017 ([NAME], 3688), [NAME] also advised [NAME] of his commitment to the project and his positive view of [NAME], as follows: "We are and always have been 100% committed to the [p]roject the [NAME] and you, this will not change. I agree with you re [[NAME]] her work rate is phenomenal, I have never worked with a client like her. I feel a very strong sense of personal commitment to her. … " It may be unlikely that [NAME] would have taken the extravagant rhetoric of that statement at face value, and the second part of the second sentence is not necessarily a compliment, given the views he later expressed, as noted in paragraph 26 below. [NAME] also there addressed the difference between an earlier option of a "lightweight structure with lower levels of finish at $3.5 million" and a "heavyweight structure with a high level of finish at just under $5 million", presumably in explanation of the increased cost of the project, and noted that he was not aware of the pricing of trades that [NAME] had directly engaged. He addressed the question of program and put a proposal toward payment of a portion of [NAME]'s costs. The attitude to [NAME] expressed in that email is not consistent with the concerns which [NAME] now identifies as reasons for the release sought in the [NAME].

1. By a further email dated 5 February 2017 ([NAME], 3690), [NAME] expressed a more negative view of the position in respect of delay and indicated that [NAME] had not had a "good experience" with the project. By his email response dated 6 February 2017 ([NAME], 3694), [NAME] again referred to alternate costings of the project, and noted that [NAME] could not forecast costs where [NAME] was obtaining quotes directly and not providing it with information as to those costs. He indicated his disagreement with [NAME] as to the delays in the trades and advised that: "… I now spend more time on this job than all others combined which shows you that it is my personal mission to have this [p]roject complete to the highest standard. There will be no compromise on quality and the [NAME] will be able to go away and relax in the full knowledge that we will be completed on time and to the highest standard." 1. [NAME] was cross-examined as to that proposition which did not recognise the prospect that [NAME]'s ability to control the quality of construction would be compromised, where its role would be restricted to management and supervision under the [NAME] and [NAME] would choose contractors and pay them directly. However, that prospect must have been obvious to [NAME], then acting as [NAME]'s agent, given his experience in building projects.

2. Further correspondence between [NAME] and [NAME] followed, addressing the proposed terms of the [NAME]. By an email dated 11 February 2017 ([NAME], 3706) [NAME] referred to his previous meeting with [NAME], suggested that [NAME] pay [NAME]'s fees "to right a lot of wrongs that have occurred on this [p]roject"; noted a commitment by [NAME] to be "on site and hands on every day and whatever is required to get the proposal back on track and completed by 16 July 2017", and referred to a proposal that [NAME] forego its margin of 15% (including supervision, a labourer, overheads administration etc) and accept a fixed fee to cover the foreman, labourer and some administrative costs. He also observed that: "The [p]roject is starting to get momentum but as seen in emails and as discussed at length, I have grave concerns that [the site foreman] is in over his head and he needs for you to be overseeing every part of the construction of this very detailed and quality home. I have no issues with [the site foreman]. He is a very hard working young man but he needs experience[d] people around him to learn about detail and forward planning. …" 1. [NAME] then adopted an aggressive approach in an email dated 12 February 2017 to [NAME] ([NAME], 3723) which observed that if [NAME] and [NAME] were not "looking over your supervisor, basic construction issues would have been constructed incorrectly" and went on to observe that: "I am more than happy to advise [NAME] of you[r] view of the works and let them to decide as to whether you are to complete the works but if I was to be asked, I would terminate your services at lockup and then complete the project without you, still saving your margin etc. Your reputation would be at risk and future jobs on the North Shore not looking very favourably. … If you are terminated at lock up there would be a strong likelihood of litigation to recover the costs and damages up to until that date. …" [NAME] there referred to [NAME]'s "failure to properly administer and construct the works" [emphasis added]. He denied, in cross-examination, that that email indicated a concern that there were defects in the works. I am unable to see that an allegation of a failure properly to construct the works can have any other meaning, and I reject [NAME]'s evidence in that regard.

1. By an email dated 13 February 2017 ([NAME], 3724), [NAME] advised [NAME] that [NAME] was prepared to change its cost-plus margin to a fixed fee of $110,000 inclusive of GST to complete the project; that he agreed to pay [NAME]'s fees of $75,000 inclusive of GST at the end of the project; and that that proposal was "subject to a mutual deed of release".

2. Later on 13 February 2017 ([NAME], 3732), [NAME] circulated a draft deed which limited the scope of [NAME]'s future work on the project, altered the payment arrangements and included a mutual release in connection with the matters described in Recital E. That appears to have been intended to refer to Recital D in that draft, which referred to the accounting of the cost-plus charges by [NAME] and the project being late. Recital E referred to payment of the costs of the project by [NAME] directly, with [NAME] to receive a fixed sum for the completion of the works. [NAME] initially sent that draft deed to [NAME] and subsequently to [NAME] on that date ([NAME], 3741). This appears to have been the origin of the [NAME].

3. By an email dated 14 February 2017 ([NAME], 3741), [NAME] sent his solicitor, [NAME]'s draft deed of release and explained his perspective on the project, in strikingly different terms to what he had said to [NAME], as follows: "We have a costs-plus build in Mosman that is starting to become a bit of nightmare. The architects were relived back in June last year. The designer quit soon after and all consultants bar us have left the [NAME]. They hired a building consultant in September who is extremely outspoken and who is quickly making this a battle. We did have some accounting issues late last year and since our attention was b[r]ought to these, we have since rectified all errors. Now, with the job growing based on design changes – not because of us – the [NAME] are obviously trying to save costs and [NAME], the consultant, has put this Deed together because of this. Overall it has become a total nightmare with nightmare [NAME] and nightmare consultant. I don't care about the money, I need to close the door really tight and make sure they can't come back at me. I need you to look at this quickly please."

1. By his response dated 14 February 2017 ([NAME], 3746), [NAME] then drew [NAME]'s attention to the fact that the proposed [NAME] would be an agreement to carry out "residential building work" within the meaning of the HBA, because the definition of that term in Sch 1 of the HBA included work involved in "co-ordinating or supervising" work in constructing or altering a dwelling. He drew attention to the requirements under the HBA in respect of the agreement, and it appears those requirements were satisfied in respect of the [NAME]. [NAME] also drew attention to the limited scope of the release in [NAME]'s draft of that agreement, which he read as directed to the matters referred to in Recital E, namely the "accounts not being correct". [NAME] observed that: "I would have thought you would want a more general release than this. You cannot obtain a release from your obligations under the [HBA], such as the obligations to carry out the work in a proper and workmanlike manner. However, I would have thought you would want a release relating to any claim relating to any previous payment to you, or made by [NAME] to any third party at your direction."

1. On 16 February 2017, [NAME], the solicitor acting for [NAME], forwarded a revised draft of the [NAME] to [NAME] for review ([NAME], 3798). His email noted that: "I'm sorry it has become so verbose. However, I took the view that, under section 6 of the [HBA], the agreement needs to comply with the relevant provisions of the [HBA], which I have included. Of course, at the time of signing, the agreement will have to have complete schedules attached, including the plans and specifications, the Consumer Building Guide and our client's insurance". The attached deed included mutual releases in the form included in the final version of the [NAME].

1. On 18 February 2017, [NAME] responded to [NAME] identifying "one major issue" with the revised draft of the [NAME] relating to the reconciliation of three project claims ([NAME], 3798).

2. On 27 February 2017, [NAME] forwarded the [NAME], signed by [NAME] but not yet by [NAME], to [NAME] ([NAME], 3895). The recitals to that Agreement recorded that: "D A dispute arose between the [NAME] and the Builder regarding allegations relating to the accounting under the Original Contract and allegations that the project referred to in the Original Contract was taking longer than it should have taken. E. By way of settlement of such dispute, the Parties have agreed that, as from 13 February 2017 that the costs of the project will be paid by the [NAME] directly and the Builder will receive a fixed sum for the completion of the work and as set and defined by this agreement. [NAME] has been engaged by the [NAME] to act as superintendent of the [p]roject."

1. Clause 2 of the [NAME] substantially narrowed the scope of [NAME]'s work, providing that: "2.1 The Builder shall carry out all the work reasonably necessary to manage and supervise the completion of the Project in accordance with the Plans and Specifications, by providing the following personnel from the date of this Agreement until the Practical Completion Date: 2.1.1 a fulltime supervisor, being [NAME]; 2.1.2 a fulltime labourer; 2.1.3 a project manager, being [NAME]; and 2.1.4 such office staff as is reasonably necessary to supervise the paperwork relating to the Project. 2.2 The Builder shall have no responsibility for the cost of completing the Project, other than for the provision of the personnel referred to in clause 2.1. [NAME] shall be responsible for all of the other costs of completing the Project, including paying subcontractors and paying for materials." [emphasis added] That clause had the effect that [NAME] was no longer required to construct the project, but instead to carry out the work "reasonably necessary" to "manage and supervise" its completion and to provide the specified staff, with the construction work implicitly to be completed by subcontractors. The term "Plans and Specifications" in that clause was defined as the Plans and Specifications set out in schedule 4 of the [NAME]. It is common ground that those plans and specifications differed to those contained in the Contract.

1. Clause 3 of the [NAME] provided for [NAME]'s remuneration, with [NAME] to pay [NAME] the amount of $110,000 inclusive of GST, by six equal monthly instalments from 28 February 2017, and [NAME] to pay $75,000 inclusive of GST in consideration of [NAME]'s services as superintendent of the project; within 7 days after the Practical Completion Date (as defined). Clause 4.1 referred to a certificate of insurance contained in Sch 1 of the HBA.

2. Clause 6 of the [NAME] contained mutual releases, which were in relevantly the same form so far as releases were given in favour of [NAME] and [NAME]. Clause 6.2 provided that: "The [NAME] and each of them release and forever discharge [[NAME]] from all and any claims, suits, demands, actions and legal or other proceedings including damages for defamation, pain and suffering, which they may have or but for this Deed may have had against [[NAME]] in respect of or in connection with any event which has occurred prior to the date of this agreement, including the matters referred to in Recital D above." Clause 6.3 provided that the releases did not apply to any right to enforce the provisions of the [NAME] or any event occurring after the date of that Agreement.

1. Clause 8, headed "Statutory Warranties by the Builder", recorded warranties provided by [NAME] to [NAME]. Clause 8.1.1 provided a warranty that the Work (as defined) would be done with due care and skill and in accordance with Plans and Specifications, but, as I noted above, that warranty referred to the work to be carried out by [NAME] pursuant to cl 2.1 of the Agreement, which was relevantly to manage and supervise the completion of the project and provide the relevant personnel until Practical Completion, not itself to construct the project after the date of the [NAME]. Clause 8.1.2 was a warranty as to any materials supplied by [NAME], but there is no complaint as to any such materials. Clause 8.1.3 – 8.1.4 were each limited to the way in which the Work would be done. Clause 8.1.5 was wider, so far as it warranted that the Work "will result, to the extent of the Work conducted, in a dwelling that is reasonably fit for occupation as a dwelling." Clause 8.1.6 was in turn a warranty as to fitness of the Work and materials used in it, but that was also limited by the narrower scope of work to be performed by [NAME] under the [NAME]. The schedules to the [NAME] included the Home Building Compensation Fund Insurance Certificate obtained when the Contract was made, the Consumer Building Guide, the Consumer Building Guide checklist and further plans and specifications for the works, which differed from those attached to the Contract.

2. By an email dated 27 February 2017, [NAME] sought [NAME]'s confirmation that retentions held by [NAME] for trades and suppliers would be [NAME]'s responsibility to pay when and where required, and [NAME] provided that confirmation ([NAME], 4046). [NAME] then sent the [NAME] signed by [NAME] to [NAME] for signature ([NAME], 4044); [NAME] asked him several questions as to payment arrangements under that agreement ([NAME], 4070); and, on 5 March 2017, [NAME] returned pages of the [NAME] signed by [NAME] to [NAME], excluding the attached plans which had not been signed by [NAME] but recognised by them as being part of the agreement ([NAME], 4199). Although that agreement was dated 27 February 2017, I accept that it did not take effect until [NAME] (through [NAME]) communicated their acceptance of [NAME]'s offer (made by [NAME] by providing a signed version of the Agreement to [NAME]) to [NAME] on 5 March 2017. Both the narrowing of the scope of [NAME]'s work and the release under that agreement therefore took effect, not on 27 February 2017, but from 5 March 2017. 3. [NAME]'s evidence is that, at the date of the [NAME], all demolition, underpinning and bulk excavation works were complete ([NAME] 30.5.22 [14(a)-(c)]); the shell of the pool and its concrete surrounds were complete ([NAME] 30.5.22 [14(e)]); all structural steelwork was complete ([NAME] 30.5.22 [13(h)]); all internal stormwater and sewerage pipes had been completed, other than for rough-in to the ground floor and first floor bathrooms, connection to the rainwater tanks and sewerage pipework to the basins ([NAME] 30.5.22 [14(i)-(k)]); and the roof, other than for roof sheeting to the garage and roofing to the front entry was complete ([NAME] 30.5.22 [14(g)]). The extent to which work was complete is relevant in two respects. Work which was complete prior to the [NAME] would have the benefit of the wider release for which [NAME] contends if, contrary to my view, that release extended to building defects; and work completed after that date would be subject only to the narrower obligations of management and supervision assumed by [NAME] under the [NAME].

4. The property appears to have reached practical completion in about August 2017. About that time, issues also arose in respect of claims from unpaid trades engaged by [NAME] ([NAME], 5380).

5. On 30 September 2017, [NAME] sent emails to [NAME] of [COMPANY] ("[NAME]") regarding the windows ([NAME], 5785) and to [NAME] regarding a lack of pressure in taps ([NAME] 6.8.20 [432]; [NAME], 5784). On 1 October 2017, [NAME] sent a further email to [NAME] regarding concerns with the pool works ([NAME] 6.8.20 [567]). A certificate of compliance for plumbing, stormwater system and gas was issued by the [NAME] on 9 October 2017; an interim occupation certificate was issued on 19 October 2017; and [NAME] moved into the property in October 2017 (ASC [11], Defence [11]).

6. An initial defects list ([NAME], 6070-6072; T71-72) was prepared on or about 19 October 2017 by [NAME], and it was then planned that the painter would return to touch up paint work after other trades has carried out rectification work. [NAME] points out, and I accept, that a reference in that list to the need to remove blue tape from the window in the upstairs laundry suggests that protective steps were taken to protect the frame from paint, at least in that location, although that finding perhaps does not go very far ([NAME], 6065, T72). The defects then identified in respect of paint and other substances on window frames were, as [NAME] points out, significantly more limited than those for which [NAME] now contend. 7. [NAME] prepared a second defects list on 1 November 2017 ([NAME], 6130-6138) which is detailed, but also identifies a smaller list of paint and substances on window frames and scratches to window frames than that for which [NAME] now contend. On 1 November 2017, [NAME] sent emails to [NAME] regarding plumbing issues ([NAME], 6129; 6139-6140) and, on 5 November 2017, [NAME] sent a further email to [NAME] regarding plumbing defects ([NAME] 6.8.20 [444]). On 7 November 2017, [NAME] of [NAME] emailed [NAME] of [NAME], the painting firm, with a list of defects ([NAME], 6182).

8. In February 2018, further correspondence took place in respect of invoices that had not been paid by [NAME] ([NAME], 6337ff) and, in particular, there was a dispute as to whether [NAME] would pay the painter for work done in addressing damage caused by other trades, until those other trades had been backcharged and accepted liability for the costs incurred.

9. A further defects list was prepared by the Department of [NAME] ("[NAME]") on 25 May 2018 ([NAME], 6401-6416), although one would expect that list to reflect some wear and tear, where it was prepared after [NAME] had been living in the property for about 15 months. [NAME] then made a rectification order against [NAME] ([NAME] 6.8.20 [743]; [NAME] 29.9.21 [82]; [NAME], 6400–6408). The parties did not contend that order bound the Court in determining this claim, and it is, regrettably, plain that [NAME] paid no or no adequate attention to the limited scope of [NAME]'s responsibilities under the [NAME] in making that order. 10. [NAME] commenced proceedings in the New South Wales Civil and Administrative Tribunal on 25 June 2018 and the proceedings were then transferred to the District Court. It appears the proceedings were commenced within the period specified in s 18E of the HBA for both major and non-major defects.

11. It is plain that, even by August 2018, the painter had not been paid amounts due in respect of previous works, although several sub-contractors had agreed that they could be backcharged for the costs of painting work arising from defects in their work. By that time, several third party contractors had also made clear they would not return to repair defects until their outstanding accounts were paid. By an email dated 15 August 2018 ([NAME], 6572), [NAME] noted, inter alia, that the painter was seeking acknowledgement that [NAME] would honour his final bill of about $6,000 once he completed the rectification works and [NAME] responded that: "All payments due and payable will be honoured. [NAME] still has not verified that the trades being backcharged are aware and they all acknowledge that they will accept the backcharges. This has been requested on numerous occasions. [NAME] to provide." Plainly, that response left open the question which payments [NAME] considered were "due and payable". [NAME] then also took the position that she and [NAME] did not have to pay contractors' outstanding accounts until defects were rectified and verified by the Department of [NAME] ([NAME], 6573). As I will note below, [NAME]'s obligations under cl 2.2 of the [NAME] had no such limitation.

1. Correspondence as to defects, including difficulties with a sliding door in the dining room, continued at least into September 2018 (Ex J1, 6623).

2. In early February 2020, there was an entry of water into the property ([NAME] 6.8.20 [729]-[737]). In March 2020, there was sewage spillage into the shower and floor in an upstairs bathrooms ([NAME] 6.8.20 [489]; [NAME], 6669-6671) and, in late July 2020, a plumbing firm was engaged to undertake emergency plumbing works ([NAME] 11.2.22 [3]; [NAME], 6682).

Lay and expert evidence 1. Both parties initially relied on voluminous expert evidence, significant parts of which did not appear to be relevant to any matters in dispute in issue in the proceedings. The parties ultimately read limited parts of those affidavits, narrowed to relevant materials, at the hearing. 2. [NAME] relied on two affidavits of [NAME], a building consultant and civil engineer engaged by them from about September 2016, dated 1 September 2020 and 29 September 2021. In his first affidavit, [NAME] referred ([NAME] 1.9.20 [4]) to an initial conversation in which [NAME] indicated a concern as to the manner in which she and [NAME] were being charged for work in respect of the project. He also referred to a meeting with [NAME] on 8 February 2017, at which [NAME] agreed that the job had been "mishandled" ([NAME] 1.9.20 [39]) and that the foreman on the site had been inexperienced and needed guidance. [NAME] also indicated that [NAME] did not care if it "made no money on the job" and "wanted to do right thing", and offered a proposal for a reduced flat fee, a contribution to [NAME]'s fees, and a "change of contract" which was to be drawn up by [NAME] on behalf of [NAME]. [NAME] there characterises the position as that [NAME] was to be paid a fixed fee of $110,000 "to complete the job" or "complete the project" ([NAME] 1.9.20 [40], [41]). That characterisation is plainly inconsistent with the draft agreement prepared by [NAME] and the [NAME] that was executed by [NAME] and [NAME], which significantly narrowed the scope of [NAME]'s responsibilities, to management and supervision as distinct from construction, at the same time that it fixed the fee payable to [NAME].

3. By his second affidavit dated 29 September 2021, [NAME] referred ([NAME] 29.9.21 [19]-[20]) to correspondence with [NAME], explaining concerns which he had as to aspects of the installation of the [NAME], pool and cover, at a time that [NAME]'s responsibility had been limited to management and supervision and the pool and [NAME] was being constructed by a third party contractor, albeit one in which [NAME] appears at one point to have had an interest. [NAME]'s evidence is that he did not have instructions from [NAME] about providing any release in respect of any defects in [NAME]'s work, at the time of entry into the [NAME] ([NAME] 29.9.21, [159]). I note, however, that [NAME] had been appointed as their agent in respect of the project and acted on their behalf in initially drafting and negotiating the [NAME] and, in any event, they executed that [NAME]. [NAME]'s evidence is that he did not discuss defects in [NAME]'s work at the property with [NAME] or anyone on [NAME]'s behalf at the time of entry into the [NAME], or with [NAME] and that the dispute at that time concerned "only the overcharging" by [NAME] ([NAME] 29.9.21 [161]-[162]). I bear in mind that the discussions to which I referred above extended to the wider proposition that the job was "mishandled" and included reference to the inexperience of the foreman on the site. [NAME] asserts that the basis on which he negotiated the [NAME] "required [NAME] to remain responsible for any defects in its work at the Property", but that question must be determined as a matter of construction of the [NAME], and not by reference to [NAME]'s understanding of what it achieved ([NAME] 29.9.21 [163]). [NAME] also referred to the attachment of the Home [NAME] to the [NAME] ([NAME] 29.9.21 [164]), which is explicable by the fact that [NAME] was continuing to undertake supervision and management works in respect of the project, and does not support [NAME]'s asserted understanding that "[NAME] was responsible for defects in any of its work carried out at the Property". [NAME] also refers to photographs of work undertaken in March, May and August 2017 and to the inspection undertaken by [NAME] in May 2018 and to the rectification order made by [NAME] to which I referred above ([NAME] 29.9.21 [165]-[167], [196]ff).

4. By a third affidavit dated 30 May 2022, [NAME] responded to aspects of [NAME]'s affidavit dated 17 May 2022, to which I refer below. He outlined the process by which copies of the draft [NAME] were provided to [NAME] and the final [NAME] was signed by them. He addressed the question of work which had been completed prior to the [NAME], and noted that significant aspects of the installation of internal stormwater and sewerage pipes were not complete as at the date of the [NAME]; installation of hot and cold water pipework was not complete as at the date of the [NAME]; rainwater tanks were not connected or tested or working as at the date of the [NAME]; electrical cabling work in the house was not completed by the [NAME], and the installation of ground floor windows and doors was not complete by the date of the [NAME]. That evidence is adverse to [NAME]'s interests, so far as [NAME]'s obligations were narrowed by the [NAME]. 5. [NAME] was cross-examined. Some aspects of [NAME]'s evidence were implausible, including his denial (T42) that he had formed the view early in his engagement that the construction process was being undertaken "on the run" or that numerous design changes were occurring, where that is apparent from contemporaneous correspondence. His evidence (at T51) that his reference, in his email dated 12 February 2017 (to which I referred above) to a concern as to [NAME]'s ability to "construct the works" was limited to the cost and time of construction, and not the quality of construction, reflected a narrow, but not impossible, reading of those words. [NAME] was at times, argumentative and defensive, and I approach his evidence with a degree of caution. 6. [NAME] was cross-examined to seek to establish that [NAME], or at least he (as their agent) was on notice of issues which may have given rise to defects in the work undertaken by [NAME], prior to the entry into the [NAME]. Those included the inexperience and lack of knowledge, as to some matters, of the foreman who [NAME] originally appointed to the project (T36). [NAME] indicated those matters did not cause concern, because the project manager, implicitly [NAME], would be overseeing the works and assisting and directing his employees, although he also acknowledged that the foreman was not appropriate for the project, because of its detail and complexity (T36) and his later evidence was that the foreman had ability but also "needed guidance" (T49). [NAME]'s cross-examination demonstrated that there was plainly a potential issue as to the foreman's experience, which at least raised a risk that work might be undertaken inefficiently, it did not seem to me to indicate that there was any real recognition, as at February or March 2017, of any substantial risk of defects in the work undertaken to date, and [NAME]'s evidence (to which I refer below) supports that conclusion. [NAME] was also cross-examined as to the photos which had been taken of work at site, to seek to establish that they were taken to show whether the works were defective. [NAME] responded that those photos were directed to documenting the status of the work, as distinct from defects (T40). [NAME] and [NAME] took numerous photos of that work, that is readily explicable by the then concerns as to delays and overcharging, and does not give rise to any inference that there were then recognised defects in the work. 7. [NAME] was cross-examined as to the circumstances in which he prepared the initial draft of the document that became the [NAME] and consulted with [NAME] as to the terms of that agreement and as to the execution of that agreement (T48ff). His evidence was that he formed the view that the scope of the release in his original draft of that agreement and in the further draft prepared by [NAME]'s solicitors was "similar", and he accepted that he formed that view without any encouragement from [NAME] (T56). [NAME] was also cross-examined as to the delay after the execution of the [NAME] by [NAME], after he had sent it to them, and its return to him on or about 28 February 2017; his attendance at the site on 1 March 2017, at which he took multiple photographs; and his then returning the executed [NAME] to [NAME] on 5 March 2017 (T65). His evidence is that he could not recall the extent of any discussions he had about the [NAME] with [NAME] in that period, although he accepted that it was likely that he had such discussions (T66). [NAME] was not cross-examined as to the whether the narrowing of [NAME]'s obligations under the [NAME], which he had negotiated with [NAME] on [NAME]'s behalf, was disadvantageous to [NAME] and I reach no finding as to that question, although that possibility plainly arises from the findings that I reach below. 8. [NAME] was also cross-examined as to the extent of communications received from [NAME] (T67), with the implication that she was a demanding client, and as to the fact that some subcontractors were paid directly by [NAME], from February 2017 and after the entry into the [NAME]. He acknowledged that, on one weekend, [NAME] had sent over 30 emails to [NAME] although his evidence was that that was not a typical exchange between [NAME] and [NAME] (T68). He a was also cross-examined as to [NAME]'s withholding payment of contractors in the latter part of the project, and as to the difficulties which the painting contractor encountered in being paid for that work, where [NAME] sought to have those costs backcharged to other subcontractors (T75ff). [NAME] also accepted that his position, in early February 2018, was that he was not prepared to make payments to contractors until works had been rectified (T76); plainly, that approach exposed [NAME] to the risk that contractors would take the view (as some did) that they were not prepared to undertake rectification work if they had not been paid amounts that were already due and payable to them. 9. [NAME] also relied on the affidavit of [NAME] dated 29 September 2021, which was in relatively narrow scope, and only parts of which were read. [NAME] referred to the execution of the Contract; to the fact that he was working fulltime during the works at the property and was, obviously enough, unable to be on site "all the time"; and indicated the nature of his involvement, which appears to have been less extensive than [NAME]'s ([NAME] 29.9.21 [14]-[16]). He refers to the engagement of [NAME] to act as contract administrator in September 2016 and to the concern as to whether he and [NAME] were being charged correctly by [NAME] at that time; and to his advice on 11 September 2016 to [NAME] of [NAME]'s engagement and the contractual basis on which that engagement took place ([NAME] 29.9.21 [43], [45]). 10. [NAME] also refers to the identification, in about mid-December 2016, of the fact, which now appears to have been common ground, that [NAME] had overpaid an amount of about $428,700 at that point, being an overcharge for [NAME]'s labour of about $196,000; an overcharge by third parties of nearly $58,000 and the amount of the deposit of $175,000 ([NAME] 29.9.21 [48]). [NAME] also refers to a meeting between himself, [NAME] and [NAME] in early February 2017, at which [NAME] apologised for accounting errors and the three of them discussed the mechanism for payment of trades and of a fixed fee, and of payment of [NAME]'s costs by [NAME] ([NAME] 29.9.21 [55]). 11. [NAME] referred to the receipt of the draft [NAME] from [NAME] ([NAME] 29.9.21 [57]). That evidence is plainly in error, since the first draft of that agreement had been prepared by [NAME] and the drafts of that agreement were provided by [NAME] or its solicitors to [NAME], and then by [NAME] to [NAME]. [NAME] indicated that he never had discussions with [NAME] or anyone from [NAME] about giving [NAME] a release in relation to defects before signing the [NAME], and that he would not have signed that Agreement if he knew that [NAME] or he were giving [NAME] any release in relation to defects ([NAME] 29.9.21 [57]). I will return to questions of construction of the [NAME] below. I note, at that this point, that evidence as to [NAME]'s subjective intentions is of less assistance where they had appointed [NAME] as their agent for relevant purposes, and left him to negotiate the [NAME] which they signed. [NAME]'s evidence, which can go no further than his understanding, was that defects were "not an issue at this time" and "only arose after the works were completed" ([NAME] 29.9.21 [57]). 12. [NAME]'s evidence is also that he would never have agreed to manage the project or the subcontractors, and the [NAME] did not provide for that to occur, so far as it left the responsibility for supervision and management with [NAME] ([NAME] 29.9.21 [60]-[61]). The difficulty for [NAME], which will arise below, is that the [NAME] removed construction responsibilities from [NAME], and limited their responsibility to management and supervision of the project. [NAME] also refers to issues which he identified in respect of the pool and [NAME] in about November 2017 ([NAME] 29.9.21 [76], [78]) and refers to a complaint to [NAME] made in May 2018, as to which [NAME] expressed certain views and issued a rectification order ([NAME] 29.9.21 [79]ff). As I have noted above, the content of that order does not bind the Court in determining these matters on the evidence before it, and it is apparent that [NAME] paid no attention to the scope of [NAME]'s contractual obligations under the [NAME] in making that order. 13. [NAME] was briefly cross-examined briefly, and had a limited recollection of some matters, which is understandable given the passage of time. He readily acknowledged that he and [NAME] could have obtained legal advice as to the [NAME] if they wished to do so, and his evidence was that he, [NAME] and [NAME] had discussed that Agreement and its purpose (T83). He fairly accepted that he did not rely on advice provided by [NAME] with respect to the execution of that Agreement (T84).

14. The [NAME] rely on the more extensive evidence of [NAME], in five affidavits dated 6 August 2020, 29 September 2021, 11 February 2022, 6 May 2022 and 27 May 2022, although large parts of those affidavits were not relevant to the matters in issue in the proceedings, and narrower portions of those affidavits were read at the hearing.

15. By her first affidavit dated 6 August 2020, [NAME] referred to the initial engagement of an architect in respect of the project, who subsequently withdrew from the project and was not replaced, and to a tender received from [NAME] in September 2015 ([NAME] 6.8.20 [5]-[7]). She referred to the execution of the Contract and to the insurance policy obtained by [NAME] reflecting an initial contract price of $3,500,000 and to the issue of a construction certificate and other documents in relation to the project ([NAME] 6.8.20 [15], [17]). [NAME] referred to the subsequent engagement of [NAME], as a result of concerns as to the accounting for the project, and to the subsequent meeting between her, [NAME] and [NAME] in February 2017, prior to the entry into the [NAME], and to correspondence from [NAME] concerning drafts of that Agreement and its execution ([NAME] 6.8.20 [140]ff]). [NAME] also gave evidence of her subjective understanding of the [NAME], which I admitted so far as a rectification claim was brought in respect of that Agreement ([NAME] 6.8.20 [154]). 16. [NAME] there addressed the identification of concerns as to defects in plumbing work, from September 2017 onwards, and correspondence concerning those defects, continuing through until March 2019, with a further difficulty arising in March 2020 ([NAME] 6.8.20 [432]-[489]). She also referred to correspondence in respect of defects in the swimming pool during April 2016, correspondence as to concrete finishes in June 2017, and further correspondence concerning defects with the pool, and surrounding decking and addressing other matters from August 2017 ([NAME] 6.8.20 [498]). [NAME] refers to water entry into the property in February 2020 and to a rectification order issued by [NAME] ([NAME] 6.8.20 [729]). I have referred above to the limited relevance of that order in these proceedings.

17. By her second affidavit dated 29 September 2021, only a small part of which was read, [NAME] again addresses her intent in respect of the [NAME], in evidence of subjective intention which I admitted where a rectification claim was brought, as follows ([NAME] 29.9.21 [214]): "The February 2017 Agreement only arose as a result of the change in payment terms at the request of [NAME] so as to assist [NAME] in meeting their financial obligations [NAME] and I were asked to pay contractors direct. We did not have any discussions about defects at that time or beforehand as the works were far from complete as at February 2017. I was not asked to provide a release in respect of any defects in [NAME]'s work."

1. It may be that this was [NAME]'s subjective intention in respect of the [NAME], but it is not consistent with the circumstances in which that Agreement was negotiated by [NAME]. In negotiating that Agreement, [NAME] had made criticisms of the quality of the level of experience of [NAME]'s foreman on the site, and his suggestion that the foreman was inexperienced and not up to the job plainly carried an implication that the work may have been done inadequately, giving rise to a risk of defects; and the proposition that [NAME] was not asked to provide a release in respect of any defects in [NAME]'s works must be qualified by the fact that [NAME] then signed the [NAME] in the form provided to them by [NAME]. 2. [NAME] also gives evidence of an issue with the performance of the dining room sliding door ([NAME] 29.9.21 [277]); criticises the manner in which the pool cover operates ([NAME] 29.9.21 [390]); refers to the installation of the [NAME] between June and July 2017, after the entry into the [NAME] ([NAME] 29.9.21 [409]); refers to a comment made by a contractor as to whether timber decking would be required to be maintained or oiled on a regular basis ([NAME] 29.9.21 [422]); refers to a comment made by a contractor as to the poor finish of outdoor stairs ([NAME] 29.9.21 [437]); contends that water is penetrating the wall of the barbeque ([NAME] 29.9.21 [442]); gives evidence that the control panel, light and speakers for the [NAME] cannot be accessed since they are under the pool deck ([NAME] 29.9.21 [445]); and also addresses the payment of an invoice (JW29.9.21 [457]-[460]).

3. By her third affidavit dated 11 February 2022, [NAME] refers to the engagement of a plumbing firm to do emergency plumbing works in July 2020. By her fourth affidavit dated 6 May 2022, [NAME] refers back to her third affidavit and says that the ceiling linings and finish services removed to access plumbing works were not reinstated, By her fifth affidavit dated 27 May 2022, [NAME] repeats her earlier evidence that she did not discuss defects with [NAME] at the time of entry into the [NAME] ([NAME] 27.5.22 [15]). [NAME] denies that concreting, with the exception of the concrete driveway, was complete prior to the date of the [NAME], and her evidence is that the basement topping slab and stairs, external front door stairs, front balcony and living room topping slab were not complete by February 2017; there was outstanding blockwork to the barbeque area and landscaping as at the date of the [NAME]; brickwork was still being carried out internally as at that date; and the common brickwork has not commenced on the garage as at March 2017. Her evidence is also that plumbing works were still taking place at the property after the date of the [NAME], and the garage was not built at that stage that included a kitchenette and roof drainage; the rough-in for the hot water system had not been installed as at that date; the hot water system was not installed as at 31 July 2017; the rainwater tanks were also not installed by the date of the [NAME]; most of the electrical work was not completed at the house by the date of the [NAME]; and the ground floor windows and doors were not installed by the date of the [NAME]. [NAME]'s evidence is also that the air-conditioning works were not completed by the date of the [NAME] ([NAME] 27.5.22 [20]). This evidence is largely adverse to [NAME]'s case, so far as the responsibilities of [NAME] were narrowed by the terms of the [NAME]. 4. [NAME] was cross-examined and accepted that construction drawings were still being prepared for the project in the period up to October 2016 (T103). She did not recall a number of matters, including the discussion with [NAME] as to whether works should cease for a period in October 2016, although that is also understandable given the passage of time. Her evidence was that she had not formed the view that the foreman on the site was inexperienced by February 2017, although that was not entirely consistent with her observation in email correspondence at that time that he seemed "a little green" to her (T105). She accepted that she would have read the [NAME] when it was sent to her, although not that she read it "carefully", and acknowledged that she would have understood that it was an important document and that she had the ability to seek legal advice about it (T106). She referred to discussions with [NAME] as to that document, although she fairly accepted that she did not rely on him for legal advice as to that document, where he was not legally qualified, although she had relied on him to accurately convey its content (T107). She also accepted that she formed her view as to the operation of the [NAME] from her own reading of it and from [NAME] (T108) and, it follows, not from anything [NAME] or [NAME] had communicated to her. 5. [NAME] was also cross-examined as to the non-payment of trades in the latter part of the project, while issues as to alleged defects in the work were being addressed; her evidence was that many trades had been fully paid (T110) but plainly some were not. Her evidence was that payments were made to contractors in the reconciliation period after practical completion but, to the extent that questions of non-payment continued until September 2018, her position was then that payments would not be made where defective works existed on a "large scale", although some payments were made in that period" (T111). 6. [NAME] also read the affidavit dated 22 September 2021 of [NAME], a director of a business that supplies and instals glass, who referred to the supervision of his work on site and to the way in which his invoice was addressed. An affidavit dated 23 September 2021 of [NAME], an air conditioning contractor; an affidavit dated 23 September 2021 of [NAME], a tiler; and an affidavit dated 24 September 2021 of [NAME], a director of a company which undertakes rendering, addressed similar matters. By his affidavit dated 31 March 2022, [NAME], formerly the general manager of [NAME], which installed windows and doors at the project, gave evidence as to how work was done and invoices issued. He was briefly cross-examined, although his evidence was of limited assistance where he had not attended the site until works were "just about complete" when he met [NAME] on site to go through a defects list in about mid-2017 (T118).

7. The [NAME] read a small part of the affidavit dated 7 May 2021 of [NAME], a director of [NAME]. [NAME] refers to his background in the building industry, in which he has worked for approximately 28 years, almost exclusively in residential construction. [NAME] refers to the Contract and to the commencement of the project in December 2015, and the entry into the [NAME]. [NAME] refers to a quotation provided by [NAME] to resolve a difficulty in opening the living room sliding door, by removing the doors, shaving a few millimetres from them and reinstalling them, at a cost of $1,639.00 including GST ([NAME] 7.5.21 [103]).

8. By a second affidavit dated 19 May 2022, [NAME] led evidence of correspondence with his solicitor, waving legal professional privilege in respect of that correspondence, in respect of the [NAME], which was admissible to establish [NAME]'s subjective intention where the [NAME] brought a rectification claim. [NAME] also exhibited a program of the works that were finalised and in progress as at 1 February 2017, which is relevant to determining the nature of the work undertaken after the [NAME] was executed. [NAME] referred to an email sent by [NAME], in August 2016, regarding the warranty period for claiming for defective windows and an email dated 19 September 2016 from [NAME] regarding "efflorescence" forming on the brickwork which are relevant to whether defects had been claimed at the time the release in the [NAME] was given. [NAME] also led evidence as to his concerns in late 2017, prior to the entry into the [NAME], which was admissible as to [NAME]'s subjective intention where a rectification claim was brought, and he referred to the meeting with [NAME] concerning the entry into the [NAME]. 9. [NAME] was cross-examined as to the circumstances of [NAME]'s engagement and the overcharge by [NAME] which had been identified at that time, and readily conceded the facts relating to that overcharge. He was also cross-examined as to his email dated 6 February 2017 to [NAME], referring to his strong personal commitment to [NAME], to which I referred above, and to his meeting with [NAME] to discuss accounting issues in the project and the offer that he had made at that time (T174-175). He accepted that the substance of the dispute at that time related to accounting for the project (T176). He was also cross-examined as to the drawings attached to the [NAME], and acknowledged that those drawings would ordinarily call up engineering drawings in relation to matters such as stormwater details (T180). He was also cross-examined as to the rectification order made by the Department of Fair Trade to which I have referred above (T181-182) and his position was that the order related partly to defective work and partly to incomplete work, which was a matter between the relevant contractor and [NAME] (T182). 10. [NAME] maintained the position in cross-examination that the [NAME] released [NAME] for defects and any breaches of the statutory warranties under the HBA that arose from events prior to February 2017, and that he had contemplated that there would be such a release in respect of any such defects (T183). He accepted that there was no mention in the correspondence with [NAME] at that time that [NAME] would no longer be liable for defects in the works performed to date and that he was not then aware of any defects in those works (T184). He also accepted that, where works were in the process of being completed, it would then not have been possible to determine whether there were any defects in the completed works (T185). He accepted that earlier communications had repeated his and [NAME]'s commitment to completion on time and to the highest standard, but contended that position was changed by the [NAME] and that the quality of the project would subsequently depend on the contractors that were selected, implicitly by [NAME] (T185). He cogently explained (T187) the difference in the position, before and after the [NAME], as follows: "Once the [[NAME]] was signed, I lost control, or [NAME] lost control of the contractors that could be appointed, and our regular contractors, who we use, project in, project out, were not selected on the basis of cost, and we were left to supervise and manage contractors who, in my opinion, were not up to the quality of the work and had not performed that quality of work previously." It seems to me that that evidence highlights the difference between a builder's overall responsibility for the completion of a project, using subcontractors which it would ordinarily choose and retain, and a narrower supervision and management obligation, where contractors are chosen and retained by the client. I return to issues associated with that difference below. 1. [NAME] nonetheless accepted that, at the time the [NAME] was signed, he intended that [NAME] would complete the work to the highest standard, without compromise on quality (T188). He then gave a somewhat more qualified answer as to whether it remained his intention, as and from the [NAME], in performing the work of management and supervision under the [NAME], to achieve completion of the project to the highest standard, as follows: "Yes. When – in – in the normal course of construction, when we have our contractors and architect, who[se] documenting changes, and we're left alone to do what we specialise in, we could have done that, absolutely, and we could have finished probably before that time." That answer implicitly drew attention to differences between that normal course, and the position which arose in this case, where [NAME] chose a number of the contractors to be used in the project and the architect had withdrawn as result of the difficulties with design changes to which I referred above.

1. The [NAME] also read the affidavit of [NAME] dated 7 May 2021, which referred to her involvement with contract administration work on the project from about October 2015 to February 2016 and from October 2016 to the completion of the project. [NAME] referred to meeting [NAME] and providing quotations from subcontractors to her, and to discussions of monthly progress claims, in the course of the project. [NAME] also referred to the nature of landscaping defects claimed by [NAME] as at 31 July 2018 and to emails sent to subcontractors who worked on the project, identifying alleged defects which were relevant to their work on the project. [NAME] also referred to work she had done to identify any charge-back to relevant contractors, in respect of defects in painting as a result of their work, and referred to an email she had sent to [NAME] suggesting that the charge-backs be deducted against amounts that [NAME] had not paid the relevant contractors. She referred to her working fulltime at the site from early August 2018 to coordinate contractors to rectify alleged defects. She exhibited an email dated 2 June 2017 from the site supervisor, [NAME], to [NAME] providing a warning concerning the manner in which the designers had specified that the floor waste for the terrace should be constructed, and noted a risk of pooling of water if the terrace was constructed in that way, and to [NAME]'s instruction to proceed in that manner. [NAME] was not cross-examined.

2. The [NAME] also read the affidavit dated 7 May 2021 of Mr [NAME], a landscape architect, who is involved with swimming pool construction through [COMPANY] ("[NAME]"), of which he and [NAME] were each 50% shareholders until 2018 and in which he is now the sole shareholder. He refers to the entry into an agreement for the design of landscaping and a swimming pool for the home on 28 September 2015. He refers to his invoice for work carried out pursuant to the agreement and to the initial estimate for landscaping work and construction of the swimming pool and [NAME], and to [NAME]'s acceptance of a reduced quote for those works. He describes the form of swimming pool covers which are available, either floating on the surface of the water of suspended above the water, and he refers to emails and drawings concerning the form of pool cover that was used. His evidence is that the pool cover was installed by its manufacturer or distributor, [COMPANY] ("[NAME]"), rather than by [NAME] and to a confirmation received from [NAME] in response to [NAME]'s complaints about the height of the swimming pool cover. [NAME] also responds to complaints made as to the operation of the pool cover. 3. [NAME] also addresses the plan prepared and emailed to [NAME], in relation to the installation of a fibreglass [NAME] and further emails concerning that matter, which identified options to resolve the difficulty of the location of the control panel of the [NAME], including moving the control panel or installing a wireless control. [NAME] also gives evidence as to the fact that the timber deck had not been oiled when he visited the property in September 2020. He also refers to his recommendation to address imperfections in the surface of steps installed by [NAME]. [NAME]'s evidence is that the barbeque bench was poured and finished in polished off-form concrete and he also refers to approval of a quotation to lay additional ground covers between stepping stones instead of lawn as originally planned. [NAME] also refers to an instruction given by [NAME] to proceed with a suggested resolution of a complaint as to the concrete finish on steps. [NAME] was not cross-examined. 4. [NAME] tendered a report (Ex P2) and supplementary report (Ex P3) of [NAME], and [NAME] tendered a report and supplementary report of [NAME] in respect of hydraulic matters (Ex D1); [NAME] and [NAME] in turn prepared a joint report (J1), and they gave helpful and constructive concurrent evidence, in which the areas of agreement between them somewhat expanded. [NAME] had attended the site and conducted the investigations reflected in his report in June 2020 and [NAME] did not do so until March 2021 (T149) and that difference in the time of their inspections explained some differences in their observations. I will address their evidence below in dealing with the hydraulic defects for which [NAME] contend. [NAME] and [NAME] also recorded their observations from an attendance at the property after they had given concurrent evidence, in a further report (Ex J7). 5. [NAME] tendered the report of [NAME] (Ex P4) and [NAME] tendered the report of [NAME] as to building defects, and [NAME] and [NAME] also prepared a joint report (Ex J2) and gave oral concurrent evidence. [NAME] and [NAME] undertook a further inspection of the property on 14 June 2022, after their concurrent evidence was complete, and delivered a further report (Ex J3), which was in a somewhat abbreviated form, and did not draw express conclusions as to the implications of what they had observed for their evidence. I will return to their observations in dealing with particular issues below and also address a wider difficulty that arises from the lack of conclusions from them below. I have had regard to that evidence, although it is not necessary to summarise it in detail, and I address the relevant issues below.

The effect of entry into the [NAME]

1. I now turn to several of the issues in the proceedings. I have had the benefit of very detailed written submissions, and briefer oral submissions, although the changes in [NAME]'s position at the point of written reply submissions have given rise to the difficulties noted below. I have had careful regard to those submissions, even when I did not find it necessary to summarise or specifically address them, which would not have been feasible given their volume and detail. In particular, I have not considered it necessary to summarise [NAME]' reply submissions at length, to the extent that they address material that had already been raised in chief, although I have identified matters may have been first raised in reply above. I have had regard to the entirety of those submissions, even where I do not summarise them. I have also had regard to, but need not separately address, [NAME] paragraph by paragraph response to aspects of [NAME]'s submissions, in reaching conclusions as to those submissions above.

2. It will be convenient to address [NAME]'s claim by reference to the case set out in the Amended Statement of [NAME]'s response to it, although I will also address other issues which arose in the course of submissions below. [NAME] contend (ASC [9]) that the [NAME] "varied their Contract" but omit reference to [NAME]'s amended scope of work under cl 2.1 of that agreement in pleading that variation. [NAME] denies that the [NAME] constituted a variation of the existing Contract and, not surprisingly, deny that [NAME]'s identification of its terms (omitting that reference to cl 2.1) accurately set out its terms.

3. In his opening written submissions, [NAME], who appears with [NAME] for [NAME], submitted that [NAME]'s obligations in relation to the statutory warranties and the Contract (so far as it relates to the quality and standard of works required in relation to the Contract, plans and specifications) were not impacted by the entry into [NAME]. I do not accept that submission for the reasons noted below. In closing submissions, [NAME] submits that the [NAME] was a variation to the Contract and "both remained on foot", implicitly operating concurrently. He points out that the [NAME] contains no express statement that it replaces the Contract and does not include an "entire agreement" clause. He submits that this "supports the proposition that it was a variation to the contract". I am not persuaded of that proposition, at least if it is intended to suggest that the Contract and the [NAME] could continue concurrently, where they contained inconsistent obligations and no mechanism to resolve the inconsistency between them. I return to that matter below. 4. [NAME] also points to cl 10.3 of the [NAME], which records that there is no agreement between the parties relating to variations under that Agreement. It is not apparent, and [NAME] does not explain, how that clause supports an inference, which he seeks to draw from it, that the Contract was still on foot. [NAME] also submits that various things would have been done if the residential building works were to be undertaken by [NAME] as "owner/builder", including revising insurance requirements. That submission also does not seem to me to support any inference that the Contract remained on foot, where an arrangement where [NAME] undertook to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with specified Plans and Specifications, and third party contractors performed the works, which would not necessarily be an "owner/builder" arrangement in any common sense. 5. [NAME] in turn submits that: "As and from the [NAME], and pursuant to the Contract, the builder remained responsible for the residential building works and for bringing those works to completion pursuant to the statutory warranties and the plans and specifications." That proposition depends on the concurrent operation of the Contract and the [NAME], although the concept of "responsibility" which it adopts is plainly not directed to carrying out the building works, since cl 2.1 of the [NAME] made clear that [NAME] would not do so. For the reasons noted below, it seems to me that the Contract and the [NAME] were not capable of operating concurrently and did not do so. [NAME] goes further to contend that: "There is no rational basis to conclude that the [NAME] brought the Contract to an end."

1. It is settled law that a subsequent agreement may operate to vary or instead replace an original agreement. As the plurality explained in Commissioner of Taxation (Cth) v Sara Lee Household & Body Care (Australia) [COMPANY] (2000) 201 CLR 520; [2000] HCA 35 at [22]–[24]: "[22] When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists. … [23] In [COMPANY] v [COMPANY] J said: It is firmly established by a long line of cases … that the parties to an agreement may vary some of its terms by a subsequent agreement. They may, of course, rescind the earlier agreement altogether, and this may be done either expressly or by implication, but the determining factor must always be the intention of the parties as disclosed by the later agreement. [24] That passage was cited with approval by Wilson and Dawson JJ in [NAME] v [COMPANY]. It accords with principle and with authority." [citations omitted] Those passages were approved by the Court of Appeal in [COMPANY] v [NAME] No 65111 [2021] NSWCA 162 at [334] (Bathurst CJ with whom [NAME] and [NAME] agreed). Here the question is therefore whether the intention of the parties, objectively construed and as disclosed by the [NAME], was to vary the obligations under the Contract or to instead rescind the Contract and replace it with the [NAME].

1. It seems to me that [NAME]'s obligations were plainly impacted by the restriction of the scope of its work under cl 2.1 of the [NAME], and its obligations in relation to the plans and specifications attached to the Contract were affected by the replacement of those documents by the different plans and specifications attached to the [NAME]. Third party contractors then undertook particular areas of works after the [NAME], where [NAME]'s responsibility was limited to carrying out the work "reasonably necessary to manage and supervise" the project's completion in accordance with specified plans and specifications, by providing specified personnel until practical completion.

2. It also seems clear to me that the Contract and the [NAME] did not operate concurrently, but successively, from the date the [NAME] took effect. The most obvious reason for that conclusion is that they were inconsistent as to significant matters, namely the scope of [NAME]'s obligations, the manner of retention of third party contractors and the payment arrangements; but there was no provision to deal with the inconsistency that existed if they operated concurrently, by providing that the obligations in the [NAME] prevailed over the obligations in the Contract. By contrast, the parties had expressly provided in cl 2.4 of the [NAME] for the risk of inconsistency between those instruments that did operate concurrently, namely the [NAME], the Plans and the Specifications, by providing that the [NAME] would prevail. It seems to me inconceivable that the parties would not also have there addressed the substantial inconsistency between the Contract and the [NAME], which was an obvious fact and not merely a risk, had the two had concurrent operation after the execution of the [NAME].

3. Even if, contrary to my view, the [NAME] varied the Contract, rather than replacing it, it also seems to me plain that it narrowed the scope of [NAME]'s obligations to those set out in cl 2.1 of the [NAME]. No other view seems to me to be open, since cl 2.1 of the [NAME] would be, at best, superfluous and at worst inconsistent, if [NAME] continued to have the wider obligations imposed under the Contract, which contemplated that it would construct, rather than do the work "reasonably necessary" to "manage and supervise" the completion of the Contract. 4. [NAME] also submitted, in his opening written submissions, that the hydraulic plans attached to the [NAME] were "concept only" and required [NAME] to resolve matters on site with its [NAME], although it was not clear how this proposition arose in [NAME]'s pleaded case . I do not accept that submission, since I cannot assume, without evidence, that the scope of management and supervision responsibilities conferred on [NAME] under cl 2.1 of the [NAME] extended that far in relation to the [NAME] or other contractors. [NAME] also submitted that the hydraulic plans could not be relied on without reference to the engineering plans, and the engineering plans were incorporated into the [NAME]. I also do not accept that submission, where it is not apparent that the [NAME] imposed any obligation on [NAME] to determine questions of construction detail in respect of construction works which were no longer allocated to it, but would of necessity be undertaken by particular contractors where its obligation was limited to management and supervision. 5. [NAME] alternatively contend, and the [NAME] deny, that the [NAME] was a contract for the performance by [NAME] of the balance of the works under the Contract that were outstanding as at 21 February 2017 (ASC [10], Defence [10]). That contention is not sustainable, given the narrowed scope of the continuing role of [NAME] under the [NAME].

6. In reply, [NAME] developed an arguably new case that the amendments made by the [NAME] were void, to the extent that they narrowed [NAME]'s obligations in the future, by reason of s 18G of the HBA. That case was not pleaded, where [NAME] had relied on that section only in answer to the release in the [NAME]. Even if that case could be raised in that way, where that would deprive [NAME] of any opportunity to be heard in respect of it, and of procedural fairness, I would not accept it. There is no reason to read s 18G of the HBA as preventing an amendment to a building contract that narrows a builder's obligations in the future, because the owner's needs have changed or, conceivably, they do not wish to engage the builder in future for works which the owner can no longer afford. The [NAME], so far as it preserved [NAME]'s rights in respect of previous construction work done by [NAME] (as I have held) but narrowed the scope of [NAME]'s obligations in the future, did not "restrict or remove the rights of a person in respect of any statutory warranty", but only define the scope of [NAME]'s obligations in the future. 7. [NAME] put a further submissions in reply that, if the [NAME] narrowed [NAME]'s obligations (as I have found it did), then there was no contract for the performance of residential building works as required by the HBA, and the residential building works were not insured as required by the HBA. So far as these are also new contentions, there being raised in this way would again deprive [NAME] of any opportunity to be heard in respect of it, and of procedural fairness. In any event, these submissions do not assist [NAME], because there is no pleaded case of breach of the HBA in that respect, and no identified consequences of such a breach. In reply, [NAME] also advances several new arguments as to the effect of the [NAME], relying on the proposition that [NAME] had no contract with any trade contractor. I do not consider it necessary to address that argument. It depends on a premise, which is not established, that [NAME] in fact had no contact with any trade contractor. The fact that [NAME] did not press its allegation that such contracts existed does not mean the negative, that such contracts did not exist. No question as to claims between [NAME] and trade contractors arises in these proceedings, not least because trade contractors were not joined as party to the proceedings, even where significant aspects of the defects on which [NAME] rely arose from their work. Finally, that submission also appears to be raised in support of the unpleaded claim that any narrowing of [NAME]'s obligation under the [NAME] is void by reason of s 18G of the HBA, which I have not accepted.

[NAME]'s claim under s 18B of the HBA and under the [NAME] 1. [NAME] contend (ASC [12]) that, by s 18B of the HBA, they are entitled to the benefit of statutory warranties implied into the Contract and the [NAME]. That section of the HBA relevantly provides that: "(1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work-- (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new, (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment. (2) The statutory warranties implied by this section are not limited to a contract to do residential building work for an owner of land and are also implied in a contract under which a person (the "principal contractor") who has contracted to do residential building work contracts with another person (a "subcontractor" to the principal contractor) for the subcontractor to do the work (or any part of the work) for the principal contractor.

1. The [NAME] point out that the relevant statutory warranties were also expressly set out in both the Contract and the [NAME] (Defence [12]). There is no dispute that these warranties applied in respect of the work that [NAME] had contracted to do, which was in the nature of "residential building work" as defined, but that emphasises the significance of identifying that work, as defined by the Contract and then by the [NAME]. It seems to me that the statutory warranties in respect of [NAME]'s work under the [NAME] cannot extend beyond the scope of the work that [NAME] was required to perform under that Agreement. That much is clear where each warranty in cl 8.1 of the [NAME] was given by reference to "the Work", which was in turn defined by reference to [NAME]'s limited obligations under cl 2.1 of the [NAME]. 2. [NAME], in his opening written submissions, submitted that the schedules to the [NAME] made clear that [NAME] was performing the whole of the Works under the [NAME]. I do not accept that submission, which is plainly inconsistent with the limited scope of the obligations imposed on [NAME] under cl 2.1 of the [NAME]. Although the parties directed some attention to whether [NAME] or [NAME] retained particular contractors after the date of the [NAME], it is not necessary to address that question in any detail, because the answer to it is not capable of expanding the scope of the obligations undertaken by [NAME] under that clause. 3. [NAME] also contend and [NAME] denies (ASC [13], Defence [13]) that the Works (as defined): "did not conform to the requirements of one or more of the statutory warranties and, because of those breaches, were defective." The term "Works" is defined in the Amended Statement of Claim (at [6]) as the building work involved in the project. That definition is much wider than the definition of "Works" In the [NAME], which was limited by reference to [NAME]'s obligations under cl 2.1 of the Agreement. This paragraph is particularised by reference to a schedule to a rectification order issued by [NAME] on 25 May 2018, to which I referred above, (although the parties did not contend the findings of [NAME] were binding on the Court), and by reference to expert reports, to which I have referred above and to a schedule which was (in amended form) marked "[NAME]" and which I will review in some detail below. 1. [NAME] then contend (ASC [14]) that: "[[NAME]] is liable to [[NAME]] for the cost of repairing and rectifying the defective Works, and for loss and damage suffered by [[NAME]] by reason of the failure to carry out the Works in conformity with the statutory warranties." It will again be necessary to distinguish between the position before and after the [NAME] took effect in that respect, and it is also necessary to have regard to the particular defects to which [NAME] refer, which I address below. 1. [NAME] initially relied only on the implied warranties arising from the HBA, although they raised express warranties in cl 8.1 of the [NAME] in their reply, to which I refer below. This claim proceeds on the premise that, even after [NAME]'s obligations were limited to the obligation to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" under cl 2.1 of the [NAME], compliance with the statutory warranties is to be tested against the result of the building work undertaken by third party contractors from late February or March 2017, rather than against the work of management and supervision which [NAME] had contracted to undertake. I do not accept that premise. 2. [NAME] fairly accepted in his opening oral submissions that the statutory warranties under the HBA, in respect of [NAME]'s work undertaken under the [NAME], would apply in respect of the scope of the work undertaken, although he contended that there was no "material difference" in respect of the scope of that work from its obligations under the Contract (T11). I cannot accept that submission where, as I noted above, [NAME] assumed responsibility for the construction work generally under the Contract, although it engaged a number of contractors in respect of that work. By contrast, the obligation assumed by [NAME] under the [NAME] was, as I also noted above, to do the work "reasonably necessary to manage and supervise the completion of the [p]roject in accordance with the Plans and Specifications", by providing the specified personnel from the date of that Agreement until Practical Completion. 3. [NAME] also submitted, in opening, that [NAME] breached the [NAME] by leaving the supervision and management of the works to a person who was not sufficiently qualified or experienced to perform the role required under the [NAME]. Putting aside the fact that allegation was not part of [NAME]'s pleaded case, I do not accept that submission. There was no expert evidence to establish the qualifications which would be required of a supervisor in the somewhat unusual circumstances of the [NAME], still less to establish that any failure of the supervisor's qualifications had any link with the defects in work actually performed by third party contractors after the date of the [NAME]. 4. [NAME] alternatively contended (T12) that, if works were defective, there had "necessarily" been a failure of management and supervision. I also do not accept that proposition, where that will depend on what, if anything, the work "reasonably necessary" in respect of the management and supervision obligation would have required [NAME] to do in respect of the particular works that are said to be defective. It is neither self-evident, nor logically necessary, that adequate supervision, provided across a range of trades working at various times on the completion of the project from February or March 2017, could prevent defects in the detail of the work. No doubt, some work may be so fundamental that an obligation to do work "reasonably necessary to manage and supervise the completion of the [p]roject in accordance with the Plans and Specifications" would necessarily extend to them; other work may be of a less significant character and outside the scope of such an obligation or be of a technical character that would be left to the relevant contractor. It seems to me that the nature of the work that might fall in either category is a matter of evidence, and neither self-evident nor a matter for judicial intuition. There is no evidence to establish either the extent of supervision and management that was "reasonably necessary", or how it would have been applied to the particular work undertaken by contractors, or how it would have prevented particular defects on which [NAME] now rely. 5. [NAME] submits, in closing submissions that at the point of the [NAME]: "was still the licensed builder and, at law, performing the whole of the residential building works pursuant to the [HBA], the insurance under the [HBA], the EPA Act, and the approved D[evelopment] A[pplication] by which the residential building works [sic]." [emphasis added] I am unable to accept that submission. The scope of [NAME]'s obligations was to be determined by the construction of the [NAME] and, as the evidence plainly establishes that the bulk of work was not undertaken by [NAME] following the [NAME] but by third party contractors, and they are identified by the [NAME] in indicating the defects in their work, so the proposition that [NAME] was "performing" (in any sense of undertaking) "the whole" of the residential building work is simply incorrect. [NAME] submits that it was also reasonable for [NAME] to rely on representations of [NAME] prior to the entry into the [NAME]. I accept that proposition, but it leads nowhere, where [NAME] bring no claim for rectification of the [NAME], other than in respect of the release that I address below. 1. [NAME] submits that [NAME] supervised and managed the works after the [NAME] was made and, at least to that extent, there is no contest that it complied with its obligation to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with specified Plans and Specifications under cl 2.1 of the [NAME]. Both parties point to evidence called by several contractors, including [NAME] and [NAME], whose evidence I addressed above, all of whom gave evidence that their work was in fact managed and supervised by a representative of [NAME], who was on site everyday observing and inspecting the works being performed and managing trades. By an email dated 22 May 2017 ([NAME], 4622), [NAME] in turn stated that it would be supervising the painter on site "as we do with all contractors". [NAME]'s case is therefore not that [NAME] was not managing and supervising the project, but that the manner in which it did so was inadequate. However, that highlights the difficulty that, in order to determine whether supervision is inadequate, one would ordinarily need first to identify what would constitute adequate supervision, and that would almost inevitably be a matter of evidence, at least in a complex project where any exercise of supervision will require decisions as to what is supervised, and how it is supervised. 2. [NAME] submits that there is no evidence that [NAME] was "unable to manage or supervise" the works after the [NAME] was made, because its personnel were precluded from attending the property, observing the works or giving directions as to the performance of the works. That proposition is, with respect, a distraction, because [NAME] does not suggest that it was prevented from managing or supervising the residential building works. It instead contends that the [NAME] have not established that it failed to do so adequately, in respect of the particular defects for which they contend. [NAME] also submits that there is no evidence that [NAME]'s instructions were rejected or disobeyed by any contractor or that any contractor refused to perform works under [NAME]'s management and supervision or that any contractor "covered up" works it had performed to prevent [NAME] from inspecting that work. 3. [NAME] points to the fact that [NAME] has not called evidence from two individuals who had supervisory responsibilities on the site, and not led evidence of [NAME] as to any events that prevented [NAME] managing and supervising the works. He refers to the application of the principle in Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 in negligence cases, as summarised by Dixon J in Hampton Court Ltd v Crookes (1957) 97 CLR 367 at 371; [1957] HCA 28. That principle does not assist [NAME], where the need for the Plaintiff to offer "some evidence of negligence" recognising that "slight evidence" may be enough in a particular case, and the proposition that the evidence should be weighed according to the power of the party to produce it, does not displace the need to establish the content of a duty to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject", if a breach of that duty is alleged. Where [NAME]'s duty was limited in that way, from the date of [NAME], it is not correct to say, as [NAME] does, that: "It is reasonable to conclude, in the absence of any evidence of the kind that [[NAME]] could have adduced, that the defects have arisen as a consequence of [[NAME]'s] breaches of the Contract and/or the [NAME]." That proposition is not correct in respect of the Contract, because it did not have concurrent operation with the [NAME], as I have noted above; and it is not correct, in reference to the ultimate quality of the works, because it is reasonable to conclude that, self-evidently, the defects in those works have arisen as a consequence of the third party contractor's failure to undertake the work adequately; and, whether there was also a breach of [NAME]'s obligation to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with specified Plans and Specifications under cl 2.1 of the [NAME] is a much more complex question.

1. While I accept that an inference would ordinarily follow that the evidence of the supervisors would not assist [NAME] in demonstrating the adequacy of its supervision and management generally or in respect of the particular defects, that inference would only assist the [NAME] if they had established an evidentiary basis for any failure on [NAME]'s part to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with specified Plans and Specifications, as distinct from proving only the fact of defects in work undertaken by third party contractors. Little turns on that inference where the [NAME] have not established what should have reasonably be done in order to comply with [NAME]'s duty of management and supervision, to allow an evidentiary basis for the Court to determine the content of that duty, and whether it had been breached. The absence of evidence from the [NAME] in that regard cannot fill that gap. 2. [NAME] also submits that there were defects in the work undertaken and I accept that broad proposition, where the rectification order issued by [NAME] ([NAME], 6400) provides at least some evidence of that matter, the [NAME] have tendered video records and photographs of water ingress into the premises (Ex P1 and MFI 4) and the experts find defects in the work. However, that submission is the start, not the end, of the inquiry whether any breach of [NAME]'s obligation to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with specified Plans and Specifications, as distinct from the work done by third party contractors, was causative of those defects. 3. [NAME] alternatively relies on [NAME]'s obligation to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with the Plans and Specifications to seek to incorporate the statutory warranties in the [NAME], and he also refers to the warranties given under cl 8 of the [NAME], to assert that: "Accordingly, as and from 27 February 2017, [[NAME]] remained responsible for the residential building works as completed and was liable to the [[NAME]] in relation to breaches of the statutory warranties." That proposition has the obvious difficulty that, as I note below, both the statutory warranties and the express warranties under cl 8 of the [NAME] were directed to the work which [NAME] was obliged to undertake under the [NAME], which was itself limited to carrying out the work reasonably necessary to manage and supervise the completion of the project, and did not extend to the outcome of work performed by third party contractors. 1. [NAME] in turn refers to several cases in which Courts have reached findings, on the particular facts and by reference to the evidence before them, as to the scope of a supervisory obligation. He refers to Sutcliffe v Chippendale & Edmonson (A Firm) [1971] 18 BLR 149, where Stabb J stated: "[T]he building owner is entitled to expect his architect so to administer the contract and supervise the work, as to ensure, as far as is reasonably possible, that the quality of work matches up to the standard contemplated."

1. He also refers to Sheldon v McBeath (1993) Aust Torts Reports 81-209, where Handley JA stated that "the duty of supervision must be performed progressively and at critical stages of the building works. He refers to an observation of Barwick CJ in Florida Hotels Pty Ltd v Mayo (1965) 113 CLR 588 at 593 ("Florida Hotels"), that: "There can be no doubt that due skill and care in this case required [the respondents] to supervise the work done in preparation for the pouring of concrete to form these slabs … the respondents were bound to take reasonable steps to ensure that they inspected the formwork and the placed the reinforcement before concrete was poured and the work was covered up. They do not satisfy this be relying on the workmen whose work they were employed to supervise…"

1. He also refers to Windeyer J's observation in that case that: "An architect employed to supervise the construction of a building must bring a proper degree of skill to his task and exercise reasonable care in its performance … whether he be engaged to supervise the work of an independent contractor or of the building owner's servants the obligation of a supervising architect is the same. He must exercise reasonable care in carrying out the duty he has undertaken." 1. [NAME] also notes that Windeyer J there quoted Lord Ordinary, Lord Kyllachy in James v Simon (1899) 1 F (Ct of Sess) 1211 who said: "I cannot assent to the suggestion that an architect undertaking and being handsomely paid for supervision, the limit of his duty is to pay occasional visits at longer or shorter intervals to the work, and paying, those visits to assume that all is right which he does not observe to be wrong…speaking generally, his obligation is, so far as reasonably possible, to see that the work is duly and properly executed, and whether he has failed in that duty in any particular case is a question of circumstances, and a question not for his professional brethren but for the Court."

1. First, I largely read these observations in the case law as recording the findings which the Court has reached in the particular cases, and not as expressing principles of law that can be applied without an evidentiary basis for their application, where what is required to "carry out all the work reasonably necessary to manage and supervise the completion of [a] [p]roject", in particular circumstances, will be a question of fact. Second, there may be some defects that are so significant that little evidence may be required to find a breach of a duty to supervise, and Florida Hotels may be an example of such a case. However, that does not support the extended proposition which [NAME] seeks to draw from that decision that, because due care and skill required the supervisor in that case to supervise a concrete pour, where a failure to do so would have potentially catastrophic consequences, an obligation to "carry out all the work reasonably necessary to manage and supervise the completion of [a] [p]roject" extends to ensuring that all works undertaken by third parties are not defective and is self-evidently breached if any, or some, such works are defective. Obviously, as a matter of practicality, a supervisory role is likely to require a degree of focus on what is more important, since the costs of supervising every step taken by every subcontractor in every stage of a complex project would likely be ruinous. Third, the proposition to which Windeyer J referred in Florida Hotels, that the question of breach of a duty of care is a matter for the Court, is familiar, but does not displace the need for evidence. As I observed in the course of submissions, the question whether a doctor has breached his or her duty of reasonable care is a matter for the Court and not a matter for the medical profession, but that does not follow that Courts regularly decide medical negligence cases without expert medical evidence to inform them of what that duty might require to be done in particular circumstances.

2. I should also recognise that, in the law of negligence, the Courts have recognised that the extent to which a contractor will supervise the work of a competent subcontractor may vary, even where the contractor has engaged that subcontractor, as distinct from the position here where [NAME] frequently directly engaged subcontractors rather than [NAME] doing so. In [COMPANY] v Church Commissioners for England [1989] 1 AC 177, in dealing with the question of a head contractor's liability in negligence for the conduct of a subcontractor, Lord Bridge of Harwich observed (at 209, with the other members of the House of Lords agreeing) that: "If the fact of employing a contractor does not involve the assumption of any such duty [to a third party] by the employer, then one who has himself contracted to erect a building assumes no such liability when he employs an apparently competent independent sub-contractor to carry out part of the work for him. The main contractor may, in the interests of the proper discharge for his own contractual obligations, exercise a greater or lesser degree of supervision over the work done by the sub-contractor. If in the course of supervision the main contractor in fact comes to know that the sub-contractor's work is being done in a defective and foreseeably dangerous way and if he condones that negligence on the part of the sub-contractor, he will no doubt make himself potentially liable for the consequences as a joint tortfeasor. … In so far as the former decision [an unreported decision of Judge Edgar Fay Q.C. in [NAME] v. [COMPANY]., 19 February 1982] relied on any general principle of law that a main contractor is liable to a third party who suffers damage from the negligently defective work done by his sub-contractor, I can only say, as already indicated, that I can find no basis in law to support any such principle." [emphasis added] That decision was in turn noted, as authority as to the extent of a head contractor's liability of negligence for conduct of its subcontractor, in Metropolitan Fire and Emergency Services Board v Yarra City Council (2015) 214 LGERA 1; [2015] VSC 773 at [283]-[285]. 1. [NAME] faintly submitted for [NAME] that the appointment of the relevant personnel would be enough to comply with its obligation under cl 2.1 of the [NAME]. I do not accept that submission. With greater substance, [NAME] submits that the terms of the [NAME] do not impose an obligation on [NAME] to build anything, but to "manage and supervise"; that the Plans and Specifications referred to in schedule 4 of the [NAME] are different to and narrower than those included in the Contract; the entire suite of contract drawings are not to be included by reference; the obligation of management and supervision does not extend beyond the date of practical completion, in October 2017; and the obligations imposed on [NAME] are limited by reference to the defined term "Project". [NAME] submits that the obligations on [NAME] under the Contract did not remain in place after entry into the 2017 Agreement, where the obligation to execute and complete construction works under the Contract is substituted by the reference to the defined term "Project" in the [NAME]; a contention that [NAME] was obliged to "execute and complete" the construction of the house under the [NAME] is inconsistent with the express terms of cll 2.1 and 2.2 of the [NAME]; if the Contract remained on foot, cll 2.1 and 2.2 of the [NAME] would have no work to do, and the scope of work defined in the [NAME] would not be operative; and the continuance of insurance under Pt 6 of the HBA is not material, both because of the insurance requirements under the HBA and because [NAME] was expressly required to continue to maintain that insurance under the [NAME]. [NAME] also submits that, so far as the statutory warranties are implied into the [NAME], they attach only to [NAME]'s limited obligations under that Agreement. 2. [NAME] submits, with some force, that [NAME]'s pleaded case was that the [NAME] included an ongoing obligation to demolish the previous building and construct the new dwelling, and the language of the [NAME] does not include that obligation. [NAME] also points out, correctly, that the breaches of obligation which were identified by [NAME] were directed to defective workmanship, and works wholly or largely undertaken by third party contractors, rather than any failure to manage and supervise by [NAME]. [NAME] also submits that [NAME]'s case, in substance, assumed that proof of defective workmanship (I interpolate, largely undertaken by third party contractors) was proof of a failure to manage and supervise by [NAME]. I accept that the case was largely put by [NAME] on that basis, possibly relying on the contention, which I have not accepted, that [NAME]'s wider obligations under the Contract subsisted in parallel to its narrower obligations under the [NAME]. [NAME] also submits that a breach of a duty to supervise must be pleaded and particularised: QBE Insurance Australia Ltd v Stewart [2009] NSWCA 66 at [60]. I accept that such a breach was neither pleaded nor particularised here, although I do not decide the case on that basis. The parties here conducted the case on the basis that the narrower obligations of management and supervision were also in issue and I will determine it on that basis. 3. [NAME] also submits that the distinction between the construction obligations imposed on [NAME] under the Contract, and the management and supervision obligation under the [NAME], is contemplated by the HBA, which itself distinguishes between the activities of construction and supervision, and imposes different licensing requirements in respect of those activities. [NAME] in turn addresses, in reply, the scope of the licensing regime for contractors and supervisors under the HBA, which was also addressed by [NAME] in its submissions in chief. It is not necessary to address that matter further, since it is at best peripheral to the issues that I have to decide. 4. [NAME] also points to the absence of evidence that [NAME] was in breach of its obligations to manage and supervise the Works after the entry into the [NAME], implicitly excluding the inference which [NAME] seek to draw from the fact of defects in third party contractors' works. He points out that the only evidence as to the performance of those obligations, found in the evidence of sub-contractors called by [NAME], was that [NAME] in fact managed and supervised their work, at least in a general sense, and I have referred to that evidence and to [NAME]'s reliance on it above.

5. In submissions in reply, [NAME] emphasises [NAME]'s advice to [NAME] that it was not possible to contract out of the HBA and that [NAME] was and would remain liable for breaches of the statutory warranties. It does not follow, however, that [NAME] was liable, after the date of the [NAME], for any breach of the statutory warranties in respect of work which it had not undertaken to do and which was in fact to be done by third party contractors.

6. For the reasons indicated above in dealing with Counsel's submissions, and that further reasons noted in dealing with particular defects below, neither a breach of the statutory warranties nor a breach of the contractual warranties in the [NAME] is established. Several defects were established so far as work was done under the Contract and before the [NAME] took effect, likely on 5 March 2017.

[NAME]'s response to the relief claimed – whether the work was defective 1. The [NAME] plead (Defence [14]) a comprehensive series of defences to the relief claimed by [NAME] in paragraph 14 of the Amended Statement of Claim. First, they raise several defences which relate to the scope of their obligations under the [NAME]. They deny (Defence [14(a)]) that [NAME] (presumably, as distinct from third party contractors) carried out defective work under the Contract. I have addressed that issue in dealing with the particular defects for which [NAME] contend above.

[NAME]'s response to the relief claimed – release under the [NAME]

1. Second, the [NAME] contend (Defence [14(b)] that if (which they deny), [NAME] carried out defective work under the Contract, its liability was released by the terms of the [NAME] by way of accord and satisfaction. 2. [NAME] relies on [NAME]'s inquiry as to product warranties in mid-August 2016 to suggest she was then concerned about defects in the work. I do not accept that submission; the inquiry seems to me, in its context, to be directed to whether she would be in a better position, in respect of warranties, by contracting directly with [NAME] rather than with [NAME]. [NAME] also relies on [NAME]'s email of 21 September 2016 concerning efflorescence on an area of the brickwork to contend that [NAME] were then conscious of defects in the work, but does not seem to me to be sufficiently material to support that inference. [NAME] also relies on [NAME]'s email of 15 February 2017 ([NAME], 3723) referring to a failure properly to construct the works, to which I referred above, as indicating a consciousness of defects in the works. I do not accept that submission. It seems to me that the position there put was part of an aggressive email, seeking to persuade [NAME] to accept [NAME]'s terms for the [NAME], and is not sufficient to indicate a consciousness of any material defects in the work, although I have also not accepted [NAME]'s oral evidence seeking to explain away that language above (T49-50). [NAME] also relies on the focus on retentions, prior to and in negotiations of the [NAME], as indicating a consciousness of defects. I also do not accept that submission, where the possibility of defects always exists in a construction contract, and retention arrangements are a prudent means of dealing with it, which will generally be addressed in construction contracts whether or not defects then exist or will ultimately emerge. 3. [NAME] also refers to well-established principles of construction of written agreements, referring to Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [40]. He submits that the release in the [NAME] operates in respect of any event that has occurred prior to the date of its execution and the only constraints on the release are that it is "in connection with" an event "which has occurred prior to the date of" the [NAME]. [NAME] initially submitted that [NAME] gave up more than $2.5 million in revenue that would have been paid under the original Contract, and that is relevant to the scope of the release given; however, a focus on revenue does not assist where [NAME] would also have incurred the costs of construction prior to the [NAME] and its profit would likely not have exceeded its builder's margin. The effect of the [NAME] was that [NAME] gave up its builder's margin on work to be undertaken in the future, to the extent that it exceeded the fixed fee it was to receive under the [NAME], but assumed a narrower obligation and a narrower risk in doing so. [NAME] also accepts that the decision in Grant v John Grant & Sons (1954) 91 CLR 112 ("[NAME]") permits an investigation of the circumstances, including the actual intention of the parties, to determine whether enforcement of the general words of a release would be against conscience, referring to the [NAME] v [COMPANY] (No 2) [2012] NSWSC 322 at [29]. He submits that principle has no rule to play, because the release in cl 6.2 extends to unknown claims and there is nothing to suggest that [NAME] took advantage of any non-awareness of [NAME] as to the existence and likelihood of defects in the work. 4. [NAME] submits, and I accept, that the language "or but for this Deed may have had against the builder" in the terms of the release is sufficiently broad to include claims that were then unknown; compare [NAME] v [NAME] as Executor of the Estate of [NAME] (No 2) [2021] WASC 159 at 806. However, I do not accept his further submission that that conclusion is the end of the inquiry as to the proper operation of the release. I also do not accept his submission that [NAME], or [NAME], or indeed [NAME], were then aware of defects of any materiality, given the findings which I have reached in dealing with the relevant evidence above. 5. [NAME] responds, in opening submissions, that [NAME] released [NAME] under the [NAME] only from liability in respect of "its breaches and overcharging" and [NAME] released them from any claims for Works performed prior to that Agreement. [NAME] refers to [COMPANY] (in liq) v [NAME] [No 1] [2002] 1 AC 251, and to Lord Bingham's observation that: "… there is a long and in my view salutary line of authority [which] shows that, in the absence of clear language, the court will be very slow to infer that a party intended to surrender rights and claims of which he was unaware and could not have been aware."

1. He also refers to [NAME] above, where the Court stated that: "The question is whether upon a proper interpretation of the deed the general release clause should be restrained to matters in dispute within the meaning of these recitals. The question depends primarily on the application of the prima facie canon of construction qualifying the general words of a release by reference to particular matters which recitals show to be the occasion of the instrument. But it is also affected by the general tenor of the deed. It is unnecessary to say more about the canon of construction or to discuss further the contents of the deed. As to the first all that remains is to apply the principle that prima facie the release should be read as confined to the matters forming the subject of the disputes which the deed recites. As to the second, such indications as can be found in the provisions of the deed point rather in the same direction. The detailed character of the terms of settlement, the careful readjustment of rights, the specific reference to the debt of [NAME] and his wife and its discharge and the particularity of the allocation of things and contracts between the companies do not favour the view that a general release was intended going outside the actual area of dispute." 1. [NAME] in turn refers to Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26, where Gleeson CJ and Handley JA referred to [NAME] and stated that it: "…sets out the principles by reference to which a court will decide whether a general release will be held to cover a particular dispute. The rule is that the general words of a release will, in an appropriate case, be read down to conform to the contemplation of the parties at the time the release was executed." 1. [COMPANY] formerly known as James Hardie & Coy Pty Ltd v CSR Ltd [2001] NSWSC 324, Bergin J (as her Honour then was) considered a question whether a widely framed release in a partnership dissolution deed extended to releasing liability for claims regarding asbestos. Her Honour observed (at [97]-[98]) that: "In considering the surrounding circumstances on this aspect of the matter I am applying the approach of giving to the Deed the meaning which ought reasonably be ascribed to the words having due regard to the purpose of the contract and the circumstances in which it was made. It is these circumstances and purpose which convince me that the words, although apparently broad enough on one view of them to include the claim in these proceedings, do not in fact include it. I am satisfied that in the context of the Deed, the partners relationship at the time and the surrounding circumstances, the terms of the Release do not include the claim of the type in these proceedings."

1. In Karam v ANZ Banking Group Ltd [2001] NSWSC 709, at [406], Santow J in turn identified the general principles applicable to construing releases or purported releases, observing that: "(2) In order for the Court to give effect to what in an objective sense the contracting parties intended, it is clear that a party may agree to release claims or rights of which it is unaware and of which it could not be aware, provided clear language is used to make plain that that is its intention: see Salkeld v Vernon (1758) 1 Eden 64 at 28 ER 608 per Lord Keeper Henley. (3) Consistent with this emphasis on intention, general words in a release are limited to what was specifically in the contemplation of the parties at the time when the release was given: Grant v John Grant and Sons (1954) 91 CLR 112 per Dixon CJ, Fullagar, Kitto and Taylor JJ; [COMPANY] v [NAME] (NSWCA, 17 April 1997, unreported) per Priestley JA with whom Grove AJA and Handley JA agreed). (4) Although there are no special rules of construction, such as a contra proferentem requirement, in the absence of clear language courts have been slow to infer that a party intended to surrender rights and claims of which it was unaware and could not have been aware: BCCL v Ali [2001] 1 All ER 961 at 966 per Lord Bingham, (contrast Lord Nicholls in [NAME] v [NAME] (supra) at 971-972 who was of the view that for the purposes of construction a general release is simply a term in the contract). (5) Although each release should be considered against its own matrix of facts, an example of this line of "cautionary principle" (Lord Bingham's phrase) is the frequently cited judgment of the High Court of Australia in [NAME] v [COMPANY] (supra), where Dixon CJ, Fullagar, Kitto and Taylor JJ (at 125) referred with approval to the proposition put by Sir Frederick Pollock in his Principles of Contract (Stevens: London, 1950) 13th ed at 412, that "in equity a release shall not be construed as applying to something of which the party executing it was ignorant." … (8) Most recently in this [COMPANY] formerly known as [COMPANY] v [COMPANY] [above], Bergin J adopted the principles of construction broadly as outlined above, including the "cautionary principle" and taking into account the purpose of the contract and the circumstances in which made". 1. [NAME] also refers in closing submissions, in respect of the construction of the releases, to the general principles for the construction of contract terms summarised in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 at 656-657. 2. [NAME] submits that, in respect of defects or non-conformities in the residential building works as performed as at 27 February 2017, there was no communication or knowledge of their existence; the evidence does not disclose that any person or party was aware of any defective or non-conforming work; and the residential building works were then substantially incomplete. He submits that there is no evidence that the parties intended that any release would be given to [NAME] for any extant defective work or any consequent breach(es) of the HBA. He submits that, as at the date of the [NAME] could not have known about the existence of any defects in the Works, and [NAME] has not led evidence to suggest that it was aware of any defects or non-conformities in the works at that time. [NAME] also addressed a principle, which he described as "temporal disconformity", depending on the proposition that [NAME] had the opportunity and obligation to rectify any defects by the time the works were complete. It is not necessary to address that question, given the conclusions I reach on other grounds below.

3. On balance, I accept that the releases given in the [NAME] did not extend to the quality of works or defects in works undertaken prior to that agreement, where there is limited reference to that matter in prior correspondence between the parties and no reference to that matter in the recitals to the [NAME]. However, little turns on that finding, where [NAME] do not seek to establish, on the balance of probabilities, that any defects that are in issue arose from work undertaken prior to the [NAME], as distinct from work that "may" have been undertaken prior to that date.

[NAME]'s other responses to the release – rectification, unilateral mistake and s 18 of the HBA 1. The [NAME] reliance on the release given by [NAME] under the [NAME] in turn prompted a claim for rectification and other claims by [NAME]. 2. [NAME] contend that if the Court finds that, on its proper construction, cl 6.2 of the [NAME] released [NAME] from liability to them for breaches of the statutory warranties contained in s 18B of the HBA (which is denied), then they seek an order for rectification of that agreement (ASC [24]). They plead, at some length, their actual intention in entering into the [NAME] and [NAME]'s actual intention in entering into that Agreement, and they plead (ASC [27]) that a release of [NAME] from liability for any claim in respect of breaches of the statutory warranties under the HBA does not reflect that actual intention and agreement of the parties in respect of the [NAME]. They claim that the [NAME] should be rectified to exclude the words "or in connection with any event which has occurred prior to the date of this Agreement including" in cl 6.2 of the [NAME]. 3. [NAME] refers to Maralinga Pty Ltd v Major Enterprises Pty Ltd (1973) 128 CLR 336 at 350; [1973] HCA 23, where Mason J (as his Honour then was) observed that the purpose of the remedy is to make the instrument conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately; and that an antecedent agreement is not essential to the [NAME] of relief by way of rectification, which may be granted in cases in which the instrument sought to be rectified constitutes the only agreement between the parties, but does not reflect their common intention. He also draws attention to the Einstein J's review of the case law in P Ward Civil Engineering Pty Ltd v Civil and Civic Pty Ltd [1999] NSWSC 727 at [409]-[421] and submits, relying on Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [32] and [103], and that rectification is available where there is a common mistake, so as to make an instrument conform to a concluded antecedent agreement or to a continuing concurrent intention of the parties to the instrument.

4. In closing submissions, [NAME] identifies conversations and exchanges of emails between the parties, from October 2016 until mid-February 2017, concerning the scope of the agreement which became the proposed [NAME], and emphasises that the parties did not have discussions about alleged breaches of the statutory warranties in that period, as a matter that would support a claim for rectification to narrow the scope of the release. He submits that the breaches of the statutory warranties were not the subject matter of the dispute that the parties sought to resolve by the [NAME]. I have referred to the relevant communications and emails above, and I accept that there was no specific reference to the release of defects in that period, which is a matter to which I have had regard in finding that the release has a narrower operation, on its proper construction. 5. [NAME] in turn submits that an action in rectification requires proof of the parties' common intention, and that, relevantly, cl 6.2 of the [NAME] did not correctly record that common intention: Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 at [451]-[461]. [NAME] also accepts that [NAME]'s claim in rectification permits the Court to have regard to the parties' subjective intention, as opposed to their objective intention relevant to contract formation and construction: SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd [2017] NSWCA 132. He submits that rectification is not available, where the evidence does not establish a common intention as to the scope of the release in the [NAME], where at least [NAME] intended that it would have wide effect. [NAME] also points out that [NAME] squarely rejected, in cross-examination, the proposition that it was not in his contemplation that [NAME] would be relieved or released of its obligations with respect to defects or breaches of the statutory warranties by the release in the [NAME] (T183). His evidence in cross-examination is corroborated by contemporaneous correspondence between [NAME] and [NAME]'s solicitor, [NAME]. In particular, [NAME]'s instructions to [NAME] on 14 February 2017 ([NAME], 3741), to which I have referred above, made clear that a comprehensive release was sought.

6. It is not necessary to address this claim, where I have held that the [NAME] did not release [NAME] from liability in respect of breach of any such warranties. However, I note that there seems to be little prospect that [NAME] could establish their rectification claim, where it seems plain that at least [NAME] sought a wide release in the relevant circumstances, and there was no common intention that the [NAME] should confer only the narrower release for which [NAME] contend, and to which I have held it was limited. 7. [NAME] alternatively plead (ASC [29]ff) a case of unilateral mistake. [NAME] points out there is no pleading and no evidence that [NAME], through [NAME], had knowledge of any mistaken belief of [NAME], or proceeded to take advantage of it, or contributed to any such mistaken belief on the part of [NAME]. He points out that [NAME] assisted [NAME] in negotiating and finalising the terms of the [NAME], but they did not seek legal advice in respect of that Agreement. It is not necessary to determine this claim, for the same reason that it is not necessary to determine the rectification claim, However, I do note that there seems to be little prospect that [NAME] could establish unilateral mistake, where there is no evidentiary basis for a finding that [NAME] contributed to any error by [NAME] as to the scope of the release if, contrary to the finding that I have reached, that error existed.

8. By their Amended Reply, [NAME] also contended that the release, if it had the wider construction for which [NAME] contends, would be void by reason of s 18G of the HBA, which provides that: "A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void." 1. [NAME] refers to the limited caselaw which has considered the effect of s 18G of the HBA, including Cappello v Hammond and Simonds NSW Pty Ltd [2020] NSWSC 1021 at [31]; [NAME] 6511 v [COMPANY] [2016] NSWSC 909 at [12]; and, most relevantly although not binding on me, Roberts v Jandson Pty Ltd (Homebuilding) [2011] NSWCTTT 105, which held that the release of a right to enforce a claim for breach of statutory warranties under s 18B was not void by reason of s 18G of the HBA. [NAME] submits that that section does not prevent parties from agreeing to settle an action to enforce a statutory warranties claim and that a party may choose not to enforce the statutory rights given by the HBA and contract not to do so. It is by no means clear to me that the [NAME] had such a character, particularly where any dispute as to defects in the work undertaken by [NAME] had not then developed to the point that any such defects were known or identified. However, it is not necessary to decide that matter, where I have held that the release given in the [NAME] had a narrower scope in any event. [NAME] submits, and I also accept, that s 18E of the HBA does not assist [NAME], since they had not enforced any claim for defects at the time the [NAME] was entered, and no question of further enforcement of such a claim arises.

[NAME]'s other responses to the relief claimed 1. Third, the [NAME] contend (Defence [14(c)]) that the obligations of [NAME] and [NAME] under the Contract do not apply to building work carried out after the parties entered into the [NAME], and I have accepted that contention above, at least so far as the [NAME] narrowed the range of [NAME]'s obligations. Fourth, the [NAME] rely (Defence 14(d)-(e)] on cl 2.1 of the [NAME] for the contention that [NAME]'s role on February 2017 was limited to carrying out the work "reasonably necessary to manage and supervise" the project's completion in accordance with specified Plans and Specifications, by providing specified personnel, and that it was not liable for building work carried out after the date of the [NAME], which did not relate to managing and supervising the completion of the project. I have largely accepted that contention above.

2. Fifth, [NAME] contends (Defence [14(g)]) that it is not liable for any failure by contractors to complete work as a result of [NAME] failing to pay money due to them. That defence was relied on in respect of the work of several contractors. The [NAME] respond to this defence by the robust submission that: "It cannot reasonably be suggested, in any circumstances, that an owner or a principal should have to pay for work that is defective before it can be expected that rectification will occur. This assertion defies the law, common sense and human nature."

1. Putting aside wider questions as to human nature, which I do not think it necessary to determine, it seems to me that this proposition is plainly wrong. First, the [NAME] imposed an obligation on [NAME] to pay the contractors and did not defer the time for payment until the work was "defect free", and there can be no suggestion that there was any total failure of consideration in the contractors' work that would displace that obligation. Second, as a matter of fact, whatever the practical desirability of [NAME] taking the course they did, it had the consequence, in fact, that [NAME]'s efforts to manage and supervise the rectification of defects were frustrated, because contractors which had not been paid substantial amounts refused to undertake additional rectification works until the amounts due to them were paid. It seems to me that that matter displaced any breach of an obligation to carry out all the work reasonably necessary to manage and supervise the project's completion in accordance with specified Plans and Specifications, in respect of those matters. It also displaced causation, since any breach was not then causative of the failure to rectify defects, which were not rectified because [NAME] declined to pay the relevant trades. 2. [NAME] also advances the surprising proposition that, as a matter of law, there is no basis that a person is entitled to the agreed payment if they have done "less than" what it was agreed would be provided. That proposition, with respect, does not recognise the limits to the defence of total failure of consideration, and it is not surprising that he cites no authority to support that proposition. [NAME] also submits that, in the context of inadequate or defective work, "the withholding of payment is the only commercial leverage that an innocent party has". It is not necessary to assess the correctness of that matter, as a proposition of practicality; it is sufficient to note, that a party who takes that course will also likely assume the risks associated with it, which are well illustrated here, where third party contractors refused to return to site to rectify defects when that approach had been taken. 3. [NAME] also relies, in submissions in reply, on [NAME]'s evidence that representatives of [NAME] had advised that [NAME] did not need to pay for "incomplete or defective works". Assuming, without deciding, that advice was given, it was plainly incorrect, which was not surprising where [NAME] does not appear to have paid any attention to the terms of the [NAME], and its inspectors were hopefully not holding themselves out as legal advisors to [NAME], where there is no reason to think that they had professional qualifications which would permit them to undertake that role.

4. I find this defence is established in respect of the defects claimed identified in [NAME] items G28, G30 and G37 (so far as waterproofing issues are raised in respect of landscaping) and I address the relevant facts in dealing with those matters below.

Issues raised by [NAME]'s Reply filed 7 March 2022 1. By their Reply, [NAME] in turn plead that the management and supervision of the completion of the project in accordance with the Plans and Specifications "necessarily requires rectification or remediation of non-conforming work" (as defined). I do not accept that proposition. It is not self-evident that a person responsible for project management or project supervision guarantees the adequate performance of work by the contractors that undertake it, still less that it undertakes an obligation to rectify or remediate any inadequate work performed by those contractors. 2. [NAME] also rely, in reply, on cl 8.1 of the [NAME], by which [NAME] gave warranties with respect to the Work (as defined). However, the Work conducted by [NAME] under the [NAME] was limited to the management and supervision of the completion of the project, and did not amount to a guarantee as to the work undertaken by contractors from February or March 2017. The statutory warranties under the HBA in turn did not extend beyond the scope of the work which [NAME] undertook under the [NAME].

Some general observations as to the defect claims, an attempted shift in [NAME]'s case and a late amendment application that was not pressed 1. [NAME] rely on a schedule of defects (MFI 1, subsequently updated as [NAME]) which reflects expert evidence led in the proceedings to identify the relevant defects. [NAME], in closing submissions, provides a comprehensive and helpful summary of the relevant defects, which I have closely reviewed, but will not seek to repeat. I will, however, address the broad scope of the expert evidence below, so far as it is necessary to do so to determine whether a breach of [NAME]'s contractual obligation under cl 2.1 of the [NAME] or the statutory warranties can be established in respect of the relevant works, to the extent that they occurred after that agreement took effect, or under the Contract in those cases where work had been done while it remained the operative source of [NAME]'s obligations. [NAME] in turn submits, and I accept, that [NAME] bear the onus of establishing the existence of the defects for which they contend and that the rectification work for which they contend is necessary to produce conformity with the Contract and that the expenditure of money on the proposed rectification is reasonable: [NAME] 62930 v Kell & [COMPANY] [2010] NSWSC 612 at [249]. Importantly, in order to establish a breach of the Contract or the [NAME] respectively, they must establish that a particular defect arose from work within the scope of the Contract undertaken prior to early March 2017, or fell within the scope of the [NAME], so that the narrower obligations under that Agreement were applicable to it. It will be necessary, in dealing with the many defects for which [NAME] contend, to distinguish between those which [NAME] initially contended "may have" arisen from work done prior to the entry into the [NAME] (which they initially contended occurred on 27 February 2017 and [NAME] initially contended occurred on 5 March 2017) and those which [NAME] initially accepted arose from work done after entry into the [NAME]. I also address the expert evidence led by the parties in respect of hydraulic defects, general building defects and quantum.

2. The structure of [NAME]'s case in respect of the hydraulic defects which I address below, and the general defects to which I will then turn, is generally to identify a defect with a third party contractor's work and then to assert, without supporting evidence, that that must have involved a breach of the Contact, the [NAME] or the relevant statutory warranties, without addressing the scope of [NAME]'s management and supervision obligations under the [NAME] or how they applied to any particular defect in a contractor's work. I do not accept the proposition that any defect in any contractor's work necessarily establishes a breach of [NAME]'s contractual obligations or any relevant contractual or statutory warranty under the HBA. That proposition is particularly unpersuasive in respect of the [NAME], where [NAME]'s obligations were limited to management and supervision of the completion of the project under cl 2.1 of that Agreement. 3. [NAME] led no evidence to establish the steps that [NAME] should have taken to comply with its obligation of supervision or management under cl 2.1 of the [NAME], in respect of the project generally or particular works undertaken by contractors, or to establish that any breach of that obligation had any connection with any of the defects in work undertaken by the several contractors on the project after the entry into the [NAME]. There were also differences in view between the hydraulic and building experts called by [NAME] and by [NAME] as to the underlying facts in respect of the asserted defects and as to the extent to which the relevant defects existed. All of those experts were experienced and credible witnesses, who appeared to be doing their best to assist the Court although they held different views. It is plainly not self-evident that [NAME], in managing and supervising the project after the date of the [NAME], should or could have identified defects in work undertaken by contractors, still less that it should or could have required contractors to correct them, where, even after detailed investigations, the expert witnesses disagree as to the existence and scope of those defects.

4. As I noted above, the express warranties under cl 8.1 of the [NAME] and the corresponding statutory warranties under the HBA are largely limited to the scope of Count's work under that agreement, and could not expand the expressly agreed scope of [NAME]'s management and supervision obligation under that agreement: compare Oikos Constructions Pty Ltd v Oston [2020] NSWCA 358 at [83]. The widest of those warranties required that the property be a dwelling that was reasonably fit for occupation as a dwelling. [NAME] fairly accepted in closing submissions that it was not suggested that warranty was breached, and that concession was rightly made where the identified defects, separately or together, did not have the consequence that the property did not have that character, where an occupation certificate was issued and [NAME] have lived in it for several years. I recognise that this and other defects may well be a disappointment to them, particularly give the costs of the works, but I was not taken to any authority that the content of this warranty escalates to require something more than that the dwelling is reasonably fit for occupation, even if the works are expensive or [NAME]' expectations are particularly (and possibly justifiably) demanding. I will not repeat that conclusion in respect of each of the defects that I address below, although I reach it in respect of each of them.

5. I have also borne in mind that the fact that a relatively large number of defects have been identified increases the prospect that [NAME]'s obligation to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with the specified Plans and Specifications under cl 2.1 of the [NAME] and the relevant contractual and statutory warranties might have been breached. However, it does not seem to me that that proposition takes [NAME] very far, because there are genuine disputes as to whether several of these matters amount to defects, and I find below that there is no basis to prefer [NAME]'s and [NAME]' evidence led by [NAME] to [NAME]'s and [NAME]'s evidence led by [NAME]; [NAME]'s obligations of supervision and management would also have extended to other matters, across the construction of a relatively complex building, as to which no defects are alleged, as well as to the areas in which defects are alleged; and the fact that it is more likely that a duty of supervision was breached, if there are more rather than less defects in the ultimate result, does not assist in determining, absent adequate expert or other evidence, what ought to have been done in managing and supervising the project in respect of the particular areas in which breaches are alleged, or which defects arise from any breach of [NAME]'s management and supervision obligations under cl 2.1 of the HBA or give rise to a breach of the relevant contractual and statutory warranties under the HBA.

6. To put that another way, I cannot simply assume that some or many defects could not occur in areas of specialist contractors' works, although [NAME] had in fact carried out all the work reasonably necessary to manage and supervise the project's completion in accordance with specified Plans and Specifications under cl 2.1 of the [NAME]; or find, without evidence, that any particular defect in particular contractor's work must have arisen from a failure of management or supervision, or breached a contractual or statutory warranty to the scope of [NAME]'s work (as distinct from the contractor's work) under the [NAME].

7. I should now address a radical shift in [NAME]'s case which they initially sought to make in Annexure B to their reply submissions (MFI 11) after the hearing had concluded, but ultimately did not press. [NAME]'s case initially, and throughout the hearing, was that only several defects related to work performed before the execution of the [NAME], and in respect of those several defects, [NAME] initially went no further than to suggest that the relevant work "may" have been initially performed prior to that date which would not be sufficient to establish that proposition on the balance of probabilities. This issue was addressed in [NAME]'s opening (T16-T17) where [NAME] identified the work they contended may have been done by the date of the [NAME], which they then contended had taken effect on 27 February 2017. I there sought clarification of the case put by [NAME] as to when work was done, although [NAME] may have been then focussing on the impact of the release in the [NAME] on which [NAME] relied in formulating that case. I set out the exchange at some length because of the importance of this issue and [NAME]'s later attempt radically to reshape that case in reply, as follows: "HIS HONOUR: And one question I was going to ask you is where in the schedule of defects are there defects which are said to have arisen from work prior to [27] February 2017 [when [NAME] contended the [NAME] took effect], which would raise the issue you just addressed [as to the scope of the release in the [NAME]]? [NAME]: Where we have indicated, for example, in item H2, your Honour will see in the fourth column "contractor" and "work performed". … [NAME]: So, for example, in H2 we have indicated that the work may have been initially performed prior to 27 February, but we need to clarify that because the invoices by which we derive that information are not always entirely clear. And the other thing we would submit in due course is that, whereas there may be some parts of, say, the sanitary drainage system, which were untaken prior to February 2017, the whole of the system was not completed as at that time. So, I would have to accept, for example, that much of the external drainage and pipes were laid prior to February 2017. But that was an incomplete system because they had not been connected to the drainage points, both within the house and externally, which was intended to operate as a system as a whole. HIS HONOUR: Yes. But a question of whether a release can release defects for earlier work, is only going to arise once we identify the earlier work which is said to be defective. … HIS HONOUR: So, there's H2 and H3. Are there any others? [NAME]: H4. H17, H18. … [NAME]: Those are the only works on our case, in respects of the hydraulics, undertaken, clearly, prior to February 2017. In respect of the "G" which stands for "General", can I refer to G29. … [NAME]: Item G31, we've said most work was performed after February 2017. I think there were one or two of the external aluminium window and door frames that may have been installed prior to that date, but I'll seek to get some detailed instructions as to what those are. … [NAME]: G34. I would have to accept that Item 1 "swimming pool defects" concerns the location of what's described as a "skimmer box". Now, that is part of a concrete pour, that is made for the pool. And my understanding is that concrete pour did occur in 2016. But the rest of the swimming pool work was done later. And that is it. … On our case, and on our evidence, all the rest of the items occurred after February 2017, or the relevant date of the deed." [emphasis added] 1. [NAME] sought to radically shift their case in written reply submissions, after the hearing had been completed, by first accepting [NAME]'s contention that the [NAME] did not take effect until 5 March 2017 rather than on 27 February 2017, then identifying many new contentions that items of work were done prior to 5 March 2017, and for the first time identifying evidence and making submissions in support of those contentions. The radical character of that shift can be illustrated simply. [NAME]'s case, as summarised above by [NAME] in opening, was that eight items of work ([NAME] H2, H3, H4, H7, H18, G29, a small part of G31 and one item in G34) had been undertaken before the [NAME] and all other work had been done after that agreement took effect. By their written submissions in reply, after the hearing had completed, they sought to shift that position, purportedly in response to [NAME]'s response to their case in chief, to contend that some fourteen items of work ([NAME], H5-H10, H16, H20-H21, H23-H24, G26, G28 and other items in G34) in addition to the eight items noted above in their case in chief, were now to be treated as work done before the [NAME] rather than, as they had contended throughout the hearing, as work done after the [NAME].

2. On 29 June 2022, my Associate advised the parties, at my request, that: "His Honour has reviewed the [[NAME] written reply submissions] and notes that his preliminary view is that a significant part of the material in Annexure B is not properly in reply, at least if it is intended to reverse the position summarised by [NAME] in the [NAME]' opening at T17, namely that Items other than H2, H3, H4, H17-H18, possibly part of G31, and G34 (the skimmer box) were performed after the date of the [NAME].1 His Honour may well decline to address submissions of that character, to the extent they are first raised in reply in respect of issues that are necessarily part of the [NAME]' case in chief, where the [NAME] will not have had a proper opportunity to respond to them. His Honour has asked me to seek confirmation, by 4pm tomorrow, whether the [NAME] seek leave to reopen in respect of Annexure B, and, if so, you should in support by that time, and his Honour will then list that application for directions or hearing. If not, his Honour will, obviously enough, determine the matter on the basis that no such application is made."

1. On 30 June 2022, [NAME] served and sent to my Associate a notice of motion which sought leave to rely on Annexure B to their reply submissions and an order that the [NAME] by given leave to reply to [NAME]'s reply submissions. That application was supported by an affidavit of their solicitor, [NAME], dated 30 June 2022 (which was ultimately not read) which sought to characterise these matters as a response to the [NAME]' closing submissions. They were not, in substance, for the reasons that I will note below. My Associate, at my request, then advised that the application would be listed for directions or hearing on 5 July 2022, when it proceeded to hearing at a time convenient to Counsel, and also noted that: "His Honour has also asked me to note that it is not entirely clear to him that the motion squarely raises the relevant issue, which is not really whether the [NAME] can rely on the written submissions and Annexure B, which his Honour has already received, but whether they can do so in a way that makes, in reply and after the hearing has closed, a substantial change in the basis of their case from that put in chief so that their case is (1) 7 items of work fall within the scope of the contract and the balance within the scope of the [NAME] (as put in chief) and (2) 21 items fall within the scope of the contract and the balance within the scope of the [NAME] (as put in reply); and how the [NAME] respond to a case put in that way, even if they had the opportunity to do so after the hearing was complete, or how the Court determines it. His Honour expects that he will hear the parties as to that issue in dealing with the motion."

1. Shortly before that motion was listed for hearing, [NAME] advised my Associate that [NAME] did not seek to proceed with it and, when the matter was then dealt with in open Court, they advised that the Court should disregard Annexure B to their reply submissions. I will proceed on that basis. However, I consider I should also indicate why I would likely not have permitted reliance on Annexure B, and the amendment to [NAME]'s case which was involved in it, had the application been pressed.

2. I have no doubt that [NAME]'s reliance on Annexure B to their reply submissions, although not characterised as such, would in substance have been an application to amend their case in chief and I would have approached it by reference to the well-established principles applicable to such an application. The reason why reliance on that Annexure had that character can simply be demonstrated. I recognise that, in the Construction List, as in the Commercial List, the List Statement and List Response are not pleadings in the strict sense, and a pragmatic view must be taken of the case as it develops through the List Statement, the List Response, and the evidence as it is served: [COMPANY] v [NAME] No. 97315 [2022] NSWCA 114 at [12]. [NAME] properly identified the material facts on which they relied in their case in chief, at opening and throughout the hearing in their Commercial List Statement, which they did not, they would have at least identified the dates and circumstances in which the eight items of work comprised in [NAME] H2, H3, H4, H7, H18, G29, a small part of G31 and one item in G34 were done, and by whom they were done, and that work occurred prior to the [NAME] and was governed by the Contract. They would also have identified the dates and circumstances in which all remaining items of work were done, and by whom they were done, and that work occurred after the [NAME] and was governed by the [NAME] or (as they contend) the Contract as operating in parallel to or as varied by the [NAME]. The amendment made by Annexure B to their reply submissions, to the identification of material facts which should have but did not exist in the Commercial List Statement, would have increased the eight items that fall in the first category to 21 items; decreased the items that fall in the second category by 14 items, and amended the identification of material facts which ought to have occurred in respect of those items to indicate, for the first time, the fact that they were contended to have occurred prior to (reversing the previous claim that they occurred after) the [NAME].

3. With that background, the principles that are applicable to amendment applications are well-established, and this would not have been the first late amendment application that the Courts have considered, although it may have been one of the latest. I have here partly drawn on my summary of those principles in Re Graziers Pastoral Pty Limited [2021] NSWSC 1680 at [8]ff, where I declined such an application made shortly before, rather than after the completion of, a similarly complex hearing. Had the application been pressed, I would have been required to exercise my discretion whether to allow the amendment having regard to ss 56-58, 60 and 64 of the Civil Procedure Act 2005 (NSW). In particular, s 58 of the Civil Procedure Act requires the Court to have regard to the dictates of justice when considering an order for, inter alia, the amendment of a document, and requires the Court to have regard to the provisions of ss 56 and 57 of the Act. Section 56 identifies the overriding purpose of the just, quick and cheap resolution of the real issues in dispute, and s 57 requires proceedings to be managed having regard, inter alia, to their just determination. Section 64 relevantly provides that, at any stage of the proceedings, the Court may order that leave be granted to a party to amend any document in them and, subject to s 58, all necessary amendments are to be made for the purpose of determining the real issues raised by the proceedings and avoiding multiplicity of proceedings.

4. I would have had regard to the case law including Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; (2009) 258 ALR 14; [2009] HCA 27 ("[NAME]") which emphasised the significance of delay not only for particular proceedings, but for the Court system generally. The High Court there recognised, in the context of an amendment application, that a costs order cannot be treated as an automatic solution for failures to comply with case management requirements and also pointed to the strain imposed on litigants and the cost to the community of late amendment applications. In their joint judgment, five members of the Court observed (at [98]) that: "Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon re-pleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs."

1. The joint judgment also observed (at [113]) that: "In the past it has been left largely to the parties to prepare for trial and to seek the court's assistance as required. Those times are long gone. The allocation of power, between litigants and the courts arises from tradition and from principle and policy. It is recognised by the courts that the resolution of disputes serves the public as a whole, not merely the parties to the proceedings."

1. I would also have had regard to the reference to those principles in Dymocks Book Arcade Pty Ltd v Capral Ltd [2011] NSWSC 1423 at [5]–[10], where the Court again referred to the relevance both of the nature of the amendments and their importance to the [NAME] on the one hand, and prejudice to the [NAME] on the other. A unanimous High Court in turn summarised the holding in [NAME] in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303; [2013] HCA 46. The High Court there observed (at [51]) that: "In [COMPANY] v [COMPANY] , it was pointed out that case management is an accepted aspect of the system of civil justice administered by the courts in Australia. It had been recognised some time ago by courts in the common law world that a different approach was required to tackle the problems of delay and cost in the litigation process. Speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. The achievement of a just but timely and cost-effective resolution of a dispute has effects not only upon the parties to the dispute but upon the court and other litigants. The [[NAME] decision] … confirmed as correct an approach to interlocutory proceedings which has regard to the wider objects of the administration of justice." 1. [ADDRESS] also there observed (at [56]–[57]) that: "The evident intention and the expectation of the C[ivil] P[rocedure] A[ct] is that the court use these broad powers to facilitate the overriding purpose. Parties continue to have the right to bring, pursue and defend proceedings in the court, but the conduct of those proceedings is firmly in the hands of the court. It is the duty of the parties and their lawyers to assist the court in furthering the overriding purpose. That purpose may require a more robust and proactive approach on the part of the courts. Unduly technical and costly disputes about non-essential issues are clearly to be avoided. However, the powers of the court are not at large and are not to be exercised according to a judge's individualistic idea of what is fair in a given circumstance. Rather, the dictates of justice referred to in s 58 require that in determining what directions or orders to make in the conduct of the proceedings, regard is to be had in the first place to how the overriding purpose of the C[ivil] P[rocedure] A[ct] can be furthered, together with other relevant matters, including those referred to in s 58(2). The focus is upon facilitating a just, quick and cheap resolution of the real issues in the proceedings, although not at all costs. The terms of the C[ivil] P[rocedure] A[ct] assume that its purpose, to a large extent, will coincide with the dictates of justice."

1. Subsequently, in [NAME] v [NAME] as Trustee of the [COMPANY] (2018) 265 CLR 77; [2018] HCA 45, in dealing with a different question, the plurality of the High Court referred to [NAME] and noted (at [38]) that: "As the joint reasons in [COMPANY] v [COMPANY] explain, the 'just resolution' of a dispute is to be understood in light of the purposes and objectives of provisions such as s 37M of the [Federal Court Act]. Integral to a 'just resolution' is the minimisation of delay and expense. These considerations inform the rejection in [NAME] of the claimed 'right' of a party to amend its pleading at a late stage in the litigation in order to raise an arguable claim. The point is made that a party has a right to bring proceedings but that choices are made respecting what claims are made and how they are framed. Their Honours speak of the just resolution of the dispute in terms of the parties having a sufficient opportunity to identify the issues that they seek to agitate."

1. Had the application been pressed, I would have had regard to the dictates of justice in respect of the amendment that was, in substance, sought to be made by Annexure B to the [NAME]' reply submissions, including the fact that the amendment was potentially important to them where they had not led evidence to establish the content of [NAME]'s obligations of management and supervision under the [NAME], and would have involved a substantial change in their case against the [NAME] which may have operated to their advantage. I would have recognised that that advantage to the [NAME] would involve a corresponding detriment to the [NAME] of being required to address a radically changed case, after all the evidence has been led and the oral hearing was complete, and to face the risk that the proceedings would be determined by reference to a substantially different case to that which they defended. I would have borne in mind the detriment to the three natural persons who are party to the proceedings of prolonging the existing delays and further increasing the already substantial costs that must have been incurred in these long-running proceedings, although I would have inferred that [NAME] were prepared to bear that detriment given the advantage they presumably perceived from the amendment. I would have had regard to the fact that [NAME]' evidence explained, in a limited way, the factual analysis he undertook after the hearing was completed to respond to the [NAME]' closing submissions, but that did not explain why that analysis was not undertaken earlier where these matters were an essential part of the [NAME]' case in chief.

2. Had the application been pressed, I would likely have found that there would be a significant prejudice from the amendments to the [NAME], so far as they would be exposed to the costs and potential disadvantage of responding to a radically different case, by submissions made when it would be too late to change their conduct of the case to date; and their proper expectation that the case they defended, and not a different case, would be decided would be frustrated. I would have also borne in mind that several steps might potentially be taken to mitigate the detriment of that course to the [NAME], including an order for costs. However, that would not have avoided the detriment to the [NAME] of defending one case and then facing judgment on a substantially different one. I would also have recognised that, as the High Court emphasised in [NAME], an order for costs is not always a solution in late amendment applications. Had the application been pressed, I am inclined to think that, balancing these factors, and recognising the importance of the amendment to the [NAME], it would not have been consistent with the just, quick and cheap resolution of the matters in dispute, or more fundamentally with the just resolution of these proceedings, to impose the prejudice arising from this amendment on the [NAME], at this late stage, and after the oral hearing had concluded.

Accordingly, I would likely not have granted leave to [NAME] to rely on Annexure B to their reply submissions, so far as it amounted to an implied amendment of the [NAME]' case in chief. On that basis, [NAME]'s decision not to press the application was likely well founded. [NAME] accepted that, where that application was not pressed, I should disregard Annexure B to [NAME]'s reply submissions and two references to it in those submissions and I have now done so.

The alleged hydraulic defects 1. I now turn to address the hydraulic defects alleged by [NAME], largely relating to plumbing work, and following the structure of their case in chief. I first address the alleged hydraulic defects as to which [NAME] initially contended that the works "may have" been completed prior to the [NAME]. First, [NAME] contended that plumbing works performed by a contractor, [NAME], "may have" been initially performed prior to that Agreement and were defective so far as a sanitary drainage system incorporated a boundary trap not provided with a low level vent ([NAME], item H2). [NAME] accepted, in closing submissions, that this work was done prior to 5 March 2017, when the [NAME] took effect. The parties, by an Agreed Statement of Facts dated 8 July 2022, then recorded their agreement that this work was completed before the [NAME] was made and I proceed on that basis. The hydraulic experts retained by [NAME] and by [NAME] and [NAME] respectively, agree as to this matter, which it appears was rectified by the date that [NAME] undertook his inspection at the property. I accept that a breach of the contractual and the statutory warranties under the HBA is established in respect of this matter, where the work was done while the Contract rather than the [NAME] was in effect.

2. The second defect initially identified by [NAME] ([NAME], item H3) in this category relates to plumbing works that they contend "may have" been initially performed prior to 27 February 2017 in respect of a sanitary drainage system, which they contend was not provided with an overflow relief gully. [NAME] also accepts, in closing submissions, that this work was done prior to 5 March 2017, when the [NAME] took effect. The parties, by an Agreed Statement of Facts dated 8 July 2022, also recorded their agreement that this work was completed before the [NAME] was made and I proceed on that basis. The hydraulic experts agree that an installation defect was present in this respect and that necessary works have now been completed to address it. I also accept that a breach of the contractual and the statutory warranties under the HBA is established in respect of this matter, where the work was done while the Contract rather than the [NAME] was in effect.

3. The third defect initially identified by [NAME] in this category also relates to plumbing works that they contended "may have" been performed prior to 27 February 2017 ([NAME], item H4) relating to inground sanitary drainage pipework, which is said to have internal projections, pipe deformations and to lack a continuous positive gradient. [NAME] also accepted, in closing submissions, that this work was done prior to 5 March 2017, when the [NAME] took effect. The parties, by an Agreed Statement of Facts dated 8 July 2022, confirmed their agreement that this work was completed before the [NAME] was made and I proceed on that basis. [NAME] and [NAME] disagree as to whether an installation defect was present and whether repair works need to be undertaken; they disagree whether the relevant pipe should have been cleaned before it was inspected by CCTV to identify any defects; and [NAME] considers that the asserted defects are minor in nature and that there has been no adequate measurement of the grade on the pipe to demonstrate any defect in it. In concurrent evidence, [NAME] accepted that there were some defects in the pipe but disagreed that it had been shown that there was a lack of an adequate gradient in the pipeline, and [NAME] maintained his view that there was a negative gradient in the pipeline (T144). [NAME]'s evidence was that about 12 metres of pipe would need to be replaced; [NAME] considered that was not necessary, where he did not consider the gradient on the pipe was inadequate and other issues could be addressed by pipe relining (T146). [NAME]'s evidence was that he could not form a reliable conclusion as to the gradient of the pipe from the CCTV footage arising from [NAME]'s investigations (T146), and [NAME] emphasises the continuing difference of opinion between [NAME] and [NAME] as to whether a reliable inference that the pipe does not have sufficient gradient can be drawn from the CCTV footage. The expert reports and their concurrent evidence do not provide any basis on which to prefer [NAME]'s evidence to [NAME]'s evidence in this regard and, for that reason, I do not find that this defect is established on the balance of probabilities. Had a defect been established, I would have held that it gave rise to a breach of the contractual and the statutory warranties under the HBA, where the work was done while the Contract rather than the [NAME] was in effect. 4. [NAME] also identify defects in the property's stormwater drainage system ([NAME], item H13). In closing submissions, [NAME] at least left open the possibility that that this work was done prior to the entry into the [NAME], and [NAME] submitted that this work was done prior to 5 March 2017, when the [NAME] took effect. The parties, by an Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed before the [NAME] was made and I proceed on that basis. The hydraulic experts agree that there was an installation defect in relation to a reflex valve in a stormwater line, and more widely in respect of pipework issues, but disagree as to the reasonable and necessary scope of rectification works. In concurrent evidence concerning this and another defect ([NAME], item H18), both considered that defects in the pipework needed to be corrected, although [NAME] considered that a more limited repair or remediation was required and [NAME] considered that complete replacement would be more cost effective (T162). [NAME] submits that the narrower repair supported by [NAME], should be preferred to the wider repair for which [NAME] contended, and [NAME] contended for the inverse position. That seems to me to be a question as to which minds may reasonably differ, and it may be that the [NAME] have not established that [NAME]'s scope of works should be established on that basis. I accept that a breach of the contractual or statutory warranties under the HBA is established in respect of this matter, where the work was done while the Contract rather than the [NAME] was in effect. I will return to what is to be done with this issue below. 5. [NAME] also identify a defect as to the size and capacity of the rainwater tanks overflow pipework ([NAME], item H17) and contend that works "may have" been initially performed in 2016. The hydraulic experts agree as to the scope of the defect and the scope of rectification. [NAME] also contend that a defect exists in respect of provision for roof rainwater runoff to be conveyed to rainwater tanks ([NAME], item H18) and that this work "may have" been initially performed in 2016. The hydraulic experts agree that the stormwater rainwater collection contains at least some defects, although [NAME] considers that investigations to date have established that the system is inadequate, whereas [NAME] considers that further investigation is required. In concurrent evidence, they both considered that defects in the pipework needed to be corrected, although [NAME] considered that a more limited repair or remediation was required and [NAME] considered that complete replacement would be more cost effective (T162). That may be a question as to which minds may reasonably differ, and it is not necessary to resolve it given the conclusions that I have reached on other grounds. I am also not satisfied that a breach of [NAME]'s obligations under the Contract or the [NAME] has been established in respect of these matters.

6. My finding that [NAME]'s liability for these matters has not been established does not mean that [NAME] had no recourse for any defect in respect of the work. They may well have had such recourse against the plumber which undertook the works, [NAME], but they did not join [NAME] as party to the proceedings or seek to establish any liability on its part, notwithstanding the number of defects that were alleged to have arisen from its work.

7. I now turn to hydraulic defects identified by [NAME] for the period from February or March 2017, when [NAME] was subject to the narrower obligations of management and supervision arising under cl 2.1 of the [NAME] and its statutory obligations under the HBA would apply in respect of that narrowed scope of work. First, [NAME] identified a defect ([NAME], item [NAME]) arising because sewer gases from the sanitary drainage system are permeating into the building, in the ground floor powder room, master on-suite and two other on-suites, which they initially contended arose from work undertaken by [NAME] in the period to October 2017. As I noted above, they did not press their attempt in reply to shift their position put during the trial that this work was done after the [NAME], to contend instead that this work was done pursuant to invoices issued by [NAME] in August and September 2016. The hydraulic experts are now agreed as to this issue. However, there is no expert or other evidence as to what would have been done to "carry out all the work reasonably necessary to manage and supervise the completion of the [p]roject" in accordance with the specified Plans and Specifications, in respect of works undertaken by a [NAME] in particular parts of the property, when [NAME]'s obligations were limited by cl 2.1 of the [NAME]. I am unable to find, without such evidence, that the scope of [NAME]'s supervision and management obligation under that Agreement extended to intervention in the manner in which this work was undertaken by the [NAME]. It has therefore not been established that [NAME] breached either its obligations under cl 2.1 of the [NAME] or the contractual or statutory warranties under the HBA in respect of the performance of those obligations in respect of this item.

8. The next issue identified by [NAME] in respect of plumbing work performed after the [NAME] ([NAME], item H5) relates to a contention that a suspended sanitary drainage pipe work in the ceiling void above the main kitchen and butler's pantry hallway was not provided with the required minimum gradient and has an internal projection. As I noted above, they also did not press their attempt in reply to shift their position put during the trial that this work was done after entry into the [NAME] to contend that it was done prior to the [NAME] although possibly not invoiced by that time. The hydraulic experts agree that a defect existed at the time of installation, but necessary repair works were completed between [NAME]'s and [NAME]'s site inspections, and that defect has now been addressed to their satisfaction. Again, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of a [NAME], I cannot conclude that [NAME]'s management and supervision obligations under cl 2.1 of the [NAME] extended to requiring [NAME] to determine whether that contractor installed each sanitary drainage pipe with the appropriate minimum gradient, and it is plainly not self-evident that a management or supervision obligation required intervention in each contractor's work, or the [NAME]'s work, to that level of detail. A breach of cl 2.1 of the [NAME] or any associated contractual or statutory warranty under the HPA is again not established in respect of this issue.

9. The next issue identified by [NAME] in respect of plumbing work performed after the [NAME] ([NAME], item H6) relates to a claim that a swimming pool backwash is connected to a floor waste gully located in the pool plant room. Again, [NAME] did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. [NAME] considers that connection to a gully is insufficient, although his oral evidence suggested this conclusion depended on a strict and possibly somewhat legalistic construction of the relevant standards, rather than any functional difficulty with the connection. [NAME] disagrees with [NAME]'s construction of the standard, observes that the pool backwash was operating without issue during his inspection and considers the relevant connection complies with the applicable standard. Perhaps oddly, [NAME] and [NAME] disagreed, in concurrent evidence, as to whether the relevant connection was found in a plant room or in a bathroom; [NAME] maintained his view that the pump discharge was connected to a gully in accordance with the relevant standard; and [NAME] accepted, in answer to a question from me, that the present fixture was operating properly, although he did not consider it complied with the definitions in the relevant standard (T148). It was common ground that no rectification of that issue was required, apart from any non-compliance with the definitional elements of that standard (T149). It is not necessary to address the difference between the experts in this respect, because it is not self-evident that, and there was no evidence that, [NAME]'s obligation of management or supervision under cl 2.1 of the [NAME], or any associated contractual statutory warranties, extended to resolving contested questions of construction of the applicable standards as to connections for swimming pools, or intervening to correct an approach adopted by the [NAME] which [NAME] considers was appropriate, although [NAME] takes a different view. A breach of [NAME]'s obligations under the [NAME] and the contractual and statutory warranties under the HBA is not established. 10. [NAME] identify a defect ([NAME], item H7) that an inspection opening was not provided to a common discharge pipe, in a services duct in the butler's pantry at ground level, which they contend failed to comply with applicable standards. [NAME] again did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. The hydraulic experts agree that a defect was present, but the necessary repair works were completed between [NAME]'s and [NAME]'s site inspections, and that issue has now been addressed to their satisfaction. For the same reasons as I have indicated in respect of [NAME] item H5 above, I am unable to conclude, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management of plumbing contractors, that those obligations, or any contractual or statutory warranties under the HBA, extended to requiring its intervention in the [NAME]'s work in respect of the installation of inspection ducts whether in this area or generally. 11. [NAME] also identify a defect ([NAME], item H8) that air admittance valves have not been installed in the proper locations in the master ensuite and ensuite 1. [NAME] also did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. [NAME] no longer presses a factual issue as to this item, and the hydraulic experts reached agreement about it on that basis. For the same reasons as I have indicated in respect of [NAME] item H5 above, I cannot find, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management of plumbing contractors, that a defect in the [NAME]'s work in this area establishes, without more, a contravention of [NAME]'s supervision and management obligation under the [NAME] or any associated contractual or statutory warranty under the HBA.

12. Next, [NAME] contend that ensuite showers have not been provided with fixture traps and correctly sized outlets ([NAME], item H9) and again note that the work was performed by [NAME] in the period to October 2017, and that internal drainage works were performed in March 2017. [NAME] again did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. The experts do not agree as to the existence of the defect or that repair works need to be undertaken, although it appeared that a degree of consensus was reached in their concurrent evidence that larger pipes should be installed and the existing grates could then remain (T153-154). [NAME] points to the common ground that the pipes are defective, the disagreement as to whether the grates were defective, and submits that [NAME]'s scope of works is required for the master bedroom, but [NAME]'s narrower scope of works is required for other areas. Again, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management of plumbing contractors, I am unable to find that those obligations or any contractual or statutory warranty under the HBA was breached by any failure to intervene in the [NAME]'s work in respect of this matter.

13. Next, [NAME] contend ([NAME], item H10) that the branch drain for the steam ovens was connected to a vertical section of vented sanitary drainage and was not connected by a 50mm trap and 65mm waste and that installation failed to comply with the relevant standard. They again note that the work was performed by [NAME] in the period to October 2017, and that internal drainage works were performed in March 2017. [NAME] did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. The hydraulic experts, [NAME] and [NAME], initially disagreed as to whether a defect was present. In concurrent evidence, [NAME] accepted the rectification work had been undertaken to stop any leakage, and appeared to be working, but considered the steam ovens were not properly connected. His and [NAME]'s evidence also indicated a disagreement as to what they had observed at site (T157-158) although [NAME] considered that the installation would not be compliant in any event (T159). It appears that the experts had now reached common ground as to the rectification which was required, if any rectification is required (T160). In their further report (Ex J7), [NAME] and [NAME] agreed that the branch line conducted to the steam ovens was 50mm in size as identified in [NAME]'s report. [NAME] accepts that the earlier factual disagreement between the experts as to whether a branch line completed to the steam oven was 50mm in size or 65mm in size has been resolved, and the experts now agree that branch line is 50mm in size.

14. For the same reasons as noted above in respect of earlier defects, I cannot conclude without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management of plumbing contractors, that [NAME] breached either cl 2.1 of the [NAME] or the contractual or statutory warranties in respect of this work. I am unable to address [NAME]'s further submission that this work was carried out by a third party contractor, after completion of the project and indeed after proceedings had commenced, absent a sufficiently identified evidentiary basis for that submission. I accept that, if that were so, it would not be apparent why [NAME] would be liable for any defect in that third party's work. 15. [NAME] also contend that an inspection opening has not been provided to a branch drain connecting a water closet for maintenance purposes, in a bathroom located adjacent to the pool in the rear yard, and that fails to comply with the requisite standard ([NAME], H11). [NAME] also did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. I again cannot accept that submission, also for the reasons noted above. The hydraulic experts disagree as to whether that defect is present and whether repair works need to be undertaken, and they appear to disagree as to the adequacy of the current location of an inspection opening in the drainage line below the pool deck. It is not necessary to resolve that debate, because it is not self-evident and there is no evidence that [NAME]'s obligation of management and supervision under cl 2.1 of the [NAME] would have required it to engage with an issue of this character, where compliance with the standard is disputable, or to intervene with the [NAME]'s work in that regard. No breach of that obligation or any contractual or statutory warranty under the HBA is established, 16. Next, [NAME] contend that a reflux valve to protect the lower ground level from sewer discharge cannot be serviced or maintained from the finished surface level, and that does not comply with relevant standards ([NAME], item H12). [NAME] did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. I again cannot accept that submission, again for the reasons noted above. The hydraulic experts agree that an installation defect is present and as to the scope of repair works. For the reasons noted above, without evidence to support a finding that this matter involves a breach of [NAME]'s obligations under cl 2.1 of the [NAME] or the contractual or statutory warranties, as distinct from the [NAME]'s obligations, I cannot find that breach to be established. 17. [NAME] identify an issue as to the location of outlets from the trench drain on a level 1 balcony, adjacent to the yoga room, and the hydraulic experts agree that an installation defect is present and that repair works need to be undertaken ([NAME], item H14). An issue was also identified in respect of the absence of an overflow provision, to operate if the stormwater system was blocked, in an external balcony adjacent to the "yoga room" (MFI 1, item H15). The parties, by an Agreed Statement of Facts dated 8 July 2022, recorded their agreement that the work in these items was completed after the [NAME] was made and I proceed on that basis. The hydraulic experts agree that a defect is present and that repair works need to be undertaken, and that this would be remedied concurrently with any remedy of building defects in that area. However, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of a [NAME], I am not persuaded that the existence of the identified defects, without more, establishes a breach of [NAME]'s obligations under the [NAME] or any contractual statutory warranties under the HBA in that regard. No doubt, the fact of those defects may have established a claim against the [NAME], had it been joined as party to the proceedings. 18. [NAME] contend that an unsealed and redundant open-ended stormwater pipe is present in the lower ground level plenum void which may permit internal surcharge of stormwater into the building, and the hydraulic experts agree that an installation defect is present and as to the scope of the repair works that should be undertaken ([NAME], item H16). [NAME] again did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. Absent expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of a [NAME], I cannot conclude that [NAME]'s obligations under cl 2.1 of the [NAME] or the relevant contractual or statutory warranties were breached. I have addressed [NAME]'s claims in [NAME] items H17 and H18 above, so far as they relate to works which appear to have been undertaken, or partly undertaken, prior to the entry into the [NAME]. 19. [NAME] also identify defects relating to the absence of an isolation valve for a rainwater controller adjacent to the rainwater tanks and to issues as to the ability to remove and maintain the rainwater reuse pump ([NAME], items H19 and H20). The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that the work relating to item H19 was completed after the [NAME] was made and I proceed on that basis. [NAME] also did not press their attempt to shift their position that work in respect of item H20 was done after entry into the [NAME], in reply, to contend that this work was done prior to the [NAME]. The hydraulic experts are agreed that installation defects are established as to these items and as to the scope of necessary repairs. For the reasons noted above, I cannot find a breach of [NAME]'s obligations under cl 2.1 of the [NAME] or a breach of the contractual or statutory warranties in respect of these items.

20. The experts also agree as to an installation defect and the need for repair works as to an issue regarding the rainwater supply pipe ([NAME], item H21). [NAME] also did not press their attempt to shift their position put during the trial, that this work was done after entry into the [NAME], in reply to contend that it was done prior to the [NAME]. Also for the reasons noted above, I cannot find a breach of [NAME]'s obligations under cl 2.1 of the [NAME] or a breach of the contractual or statutory warranties in respect of this item.

21. There is some common ground that defects exist and repair works are needed in respect of the hot water system installed at the property ([NAME], item H22). The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. The hydraulic experts are agreed that defects are present and that repair works are needed in respect of the hot water system installed at the property ([NAME], item H22), although they disagree as to the scope of works required to remediate the identified defects. In concurrent evidence, the hydraulic experts agreed as to the time delay in delivery of hot water, but disagreed as to the number of fixtures that could be operated at the same time, although they had a similar view as to the scope of remediation if necessary (T166). [NAME] accepts that the existence of the defect and scope of rectification as to this item is now agreed, following the inspection on 15 June 2022. The hydraulic experts' concurrent evidence indicates that there is a real question as to whether this issue arises because the design of the hot water system required the input of a specialist hydraulic engineer in order to ensure adequate performance. Without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of this matter, I cannot conclude that [NAME]'s management or supervision obligation under cl 2.1 of the [NAME], or any relevant contractual statutory warranty, was breached by [NAME], where there is no suggestion it had contracted to provide advice of that specialist character. 22. [NAME] did not press their attempt to shift their position in reply in respect of the claims made in [NAME], items H23 and H24, concerning the installation of the eaves gutters to the main dwelling and damage to roof sheeting respectively, in written reply submissions made after the hearing had concluded. The hydraulic experts are also agreed as to defects and as to the scope of rectification in respect of items H23 and H24, although they are in disagreement as to the rectification works required in respect of the latter issue. The experts' report of their further attendance at the property after they gave concurrent evidence (Ex J7) indicates that they were unable to measure the flow rate from showers or any subsequent decrease in flow under test conditions, and found the flow from the laundry tub mixer while both showers were operating to be adequate. However, they found that the flow rate was less than that specified by the Australian Standard when the butler pantry sink mixer, ground floor laundry sink mixer and ground floor powder room basin outlet were operating at the same time, but are still not in agreement that the minimum flow rates required from the outlets has not been achieved. They now agree that the 20mm flow and return hot water circuit is inadequate for the property, and [NAME] considers that at 25mm hot water flow and return service, as proposed in [NAME]'s quotation, would have been adequate. For the reasons noted above, I cannot find a breach of [NAME]'s obligations in respect of these matters.

The alleged general defects 1. I now turn to the "general defects" identified by [NAME]. [NAME] here contend that an alleged defect as to concrete finishes arose from works that "may have" been performed prior to February 2017 and some part of work relating to aluminium windows and door frames "may have" been performed before February 2017 and they contend that all other works occurred after February 2017. That is a matter of some significance, given the narrowed scope of [NAME]'s obligations under the [NAME], and the fact that [NAME] do not lead expert evidence to establish any failure by [NAME] to comply with its narrower obligations of supervision and management under the [NAME] or the statutory warranties under the HBA in respect of [NAME]'s performance of those obligations.

2. I first address work which [NAME] contend "may have" been undertaken before the [NAME] commenced. [NAME] identify a dispute as to the level of concrete finishes ([NAME], item G29) and contend that this work "may [have] be[en]" undertaken prior to February 2017, and [NAME] accepts in closing submissions that the work was "in part" undertaken prior to 5 March 2017, although it was not apparent that the evidence establishes the extent of the work done prior to that date. The parties, by an Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed before the [NAME] was made and I proceed on that basis. The experts disagree as to whether this work is defective, and [NAME]' view that the finish is inadequate depends upon an inference as to the required grade of finish which is not made express in earlier drawings, and a proposition that is not established on the evidence that the highest possible grade of finish can be achieved other than by prefabricated concrete. [NAME]' position is arguable, but that does not establish a breach on the balance of probabilities, and [NAME] does not express a concluded view as to whether the concrete finishes are defective, where the performance of structural concrete is outside his area of expertise. In their report as to their further attendance at the property on 14 June 2022 (Ex J3), [NAME] and [NAME] identified further observations as to this item, including discolouration and other matters in concrete finishes to outdoor terraces being the western and eastern walls and concrete slab soffit; hairline cracks less than 1mm in the basement terrace concrete soffit; and discolouration in other matters in the western concrete wall adjacent to the front pathway, but drew no evaluative conclusions from those observations. On balance, I am not persuaded that this breach has been established, where [NAME]' view depends on the matters noted above that are arguable but not established on the balance of probabilities .

3. I now turn to work that [NAME] initially contended was undertaken from late February or March 2017, when [NAME] was subject to narrower obligations under cl 2.1 of the [NAME] rather than the wider obligations under the Contract. [NAME] identify numerous matters said to constitute defects in respect of roof cladding and gutters ([NAME], item G25). [NAME] accepted, throughout the hearing, that it was likely that this work was done after the entry into the [NAME] (which they initially dated as late February 2017), although they point to the fact that the roofing contract was between [NAME] and [NAME] and invoices were issued by [NAME] to [NAME]. [NAME] did not press their attempt to shift their position put during the trial, in reply, to contend that this work was done prior to the [NAME]. This work would fall within the scope of [NAME]'s narrower management and supervision obligations under cl 2.1 of the [NAME], rather than its wider obligations under the Contract.

4. The first matter relates to dents in the roofing. There is no evidence as to when those dents arose or who caused them, and the experts' evidence deals with the extend of those dents as at August 2020 rather than the position when building works were completed. [NAME] gives no attention to whether the existence of such dents, whenever they arose, had any connection with any failure of management or supervision by [NAME] in respect of the completion of the project, and [NAME]'s position is that the debts are minor and do not require rectification. Neither a breach of [NAME]'s management and supervision obligations under cl 2.1 of the [NAME], or of its statutory warranties under the HBA in respect of the limited scope of that work, has been established in this regard.

5. Second, [NAME] refer to the existence of "swarf" which will contribute to corrosion on the roof, although there is again no evidence as to when it arose or what caused it, and there is a significant disagreement between [NAME] and [NAME] as to whether the appropriate remedy is to replace relevant parts of the roof sheeting and stormwater system or only to clean the swarf from the surface to prevent any future damage. Third, [NAME] refer to the existence of touch-up paint on the roof, although there is no evidence of when or by whom it was applied. It is not established that either the contractor which installed the roof, still less that [NAME], applied that touch up paint. The experts disagree as to whether the appropriate remedy would be the removal and replacement of roof sheeting, or merely the removal of the touch-up paint, but it would only be necessary to determine that question if the relevant breach had been established. I am again unable to find, without evidence as to what ought to have been done by [NAME] in this respect, that these matters give rise to any breach of [NAME]'s management and supervision obligations under cl 2.1 of the [NAME] or any associated warranties under the HBA.

6. Fourth, [NAME] contend that a relatively small "flat" section of the roof has an insufficient fall. [NAME] and [NAME] disagree as to whether that is the case, as a matter of fact, and there is no basis to prefer [NAME]' evidence to [NAME]'s evidence in that respect. Where that question of fact is disputable, even after investigation by experts, there is no basis to find that [NAME] breached its management and supervision obligation under cl 2.1 of the [NAME] or any associated statutory warranties under the HBA in this respect. Fifth, [NAME] identify an issue as to whether the specified gutters were defective, which depends on a question as to the interpretation of drawings, and the experts disagree on whether any non-compliance requires replacement of the gutters, and as to which [NAME] considers the opinion of a hydraulic engineer is required. Sixth, there is an issue in respect of skylight flashing, as to which [NAME] and [NAME] also disagree as to whether the installation of the skylight flashing is defective, and whether rectification would require the removal of the roof sheeting and stormwater system. There is again no basis to prefer [NAME]' view to [NAME]'s view as to these matters and, where the existence of any defect is disputable, there is no basis to find that [NAME]'s not intervening in the contractor's work, even if it had power to do so, gave rise to a breach of its management and supervision obligation under cl 2.1 of the [NAME] or the statutory warranties in respect of the scope of that management and supervision work.

7. Seventh, [NAME] expresses the view that [NAME] has not installed downpipes in required locations, and [NAME] agrees that a downpipe should be installed and connected to the gutter and existing stormwater system in the northeast corner of the yoga terrace. There is no suggestion that [NAME] was obliged to, or did, install the relevant downpipes under the [NAME], still less that it installed it or them in the wrong position, where the work was done by a contractor and [NAME] do not seek to establish that it was done prior to the entry into the [NAME] and the restriction of the scope of [NAME]'s obligations by that agreement. [NAME] accepted, in concurrent evidence, that there may be reasons why a contractor would properly alter the location of the downpipe, and it has not been established that any failure by [NAME] to interfere with the contractor's work in this respect involved a failure of its supervision and management obligation under cl 2.1 of the [NAME] or any associated statutory warranty.

8. Next, [NAME] point to an issue as to weatherproofing on the "yoga terrace" which is said to have given rise to water penetration and water damage ([NAME], item G26). [NAME] did not press their attempt to shift their position in reply to contend that this work was done prior to the [NAME]. The existence of a defect is agreed between [NAME] and [NAME], although there is a disagreement as to the scope of any necessary rectification, and particularly as to whether the tiles and screed could be removed to address this issue without damaging the waterproofing membrane so as to require its replacement. [NAME] and [NAME]'s further report (Ex J3) observed, in respect of this issue, that the western half of dining room plasterboard ceiling was sagging when they again inspected it on 14 June 2022, but that no water staining was evident, and they observed a crack adjacent to the curtain track ceiling of the dining room door. They did not seek to identify any implications of those observations. I am unable to find, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of this matter, that this defect could have been identified or avoided by adequate supervision or project management by [NAME], or that [NAME] had the power to require the tiling contractor to address it. A breach of [NAME]'s obligations under cl 2.1 of the [NAME], and a breach of the statutory warranties under the HBA, is not established. 9. [NAME] also contend that a defect exists in respect of metal balustrades to the terraces ([NAME], item G27). The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. This work therefore fell within the scope of [NAME]'s narrower obligations under cl 2.1 of the [NAME]. The existence of the defect and scope of rectification is agreed between [NAME] and [NAME]. I accept that the relevant defect may have given rise to claims against the contractor, which has not been joined as party to the proceedings, but there is no expert or other evidence that it should been identified or addressed by [NAME] in undertaking a supervision or management obligation under cl 2.1 of the [NAME]. I am unable, without such evidence, to find a breach of [NAME]'s obligations under the [NAME] or the statutory warranties under the HBA in respect of the scope of [NAME]'s work in this regard. 10. [NAME] identify a suggested defect in the master terrace rock garden ([NAME], item G28). A contractor, [NAME], performed the waterproofing works in the area, and [NAME] initially accepted that this work was performed in March 2017, likely after the [NAME] had narrowed [NAME]'s obligations. [NAME] did not press their attempt to shift their position put during the trial, in reply, to contend that this work was done prior to the [NAME], in October or November 2016. It is common ground between the experts that a waterproofing defect exists, although they disagree as to what steps would be necessary in order to identify a rectification process, and as to whether the existing waterproofing membrane requires replacement in full or merely cleaning and extension to cover the front hob and face edge. It is not necessary to determine that disagreement, where the evidence does not establish that any defect arises from any failure of [NAME] in respect of its management or supervision obligations under cl 2.1 of the [NAME] or breaches the associated statutory warranties under the HBA.

11. I also find that [NAME]'s defence (Defence [14(g)]) that it is not liable for any failure by contractors to complete work as a result of [NAME] failing to pay money due to them is established in respect of this item. [NAME] points to the fact that a substantial amount was unpaid to the waterproofing contractor, [NAME], as at 4 July 2018 ([NAME], 6474-6475); that [NAME] then declined to return to site while it was unpaid to rectify defects, and [NAME] communicated that position to [NAME] on 14 August 2018 ([NAME], 6572); and that [NAME] then maintained the position that they would not pay for works until the defects are rectified and that was verified by [NAME] ([NAME], 6572). I accept that position was in breach of [NAME]'s obligations under cl 2.2 of the [NAME] and, more significantly, it prevented [NAME] from complying with any continuing management and supervision obligation, so far as rectification of waterproofing works in the master terrace rock garden were concerned. Even apart from the findings I have reached as to wider issues, [NAME]'s claim in respect of this matter would fail.

12. I have addressed [NAME]' claim in respect of [NAME] item 29 above. [NAME] also identify a suggested defect ([NAME], item G30) concerning poor finishes and damage of internal plasterboard and painting. The parties, by their Agreed Statement of Facts dated 8 July 2022, also recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. This work therefore falls within the narrower scope of [NAME]'s obligations under the [NAME], and accept that they were performed by a contractor, [NAME], although they contend that contractor issued its invoices to [NAME]. The experts are agreed that there is defective plasterboard in one bedroom, but the extent of defects is otherwise disputed. In their report as to their attendance at the property on 14 June 2022 (Ex J3), [NAME] and [NAME] again observed that there was damage to paint and plasterboard in several areas, but did not reach a common position as to other defects, and [NAME] emphasised the fact that these observations were being made five years after occupation of the property by [NAME].

13. The expert evidence is here directed to the extent of defects in the work as at August 2020 or later, well after practical completion of the project in the second half of 2017, and does not provide any basis for determining the condition of the work at the date it was completed. I am not persuaded that a breach of [NAME]'s supervision and management obligation under cl 2.1 of the [NAME] or any statutory warranty under the HBA in respect of that obligation has been established as to this matter, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of this matter. It is therefore not necessary to determine the dispute between the experts as to the extent of rectification that is required as to this matter.

14. I also find that [NAME]'s defence (Defence [14(g)]) that it is not liable for any failure by contractors to complete work as a result of [NAME] failing to pay money due to them is established in respect of this item. I find that [NAME] was prevented from complying with its management and supervision obligations, in respect of the rectification of defects, by [NAME]'s failure to pay the painting sub-contractor, [NAME], or to give clear confirmation that payment would be made once events were rectified, and by their maintaining the position that no payment need be made until all defects were rectified and verified by [NAME] ([NAME], 6344, 6533-6537, 6538, 6561-6562, 6557-6558, 6568). [NAME]'s claims in respect of these items would fail, as far as they are attributable to painting defects, for the same reason that their claims in respect of rectification work that [NAME] failed to perform because it was unpaid failed. I do not accept that defence is established in respect of external windows and doors, where it is not apparent that any damage to powdercoated surfaces could have been corrected by a painting contractor. 15. [NAME] identify a defect ([NAME], item G31) concerning external aluminium windows and doorframes, which partly relates to the operation of the doors and partly to damage by paint overspray and "speckles" and scratches to the powder-coated finish. [NAME] initially accepted that windows and doors were installed by a contractor, [NAME], and that most of the work was performed after February 2017, so [NAME]'s obligations were in the narrower form that arose under the [NAME]. They did not press their attempt to shift their position put during the trial, in reply, to contend that this work was done prior to the [NAME]. The experts agree that there is a defect in the function of the stacker doors to the living room and dining room and the basement games room door. [NAME] considers that replacement of the doors is required, in reliance on the scratches and paint and render product over aluminium frames, whereas [NAME] considers those defects could be addressed by dismantling the stacker door units and reducing their size on site, and then reassembling them, and by cleaning paint and render from the external doorframe for the basement games room door. In their report as to their further observations of the property on 14 June 2022 (Ex J3), [NAME] and [NAME] observed that there were paint spots and overrun on external aluminium doorframe styles and a door header at three locations and commented on a "crevice" left in powder coating after a paint speckle was removed by [NAME] with his fingernail. They also observed matters as to the garage roller door and other matters, and agreed that paint overruns, scratches and other matters were observable from a distance of 1.5 meters. They also referred, without elaboration or reaching any conclusion, to two alternative methods of rectification in respect of those matters.

16. I cannot find that [NAME] breached a duty of supervision and management under cl 2.1 of the [NAME] or the relevant statutory obligations in respect of the installation of the doors, absent adequate evidence as to what should have been done by [NAME] in this respect, where [NAME] had selected [NAME] to perform that installation and it is not apparent, without that evidence, how [NAME] could or should have interfered with [NAME]'s performance of its role. I am also not persuaded that [NAME] breached a duty of supervision or management or statutory obligations under the HBA in respect of scratches or paint or render on the doors, where there is no evidence that [NAME]'s duty of management and supervision required [NAME] it to address those scratches or remove that paint and render product at the conclusion of the project, rather than for [NAME] or the render contractor or painter to do so, or leaving it to [NAME] to organise a thorough clean at the conclusion of the works, as the evidence indicates is common practice in respect of building works. 17. [NAME] identify a defect ([NAME], item G32) concerning damage by paint overspray and speckles in respect of face brickwork, and [NAME] attribute that damage to the painting contractor, [NAME]. The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. [NAME] and [NAME] agree that the brickwork should be cleaned, although they disagree as to whether a light acid or soap and water should be used for that cleaning. It is not necessary to resolve that question, where [NAME]'s obligations in respect of management and supervision of the project under cl 2.1 of the [NAME] did not impose upon it any obligation to clean the brickwork at the completion of the works, which was a matter for the painting contractor or [NAME]. 18. [NAME] also point to a defect ([NAME], item G33) concerning light fittings, where [NAME] contend that downlights are not flush and that there are other inconsistencies in the lighting. [NAME] accept that lighting work was undertaken by a contractor, [NAME], which they submit was a contractor to [NAME]. The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis, so that [NAME]'s narrower obligations under the [NAME] therefore apply. I accept that these matters may have given rise to a claim against [NAME], had it been joined as party to the proceedings. It may be that I could find, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of this matter, that [NAME]'s management and supervision obligation under cl 2.1 of the [NAME] would have required it to identify this issue and raise it with [NAME], and that its not doing so (if it did not do so) would have breached the warranties under the HBA in respect of the scope of its work. There is no evidence that [NAME] would have accepted that the defects existed, had they been raised with it, or whether it would have rectified them, and [NAME] did not guarantee other contractors' performance under the [NAME]. Even if a breach was established, it does not seem to me to give rise an obligation on [NAME] to rectify defects in [NAME]'s work, where it is not shown that performance of its management and supervision obligations would have avoided or brought about rectification of those defects. 19. [NAME] also raise a multitude of suggested defects in relation to the swimming pool ([NAME], item G34). There is some complexity in the claim in respect of swimming pool defects, where [NAME] contends that defects relating to the location of the skimmer box, the dividing wall between the bench seat and pool shadow, and the installation of the [NAME] are consequential on the concrete pour of the pool shell which occurred in May 2016, and [NAME]'s obligations were governed by the Contract rather than the [NAME]. However, the parties appeared to accept at the hearing that at least the dividing wall was laid before the [NAME] was made, and the parties, by the Agreed Statement of Facts dated 8 July 2022, also recorded their agreement that the slimmer box was completed before the [NAME] was made and I proceed on that basis.

20. A further difficulty arises because [NAME] appears to have relied, when addressing the defects, on documentation issued in 2016 in respect of a quote by [NAME] which was not accepted by [NAME], rather than on the different and less expensive quote which was ultimately accepted by them at a later date. [NAME]' focus on the earlier drawings in turn obscures the question of the extent to which any difficulties have arisen from later changes in the scope of the pool design or pool work. It is ultimately not necessary to address these difficulties, given the wider difficulties to which I refer below. 21. [NAME] initially accepted that a contractor, [NAME], was engaged in respect of the swimming pool, and that the works were largely done in July 2017. It appears that an issue as to the location of the skimmer box is an exception, because that arose from pouring the concrete shell of the pool prior to the date of the [NAME], and I have noted the parties agreement as to that matter above. Other than in respect of the location of the skimmer box, [NAME]'s obligations were therefore narrowed to the obligation of supervision and management under cl 2.1 of the [NAME] in respect of these matters. I have referred to the affidavit evidence led by [NAME] of Land Form in respect of this work above. [NAME]'s claim that the skimmer box for the pool is in an incorrect location depends on inferences to be drawn from earlier drawings and appears to be inconsistent with the information contained in [NAME]' quote for the relevant works. I am not persuaded that any breach of the Contract, so far as the parties now agree that the work was done prior to the entry into the [NAME], is established in this respect. 22. [NAME] also point to an additional defect in the swimming pool, that a dividing wall has been constructed between the bench seat and the pool shallows, and it appears this took place in May 2016, prior to the entry into the [NAME], although it was not addressed by parties' Agreed Statement of Facts dated 8 July 2022. It is common ground that this defect exists and I am satisfied that a breach of the Contract and statutory warranties is established in that regard. 23. [NAME] also point to several "deficiencies" that are alleged to have arisen in respect of the installation of the pool cover, and [NAME] addressed that matter in his evidence, although it emerged that he had no experience in installing the brand and type of pool cover that [NAME] had chosen and, it seems to me, no basis on which to determine whether these matters were deficiencies in the installation of the pool cover or simply the characteristics of that brand and type of pool cover, which necessarily followed from [NAME]'s choice of that brand and type of pool cover. [NAME] did not press their attempt to shift their position, in reply, to contend that this work was done prior to the [NAME]. I am not persuaded that the relevant defects arise from a construction defect, still less from a breach by [NAME] of any duty of management or supervision under cl 2.1 of the [NAME], as distinct from the performance characteristics of that pool cover. 24. [NAME] also refer to missing grout, chipped tiles and hardwood staining to the tiles, although the evidence does not establish when or how those defects arose or by whom they were caused. They may or may not have given rise to claims against the relevant contractors, but I am not persuaded that they establish a claim against [NAME] in respect of its narrower duty of supervision and management under cl 2.1 of the [NAME] or the relevant statutory warranties. [NAME] also contend that the fibreglass [NAME] control panel has been installed such that it cannot be accessed without difficulty. That contention seems to me to misstate the nature of the difficulty, because the control panel was an integral part of the fibreglass [NAME]'s evidence establishes that its location was dictated by the need to install that [NAME] in a manner that allowed access to its access panel. It seems to me that this difficulty arose from the choice of that [NAME], where it was to be installed adjacent to a concrete pool and timber decking, which dictated the manner of its installation, and I have referred above to [NAME]'s evidence as to steps which were available, but not taken by [NAME], to mitigate that difficulty. I am not persuaded that a breach of the Contract, in respect of pouring of the shell of the [NAME] prior to March 2017, or a duty of supervision and management by [NAME] or any statutory warranty has been established in that respect.

25. A defect in respect of termite protection ([NAME], item G35) is now not pressed. [NAME] also identify a defect in respect of external render ([NAME], item G36) and contend that there are no expansion joints on the north and east elevations of the first floor, that there is cracking to planter boxes, and that there are several other defects. [NAME] accept that this work was undertaken by a contractor, [NAME]. The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. It follows that [NAME] is only subject to the narrower obligations arising under the [NAME] in that respect. [NAME] and [NAME] agree as to the scope of the defect and as to the appropriate rectification, although neither address the steps which should have been taken by [NAME] to perform any supervision or management obligation in respect of this matter, or how the performance of those steps would have impacted upon the ultimate quality of the render work undertaken by [NAME]. I will assume, without deciding, that it might be open to find, even without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management in respect of this matter, that adequate supervision and management would at least have identified a lack of expansion joints on the first floor, although the question whether and what expansion joints were required may have been open to dispute. It is not apparent, in any event, what would have occurred had [NAME], having identified that matter, drawn it to the attention of [NAME], which had undertaken the relevant work. While this matter might have given rise to a claim against [NAME], which was also not joined as party to the proceedings, I am not persuaded that a claim against [NAME] is established in this respect. 26. [NAME] also point to suggested defects in landscaping works undertaken by [NAME] ([NAME], item G37) and point out that [NAME]' invoices were issued to [NAME] and then by [NAME] to [NAME] from June 2017 to completion in respect of this work. The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. [NAME] identify criticisms including water retention in the treads on the front porch steps, questions as to the basement terrace steps and outdoor stairs, allegations of a poor finish and cracking and moisture on the concrete barbeque area. They also point to floor tiles removed but not replaced, although the evidence as to when those floor tiles were removed and by whom is unclear. [NAME] and [NAME] agree that there is a defect as to the porch steps and agree as to the method of rectification; they disagree as to whether any issue as to the outdoor stairs will be rectified when any issue as to the porch stairs is rectified; they also disagree as to the extent of any defect in respect of cracks in the outdoor stairs, and as to whether they should be rebuilt; and they agree as to a defect in respect of the tiles to the outdoor barbeque area and as to the method of rectification of that defect, but not as to any question as to moisture and efflorescence to the concrete barbeque area. Again, it is not self-evident that a defect in the quality of the work performed by a contractor, [NAME], establishes a breach of [NAME]'s management and supervision obligations under cl 2.1 of the [NAME] or of the statutory warranties, which it seems to me would be a matter for expert evidence as to the scope of that duty and what would or would not have been undertaken by a project supervisor and manager in performing it in the relevant circumstances.

27. I am not persuaded that the relevant breach of the [NAME] or the relevant statutory contractual warranties under the HBA is established, and it is therefore not necessary to determine any question as to the scope of rectification work. [NAME]'s claim, so far as waterproofing issues are raised in respect of landscaping, would also fail by reason of their non-payment of [NAME], so that it declined to return to site, for the same reasons as their claim in respect of [NAME], item G28, which I have addressed above. 28. [NAME] identify a defect in respect of missing air conditioning grill vents (MFI IA, item G38) and contend the relevant work was undertaken by an air conditioning contractor, [NAME], which was engaged by [NAME]. The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. It follows that [NAME] owed the narrower obligations under the [NAME] in respect of this work. [NAME] and [NAME] have agreed the defect and agreed the scope of rectification. I will assume, without deciding, that the air conditioning grills were not installed at the completion of the work, and that adequate supervision and management by [NAME] would have identified that matter. It is not, however, apparent whether [NAME] identifying that defect would have caused it to be remedied by [NAME], and [NAME] did not guarantee [NAME]'s work by the terms of the [NAME] . While this matter may have given rise to a claim against [NAME], which is again not party to the proceedings, it is not apparent that any breach of the duty of supervision and management by [NAME] in this respect gives rise to a basis for [NAME] to be required to bear the costs of rectification of deficiencies in [NAME]'s work. 29. [NAME] advance allegations of poor finish in the garage and basement terrace slabs ([NAME], item G39) which they initially accepted were constructed by a contractor, [NAME], in work done after February 2017. [NAME] did not press their attempt to shift their position put during the trial, in reply, to contend that this work was done prior to the [NAME]. I proceed on the basis that [NAME] was again subject to the narrower obligations under cl 2.1 of the [NAME] in respect of this work. [NAME] and [NAME] disagree as to whether a defect is established, and [NAME] expresses the view that the crack width is less than 1.0mm, there has been no change in slab level and there is no evidence of moisture and the cracking does not require rectification under Australian Standard AS2870. There is no basis to prefer [NAME]' position to [NAME]'s position in that respect and, in any event, there is no evidence that appropriate supervision and management of the project by [NAME] would have identified cracks of this character, which partly depends on when they developed, or that identification of those cracks at any earlier point would have led [NAME] to remedy them, particularly where there is at least an arguable case that are not properly treated as defects. No basis for an order for compensation against [NAME] is established in respect of this matter. 30. [NAME] identify an issue as to polished concrete in respect of an outdoor terrace ([NAME], item G40), which [NAME] accept was installed by a contractor, [COMPANY]. The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. It follows that [NAME] again owed the narrower obligations under cl 2.1 of the [NAME] in that respect. [NAME] and [NAME] are agreed as to the scope of the relevant defect and agreed as to the scope of rectification. Again, absent adequate evidence, I cannot find that the defect in the ultimate quality of the work undertaken by [COMPANY] establishes a defect in supervision or management by [NAME], without evidence as to what should have been undertaken by a person with supervisory or management responsibility in respect of the relevant works. The basis for the claim against [NAME], as distinct from [COMPANY], in respect of this matter is not established. 31. [NAME] also point to defects in electrical works ([NAME], item G41) and accept that this work was undertaken by [NAME], a contractor, although they contend that [NAME] engaged that contractor. The parties, by their Agreed Statement of Facts dated 8 July 2022, recorded their agreement that this work was completed after the [NAME] was made and I proceed on that basis. [NAME] maintains that the work is defective; [NAME] accepts that the electrical work appears to be incomplete, although observing that it is a matter outside his expertise, and advising that an electrician should be engaged to complete the work. For the reasons which I have addressed above in respect of other issues, I am not able to conclude, without expert or other evidence as to the content of accepted or appropriate industry practice in respect of supervision and management of electrical contractors, that a deficiency in the ultimate quality of the work performed by [NAME] is sufficient, in itself, to establish a breach of the narrower duty of management and supervision owed by [NAME] under the cl 2.1 of the [NAME] or the corresponding contractual or statutory warranties under the HBA.

32. I have held that [NAME] is liable in respect of several aspects of the work done before the [NAME] took effect (items H2, H3, H13 and G34, in respect of the dividing wall only) as to which it had assumed the wider obligations under the Contract, and the statutory warranties had wider effect, and that liability is not released by the release in the [NAME]. I will allow the parties an opportunity to reach agreement as to the quantification or works relating to those items, or make further submissions, given the difficulties as to the expert quantification evidence, to which I refer below. [NAME] have otherwise not established their claims for breach of the Contract, the [NAME] or the statutory warranties against [NAME].

Matters that cannot presently be determined 1. I would ordinarily now proceed to determine the issues as to the disputed scope of defects, rectification works, their disputed costs and damages, as to which I have not found [NAME]'s liability was established, against the contingency of an appeal, although those questions do not arise on the findings I have reached above. However, it is likely not possible, and it is certainly not practical, now to do so, rather than to deal with those matters on remittal from any successful appeal. First, the experts' positions continued to change until the last day of the hearing, and those changes and their implications were neither fully nor clearly integrated into any final position. I do not say that critically where it resulted from further attendances at site and attempts to narrow their differences. To allow these questions to be determined, I would first have to direct the parties to provide an updated joint report as to the matters as to which the experts now agree and disagree, updated for their changes in position, and then updated quantification reports. There is no utility in doing so where it will make no difference to the result at first instance and may make no difference on any appeal, particularly if the Court of Appeal accepts the view I have formed as to matters of construction and the absence of evidence as to the content of [NAME]'s obligations.

2. Second, there is presently no basis to generally prefer the expert witnesses of one party over the other as to the hydraulic and building issues on which consensus had not been reached, where each is experienced and credible and, given the nature of the issues, their differing views are largely based on the application of their experience to reach difference results. This could be addressed in a not particularly satisfying way by reference to the onus of proof, by generally adopting the narrower scope of work conceded by [NAME] or not ordering work where there was no such concession, in the many cases where I could not conclude, on the balance of probabilities, that the wider scope preferred of work by [NAME] or [NAME] should be adopted in preference to [NAME]'s or [NAME]'s views, where both are reasonably open. A second possibility would be now to appoint a court-appointed expert, with appropriate expertise, to express a view as to the matters on which the parties' experts differ. There is no reason to think the parties would wish to incur the costs of the latter course, or that there is any utility in it, where it will make no difference to the result at first instance and possibly no difference to the result on any appeal for the reasons noted above.

3. Third, and most fundamentally, it is impossible to determine the question of the quantum of rectification costs and the amount of any damages on the quantification evidence as it stands. As counsel acknowledge, the joint quantification reports quantify rectification costs on the basis that I accept one or other of the hydraulic and building expert reports in its entirety and without modification as to each issue, although there are multiple disagreements between the quantification experts as to the costs of remedial work even on that basis. The quantification reports do not allow costs to be determined unless I make a binary choice of that kind as to each issue. It is plain that I could not proceed in that way, unless I simply determine that the there is no basis to prefer the expert evidence called by [NAME] to that called by [NAME] as noted above, where several issues have sub-issues and raise questions of degree, and the result as to particular issues will also depend on which of the two approaches noted in the second point above was adopted. Once one of those approaches was taken and the many issues and sub-issues as to the scope of rectification works were determined, further quantification reports would then need to be prepared on that basis or this issue would need to be referred to a referee. It is again unlikely that the parties would wish to go to the costs of preparing those reports now or a reference now, after they had incurred any costs associated with the second step above, where the result will again make no difference at first instance and may make no difference on appeal for the reasons noted above.

4.

For these reasons, these issues cannot be determined now, against the contingency of appeal, and may need to be addressed on a remittal in the event of a successful appeal. Although the costs of doing may well likely then be (as they would now also be) disproportionate to the amounts in issue, at least they would not then be wasted in their entirety.

[NAME]'s monetary claim 1. [NAME] also contend and [NAME] implicitly accepts that, in breach of the [NAME] failed to pay [NAME] an amount of $75,000 (ASC [15], Defence [15]). [NAME] contends that it is entitled to set-off that amount against the monies referred to in its Cross-Claim in the proceedings. It appears that there is no real dispute that, after setting off the amount claimed by [NAME] against the amount due to [NAME], an amount of $62,777.77 is due by [NAME] to [NAME]. There should be judgment for [NAME] against [NAME] in that amount.

Orders 1.

For these reasons, [NAME]'s claim against [NAME] in respect of three defects and one aspect of a fourth and their money claim, which occupied little time at the hearing, have succeeded, and the large part of their claim will be dismissed, after issues as to the quantification of damages relating to these several defects are agreed or are resolved. As I noted above, [NAME] did not press their claim against [NAME] at the hearing, and the proceedings will be dismissed as against him. My preliminary view is that, in these circumstances, [NAME]'s limited success, in respect of a much larger and longer case, means that they must pay [NAME]'s and [NAME]'s costs of the proceedings as agreed or as assessed. However, I will give the parties an opportunity to be heard in that regard.

********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 18 July 2022