Purnell v Manson[2023] QCATA 77

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL

REASONS FOR DECISION

1. [1]
   The dispute between the parties has had a long and eventful history.
2. [2]
   The respondent builder undertook renovation works for the appellant homeowners. The parties fell into dispute. The appellants purported to terminate the contract. The respondent commenced proceedings seeking a declaration that the appellants had not lawfully terminated the contract and seeking damages for breach of contract.^[1] The appellants counterclaimed seeking damages for breach of contract.
3. [3]
   Central to the determination of the dispute between the parties was the issue of whether the appellants had lawfully terminated the contract. The tribunal directed that the question of termination be determined as a preliminary issue. 
4. [4]
   The tribunal decided that the appellants had lawfully terminated the contract (the first decision).^[2] The respondent unsuccessfully appealed the decision.^[3]
5. [5]
   Following a further hearing, the tribunal finally determined the dispute between the parties (the second decision).^[4]
6. [6]
   The appellant homeowners have appealed the second decision.

The first decision

7. [7]
   In deciding that the appellants had lawfully terminated the contract, the learned member found:

   1. (a)
      At the time of the builder’s claim for completion of the enclosed stage, the roof covering was not in accordance with the plans at the time, and did not have appropriate engineering and development approval;^[5]
   2. (b)
      The builder changed the plans without obtaining approval from the owners to show a tiled roof and not a metal roof;^[6]
   3. (c)
      The builder proceeded of his own volition to conduct the roofing works by fitting a metal roof, without first obtaining appropriate statutory approval which was required when it was his obligation to obtain such approval;^[7]
   4. (d)
      The builder was not entitled to claim for the enclosed stage until the components of the stage were properly completed;^[8]
   5. (e)
      The following defective or incomplete work meant that the enclosed stage had not been reached:^[9]

      1. (i)
         Defect in the hip roof;^[10]
      2. (ii)
         Internal floorboards not properly completed;^[11]
      3. (iii)
         Windows and doors supplied were not those required to be installed under the contract;^[12]
   6. (f)
      The builder was not entitled to suspend work on the basis of the non-payment by the owners of the enclosed stage claim as that payment was not claimable by the builder under the contract at that time;^[13]
   7. (g)
      The builder had not repudiated the contract;^[14]
   8. (h)
      The builder was in substantial breach of the contract by failing to comply with his obligations under clauses 1.1 and 11.1 of the contract;^[15]
   9. (i)
      The owners were entitled to give a notice to remedy breach under clause 27.1 of the contract;^[16]
   10. (j)
       The owners were entitled to terminate the contract under clause 27.4 upon the builder’s failure to comply with the notice to remedy breach.^[17]

The second decision

8. [8]
   Relevant to the present appeal, the learned member found:

   1. (a)
      The builder was entitled, on a quantum meruit, to reimbursement for work performed in the enclosed stage which the owners utilised and had the benefit of;^[18]
   2. (b)
      The bi-fold doors referred to by the homeowners’ quantity surveyor, Mr Thornley, and those referred to by the builder, were one and the same;^[19]
   3. (c)
      The bi-fold doors should not be included in the valuation of uncompleted works;^[20]
   4. (d)
      The value of the completed works under the enclosed stage was $67,091.00;^[21]
   5. (e)
      The builder was entitled to recover $67,091.00 on a quantum meruit for the enclosed stage;^[22]
   6. (f)
      The builder was entitled to recover $10,141.30 on a quantum meruit for works completed beyond the enclosed stage;^[23]
   7. (g)
      The homeowners had failed to adduce cogent evidence as to loss in the sale value of the property directly attributable to the builder’s failure to provide inspection certificates and the amount claimed by the homeowners was not allowed;^[24]
   8. (h)
      Accepting the evidence of the homeowners’ quantity surveyor, Mr Thornley, the amount of $29,768.30 was allowed for the cost of completing the works;^[25]
   9. (i)
      The homeowners were entitled to recover consequential damages for rental expenses incurred between 30 April 2014 and 30 September 2014, a period of 22 weeks, in the amount of $9,240.00;^[26]
   10. (j)
       No award of interest was made on the amounts payable to the homeowners;^[27]
   11. (k)
       The total amount recoverable by the builder was $77,232.30 and the total amount recoverable by the homeowners was $51,978.30.^[28]

The grounds of appeal

9. [9]
   The appellants rely upon seven grounds of appeal. Ground of appeal 3 was abandoned in the appellants’ written submissions. A number of the grounds of appeal raise overlapping issues. The issues for determination can be summarised as follows:

   1. (a)
      Did the tribunal err in assessing the homeowners’ cost of completing the works? – grounds of appeal 1, 6 and 7;
   2. (b)
      Did the tribunal err in allowing the builder to recover on a quantum meruit for the enclosed stage works, and further works, which were completed by the builder? – ground of appeal 4;
   3. (c)
      Did the tribunal err in the treatment of the bi-fold doors? – grounds of appeal 2 and 5;
   4. (d)
      Did the tribunal err in assessing the claim by the homeowners for consequential loss relating to the payment of rent? – ground of appeal 8.
10. [10]
    The grounds of appeal raise questions of fact and mixed law and fact. A party to a proceeding may appeal a decision of the tribunal.^[29] An appeal on a question of law is as of right. To appeal a question of fact or mixed law and fact, the leave of the appeal tribunal is required.^[30] The principles governing the granting of leave to appeal are well established: there is a reasonably arguable case of error in the primary decision; there is a prospect that the applicant will obtain substantive relief; leave is necessary to correct a substantial injustice caused by error; and that there is a question of general importance upon which further arguments and a decision of the Appeal Tribunal would be to the public advantage.^[31]
11. [11]
    In deciding an appeal on a question of fact or mixed law and fact, subject to leave to appeal being granted, the appeal must be decided by way of rehearing.^[32] In deciding the appeal the Appeal Tribunal may confirm or amend the decision, set aside the decision and substitute its own decision, or set aside the decision and return the matter to the Tribunal below for reconsideration.^[33]

Application to adduce fresh evidence

12. [12]
    Before considering the grounds of appeal it is necessary to deal with the application by the respondent to rely upon fresh evidence.
13. [13]
    The Appeal Tribunal made directions for any party seeking to rely upon fresh evidence to file an application and for the application to be determined together with the appeal.
14. [14]
    The respondent has not filed an application for leave to rely upon fresh evidence. Rather, the respondent has simply filed submissions addressing the issue. As there has been no objection however to the respondent’s approach, we will deal with the submissions as an application to rely upon fresh evidence.
15. [15]
    The Appeal Tribunal will only accept fresh evidence if it was not reasonably available at the time the proceeding was heard and determined. A party seeking to adduce fresh evidence must satisfy the Appeal Tribunal that:

    1. (a)
       The evidence could not have been obtained with reasonable diligence before the hearing at first instance;
    2. (b)
       The evidence would probably have had an important impact on the result of the case; and
    3. (c)
       The evidence is credible.
16. [16]
    For fresh evidence to be admitted all of these requirements must be satisfied.
17. [17]
    The fresh evidence sought to be relied upon by the respondent is a photograph of the kitchen and rear deck of the house. The respondent says that the photograph is relevant to the issue of the installation of the timber doors.
18. [18]
    The respondent says that it did not have a copy of the photograph at the time of the hearing below. The respondent does not address whether the photograph could, with reasonable diligence, have been obtained before the hearing. The photograph was, says the respondent, used by the appellants in the sale of the property in 2017 and was uplifted from online material used by the appellants’ agents.
19. [19]
    The hearing was conducted in November 2018, some considerable time after the sale of the property by the appellants. The respondent offers no explanation as to why the photograph could not have been, and was not, obtained before the hearing. Accordingly, we are not persuaded that the photograph could not, with reasonable diligence, have been obtained before the hearing below.
20. [20]
    It is not necessary for us to consider the other requirements for the admission of fresh evidence in light of our conclusion.
21. [21]
    The application to rely upon fresh evidence is refused.  

Consideration

22. [22]
    For reasons that will become apparent, we will first consider appeal ground 4.

Did the tribunal err in allowing the builder to recover on a quantum meruit for the enclosed stage works, and further works, which were completed by the builder? – ground of appeal 4

23. [23]
    The contract price was payable by seven progress payments: deposit, demolition and excavation, base, frame, enclosed, fixing and final. The appellants paid the first four stage payments. The respondent submitted a claim for the enclosed stage which the appellants disputed. It was at this stage that the appellants terminated the contract.
24. [24]
    The respondent claimed that he was entitled to be paid for the work performed until the termination of the contract.
25. [25]
    The learned member found that, notwithstanding the builder was in breach, the builder was entitled to recover from the homeowners $77,232.30 on a quantum meruit for works completed up to, and beyond, the enclosed stage.
26. [26]
    The learned member did not consider the building contract to be entire.^[34] The parties approached the dispute both below and in the appeal on the basis that the contract was not entire, but rather a series of entire obligations which were defined by the stages of payment contemplated by the contract.
27. [27]
    It is clear that, in respect of the enclosed stage the subject of dispute and the work undertaken beyond the enclosed stage, the work performed by the respondent was not to the standard necessary under the contract to give rise to an obligation under the contract to pay for it.^[35]
28. [28]
    The question becomes, therefore, whether the builder was entitled to a payment on the basis of a quantum meruit for work done under the relevant stage of the contract, but not to the standard required by the contract to permit payment pursuant to it. That is, may the builder in default in the present circumstances recover on the basis of quantum meruit, where no claim under the contract may be made?
29. [29]
    In our view, there is no basis for a claim for quantum meruit in the present circumstances.
30. [30]
    There is support for the proposition that in some circumstances a builder in default of completion of a stage may recover a reasonable sum for work done within that stage. In Steele v Tardiani,^[36] Latham CJ adopted as correct the following rule:

Where work is done by one party under a special contract, but not according to its terms, the other may refuse to accept it; but if he does accept it and takes the benefit of it, he may be sued for the value on this [common indebitatus] count [for work done].^[37]

31. [31]
    It follows that the application of quantum meruit does not depend on who treated the contract as discharged. The learned authors of Mason & Carter’s Restitution Law in Australia express the view that, in principle, there is no reason why the fact that the plaintiff breached the contract should be conclusive.^[38] However, for a builder in breach to recover under a quantum meruit it must be demonstrated that the innocent party accepted the benefit of the work, within the meaning of the authorities.^[39] These circumstances will be rare and will ordinarily not be established where the owner has done no more than build upon work which was incomplete under the contract.^[40] In such circumstances, it will be difficult for a builder to demonstrate that the owner had a proper opportunity to reject, or accept, the work.
32. [32]
    In Partington & Anor v Urquhart (No 2),^[41] the builder was held entitled to recover on a quantum meruit in respect of a stage payment even though in default. There are two points that should be noted about Partington.
33. [33]
    First, in Partington there was a lengthy and complicated dispute between the owners and the builder. The builder purported to terminate the contract for the owners’ failure to pay the enclosed stage payment. The Tribunal held that the termination was ineffective, but the owners did not terminate the contract by reason of the builder’s breach. The contract was, instead, abandoned by both parties. If the builder was in breach, then the owner did not act upon it.
34. [34]
    Secondly, in Partington, there was an express finding that the owners accepted the benefit of the work. It was upon that factual finding that the appeal turned, in so far as it concerned the claim by the builder for a quantum meruit in relation to incomplete work.
35. [35]
    Partington should not be taken as authority for the proposition that a builder who has not performed work to a state requiring payment under the contract will ordinarily be entitled to a quantum meruit for the work in fact completed. Where a contract has been terminated by an owner in circumstances where a builder is in default, it will be difficult for a builder to recover on a quantum meruit. That is so because it will be difficult to demonstrate that the owner has accepted the benefit of the work where the work done is done in part performance of a contractual obligation. Where an owner elects to treat the contract as discharged, acceptance of the benefit by the owner must be proved independently of the receipt of the incomplete contractual performance.^[42]
36. [36]
    The learned member considered Partington & Anor v Urquhart (No 2),^[43] citing that decision as authority for the proposition that a builder has a right to bring a claim for quantum meruit notwithstanding the builder not being entitled to make a claim for the enclosed stage or to terminate the contract.
37. [37]
    The respondent was required to complete the enclosed stage of works before an entitlement to payment for the stage arose. In circumstances where the respondent was in breach of the contract and the appellants lawfully terminated the contract before the enclosed stage was completed, the only basis upon which the respondent could claim for the work undertaken, including the work beyond the enclosed stage, was on a quantum meruit. The appellants did not freely accept the benefits flowing from the respondent’s part performance. They could not have been expected to abandon the unfinished building. Nor could they have been expected to demolish the works or leave the works incomplete. The result was that there was no entitlement by the respondent to recover any amount for work undertaken on the basis of a quantum meruit. In allowing the builder’s claim for a quantum meruit, the learned member erred. The error by the learned member was one of mixed law and fact.
38. [38]
    It follows that leave to appeal should be allowed. The appeal must be determined by way of rehearing.

Rehearing

39. [39]
    In rehearing the matter, and consistent with the decision in Harrison & Anor v Meehan:^[44]

    1. (a)
       We will decide the matter based on the material before the tribunal below with due respect for the findings of fact of the tribunal below and due consideration of the advantages enjoyed by it;
    2. (b)
       We have adopted the findings of fact of the tribunal below other than where those findings have been challenged in this appeal or where there is doubt about the finding.
40. [40]
    In conducting the rehearing we will consider the grounds of appeal and the submissions by the parties.
41. [41]
    The learned member assessed the appellants’ entitlement to damages as follows:

    1. (a)
       Extra building costs$29,768.30
    2. (b)
       Rent incurred$    9,240.00
    3. (c)
       Solatium$10,000.00
    4. (d)
       Extra planning costs$   2,970.00
    5. (e)
       Total$51,978.30
42. [42]
    We will consider each of these heads of damage in turn.

The cost incurred by the appellants in completing the building works

43. [43]
    The learned member observed that there was a wide discrepancy in the evidence between the various assessments of the cost of completing the works in accordance with the terms of the contract.^[45] It is appropriate to pause here and consider the evidence.
44. [44]
    In his report, the appellants’ expert, Mr Thornley, opined that the cost of completion (excluding the roof) was $104,198.00.^[46] The cost was exclusive of a number of items including the cost of rectification of defective work. Mr Thornley subsequently revised this assessment. In the joint report prepared following the experts’ conclave, Mr Thornley assessed the cost of completion works in the amount of $99,623.00.^[47]
45. [45]
    Mr Davies was the respondent’s expert. He initially assessed the cost of completion work in the amount of $56,648.00.^[48] In the joint report, Mr Davies revised this assessment to $61,223.00.^[49]
46. [46]
    In addition to the evidence of the experts, the appellants relied on evidence of the actual cost they incurred in having the building works completed in accordance with the contract. The appellants say that the learned member erred in not accepting their evidence that the cost of completion of the works was the amount they paid to the new builder, Mr Newman. The amount paid to Mr Newman was $147,000.00. Mr Newman had, approximately two years earlier, provided a quote to complete the works in the amount of $138,200.00 which included the replacement of the roof.^[50] Another builder had provided to the appellants a quote to complete the works at approximately the same time. The amount of that quote was $138,815.15.^[51] The learned member said of the appellants’ claim in relation to the cost of completion:

It is very difficult to reconcile the disparity between these varying calculations of the cost of completion. The owners submit that regard should be had to only the final price paid to Mr Newman. That price is so much greater than any of the other propositions, that it is difficult to accept, in the absence of a compelling explanation as to why it is more than double the estimate of Mr Davies, and significantly more than any of the other prices.

…

I cannot be satisfied that the later quotes were for the same work as provided for in the original contract with the builder, and have not been provided with any plausible explanation as to why the final price from Mr Newman was so much greater than his quote.^[52]

47. [47]
    The appellants’ submissions may be summarised thus: first, the appellants established a prima facie case that the cost of completion was the amount they paid to Mr Newman; secondly, the learned member erroneously reversed the onus of proof by requiring the appellants to adduce a satisfactory explanation as to why Mr Newman’s final costs were significantly more than the experts’ assessments or the quotes.
48. [48]
    In bringing the counter-application, the onus was upon the appellants to prove their loss. They claimed the cost of completing the works in accordance with the actual amount paid to Mr Newman. Once they had discharged that onus, and if the respondent sought to assert that the appellants had failed to mitigate their loss, the onus shifted to the respondent to prove the failure to mitigate.^[53]
49. [49]
    In the response to the counter-application the respondent (the applicant in the proceeding below) said:

The Applicant denies that the Respondents have suffered loss and damage as alleged or at all. Further or in the alternative, the Applicant says that the alleged cost paid under the Newman Contract is excessive and contrary to the available evidence.^[54]

50. [50]
    In written submissions at the conclusion of the hearing, the respondent said:

    1. (a)
       The works undertaken by Mr Newman were not confined to completion of the contractual works;
    2. (b)
       The appellants had failed to adduce a complete copy of the contract they entered into with Mr Newman;
    3. (c)
       The appellants had failed to adduce evidence of the payment to Mr Newman of the contract price;
    4. (d)
       The appellants had failed to adduce any evidence addressing the issue of the scope of works undertaken by Mr Newman.
51. [51]
    The respondent submitted:

The failure by the owners to provide the Expert Conclave Report to builders who were providing quotes to complete the work is important because it demonstrates the owners’ failure to take steps to mitigate their loss. A reasonable person acting in the position of the owners would have given the Expert Conclave Report to each builder quoting and have them quote within the likely range or at the least provide reasons why the quote would be in excess of the joint experts’ opinion.

…

The reasonable inference which the Tribunal may draw from the joint expert opinion on costs to complete, the lack of evidence adduced by the owners and the excessive contract sum of the Newman Contract is that the works carried out by William T Newman greatly differ from what was required to complete the original contract works.

52. [52]
    During the hearing below, the following exchange took place between Mr Brett and counsel for the respondent:

Mr Matthews: So – and I’ve already taken you to those – the sums that the experts came to. Now, at the stage that you engaged Mr New (sic) in 2016, you accept that you had the expert report – the joint expert report of Mr Davies and Mr Thornley?

Mr Brett:That is correct

Mr Matthews: And you’d accept that, if we take a broad brush approach, at the least they had agreed the base amount to complete the works was $61,000?

Mr Brett:  That’s what they’ve – they – they’ve both agreed on that sum, yes.

Mr Matthews: And you then went to Mr Newman in 2016 and entered into a contract on the basis that the contract price would be some $86,000 more?

Mr Brett:  Well, we also had other quotes from other builders and they were also – I think we’ve tendered one of them – for nearly $140,000, so my point being that even if I had shown this expert conclave report to any builder, it wouldn’t have made any difference. We were at the mercy of basically having an unfinished house and any builder’s going to jump on board and try and take advantage of that and that’s been proven by the quotes we obtained.

Mr Matthews: You didn’t show the expert report to Mr Newman, did you?

Mr Brett:  No, well I did not because, as I said, every – we – we obtained many quotes and they were all up around the 140 mark.

Mr Matthews: And on each occasion you got a quote, you didn’t show them the expert report showing the value of the quantity surveyors to complete the job?

Mr Brett:And what – what difference would it have made?

Mr Matthews: No, answer my question.

Mr Brett:  In – in the real commercial world, they’re going to take advantage.

Mr Matthews: You didn’t show any of the builders?

Mr Brett:No, I did not. No, that’s right.^[55]

53. [53]
    The written evidence of the appellants was that they entered into a contract with Mr Newman to undertake the balance of the building works left incomplete by the respondent. An incomplete copy of the contract between the appellants and Mr Newman was in evidence.^[56] The written evidence of the appellants regarding the contract with Mr Newman and the amount paid to complete the works was essentially confined to the following paragraph from the statement of Mr Brett:

Sarah and I paid Mr Newman the sum of one hundred and forty seven thousand dollars ($147,000.00) for his work in completing the house. The completion did not include changing the roof that the Applicant had built.^[57]

54. [54]
    The appellants did not file a statement of evidence by Mr Newman, nor did Mr Newman give evidence at the hearing.
55. [55]
    It is clear from the reasons that the learned member was not satisfied that the evidence supported the appellants’ claim that the cost to complete the works paid to Mr Newman was reasonable. The learned member made a number of observations about the evidence regarding the amount paid to Mr Newman:

    1. (a)
       The amount paid to Mr Newman was significantly greater than any of the other assessments of the cost of completing the works;^[58]
    2. (b)
       There was an absence of evidence about why Mr Newman’s costs increased from $116,358.00 to $147,000.00 in two years.^[59]
56. [56]
    It is also clear from the reasons that the learned member did not consider the appellants had established to his satisfaction that the amount paid to Mr Newman was reasonable.
57. [57]
    In the further amended response and counter-application^[60] the appellants’ claim for the cost of completing the works was expressed in the following terms:

93. On 29 April 2016, the Respondents entered into a written contract with William T Newman (the “Newman Contract”) for him to complete the works that the Applicant was required to perform pursuant to the Manson Contract.

94. The price payable by the Respondents pursuant to the Newman Contract for the completion of the works that were originally have (sic) to have been completed by the Applicant pursuant to the Manson Contract was $147,000.00.

95. The Respondents paid William T Newman the sum of $147,000.00 pursuant to the Newman Contract.

96. The Respondents have suffered loss and damage arising out of the Applicant’s breaches of the Manson Contract as alleged herein in the sum of any amount otherwise found to be payable by them to him, expect (sic) for the sum of eighty seven dollars ($87.00), which sum the Respondents admit to be owing to him, subject to any set off available to them in respect of their claim for damages set out in this Counter Application.^[61]

58. [58]
    In the response to the further amended counter application, the respondent asserted that the amount paid by the appellants to Mr Newman was excessive and contrary to the available evidence.^[62]
59. [59]
    It is clear therefore that the issue of the reasonableness of the cost to complete the works paid to Mr Newman by the appellants was contested by the respondent.
60. [60]
    The learned authors of Hudson’s Building and Engineering Contracts^[63] provide the following commentary in relation to assessing damages where the building owner carries out completion works:

Where the building Owner has in fact carried out the work to restore the building to the condition in which it would have been had the breach not occurred, a further question arises as to the extent to which it is open to the builder or other party in default to contest the quantum of the damages represented by the rebuilding cost… In many cases, the building Owner will know that the reasonableness of their proposed remedial scheme is contested by the defendants. Ultimately it will be for the claimant to satisfy the court in the particular circumstances of each case, that the remediation adopted by the building Owner was reasonably necessary to satisfy its expectation interest.^[64]

61. [61]
    Whether remedial work is necessary and reasonable is a question of fact.^[65] A person suffering loss as a result of a breach of contract is required to act reasonably in order to recover the loss claimed. Such a person is under a duty to mitigate their loss. A person is not entitled to recover losses attributable to their own unreasonable conduct.^[66] However, in the context of a building dispute it is for the building contractor to prove that the building owner has acted unreasonably – it is not for the building owner to prove that they acted reasonably.^[67]
62. [62]
    The respondent’s assertions that the appellants acted unreasonably in paying Mr Newman $147,000.00 to complete the works may be summarised as follows:

    1. (a)
       There was a significant inconsistency between the cost paid to Mr Newman and the experts’ opinions as to the cost to complete the works;
    2. (b)
       The work undertaken by Mr Newman exceeded the scope of works to complete the build in accordance with the contract between the appellants and the respondent;
    3. (c)
       The appellants had failed to provide Mr Newman with the joint expert report prepared by Mr Thornley and Mr Davies.
63. [63]
    There was a significant discrepancy between the amount actually paid to Mr Newman to complete the works and the expert opinions expressed by Mr Thornley and Mr Davies as to what the cost should have been. The evidence of Mr Brett was that providing another builder with the joint expert report would have been unlikely to have had any impact on the costing of the completion works. As Mr Brett stated in his evidence, the appellants were in the very difficult position of having an unfinished house and were required to engage a builder to complete works partly undertaken by another contractor. It is, in our view, hardly surprising that the actual cost of completion was more than the experts’ opinion. That the amount paid by the appellants exceeded the completion costs opined by the experts does not, of itself, speak of a failure by the appellants to act reasonably.
64. [64]
    The respondent, despite having mounted the case that the appellants had failed to act reasonably and mitigate their loss, failed to adduce any specific evidence that the appellants acted unreasonably in engaging Mr Newman to complete the building works. The respondent did not, for example, adduce evidence from its own expert that the amount paid to Mr Newman was excessive. Nor did the respondent call its expert to give evidence at the hearing. Indeed, the respondent’s attempts to establish that the appellants had acted unreasonably in engaging Mr Newman were conspicuous by their absence.
65. [65]
    The respondent says that the evidence does not support a finding that the scope of works undertaken by Mr Newman was necessary to complete the build and says:

    1. (a)
       The contract between the parties provided that the hot water system would be re-used. The quote provided by Mr Newman provided for a new solar hot water system to be installed;
    2. (b)
       The contract between the parties provided for external painting in a maximum of two colours. The quote provided by Mr Newman provided for external and internal painting and external rendering;
    3. (c)
       The earlier quote by Mr Newman provided for the removal of the metal roof and the replacement with a terracotta tiled roof. Mr Brett’s evidence was that the roof was not replaced by Mr Newman. The expert evidence was that the cost of the replacement of the roof was $21,842.00. Notwithstanding this, the appellants paid to Mr Newman $147,000.00;
    4. (d)
       The appellants undertook variations to the contract works including the closing in of an existing window on the north side of the dwelling.
66. [66]
    In order to examine more closely the respondent’s assertion that the scope of the works undertaken by Mr Newman exceeded the scope of the works under the contract between the parties it is necessary to say something about the various contract documents and quotes.
67. [67]
    We have referred earlier to the quote prepared by Mr Newman which the appellants said was provided to them in 2014.^[68] The contract with Mr Newman to complete the works was entered into in April 2016.^[69] The earlier quote did not form part of the contract. Nor is there any evidence that the work referred to in the quote formed the scope of works under the contract.
68. [68]
    The contract documents forming the contract between the appellants and the respondent included a quote prepared by the respondent dated 27 November 2013.^[70] There was no document meeting that description in evidence below however there was in evidence a quote prepared by the respondent dated 24 October 2013.^[71] This document is referred to in the respondent’s appeal book. It is assumed that the contract referred to an incorrect date for the quote.
69. [69]
    In the context of the contractual documents referred to above, we will address each of the items of building work which the respondent says do not support a finding that the scope of works undertaken by Mr Newman was necessary to complete the build:

    1. (a)
       Hot water system: the contract between the appellants and the respondent provided for the re-use of the existing hot water system. Mr Newman’s quote provided for the installation of a solar hot water unit to the roof. While the quote referred to the installation of a solar hot water unit to the roof, there is no evidence that the contract with Mr Newman included this item of work. Even if it did, the available evidence is that the cost of the installation of the unit was $3,700.00.  Presumably, had the existing hot water system been re-used there would have been a cost associated with the removal and replacement of the unit although there is no evidence as to what this cost might have been;
    2. (b)
       Painting: The respondent’s quote dated 24 October 2013, and therefore the scope of works under the contract, included internal and external painting. To the extent that Mr Newman undertook internal and external painting, such work was consistent with the original scope of works pursuant to the contract between the parties. However, the Newman quote also refers to external rendering. The contract between the parties makes no reference to external rendering. There is no evidence as to the details of the rendering carried out and the cost thereof;
    3. (c)
       The roof: Mr Newman’s quote was prepared approximately two years before the appellants entered into the contract to complete the works. The description of the works in the schedule to the contract is ‘complete additions and renovations’. No evidence is adduced by the respondent that the works undertaken by Mr Newman were more than what was required to complete the works left incomplete by the respondent. The learned member found that the appellants had paid to Mr Newman $147,000.00 to complete the works.^[72] This finding is not appealed. The learned member found:

[183] The owners acknowledge that the quotes from Mr Newman and Massa Construction were obtained at a time when it was anticipated that the metal roof would have to be removed and replaced. The experts agreed that the cost to replace the metal roof with a terracotta roof would be $21,842.00.

[184] As approval was ultimately obtained to retain the metal roof, the quotes should be reduced by the cost of replacement of it, as that work was not done, to indicate the actual cost of work to complete the house without replacing the metal roof. The reduced quotes would therefore be from Mr Newman for $116,358.00 (being $138,200.00 minus $21,842.00) and from Massa Construction for $116,973.15 (being $138,815.15 minus $21,842.00).

The contract with Mr Newman was entered into by the appellants in April 2016. Although there was no direct evidence on the point, it seems unlikely that building costs would have remained static between 2014 and 2016. It was also the fact that the appellants were in the difficult position of engaging another builder to complete the building works in circumstances where they were left with a partially completed renovation. These would undoubtedly have been matters known to Mr Newman and may well have factored into the contract price he negotiated with the appellants. It is therefore unsurprising that the contract price was more than the quoted price prepared two years earlier. The evidence of the appellants was that in May 2016 they engaged a consultant to apply for approval of the building with the steel roof constructed by the respondent.^[73] It seems unlikely that, when the contract with Mr Newman was entered into, it was intended by the appellants to replace the roof. Only one month after entering into the contract, they embarked upon the (ultimately successful) process of having the roof that was constructed by the respondent approved. If the scope of works under the contract with Mr Newman included the removal and replacement of the roof, there is no evidence that there was a negative variation for the deletion of that item of work. The evidence was that the appellants were in some degree of financial distress. It seems highly unlikely that they would have been happy to pay Mr Newman the contract sum of $147,000 if a substantial part of the works, being the removal and replacement of the roof, was not carried out. We are not persuaded that the contract price of $147,000 included any component for the removal and replacement of the roof by Mr Newman.

4. (d)
   Variations: the respondent’s evidence is limited to a short passage from a statement by Mr Manson to the effect that the respondent had ‘been made aware of major variations being carried out to the house eg closing in of an existing window on the north side of the building.’^[74] The evidence of Mr Manson is not persuasive. What the major variations were (apart from closing in an existing window), and how the respondent became aware of the variations or from whom, is entirely unclear. No weight can be attributed to the evidence.

70. [70]
    There remain however lingering issues relating to the costs associated with the external rendering work and the installation of the solar hot water system. It is appropriate that an allowance be made for these items. Subject to these issues, we are not satisfied that the respondent established that the appellants acted unreasonably in engaging Mr Newman to undertake the completion works. It is appropriate that the amount opined by Mr Thornley for the supply and installation of the solar hot water system, being $3,700.00, be deducted from the amount claimed by the appellants for the cost of completion. This deduction does not allow for what would otherwise have been the cost that would have been incurred associated with the re-use of the existing hot water system but balances any allowance in respect of any external rendering. 
71. [71]
    We allow $143,300.00 for the cost of completing the building works.

The appellants’ claim for rent

72. [72]
    The appellants claimed the cost of rent incurred during the period between 30 April 2014 being the notional date of practical completion and 4 June 2016 when the appellants took possession, being a period of 109 weeks.
73. [73]
    The respondent says that the appellants failed to mitigate their loss, that they could have engaged a builder earlier than when they engaged Mr Newman to complete the works, and had they done so, their loss would have been minimised.
74. [74]
    The contract provided for liquidated damages of $50.00 per day, payable by the respondent from the end of the building period until the earlier of the date of practical completion, or the date the contract was ended, or the date the appellants took possession. The works did not reach practical completion. The appellants terminated the contract on 28 April 2014.^[75]
75. [75]
    There is no challenge to the finding by the learned member that the appellants recover $420.00 per week for rent expenses from 30 April 2014 being the notional date of practical completion. The learned member allowed the recovery of rent from this date until 30 September 2014 on the basis that the appellants, had they acted reasonably and engaged Mr Newman earlier, would have been in a position to move into the home by this date. The appellants say that they should be entitled to recover the rent paid until they took re-possession on 4 July 2016.
76. [76]
    The appellants concede that they had the financial capacity to engage another builder in about July 2014.^[76] The evidence of the appellants is that they did not engage Mr Newman at that time on the advice of their solicitors. Mr Brett’s evidence was that the legal advice they received comprised two parts. Firstly, it was recommended that they await mediation before attempting to engage another builder to complete the works.^[77]  Secondly, after attempts to resolve the matter had failed, the advice was that the appellants not engage another contractor to complete the works until the determination by the tribunal of the termination issue, taking into consideration the risks associated with a finding that the appellants had not lawfully terminated the contract.^[78] Mr Brett’s evidence was that, as events transpired, the appellants did not wait until the determination of the termination issue by the tribunal before engaging Mr Newman on the basis that they were unable, as a result of financial, emotional and psychological reasons, to defer completing the works. Mr Brett’s evidence was that the appellants had ‘borrowed enormous amounts of money from family to pay legals, rent, mortgage to assist us and, basically, we couldn’t wait any longer.’^[79]
77. [77]
    The appellants say that the unchallenged evidence is that they were not in a position to complete the contract and meet a claim for damages by the respondent. They say that their conduct in waiting until April 2016 to engage Mr Newman to complete the works was not unreasonable.
78. [78]
    The respondent says that the appellants acted unreasonably in delaying the completion of the works. The respondent says that the appellants, acting on legal advice, terminated the contract and then delayed acting on the termination. The appellants’ rights, in the event that the termination was found to be unlawful, lay against their legal representatives.
79. [79]
    It is not in dispute that the appellants should be entitled to recover by way of damages rent paid by them as a result of the failure by the respondent to complete the works. What is in dispute is the amount of such damages.
80. [80]
    The appellants say that they were never obliged to do what they could not afford to do and that their entitlement to recover damages should not be affected by a failure to mitigate that is due to impecuniosity. In Burns v MAN Automotive (Aust) Pty Ltd Gibbs CJ stated:

However, a plaintiff's duty to mitigate his damage does not require him to do what is unreasonable and it would seem unjust to prevent a plaintiff from recovering in full damages caused by a breach of contract simply because he lacked the means to avert the consequences of the breach.^[80]

81. [81]
    As has been observed, it was for the respondent to prove that the appellants acted unreasonably in undertaking the completion works and, in particular, delaying engaging Mr Newman until April 2016. 
82. [82]
    The appellants made the decision to terminate the contract with the respondent in April 2014. Having made that decision, the appellants elected not to take steps to engage another contractor to complete the building works until April 2016.  It is understandable that the appellants were reticent to engage another builder. There was the risk that they would be found to have unlawfully terminated the contract and as the appellants conceded in their evidence, there was the concomitant risk that they would be found liable in damages to the respondent, having incurred the expense of engaging another builder. However, the appellants elected to pursue this very course of action before the tribunal had determined the issue of the termination of the contract. Presumably the appellants were of the view that the risks associated with engaging another builder outweighed the detriment associated with the building works remaining incomplete. Nor could it be said that the appellants were impecunious. The appellants conceded that they had the financial resources to complete the build in July 2014. They simply made an election to defer completing the works until, at some point in time, they decided that they were no longer prepared to do so.
83. [83]
    In all of the circumstances, the conduct of the appellants was unreasonable in delaying completing the works. The appellants had the financial resources to engage Mr Newman earlier than April 2016. They chose not to do so.
84. [84]
    The learned member confined the appellants’ claim for rent to 30 September 2014. We are satisfied that the appellants could have taken steps to mitigate their loss by engaging an alternative builder in July 2014 to complete the works. The construction period under the contract the appellants entered into with Mr Newman was 90 business days. Had the building works commenced at the beginning of July 2014, the works would have been completed by the end of October 2014. The date of practical completion under the contract between the appellants and the respondent was 30 April 2014. Accordingly we allow 26 weeks at $420.00 for late completion damages being an amount of $10,920.00.

The bi-fold doors

85. [85]
    In their grounds of appeal the appellants say that the learned member erred in his treatment of the supply of bi-fold doors by the respondent. In light of our conclusion that the respondent was not entitled to recover on a quantum meruit in respect of the enclosed stage work the respondent carried out, it is unnecessary to further consider this ground. 

Assessment of damages

86. [86]
    The amounts awarded by the learned member for additional planning costs associated with the retention of the metal roof and for the claim for solatium are not appealed.
87. [87]
    The appellants are entitled to recover the cost of bringing the works to completion less any amount that would have been payable to the respondent had the building works been completed as originally contracted.
88. [88]
    The appellants’ cost to complete the works totalled $147,000.00 less the amount of $3,700.00 to which we have earlier referred being a balance of $143,300.00.
89. [89]
    As to the balance payable to the respondent under the contract had the building works been completed the learned member found:

The owners accept that at the date of termination of the contract on 28 April 2014 the amount of $147,087.00 would have been payable to the builder for the enclosed stage, fixing stage and final stage under the contract, but for the breaches by the builder.^[81]

90. [90]
    This finding is not challenged.
91. [91]
    The appellants say that the amount that would have been payable to the respondent under the contract for work remaining to be done as at the date of termination was $79,044.70 comprising:

Completion of the enclosed stage$27,899.75

Completion of the fixing stage$61,286.25

$89,186.00

Less work undertaken by respondent for work beyond

the enclosed stage$10,141.30

Balance$79,044.70

92. [92]
    The appellants say that their loss is the amount paid to Mr Newman of $147,000.00 less the amount of $79,044.90 which the appellants say is the amount payable to the respondent under the contract. We do not accept this submission.
93. [93]
    The damages recoverable by a building owner as a consequence of the builder’s breach of contract is the difference between the contract price of the work and the cost of bringing the works into conformity with the contract. The undertaking of the completion and/or rectification works must be necessary and reasonable.^[82] A building owner must give credit for any unpaid balance of the contract price. In Ventura v Svirac it was stated:

When a building owner sues his contractor for damages for failure to complete the contract work he must give credit for what the work would have cost him if properly performed.^[83] (emphasis added)

94. [94]
    The appellants’ damages are assessed as follows:

Completion costs$143,300.00

Rental expenses$  10,920.00

Solatium$  10,000.00

Additional planning costs$    2,970.00

  $167,190.00

Less balance payable under the contract$147,087.00

Nett assessment of damages$  20,103.00

Conclusion and orders

95. [95]
    The tribunal below erred in finding that the respondent was entitled to recover on a quantum meruit basis in respect of the work undertaken on the incomplete enclosed stage. The tribunal proceeded to assess the parties’ entitlements on this erroneous basis. This was an error of mixed law and fact. Leave to appeal is allowed. The appeal is allowed. The decision below is set aside. The respondent is ordered to pay the appellants $20,103.00.
96. [96]
    The parties are directed to file and exchange any submissions on the costs of the appeal.