VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP824/2018	
CATCHWORDS	
Building contract – 11 unit development – claim by builder for non-payment of progress claims– claim for PC adjustments and variations – leave to withdraw admission – owner’s counterclaim for overpayments and liquidated damages	

APPLICANT	Omega Building Group Pty Ltd (ACN: 107 845 974)	
RESPONDENT	Shininggarden Pty Ltd (ACN: 151 739 703)	
WHERE HELD	Melbourne	
BEFORE	S Kirton, Senior Member	
HEARING TYPE	Hearing	
DATE OF HEARING	6, 7 & 9 March 2023; 17, 18, 19, 20 & 21 July 2023	
DATE OF ORDER	31 August 2023	
CITATION	Omega Building Group Pty Ltd v Shininggarden Pty Ltd (Building and Property) [2023] VCAT 1024	

Order
1	The respondent must pay the applicant Builder $238,259.39.
2	The respondent must also pay the applicant interest of $190,020.58.
3	There is liberty to apply on the question of costs and reimbursement of fees. Any application must be made by 29 September 2023. I direct the principal registrar to refer any application to a member to make any necessary orders for its determination.

S Kirton
Senior Member			

APPEARANCES:		
For Applicant	Mr M W Sanger, Counsel	
For Respondents	Mr W M Chen, director, in person, with an interpreter	

REASONS
Background
1	In 2012 the Respondent (the ‘Owner’) purchased two blocks of land in East Doncaster, with the intention of constructing and selling 11 new townhouses (the ‘Development’). The Applicant (the ‘Builder’) was the builder engaged by the Owner to construct the units.
2	According to its director Mr Chen, this was the first development undertaken by the Owner, whereas the Builder had some experience in similar sized projects. Somewhat unusually, the Owner did not have enough funds to complete the project after the first few months, and had to obtain a bank loan during the course of the project. The bank required a new building contract to be entered into, and as a result, there were two building contracts for the Development. 
3	The Owner and the Builder entered into the first building contract on or about 23 February 2013, for the price of $3,018,000. The contract was made up of a standard form Master Builders HC-6 (Edition 1 – 2007) contract and the documents referred to therein (the ‘First Contract’). 
4	The Builder commenced works in early 2013 and the Owner made payment using Mr Chen’s own funds and funds he had borrowed from family and friends until after frame stage had been reached in October 2013.
5	The Owner then obtained a loan from the National Australia Bank (‘NAB’). The NAB required the Builder and the Owner to enter into a tripartite agreement with it, which is recorded in writing and signed 11 September 2013 (the ‘Tripartite Deed’). It also required a new building contract to be entered into, pursuant to which the works would be administered by an architect, and claims would be assessed by a quantity surveyor. The parties entered into this second agreement on or about 30 October 2013, by signing a standard form ABIC Major Works Contract (2008 Vic edition) (the ‘Second Contract’). The Second Contract contained the same specifications, plans and prices as the First Contract and it thereafter governed the works.
6	The Architect appointed to administer the Second Contract was Thomas Lui, who had designed the Development and assisted the Owner to obtain town planning permission. The Quantity Surveyor was Charter Keck Cramer.
7	The Builder made its first progress claim under the Second Contract. This was assessed by the Quantity Surveyor and the Architect issued a Progress Payment Recommendation (‘PPR’) No.1 dated 3 February 2014. The PPR1 valued the works completed as at 23 January 2014 to be $1,455,000 and noted the amount paid by the Owner to that date was $973,990.91. The Architect factored in the retention sum of $137,182 to be withheld, and certified that the Owner should pay the Builder $343,827.27 excluding GST. This amount was paid by the NAB from the Owner’s loan account.
8	The works progressed, with the Architect approving most of the payment claims 1–11 and the NAB or Mr Chen making payments of most of the amounts recommended. The Builder completed the construction works sometime between April and July 2015 (the exact date is disputed but for the reasons at paragraphs 163–167 below I need make no determination about the date). On or about 17 September 2015 settlement on the sale of the last of the units occurred. There is a dispute between the parties over the balance of monies to be paid under the contract. It is this dispute that has come before me for determination.
9	I note that other issues were raised before me, such as the circumstances surrounding the Architect purporting to issue, sign and date a Practical Completion Summary in November 2015. However nothing turns on them for the purpose of the matters I had to decide and therefore I have not considered them.
The Builder’s claims
10	The Builder claims that the Owner has failed to pay the following amounts certified by the Architect and Quantity Surveyor, in breach of the Second Contract:
a.	$50,000 on Progress Payment Recommendation No 4 issued by the Architect on 2 June 2014; and 
b.	$71,924.78 on Progress Payment Recommendation No 11 issued by the Architect on 26 August 2015.
These total $121,924.78 
11	Also, the Owner requested further works which were not assessed or approved by the Architect, and these are claimed as variations to the Second Contract or as prime cost (‘PC’) sum adjustments. At the end of the hearing (after some concessions made by the Builder) these total $128,628.30.
Variations
•	$2,750.00 for Building Surveyor verification letters
•	$4,422.00 for extra timber paling fence
•	$1,950.00 for relocation of gas meter
•	$4,736.00 for pit upgrade
Further PC Sums
•	$17,327.66 for extra landscaping works 
•	$9,136.00 for appliance upgrade
•	$29,970.10 for sanitary items
•	$49,486.54 for additional tiles 
•	$8,850.00 for tapping
TOTAL $128,628.30
12	The claim for these extras is put as a contractual entitlement, alternatively, the Owner was unjustly enriched to the extent of the upgrade of the fixtures and fittings in the townhouses and improved exterior fencing and landscaping.
13	The Builder also claims interest on the payment shortfalls pursuant to clause N16 of the Second Contract at 10 per cent per annum from 9 September 2015 to today, being an approximate daily rate of $33.40.
The Owner’s counterclaims 
14	The Owner originally counterclaimed for $742,724.27 for losses allegedly caused by the Builder’s delays in completing the building works, and for reimbursement of amounts that the Owner says it should not have had to pay to the Builder. During the hearing, the Owner revised its counterclaim, to remove claims related to delay for which it either had no evidence, or which were covered by the liquidated damages clause in the contract. 
15	The Owner’s counterclaim is now for:
•	liquidated damages under the Second Contract $93,585
•	payment made directly to Builder’s subcontractor $11,296 
Cost to complete / rectify Builder’s work
•	cost of a new rectangle water tank $910
•	cost to modify 11 garage doors $12,100
•	extra landscaping material $1,390.44
•	garden paving brick $912.16
•	labour for paving $3,260
•	Telstra pit relocation $18,408.02
Overpayments to Builder
•	intercom $6,105
•	claim 11 adjustment $3,525.21
•	timber floor $9,266.81
•	variation approved and paid for additional concrete and bore pier $57,517.09
•	additional site cut $12,464.53
•	labour for repair of plaster $1,700
•	stormwater works $13,800
•	downpipe $1,010.91
•	additional electricity works $5,437.60
•	sanitary items $15,000
TOTAL $267,688.77.
16	The Owner also claims interest. 
The hearing
17	I heard the matter over eight days, on 6, 7, 9 March 2023 and 17–21 July 2023. Mr M W Sanger of Counsel appeared for the applicant Builder and Mr Wen Ming Chen, director of the respondent Owner appeared for the company. 
18	Lay evidence was given:
a)	for the Builder, by its director, Mr Nicholas Tofaris; and
b)	for the Owner, by its director, Mr Chen. A Mandarin interpreter assisted Mr Chen as needed, although he gave much of his evidence and submissions in English.
19	After the evidence had concluded the parties filed limited further documents confirming their submissions on specific matters I had requested, including the Builder’s updated Schedule of Claims filed on 11 August 2023.
The witnesses
20	I found Mr Tofaris to be an honest and credible witness. He had a generally good recollection of the project, even though the events in question were 8 to 10 years ago. He had prepared his written witness statement in 2020 and he said his memory was even clearer then. He conceded that he did not have documents to support all the items he claimed, and he made concessions withdrawing claims when he was shown to have made a mistake. The contemporaneous documents generally supported his version of events. The findings and determination of the independent Financial Ombudsman Service (discussed further below) also confirmed his recollection of the Owner’s conduct.
21	Mr Tofaris appeared to have made significant efforts to ensure that the project was completed, even in circumstances where he had been misled by the Owner. For example, it was a special condition of the First Contract that the Owner was to prove it had finance approved for the development before works would start. The Owner provided the Builder with a letter from the NAB dated 28 March 2013 in which the bank stated it had preapproved funding for the development, and so the Builder started the works. Mr Tofaris said that he was not aware that the payments made to the Builder between March and October 2013 were made by Mr Chen personally, and not from loan monies from the NAB. He said he was surprised when the Owner asked him to enter into the Second Contract and the Tripartite Deed, but did so to ensure that the project could be completed. 
22	Mr Chen was a less credible witness. He frequently made statements then when challenged, he backtracked saying he was not giving evidence of facts, but of what might have happened. For example, he regularly accused the Builder of claiming for items which he said the Builder used in other projects, not the subject property. Upon hearing Mr Tofaris’ denial, Mr Chen would say “I am not saying that actually happened, just that it might have”. 
23	Similarly, he would make definitive statements about things that did not happen, but when it was shown they had happened, he would say he had mis-remembered or his memory was not good. For example, he denied having been to a bathroom shop to choose basins, but when shown an email he had sent saying he was at the bathroom shop looking at basins, he said his memory was not good. He vehemently denied there were tiles on the walls in the shower recesses. Upon being shown photographs of tiles in the showers in unit 11, he conceded they were there but then said the photograph was of a different bathroom in unit 11. Upon that being shown to be incorrect, he said he had “mis-remembered” but still argued that unit 11 might not have been the same as the other units. 
24	He admitted that in April 2015 he had influenced the Architect to provide a Progress Payment Recommendation with a positive balance to the Builder, to “trick the NAB” into paying the Builder so that the Builder would carry on working. He did this when he had no intention of paying the Builder any further monies. 
25	Then, on 23 September 2015 Mr Chen instructed the NAB to release $68,591 from the retention account directly to him, at the time the Architect’s PPR11 was that the Owner should pay the Builder. During the hearing Mr Chen tried to play down the significance of this conduct by saying it was not a major issue because the Builder had since had that money returned to it. This suggestion ignores the fact that the Builder had to obtain a ruling from the independent Financial Ombudsman Service (‘FOS’) ordering the NAB to pay that money to it. The FOS ruling is set out in detail below. In summary it concluded that the Owner had produced multiple alternative versions of a document to legitimise the actions of itself and the NAB. 
26	Another example of Mr Chen’s lack of credibility was when he said that he was not aware that the NAB had paid the money to him, because at that time he was receiving settlement money from the sale of the townhouses and the retention monies were mixed up in that. This evidence was proven to be not credible, when it was established that the sale of the townhouses had settled in early and mid September 2015. 
27	I accept that Mr Chen is not fluent in English and the meaning of his evidence may have been less nuanced through being interpreted. Also, I accept that this was his first property development and he was under significant financial pressure. He had a layperson’s, not a lawyer’s, understanding of how the building contract worked. However, even with an accommodation for Mr Chen’s language and experience, I consider that he is an unreliable witness. Accordingly, where an allegation falls to be determined on the basis of the witnesses’ evidence, I prefer the evidence of Mr Tofaris to Mr Chen. 
The Builder’s claims
Progress Claim No 4 – $50,000 outstanding 
28	In May 2014 the Builder made Progress Claim No 4 and this was assessed by the Quantity Surveyor and the Architect. The Architect issued Progress Payment Recommendation No 4 dated 2 June 2014 for payment to the Builder of $198,539.06 excluding GST. The Owner authorised the NAB to release funds for all but $50,000 of the claim. Mr Chen’s argument was that he did not have to pay the extra $50,000 because he had already overpaid the Builder by $50,000 and so he was entitled to withhold this amount from PPR4.
29	The reason he withheld $50,000 stemmed from a variation in respect of extra site works that the Owner had incurred the previous year. On 21 July 2013, during the time the First Contract was in place, the Builder had sent variations to the Owner for extra site works and retaining wall. The variations were not in the Tribunal Book and I do not know if any particular amount was specified. The covering email (which was tendered) and the email of 6 August 2013 and the ‘Variation Dispute’ notice of 9 August 2013 (which are discussed further below) all indicate that the final figure still had to be worked out. 
30	The covering email of 21 July 2013 contained an explanation of why the extra costs had been incurred, which were that the soil report, engineering and working drawings were not true to the actual site. Mr Tofaris invited Mr Chen to come to the office to view all invoices and documents relating to the extra site works. The email also said the Builder had not charged any margin on these extra costs even though it was entitled to under the contract.
31	The Owner did not make any payment immediately. There was further correspondence between the parties. On 6 August 2023, Mr Tofaris wrote to Bin Wu (Wendy - Mr Chen’s wife) and provided further explanation of the variations claimed. He said he required payment of “at least $55,000 transferred urgently to keep the job moving and would finalise the variations and email [her] tomorrow with the final figures”. He proposed a meeting to discuss.
32	On 8 August 2023 Ms Wu sent an email to Mr Tofaris in which she said, “if you agree the variations are subject to the bank quantity surveyor review, you give us a reply we are waiting for your reply before we can make $50,000 payment”.
33	The Owner then appears to have made a payment of $50,000, before any further response from the Builder was received. This is recorded in the Builder’s next correspondence of 9 August 2013, when the Builder sent the Owner a formal notice headed ‘Variation Dispute’. In the notice, the Builder confirmed that it had received payment of $50,000 on 9 August 2013. It proposed that the Owner should “have a QS [quantity surveyor] provide a detailed cost analysis” of “all mandatory site works and bulk concrete that had been required above the allocated PC amount and the contract amount”. The cost reached by the QS would be “open to discussion with all parties present” and the final agreed cost figure would be the variation amount required to be paid by the Owner, or refunded by the Builder if too much had been paid. The Builder indicated that it thought the final figure would be approximately $127,000 or more.
34	There was no evidence that either the Owner or the Builder engaged a quantity surveyor, or that they reviewed the variations in any way at that time. Mr Chen said there was no further correspondence in relation to the $50,000 payment at that time. 
35	Once the Second Contract was entered into, the Quantity Surveyor and Architect took on the role of assessing payment claims. As part of their assessment of Progress Claim No 4, they assessed all variations which had been claimed by the Builder to that date. The Quantity Surveyor prepared a document headed ‘Builder’s Variation Summary’, in which it listed all variations claimed to that date, and stated whether or not they were approved. The variations relevant to the extra site works (excl. GST) were:
a.	Variation 1: additional site works, bulk concrete and additional bored piers, $57,517.09 
b.	Variation 3: retaining wall, part of, $4,755.00
c.	Variation 4: additional site cut, $12,464.53.
36	In PPR4 the Architect approved these variations and noted them as complete. 
37	That was when Mr Chen instructed the NAB to pay all but $50,000 of PPR4, and to pay $50,000 to the Owner’s account. In its Amended Points of Defence dated 12 December 2019, the Owner pleaded that “$50,000 was paid by the Respondent to the Applicant on 9 August 2013. The amount of $50,000 was subsequently reimbursed by the NAB to the Respondent from the progress payment under Claim No. 4.”.
38	Mr Chen said he waited until PPR4 to take back the $50,000 he had paid in August 2013, because this was the time it was first accepted by the Architect. 
39	Mr Chen also submitted that the Builder had double claimed for these extra site works, in its updated Schedule of Claims. In performing its contract reconciliation, the Builder has added $50,000 to the original contract price for these extra site works, and has also added $162,107 for all the variations approved by the Architect. Mr Chen submitted that as the Architect’s Variation Summary included variations for the extra site works, as part of the $162,107, this meant the Builder could not claim the $50,000 as well.
40	Therefore, the questions for determination before me are whether the Builder was entitled to claim for the extra site works as a variation, and if so, whether the amount should be $50,000 only or should be $50,000 plus $57,517.09 (Variation 1 in the Architect’s Variation Summary) plus $4,755.00 (Variation 3 in the Variation Summary) plus $12,464.53 (Variation 4 in the Variation Summary) plus GST. 
Is the Builder entitled to claim for extra site works? 
41	The Owner did not provide any evidence or expert reports that the extra work done by the Builder was not done, or that it was not necessary.
42	The Builder relied on the following:
a.	The first soil test was prepared 23 March 2012 and was noted to be preliminary and not of the rear property. The soil test says the land is problematic. Mr Chen agreed that he had discussed this with the Architect and the Architect said no land has no problems but it could be resolved with the civil engineering. 
b.	The final soil test was done on 10 May 2013 after the contract price had been agreed (First Contract was dated 23 February 2013). Mr Chen conceded that the first soil test had not been done on the rear property, which is where the extra works were required.
c.	The letter from the building surveyor dated 5 March 2013 in response to the building permit application noted problems with the original engineering drawings, the land slope and levels and stated extra works would be required. 
d.	The handwritten note on the engineering plans made after the contract had been signed noted that 26 additional bored piers were required. Mr Chen acknowledged that he was aware they were required.
e.	Mr Chen acknowledged he was on site nearly every day and he saw the works being done, including the demolition of the existing houses, the depths of the footings being dug, and the concrete been delivered to site. He agreed he had noticed a lot of concrete especially for the footings between units 8 and 11.
f.	He also said that he knew there would be additional work to be done even without the Builder telling him. He understood that the soil test was only a sample and that if, for example, rock was found, the Builder would be entitled to charge for that. He asked the Builder to provide him photographs so he could see what he was paying for. 
g.	The amended engineering design required by the building surveyor and the engineer were provided to the Builder after the works had commenced. Mr Chen said he asked the structural engineer if he should pay the extra costs. He said that the engineer told him that if the Builder has extra costs he should provide an invoice for the concrete and the excavation so that Mr Chen could compare if it was extra or not. It was put to Mr Chen that he would not have the expertise to estimate those costs, or to know what work and labour had been undertaken. Mr Chen said he could because he was on site quite often and he was aware of the problems with the site.
h.	The Builder tendered concreting invoices and delivery dockets to prove the amounts claimed. Mr Chen conceded these documents were not false. 
43	On the basis of this evidence, I am satisfied that the Builder is entitled to claim for the extra site works. It has established why it was unable to adequately estimate the cost of these works at the time of entering into the contract. It has provided documents to prove the amounts that were spent. There is no question that the works were actually carried out. Mr Chen agreed he saw the works being carried out. The building surveyor required the extra work and has approved them by issuing certificates of occupancy. The Quantity Surveyor and Architect also approved the need for the extra work as part of PPR4. Although it appears the Builder did not give the notice required by sections 37 and 38 of the Domestic Building Contracts Act 1995 (Vic), this defence was not taken by the Owner. If it had been, I would have been satisfied on the material before me and for the reasons above, of the matters in ss 37(3)(b) and 38(6)(b). I would have found that the Builder is entitled to recover the cost of carrying out the variation plus a reasonable profit, in accordance with ss 37(4) and 38(7).
What is the cost of the extra works?
44	The second question is whether the builder has double-dipped for these extra works. For the following reasons, I am satisfied that it has not. Mr Chen has misunderstood the way the Builder’s claim has been put. His submission is premised on an understanding that the total of the Builder’s claim for extra works was always going to be capped at $50,000. 
45	However, that is not consistent with the documentary evidence set out above. The covering email of 21 July 2013 and the Builder’s email of 6 August 2013 and the ‘Variation Dispute’ notice of 9 August 2013 all indicate that the final figure still had to be worked out and it would likely exceed $127,000.
46	Further, Mr Chen's understanding is not consistent with Mr Tofaris’ evidence. In his witness statement he said:
Michael paid an additional amount of $50,000 in or around 9 August 2013 towards this, but I informed him it was not adequate and for reasons detailed in the said notice outlining the amounts to be around $127,000 or more … [A]dditional site work amounts were included in the Variation summary of 2 June 2014 at items 1 and 4 and being $57,517.94 and $12,464.53 over and above the $50,000 direct payment amount.
47	Based on the evidence before me, I am satisfied that the Builder never intended to cap the cost of the extra works at $50,000. Instead, it has claimed four amounts for the extra works, being the first $50,000 then the amounts approved by the Architect as Variations 1, 3 and 4. As set out above, the Builder has proved the amounts spent by tendering the invoices and delivery dockets. Mr Chen did not dispute those amounts. Mr Chen also did not dispute the Architect’s approval of Variations 1, 3 and 4. Accordingly I am satisfied that the Builder is entitled to the total of these amounts for the extra site works.
Conclusion on PPR4
48	The Owner has failed to establish that it overpaid the Builder for the extra site works and that this entitled it to withhold $50,000 from PPR4. The Owner is in breach of the Second Contract by failing to pay PPR4 in full. I have included the variation amounts and the payment received as part of the contract reconciliation at paragraph 205 below. 
Progress Claim No 11 – $71,924.78 
49	Under the Second Contract, the Builder was required to provide security for performance of its obligations under the contract by allowing the Owner to withhold a cash retention sum. The Owner was entitled to withhold up to 10% of each progress payment until 5% of the contract price was held in a separate bank account on trust for both parties. 
50	There was no dispute that retention monies had been withheld from each progress claim and were held in a separate NAB account. By the time of PPR11, $137,181.82 (excl. GST) was held in the retention account.
51	The Builder made Progress Claim No 11 and the Architect issued PPR11 dated 26 August 2015 recommending payment to the Builder of $65,386.17 excluding GST (which is $71,924.78 including GST). The PPR included release of 50% of the retention to the Builder, being $68,590.91 excluding GST. 
52	The documents tendered seem to indicate that the Owner originally acknowledged liability for payment to the Builder of PPR11. On or about 7 August 2015 Mr Chen sent an email to the Architect saying “Thomas, please try your best to pay Nick ASAP”. On 1 September 2015 Mr Chen sent an email to the NAB manager asking her to “please chase Royston [the quantity surveyor] to approve the 11th QS report and make payment to [the Builder] ASAP”.
53	In its original Points of Defence dated 14 November 2018 the Owner admitted that it was liable to pay PPR11 of $71,924.78, but said that it sought to set-off that amount against its counterclaim (at paragraph 11).
54	However, instead of paying that amount to the Builder, the Owner paid nothing. Further, the Owner directed the NAB to transfer $68,591 from the retention account into the Owner’s account.
55	Mr Chen’s defence was that he did not have to pay PPR11 because in fact the Builder owed the Owner money. His evidence was that he had asked the Architect to certify in PPR11 that monies were to be paid to the Builder, because Mr Tofaris and his father had told him they would cease working if it was not paid. He was anxious to have the properties completed as the purchasers were pushing for settlement and so he led the Builder to believe that it would be paid.
56	The following answers in cross examination detail Mr Chen’s explanation for his conduct surrounding PPR11:
Chen: On 16 April 2015 the Builder sent an email to the architect saying it would not release the [compliance and occupancy] certificates until it had been paid. He told me verbally he needs another $80,000. So I asked the architect and quantity surveyor to make a progress claim for the bank to pay the Builder.
Counsel: You asked the architect and quantity surveyor to make PC11 to trick the Builder?
A: The purpose of PC11 is to trick the bank so I could pay the Builder. I have been trying to pay the Builder.
Q: All your loans settled on settlements of the properties. When did you try to pay the Builder?
A: It was not me who owed the Builder money. It was the bank as it was held in the trust account. The retention account. The purpose of PC11 is to allow the bank to release the retention to the Builder.
Q: That is not consistent. You got the retention money in September. You did not say give it to the Builder? The purpose of PC11 was to trick the Builder to finish the job?
A: You could say that.
…
Q: You had no intention of paying the Builder at the time of PC11, even though you had created PC11 and even though the Builder was still working? 
A: That happened under special circumstances as I was threatened by the Builder that if I do not pay work would be delayed.
Q: The architect had certified certain amounts. The Builder has to get paid for his work?
A: Yes I begged the architect to certify an amount so the project could keep going. The architect certified without seeing the Builder’s invoices because I begged him to.
57	Compounding the Owner’s refusal to pay PPR11, Mr Chen also directed the NAB to release the retention monies of $68,590.91 to the Owner, which it did on 23 September 2015. The Builder was not aware of this at the time. During the hearing Mr Chen tried to play down the significance of this conduct by saying it was not a major issue because the Builder had since had that money returned to it. This suggestion ignores the fact that the Builder had to obtain a ruling from the independent Financial Ombudsman Service ordering the NAB to pay that money to it. The Builder is not aware whether the Owner has in fact retained the money paid to it by the NAB on 23 September 2015 or whether it has repaid these to the NAB. Mr Chen did not answer this question. He just said he had been told by the bank that he was not entitled to keep the money and they were taking it back. However he had not checked his bank records to see if that had actually occurred.
58	Mr Chen also tried to play down his involvement by saying that he was not aware that the $68,591 had been paid to him on 23 September 2015, because at that time he was receiving settlement money from the sale of the townhouses and the retention monies were mixed up in that. This evidence was proven to be not credible, when it was established that the sale of the townhouses had settled several weeks earlier than 23 September. 
59	It was put to Mr Chen by Counsel for the Builder that after the properties had settled, he had decided to take steps to deplete whatever account he could get access to as he was of the view that the Builder owed him money. Mr Chen’s response was that it was not his fault, as the account was a construction loan account, so once the loan was paid off the account was closed automatically by the bank. That answer is not consistent with the findings of the independent Financial Ombudsman Service (‘FOS’), which concluded that the Owner had produced multiple alternative versions of a document to legitimise the actions of itself and the NAB. Their determination stated:
In allowing SG [the Owner] to withdraw half of the retained funds on 23 September 2015, the FSP [the NAB] apparently relied on SG’s document addressed to the applicant [the Builder] and headed “Final Payment to [the Builder]”. This document shows that after taking into account amounts the applicant [the Builder] allegedly owed SG for liquidated damages, and for payments SG allegedly made to subcontractors and to others to repair defects and to meet town planning requirements, the applicant owed approximately $68,500 “after release of the first 50% retention”. 
There are multiple alternative versions of this SG documents; the version held by the applicant is signed by SG only and is dated 24 September 2015 (that is, the day after the FSP released the TD [term deposit] funds to SG), but the FSP has provided a version dated 22 September 2015 signed by SG and apparently by the architect, and a version dated 21 September 2015 headed “Adjusted Final Payment to [the Builder]” signed by SG only. It is difficult to understand how a document bearing the earlier date is the “adjusted” final payment document, and the documents bearing the later dates are the “final payment” documents; one would expect the later-created documents to be the “adjusted’ version.
The applicant disputes the legitimacy of these various SG documents and suggests they were created to legitimise the FSP’s decision to release some of the term deposit funds to SG. I am unable to determine the provenance of these documents and the circumstances of their creation, but they do not in any event give SG mandate to operate the term deposit accounts or authority to the FSP to ignore or act contrary to the parties’ October 2013 agreement about the retained funds held on term deposit and the circumstances in which they should be released.
60	In this proceeding, Mr Chen tried to justify his conduct by saying:
I do not owe any money as the money should have come from the Builder’s retention account. So it is my position it was the bank who owed Mr Tofaris not me. It had nothing to do with me or my loan account … 
While the money was in the [retention] account there was a determination to be made about who gets the money. I said it should be to me. Mr Tofaris said to him. But once it was paid to him there was no issue.
61	Mr Chen’s explanation is hard to follow. Mr Chen conceded that he understood that the retention money had been quarantined into a separate account in accordance with PPR1. He said he also understood that the retention account was not a separate fund for his credit at a later time. Mr Chen’s answer seemed to be that I do not now need to consider what happened with the retention monies, because they have all since been paid back to the Builder. 
62	In my view the question of the retention monies is a significant issue in the proceeding. The mere fact the money has now been paid to the Builder does not overcome the Owner’s conduct in late 2015. Having said that, even if I accept that is correct, that does not explain why the Owner has not since paid the certified PPR11 of $71,924.78. Under the contract, the retention monies were always to be returned to the Builder at the end of the works unless applied by the Architect for defects, incomplete works, contract adjustments, liquidated damages and so on. In the present case, the Architect never issued a final certificate (see paragraphs 83ff below). Instead, the Owner’s claims for a set off against the retention have been claimed in the counterclaim, which is addressed below. 
63	For the purposes of reconciling the amounts due under the contract, the Builder has provided an updated Schedule of Claims filed on 11 August 2023. In that Schedule it has listed all payments received, and the return of the full retainer of $137,181.81 is included. The Schedule also lists the contract price, which includes the variations, the PC adjustments and GST. The Builder has also allowed some credits to the Owner. The balance of those items is the sum the Builder says is due to it at the conclusion of the project. I have adopted the same methodology in calculating the amount to be paid to the builder in this order (see paragraph 205 below). Accordingly, the Owner’s argument that the return of the retention monies to the Builder means that it is not liable to pay PPR11 is misconceived. 
Application for leave to amend defence 
64	Further to paragraph 53 above, and for the sake of completeness, I note that the Owner has twice purported to amend its Points of Defence in relation to PPR11. At paragraph 11 of the original dated 14 November 2018, the Owner admitted that it was liable to pay the Architect assessed PPR11 of $71,924.78, but said that it sought to set-off that amount against its counterclaim. In its Amended Points of Defence dated 1 October 2019 this admission was retracted and the Owner denied the allegation, and pleaded that the NAB has paid the full retention to the Builder of $150,900. The owner then filed a third version of the Points of Defence dated 12 December 2019 in which it denied the allegation and said the Owner was entitled to liquidated damages in excess of the progress claim amount and that the NAB had repaid the retention, which included an overpayment of $3,525.21. 
65	Although VCAT is not a court of pleading, I must address this change in pleading. Although no formal application was made, Mr Chen said he wanted to rely on the amended defence (although it was not clear which one), and so I will consider whether the Owner should be given leave to amend its defence. 
66	The principles to be applied in such an application were most recently summarised in Ritz Bitz Pty Ltd v Cumming as follows: 
93.	The legal principles concerning applications to amend pleadings are well-established. Whether an amendment should be permitted is a matter of discretion to be exercised according to an assessment of where justice lies.
…
95.	As to amendments having the effect of withdrawing an admission, a party may only withdraw a pleaded admission (or any other matter operating to the benefit of another party) with the consent of that party or leave of the Court. 
96.	The specific principles concerning amendments which have the effect of withdrawing admissions were recently summarised by Nichols J in Gregorich v Khouri (a case where leave to withdraw admissions was refused): 
[10]    … an explanation is ordinarily called for in recognition of the fact that the making of an admission is regarded as a serious step for a party to take – its effect being to remove the admitted fact from the arena of controversy between the parties. Thus it has been said that a party will not be permitted to withdraw an admission in a pleading ‘without good cause’.
[11]	That is a more particular emanation of the principle that generally speaking, where a discretion is sought to be exercised in favour of one party and to the disadvantage of the other, an explanation will be required. An explanation is required in order to permit the court to see that the application is brought in good faith and to weigh the circumstances against the effects of an amendment and the objectives of the relevant rule. … French CJ [has] said that one consideration in the exercise of an interlocutory discretion is the potential loss of public confidence in the legal system which arises where a court is seen to accede to applications made without adequate explanation or justification.
[12]	It has been often said in the context of applications to withdraw admissions, that the explanation proffered should be based on evidence of a ‘solid and substantial character’. However, what is adequate will depend upon the circumstances of the particular case.
[13]	Finally, it is now understood … that parties must be given a fair trial and a sufficient opportunity to identify the issues they seek to agitate, but according justice in an application to amend is not to be equated with a requirement to afford a party an unlimited opportunity to amend its case.
…
105.	Any application to withdraw an admission warrants careful scrutiny.  It is most unsatisfactory for parties to admit allegations in a defence and shortly thereafter seek leave to withdraw admissions on the basis that inadequate attention was given at the time to the making of the admission.
67	Counsel for the Builder asked Mr Chen why he had originally admitted that there was a shortfall in payments by the Owner to the Builder of $71,924, but later said there was no shortfall. Mr Chen replied that when he instructed his solicitors to prepare the original Points of Defence, he and they found it too difficult to reconcile the payments claimed and made. He therefore instructed them to admit PPR11 and to recover the overpayments via the counterclaim.
68	Later, Mr Chen instructed his solicitors to amend the Points of Defence, to confirm his view that he had overpaid the Builder under the contract and nothing is owed on PPR11. The Amended Points of Defence rely on the payment by the NAB to the Builder of the retention monies of $150,900. 
69	Having regard to the principles set out above, noting that the Owner is now self-represented, and noting that Counsel for the Builder was able to address the issues raised by the amendment, I give the Owner leave to rely on both amendments set out above. 
70	Having said that, the defence nevertheless fails, for the reasons set out at paragraphs 62 and 63 above. For the purposes of reconciling the amounts due under the contract, the Owner has not demonstrated any reason why the return of the retention monies to the Builder means that it should not pay PPR11. The alleged entitlement to liquidated damages and the overpayment of $3,525.21 are addressed in the counterclaim below and taken into account in the final reconciliation. 
Variations
Building Surveyor verification letters – $2,750
71	Mr Tofaris’ evidence was that the Builder was required by the NAB to obtain a letter from the building surveyor at the time of making each payment claim. The Builder obtained 11 letters at a cost of $550 per letter, making a total of $6,050. The Architect approved payment of some of these letters, and these were paid by the Owner, however the balance of $2,750 remains outstanding.
72	The Owner disputed any obligation to pay these amounts, on the basis that if the Builder had completed the building work on time, there would have been no need for the extra building surveyor inspections.
73	Mr Tofaris said that the delays in completion were the fault of the Owner, not the Builder. As an example, he said that the Owner had tricked his company into believing that finance had been approved for the project before the first contract was entered into. The Owner provided the Builder with a letter from the NAB dated 28 March 2013 which stated that funding had been pre-approved for the project. The Builder entered into the First Contract, which had no requirement for letters from the building surveyor to support each progress claim. However, by October that year it was apparent that the Owner had exhausted its funds and that the Second Contract and the Tripartite Deed would have to be entered into. This caused delays with the progress of the works. 
74	I accept Mr Tofaris’ evidence that he was misled into understanding that finance had been arranged for the project prior to entering into the first contract. Mr Chen did not dispute that he gave the NAB letter dated 28 March 2013 to the Builder at the time of entering into the First Contract. He also did not dispute that he had not told the Builder that he was funding the project from his own funds. It is apparent there were delays in the progress of the works during the time the second contract and the tripartite deed were being negotiated and entered into. 
75	The Owner did not provide any detail of other delays in the project which it said were caused by the Builder. Mr Chen merely relied on the date for practical completion in the second contract, being 16 August 2014, and said that as the Builder did not meet practical completion until on or around April 2015, all costs incurred by the delay were its responsibility. 
76	In the absence of any detail or evidence about the delay in completion, I do not accept that the Builder caused or is responsible for the whole period. In any event, even if the Owner were correct, the costs incurred by the delay of eight months have been resolved by the agreement that the Builder would pay liquidated damages fixed at $42,000 (see paragraph 163). Accordingly, even if there were extra costs incurred for these letters above what the Second Contract had anticipated, the cost of these has been subsumed into the agreed (or liquidated) amount for delay.
77	Further, as it was a NAB requirement for the building surveyor to provide letters for each payment claim, and as the Owner had agreed to that condition from the NAB, I am satisfied it was a term of the contract that the Owner would pay the cost of obtaining these letters. It is not a cost to be borne by the Builder under the Second Contract.
78	For the above reasons, the Owner must pay the Builder $2,750 for the building surveyor letters.
Timber paling fence – $4,422
79	There was no dispute that the contract specification included an amount of fencing to be constructed by the Builder. The Builder’s claim was originally for $9,031.68 for fencing over and above the amount specified. However during the hearing the Builder conceded that it did not have receipts to prove all that it had spent on fencing, and reduced the amount of the claim to that which it could prove, being $4,422. 
80	Mr Chen originally disputed the claim on the ground that fencing was included in the specification and was not a PC item. Mr Tofaris agreed with that, but pointed out that the specification allows for 81 LM of paling boundary fence (plus 26 LM trellis which is not relevant), and 88 LM of internal fencing between the units. He said that was adequate for the left side boundary, but Mr Chen later asked him to provide a new fence on the right side boundary. This was an extra 55 LM. Mr Chen said that it was up to the Architect to decide if extra fencing was required.
81	During the hearing I examined the plans and photographs, and each party pointed out where fences had been constructed. It was apparent to me that the contract price allowed for only 81 LM external and 88 LM of internal fencing, and that more than this amount was actually constructed. I accept Mr Tofaris’ evidence that Mr Chen asked for the right side boundary to be fenced, and that he told him this would be charged as an extra to the original contract price. 
82	During the hearing I asked Mr Chen if, having seen the measurements on the plans and accepting that either he or the Architect may have asked for the right side boundary to be fenced, he now conceded this claim. Mr Chen said no, and that he would rely on clause N11.6 of the contract as an alternative defence.
83	Clause N11.6 states as follows:
After a final claim has been made under subclause N11.1 or is treated as having been made under subclause N11.5, the contractor is not entitled to make any further claims under this contract.
84	For this clause to apply, the Builder would have had to have made a final claim in accordance with the contract. Clause N11.1 provides that a Builder may make a final claim after certain steps are completed, including the expiration of the defects liability period. The Architect certified practical completion on 27 July 2015 and the expiration of the defects liability period on 27 July 2016. The last formal claim made by the Builder was progress claim 11 in August 2015. After that date discussions continued between the Builder, the Architect, the Quantity Surveyor, the Owner and the NAB, and then the FOS, but it is apparent that no formal final claim was ever made after 27 July 2016. Accordingly clause N11.6 is not applicable.
85	For the above reasons, I am satisfied that the extra fencing work was done at the Owner’s request, the Owner has received the benefit of this work, and the Builder is out of pocket at least $4,422. The Owner must pay the amount of $4,422 to the Builder. 
Relocation of gas meter – $1,950 
86	Each of the units had its own gas meter installed by the Builder’s subcontractor. Mr Tofaris said that the location of the gas meters was not shown on the plans and so the plumber consulted with the Architect and local authority. After they were installed the Council required one meter to be moved as it was affecting access to a car park. The Builder claims $1,950 for labour and concrete cutter. 
87	The Builder claimed this cost as a variation in February 2015. Correspondence between the Architect and the Quantity Surveyor at that time appears to indicate they accepted this claim as an extra to the contract, as follows:
Quantity Surveyor: As discussed, gas and water meters do not form part of the Builder’s price as it is part of headworks and authorities’ fees, as such I will not be holding back any monies for them. 
And
Architect: It is my understanding as well that the meters are by the authorities and not part of the contract. 
88	Mr Chen submitted that as the location of the meters was not shown on the plans, it was not his fault that one had to be moved. He disputed that the Architect had been involved in choosing the original location and said that the Builder or his gas plumber should have known the space which would be required to open a car door in the car park. 
89	The Owner’s first ground of defence is misconceived. The plans were provided by it to the Builder. If there was a lack of detail on the plans, the Owner wears that risk, not the Builder. I viewed the plans and agree that the location of gas meters is not shown. I also agree with the Builder that the gas plumber could not have been expected to understand that the Council would treat the space between two units as a carpark, nor to have calculated the space needed to open a car door. 
90	The Owner did not call the Architect to give evidence and I do not accept Mr Chen’s hearsay evidence that the Architect was not involved in choosing the original location for the gas meter. I prefer the first-hand account of Mr Tofaris, as, for the reasons set out above, I found him to be a credible witness. Mr Chen on the other hand was prone to say things that he thought might be possible, rather than what he recalled actually happening.
91	Accordingly I am satisfied that the Owner must reimburse the Builder the cost of relocating the gas meter, of $1,950.
Pit upgrade – $4,736
92	The Builder claimed an extra $4,736 being the cost charged to it by its subcontractor for upgrading stormwater pits. He said that the original site drawings were inadequate, in that the drop in land under the rear four units was not allowed for. The Council required the stormwater pits to be enlarged to deal with the levels. 
93	Mr Chen originally said he had not requested the Builder to carry out this work. Mr Tofaris said that Mr Chen was aware of the need for the upgrade, as he was present on site when the Council directed it be done.
94	Mr Chen then suggested that perhaps the Builder had laid other pipes which were the wrong size, and this had caused the need for the upgrade. This submission was made without any evidence or basis.
95	Mr Chen then reverted to his first line of defence, that he needed to see evidence from the Council that the work was necessary.
96	Although the Builder did not produce any written instruction from the Council, I accept the evidence of Mr Tofaris that the work was required. There is evidence that the work was a variation, as that is the description in the contemporaneous invoice from the subcontractor: it is headed “Variation Pit 3 and Pit 4 Upgrade” and shows that the old pit sizes were smaller than the new. There appears to be no reason why the Builder would have engaged its subcontractor and paid for this extra work if it were not required. Further, I accept Mr Tofaris as an honest witness. On the other hand, Mr Chen’s evidence consisted of supposition and conjecture, with no basis. He provided no evidence to contradict the Builder.
97	Accordingly the Owner must pay the Builder $4,736 for the stormwater pits upgrade.
Further PC Sums
Landscaping – extra $17,327.66 
98	There was no dispute that the prime cost allowance in the contract for landscaping was $33,000. This equated to $3,000 per unit. Mr Tofaris gave evidence that the Builder actually spent $50,327.66 on landscaping, and so it claimed the difference as the PC adjustment. 
99	The Owner’s defence to this claim was put on several bases. First, he said that the PC allowance should have been enough and so any extra costs were not needed or requested. Second, Mr Chen said that the extra landscaping work required by the Council was because of the Builder’s failure to comply with the landscaping plan and so it should bear the cost. Third, Mr Chen said he had bought at least half of the Lilydale Toppings himself and suggested that the invoices provided by Mr Tofaris which show the purchase of Lilydale Toppings may have been for a different project. Fourth, the Owner said that the Builder had not proven that it had actually spent the amounts claimed. The invoices and receipts provided do not add up to $50,327.66.
Was the PC allowance adequate?
100	In response to the first point, Mr Tofaris said that during the contract negotiations, he had originally quoted an amount of $5,000 per unit for landscaping. He said that Mr Chen had asked for that amount to be reduced, which he had done, but he had told him that he would be charged if there was an increase on the actual amounts above the PC sum. 
101	I accept Mr Tofaris’ evidence on this point. It is supported by the contemporaneous documents. The Builder’s first preliminary quotation dated 2 September 2012 states that the allowance for landscaping is “awaiting plans to attach a landscape value”. The second preliminary quotation includes a PC sum of $3,000 per unit but notes that no landscaping plans have been received. The third preliminary quotation includes a PC sum of $50,000 but notes that no landscaping plans have been received. The fourth preliminary quotation dated 14 October 2012 includes a PC sum of $3,000 per unit but notes that no landscaping plans have been received.
102	The First Contract was signed on 23 February 2013. The landscape plan was not approved by Council until on or around 9 May 2013. The Second Contract did not change the prices agreed in the First Contract. Accordingly I am satisfied that the PC allowance of $3,000 per unit was not calculated based on any known Council requirements. Therefore if extra work was required, the PC allowance was to be adjusted.
Was the extra cost due to the Builder’s failure to comply with the plans?
103	In response to the second defence, Mr Tofaris relied on a letter from the Council dated 7 May 2015 to the Owner, which set out further works required to satisfy the planning permit/landscaping compliance. The Architect on behalf of the Owner instructed the Builder by email a few days later to carry out the work and said “Variation can be submitted for extra cost involve [sic]”. 
104	In his evidence Mr Tofaris said the work listed by Council was mostly extra work, as the landscaping plan was not detailed and/or the as built works varied from the original plans. For example the Council noted that “The extent / location of Lilydale topping surfaces within SPOS areas has been altered”. The letterboxes had to be moved because no one had decided where to put them originally.
105	I accept Mr Tofaris’ evidence that the extra landscaping works were required to satisfy the Council and that they were not due to errors or failings by the Builder. It is supported by the Architect’s email of 16 May 2015. As stated above, I found Mr Tofaris to be a credible witness. On the other hand Mr Chen took me to only two specific failures to comply, being the extra retaining wall and concrete at the rear of the property, and the issue of Lilydale Toppings. Mr Chen then admitted that the site works at the rear of the property had changed as reflected in Variations 1 and 3. As for the Lilydale Toppings, this issue is discussed further below, where I reject Mr Chen’s contention. In other words, both specific examples suggested by Mr Chen have not been substantiated. 
Is the Builder’s claim for a different project?
106	In respect of the third defence, I do not accept the Owner’s contention. Although Mr Chen put it no higher than it could have been possible, it is a serious matter to accuse someone of fraudulent conduct. Mr Tofaris vehemently denied he had made fraudulent claims or that the receipts showing the purchase of Lilydale Toppings were for a different project. As set out above, I found Mr Tofaris to be an honest witness. I accept his evidence. 
107	Further, at least one receipt for the purchase of the Lilydale Toppings from Aumann’s Building Supplies includes a delivery address of the subject property. The other receipts tendered are illegible. As stated above, I accept the evidence of Mr Tofaris over the supposition of Mr Chen. If Mr Chen were able to show me a delivery docket that was made out to a different address, that would give a basis for his allegation that the Builder has lied about the delivery of the Toppings. However he has not done so. Mere speculation does not satisfy the burden of proof. 
Is there sufficient evidence of the amounts claimed?
108	The Builder prepared a document headed Landscape Extras dated 9 September 2019, in which it set out the extra items not included in the contract price. The total of these items was $39,181.15. The Owner refused to pay this claim, on the basis that the Builder had not provided original invoices and receipts to justify the amounts claimed.
109	Mr Tofaris conceded during the hearing that the amount in the Landscape Extras included items which were not part of the landscaping PC sum, such as water tanks (which were itemised elsewhere in the contract) and retaining walls and extra fencing (which are claimed separately in this proceeding). 
110	The Builder tendered receipts and bank statements to establish that he had spent in excess of $20,074.29 on landscaping (two receipts are illegible). Mr Tofaris said that he did not have documents to prove the balance of the claim, as some of his records and data had been lost. He said the Builder was also claiming for extra labour costs associated with the extra landscaping, for which there were no documents. He said that when he prepared his witness statement in 2020, he used his ‘Data Build’ record keeping system to calculate the figures claimed. He also asked the Tribunal to accept that it was obvious the total landscaping could not be achieved for $3,000 per unit, and what had been spent was closer to the original estimate of $5,000 per unit.
Conclusion on landscaping claim
111	For the reasons set out above I do not accept the Owner’s first, second and third defences. I do agree that the Builder has not provided original source documents to prove it has expended $50,327.66. Nevertheless, I accept Mr Tofaris’ evidence that the work was done and the amount claimed is justified as an extra to the PC allowance. As I have said before, I found Mr Tofaris to be a credible witness. He made appropriate concessions to reduce the amount of this claim when items such as the water tanks and extra fencing were pointed out to him. There is sufficient evidence to support some of the money expended. Mr Tofaris gave explanations, which I accept, to the specific items challenged by Mr Chen (the retaining wall and extra concrete, the Lilydale toppings). 
112	Accordingly I am satisfied that the Owner must pay the Builder the sum of $17,327.66 for the landscaping PC adjustment.
Appliance upgrade – $9,136
113	There was no dispute that the prime cost allowance in the contract for appliances was $33,000. The Builder said it had spent $42,136 on appliances, which had been chosen by the Owner. The Builder’s claim is for the amount above the prime cost allowance, being $9,136.
114	During the course of the hearing, Mr Chen said that while he did not concede that he had asked for any upgrades, he agreed to pay the claimed amount of $9,136, now that he had seen the Builder’s invoices and bank statements. 
Sanitary Items – $29,970.10
115	There is no dispute that the contract included a PC sum for sanitary items (that is, bathroom and laundry fittings) of $27,500. The Builder originally claimed that it actually expended not less than $86,967.96, although during the hearing Mr Tofaris conceded he had included water tanks in this claim which were not sanitary items. He removed these items from the claim, and now claims that the Builder spent a total of $72,470.10 (incl. GST). The Architect approved a variation of $15,000 during the project and this was factored into the progress claims. The Builder claims the balance, namely $29,970.10. 
116	The Owner’s objections to this claim were similar to those raised for the landscaping. First, Mr Chen suggested that Mr Tofaris may have used some of the items in other properties. Second, he said had no reason to spend more than $27,500 and therefore he had not asked for any items to be upgraded above what was specified in the contract. Third, he said that some items claimed were not properly part of the PC item. Fourth, he said the Builder had not provided receipts to prove the amounts spent and the Architect had been justified in refusing to approve more than $15,000.
Is the Builder’s claim for a different project?
117	Mr Chen put to Mr Tofaris that he was trying to claim for items he had installed in another project the Builder was building on Warrigal Road. Mr Tofaris strenuously denied that suggestion. For the same reasons as the landscaping claim above, I do not accept Mr Chen’s contention. Mr Chen had no evidence to support his suggestion. The sales orders and invoices from Bourne Bathroom & Kitchen Centre show the delivery address is the subject property. I accept the evidence of Mr Tofaris.
Did the Owner choose or approve the specific items?
118	Mr Chen said that he had thought the PC allowance should be enough to cover the cost of the items specified in the contract. He said there was no reason for him to spend any more money on these items, as he had presold 9 of the 11 units before the sanitary items were purchased. He would not be able to recover any extra cost from the purchasers and they had not asked for any upgrades. He denied he had chosen or approved any specific items.
119	Mr Tofaris said that the contract specification was general. It mostly did not specify model numbers or names. For example, in the section headed “Ensuite and Bathroom” there is an item for “Vanity Basin / Selection: Square recessed basin / Colour: white”. Under the heading “WC” there is an item for “Basin / Supplier: Bourne Bathroom / Model: [blank]”. That is, neither of these rooms describe a specific item. On the other hand, the section headed “Ensuite” is more specific, in that there is an item for “Vanity Basin / Supplier: Ascot / Model: Bolero / Colour: white”. 
120	Mr Tofaris had shown Mr Chen the appliances installed in another project in Middlesex Road, and Mr Chen wanted that quality, but did not want to pay for it. Mr Chen had also provided Mr Tofaris with the sales images he had used to market the units. Mr Tofaris then made suggestions to Mr Chen about suitable appliances. As an example, the supplier Bourne Bathroom & Kitchen Centre had proposed a particular style of small basin at a cost of $114 each. Mr Tofaris told Mr Chen he did not think it looked the best, and he sent Mr Chen to Bourne to choose the basins.  
121	Mr Chen denied having visited Bourne at all. This evidence was contradicted by an email sent by Mr Chen to Mr Tofaris on 1 April 2014 in which he stated “Hi Nick, The attached pictures were taken from the shop in Mitcham, I think they are suitable. I will go to other shop tomorrow. Thanks, Michael”.  There was no dispute that the “shop in Mitcham” was Bourne, and that the “other shop” is one Mr Chen knew of in Dandenong. On being shown this email, Mr Chen conceded his memory was unreliable and he must have visited Bourne to select basins. 
122	Following this concession, Mr Chen then remembered that he had “definitely got involved in the process of purchasing sinks” and said that he had “purchased the semi-recessed sinks” from the shop in Dandenong and supplied them to the Builder. On that basis he disputed the Builder’s claim for basins. However Mr Chen could not recall how many basins he had purchased. He was shown the real estate marketing photos and agreed that sinks and basins had been installed in all the units. He also agreed with the Builder there were 31 basins in the project and 11 sinks. Mr Tofaris put to him that Mr Chen had supplied only the 11 powder room basins and Mr Chen did not disagree.
123	Mr Chen was also challenged on his Amended Points of Defence, where the Owner pleaded at paragraph 14 “the Respondent neither requested the Applicant to upgrade the fixture and fittings nor to improve exterior fencing and landscaping in excess of the Prime Cost Sums as alleged”. It was put to Mr Chen that this statement was dishonest, as he had been involved in the purchase of fittings. Mr Chen’s response was that it was 10 years ago and he may have made a mistake. He said, generally he was not part of the process, but if Mr Tofaris asked him to choose something he did. He then conceded that he remembered choosing a particular toilet, as well as the basins.
124	Having regard to the evidence set out above, I accept the Builder’s submission that the contract specifications mostly do not nominate a specific make or model number for most items. In those circumstances, it was to be expected that the Builder would discuss particular items with the Owner prior to their purchase. Based on Mr Chen’s evidence as set out above, I am satisfied that he was personally involved in choosing and supplying some of the sanitary items. Therefore his contention that he had no reason to “upgrade” the cost of any item, because he had presold 9 of the 11 units, is irrelevant. It may well be that there was no commercial reason to upgrade the fixtures and fittings, but in circumstances where he had chosen at least some of them, his motive for doing so is not relevant to the Builder’s claim.
Are all items claimed “sanitary fittings”?
125	Mr Chen also disputed that the Builder’s claims included items which were not sanitary items. As stated above, Mr Tofaris conceded that water tanks had been improperly included in this claim. Mr Chen then said that shower bases should not be claimed, as they were not one of the items included in the PC allowance for sanitary fittings. The definition in the contract is 
Sanitary Fittings:  All sanitary fittings and fixtures, toilets, basins, taps, sinks, troughs, laundry stops, shower roses, towel rails & toilet roll holders.
126	I do not accept Mr Chen’s contention that shower bases fall outside this definition. The specification required white marble shower bases, which are a fixture to be purchased and installed, in the same way as is a bath or toilet or basin. They are not constructed from the floor slab, they sit on it. The definition lists some specific items (such as toilets and basins) and also includes a general catch-all item of “all sanitary … fixtures”. Although the shower bases are not specifically listed, like the baths, I am satisfied on an objective, purposive reading of this clause, that they fall within this general description. 
Was evidence of the amounts claimed provided to the Architect?
127	Once Mr Chen conceded he had chosen some of the sanitary items, he then said he had only paid $80 each for the basins he supplied from Dandenong, and the Builder was now claiming $312.73 per basin. So, he said, the Builder must have paid too much for the ones it supplied. It was put to Mr Chen that the ones he provided were for the powder room and these were much smaller than the other basins and therefore they were cheaper. Mr Chen did not dispute that proposition. 
128	Instead, he reverted to his original argument, that the invoices provided by the Builder only add up to $25,810, not the $79,000 alleged. He did not concede that if the Builder had provided an invoice for 1 item (say 1 bath), and 11 were required under the contract, that that was sufficient evidence to support a claim for 11 baths. 
129	The Builder said that he spent $59,070 on sanitary items, although he does not have receipts and tax invoices to support all these amounts. Mr Tofaris said he prepared his calculations based on his ‘Data Build’ record keeping system and the documents he had, and the fact that specific quantities of each item has been installed. As an example, he referred to the price list and the Bourne sales order for Sagi Eco 1 ¾ bowl sink at $122.73 and said that this proved that at least one of these sinks had been purchased. He then said that as there is no dispute that one of these sinks was installed in each of the 11 dwellings, his claim for 11 of these sinks should be accepted. 
130	Mr Chen said he had not agreed to pay any more than the extra $15,000 for the sanitary items because the Builder had not provided him with proof of payments. Mr Tofaris said he did not have to provide these to Mr Chen, as he was dealing with the Architect at that time. 
131	On 25 February 2015 the Architect sent an email to Mr Tofaris which included the recommendation from the Quantity Surveyor on progress claim number 10. In respect of the variation 25 for sanitary items, the Architect said “I required further information i.e. purchasing record and where the extra items are before I can approve those items”.
132	Mr Chen’s complaint was that the Builder did not provide this information until 2019, as part of this proceeding.
133	It may be that the Builder did not provide copies of sales orders and receipts to the Architect or to Mr Chen in 2015. However under the contract he was not required to do so. Both the Second Contract and the Tripartite Deed only required the Builder to provide a statutory declaration with any progress claim: clauses N3.4 and 7.3 respectively. Both clauses provided that the statutory declaration must be in the form set out in Schedule 1, item 33, which says: “Information to be included in a progress claim: costs to date”. The same applied to a final claim (clause N11.2 of the contract). 
134	The Builder provided a statutory declaration dated 15 August 2015 when making progress claim 11. The Quantity Surveyor was satisfied with that statutory declaration. It was also satisfied with the information it had been provided in respect of costs, and it was able to prepare the schedules of construction costs and variations set out in its 11th progress report. The Quantity Surveyor said the only item outstanding was a licensed surveyor’s statement.
Conclusion on Sanitary items claim
135	I accept the Builder’s PC adjustment claim. I agree with Mr Chen that the Builder has not provided invoices or receipts for each of the items claimed. However, it has provided evidence of the purchase of some of the items and there was no dispute that each unit has been completed with all sanitary items installed. Therefore, it is open to me to draw the conclusion (which I do) that if the purchase of one item is proven (which it was), the cost to the Builder can be calculated by multiplying the item cost by the number of times it was to be installed across the Development. 
136	For example, there is a Sales Order from Bourne for the purchase of a number of shower bases 900 x 900 at a unit cost of $86.36 and a number of others 1200 x 900 at $135.45 each. The Builder’s claim is for 16 of the smaller and 13 of the larger bases, a total of 29. Mr Tofaris showed the plans for units 3 and 11 and told me these were representative of the others. Each of those units has three shower bases. The total number of shower bases claimed by the Builder is 29, so some units must only have two showers. All shower bases were installed prior to handover. I consider that is sufficient evidence to support the Builder’s claim for the shower bases.
137	Mr Chen focussed especially on the price of the basins. He referred to a price list for a Caroma Liano semi recessed basin at $312.73 per unit. The Builder’s claim includes 31 basins at that price. Mr Chen said that he had supplied this basin and as the Builder did not have a Sales Order or receipt for any of these basins, the claim was not proven. Mr Tofaris’ evidence, as set out above, was that when he prepared the claim he had used his ‘Data Build’ record keeping system. 
138	In the absence of source documents, this item must be decided based on the credibility of each witness. I accept Mr Tofaris’ evidence that the amounts claimed were expended for this project, as I found him to be a credible and honest witness. He made appropriate concessions for items wrongly claimed, such as the water tanks. On the other hand, I found Mr Chen’s evidence to be not reliable. If he was shown to be wrong about one contention, Mr Chen then suggested another. 
139	Specifically in relation to the basins, Mr Chen conceded that he had not supplied 31 basins. He could not recall how many he had supplied but did not disagree it may have been 11, one for each powder room. Further, he could not recall whether what he had supplied was the Caroma Liano semi recessed basin or something different. He had not checked his own records since the proceeding commenced. 
140	Mr Chen also could not recall if there were any Caroma Liano semi recessed basins installed at all. A review of the plans, at least for the dwellings 3 and 11 (which I was told were representative of the other dwellings) indicates that each dwelling has four basins – bathroom, ensuite x2 and powder room. On that basis, I am satisfied that even if Mr Chen supplied 11 basins, the Builder’s claim for a further 31 is consistent with what it installed in the project. I am also satisfied that the cost of the powder room basin may have been only $80 to Mr Chen, but this is explained because it was a smaller basin and not the Caroma Liano specified.
141	Accordingly, for the reasons set out above, I am satisfied that the Builder has proven its claim for the PC adjustment for sanitary items of $29,970.10 and the Owner must pay this amount to the Builder. 
Tiling – $49,486.54
142	There was no dispute that the contract included a prime cost sum of $13,200 for “floor and wall tiles”. The contract specification stated that the sum had been calculated on the basis of 440 m² of tiles at $30 per square metre, and was described as “Builders range floor and wall tiles from Omega approved retailer to all wet area floors. Wall tiles to all splash backs and all ensuite and bathroom walls to ceiling”. 
143	The Builder claimed a further amount of $49,486.54 as a PC adjustment. Mr Tofaris said the claim arose because more than 440 m² of tiles had been purchased and laid, at Mr Chen’s request. 
144	Mr Tofaris’ evidence was that the PC allowance of 440 m² had been calculated based on floor tiles to all rooms marked on the plans, and wall tiles in the bathrooms and ensuite shower cubicles only. He said that during construction Mr Chen asked for all walls in the bathrooms and ensuites to be tiled floor to ceiling, not just inside the shower cubicles. 
145	Mr Tofaris provided a marked up plan of several of the townhouses to demonstrate the amount of tiling which had been included in the 440 m², and the amount which he said had ultimately actually been tiled. For dwelling 3 this was an extra 53.26 m2 and for dwelling 11 this was an extra 61.73 m2. He said that dwelling 3 is representative of the smaller units and dwelling 11 is representative of the larger units, and that each of the 11 dwellings had floor to ceiling wall tiling as an extra. He did not include or claim any extra for waste, skirting tiles or feature tiles.
146	Mr Chen disputed the claim, on several bases. First, he disputed that extra tiles had actually been installed on the bathroom and ensuite walls. Second, he said he had not asked for any extra tiles to be installed. Third, he disputed the amount claimed as the Builder did not have tax invoices or receipts to prove each item. 
Were extra tiles installed?
147	Mr Chen maintained this denial, even when shown photographs of the completed units which clearly showed at least one ensuite and the main bathroom being fully tiled. These were photographs taken by the Quantity Surveyor during the project, and photographs of unit 11 taken after it had been completed which were used in sales advertising. 
148	Mr Chen then said that he had asked for one bathroom to be fully tiled, but he did not agree the photograph showed the ensuite. He then said that even if unit 11 had been fully tiled, the other units had not been.
Did the Owner ask for these extra tiles?
149	Mr Chen also denied having asked for the extra tiles to be installed. He said because he had not asked for them, he should not have to pay for them. 
Is there sufficient evidence of the amount claimed?
150	Mr Tofaris conceded that he did not have all invoices and receipts for the purchase of tiles and the labour costs, but he also tendered bank statements to demonstrate the amounts paid to the tile suppliers. 
151	Mr Chen disputed the bank statements, as he said they did not name the subject property. He suggested that Mr Tofaris may be claiming for tiles purchased to be used in another project. 
152	As with the other claims where this suggestion was made, Mr Tofaris strenuously disputed the allegation. He said the claim was calculated based on a measurement of the number of tiles on the floors and walls, and the bank statements show he had purchased the tiles. He properly conceded that he had not claimed for extra costs which he could not calculate on that basis, such as skirting and feature tiles.
Conclusion on tiling claim
153	I do not accept Mr Chen’s evidence on this issue. His answers demonstrated that he would say anything that he thought might help his case, rather than what he actually remembered having happened. For example, at one point he stated that there were no tiles behind the showers, but only some form of “plastic sheeting”. When shown photographs that indicated there was no plastic sheeting but there were tiles, he said that he must have “mis-remembered”. Similarly, when shown the photograph of the downstairs ensuite of unit 11, he first denied this was the ensuite. Then when shown on the plans that it had to be that ensuite, Mr Chen said that unit 11 was different to the other units.
154	When showed invoices for the purchase of tiles he disputed that these had been bought for this project, and suggested that Mr Tofaris may have bought them to use in other projects he was working on. As with the other times Mr Chen suggested this may have happened, he had no basis for this assertion. 
155	Based on the evidence, I am satisfied that extra tiling over and above the PC allowance of 440 m2 was carried out. I accept the photographs and documents tendered which demonstrate the work was done and the purchase cost of most of the tiles. Further, I accept Mr Tofaris’ evidence of the amount of work actually done, the money expended, and that extra labour costs were incurred. 
156	I am also satisfied that this work was done at the request of Mr Chen. I do not accept Mr Chen’s submission that he had not requested the extra tiling, because I do not accept his evidence. His memory has been demonstrated to be not accurate, and as set out above he was prone to inventing suggestions or propositions that were proven to be false. 
157	Accordingly, the Owner must pay the Builder the prime cost adjustment of $49,486.54.
Water tapping – $8,850
158	There was a PC allowance in the contract for water tapping, of $3,850. The description of the PC item was “A PC sum has been allocated for the water tapping as the local authorities will need to be contacted and required to advise of the size of the tapping they require after assessing the project”.
159	The Builder says that in order to comply with the authority’s requirements, it actually spent $12,700. It relies on a tax invoice from Victorian Drainage & Plumbing Services dated 4 December 2014, who carried out the work. It claims the difference, being $8,850, as a PC adjustment.
160	The Owner’s defence to this claim was that under clause N11.6 of the contract, the Builder is not entitled to make any further claims under the contract after making a final claim. It is therefore too late now to claim this item.
161	For the reasons set out above in respect of the fencing item, I am satisfied that the Builder has not made a final claim under the contract. Accordingly, I do not accept this defence and the claim is proven. The Owner must pay the Builder $8,850.
The Owner’s counterclaim
162	Although numerous heads of loss and damage were claimed in the Points of Counterclaim, during the hearing Mr Chen confirmed that the Owner was claiming only the following items:
Liquidated damages – $93,585
163	The Architect issued a ‘Notice – Application of Liquidated Damages’ to the Builder on 2 March 2018 informing the Builder that the Owner would enforce its entitlement to liquidated damages to be applied from 16 August 2014 (being the completion date in the Second Contract) to the date of practical completion (27 July 2015). This is 345 days. Item 30 of Schedule 1 of the Second Contract stipulates $393 per calendar day as the rate for liquidated damages pursuant to clause M12. The Owner said that the total amount of liquidated damages is $135,585 (345 x $393), however $42,000 has already been deducted from the amount payable under PPR11, leaving the balance of $93,585. 
164	In response, the Builder said that the agreement to allow $42,000, as recorded in PPR11, was a complete agreement, reached between the Architect and Mr Tofaris. The agreement was confirmed by the QS’s assessment of the 11th progress claim, where he said “It should also be noted that the Architect’s current progress payment certificate takes into account deductions for liquidated damages … being $38,181.82 (GST excluded) …”. 
165	Mr Chen said that Mr Lui was not authorised by him to make such an agreement. I do not accept that argument. Under clause A6.3 of the Second Contract “the Architect is the owner’s agent for giving instructions to the contractor. If the architect is acting as assessor, valuer or certifier, the architect acts independently and not as the agent of the owner.”. 
166	In negotiating and agreeing on a sum for liquidated damages, Mr Lui was not assessing valuing or certifying the Builder’s work. Instead it was acting as the Owner’s agent to reach an agreement on that item.
167	The Architect was not called to give evidence. The only evidence I have of the agreement is that of Mr Tofaris and the contemporaneous documents. Based on that evidence, I am satisfied that the parties agreed to the amount of liquidated damages at $42,000. The Owner’s claim is dismissed.
Payment made directly to Builder’s subcontractor – $11,296 
168	Mr Chen said the Owner paid $11,296.00 to Victorian Plumbing on or about 3 September 2015, to make the site ready for gas meter connection for Unit 1, even though such payments were the Builder’s responsibility under the Second Contract. He said that the Architect had asked the Builder to arrange this connection, but the Builder refused to do so, as at that time they were in dispute over outstanding payments. The Architect then directly asked the plumber to come and the plumber said he would only come if he was paid. Mr Chen said he then paid the plumber directly. He also said that the plumber had told him he would pay Mr Chen back if the Builder paid the plumber.
169	However, Mr Chen was unable to produce any documents to establish that the payment had actually been made. He was also unable to explain why he had not included any of this information in his witness statement. It was put to him that the Builder had provided a statutory declaration to the Architect with each payment claim in which the Builder declared that all payments to subcontractors had been made. In those circumstances, it was suggested that it was unlikely that either Mr Chen or the Architect simply paid the plumber without checking first with the Builder that the subcontract had not been paid.
170	In the absence of any evidence in his witness statement nor any documents establishing that any payment was made by the Owner to the subcontractor, I do not accept this claim. For the reasons set out above, I do not accept that Mr Chen’s memory is reliable. Further, on Mr Chen’s evidence it was the Architect who instructed the plumber to attend. The Architect was not called to give evidence and so there is no evidence before me as to what the terms of engagement of the subcontractor were.
171	This claim is dismissed.
New rectangle water tank – $910
172	Mr Chen said that the contract plans called for a rectangle shaped tank. The Builder supplied a round one. This was rejected by the Council and the Owner had to replace it to comply with the approved landscaping plans. The cost of this was $910 and he tendered an invoice to prove this amount.
173	Mr Tofaris said he had installed a round water tank because the slimline tank did not fit into the space. 
174	I accept the Owner’s claim for this item. The drawings indicate a rectangular water tank was required. There was no dispute that the Council rejected the round water tank because of access issues. I accept that the Owner purchased a new tank at a cost of $910. The Builder must pay the Owner this amount.
Modification of garage doors – $12,100
175	Mr Chen said that the planning permit drawings required each garage door to include a highlight window. The doors supplied installed by the Builder did not have the window. The Council directed them to be rectified, which the Owner did at a cost of $12,100. Mr Chen tendered an invoice to prove this amount.
176	The Builder referred to the contract specification which made no mention of highlight windows. It stated “slim horizontal panels”. Mr Tofaris acknowledged that the Saktek working drawings dated June 2012 show the garage doors with a highlight window. However, he said that the cost allowed in the contract for each garage door was premised on there being no window. This was done at the request of the Owner, to reduce the contract price. The Builder referred to the various quotations it provided before the contract was agreed. From these it can be seen that the cost of garage doors varied from $13,200 to $14,520 to $13,640. 
177	He did not disagree that the working drawings showed a highlight window, but said if that was what the contract had required, the specification would have recorded that and the contract price would have been higher. 
178	I accept the Builder’s argument. I note clause 3.2 of the First Contract states that if there is any discrepancy or ambiguity in or between any document in the contract, the specification takes priority over the plans. That interpretation is consistent with the lesser costing allowed in the First Contract for the garage doors.
179	Accordingly the Builder is not liable for the cost of making the garage doors comply with the June 2012 working drawings.
Extra landscaping costs 
180	These items included extra materials and labour allegedly supplied by the Owner, being $1,390.44 for materials, $912.16 for paving bricks and $3,260 for labour. Mr Chen did not have any documents to support these claims.
181	For the reasons discussed above in relation to the Builder’s landscaping claim, I do not accept this claim by the Owner. On the evidence before me, if the Owner had carried out the extra work claimed, it would have been over and above the PC allowance. Accordingly the Owner would have had to pay for it whether the Builder or Mr Chen had completed it. This claim is dismissed.
Telstra pit relocation – $18,408.02
182	The Owner said that in the contract specification it was the Builder’s obligation to move the old Telstra pit from the nature strip, as it was in the way of the new crossover. The specification stated “Telstra Pit - by Builder”. Mr Chen said the Architect helped him have the pit moved when Mr Tofaris refused to carry out any more work and he tendered the invoice and bank statement to prove the amount claimed.
183	Mr Tofaris acknowledged the wording of the specification, but said it referred only to the Telstra pits inside the property. The pit claimed by the Owner is another Telstra pit outside the property. The Builder installed the pits within the property, but any other pit on the nature strip or crossover was not included in the contract price.
184	Mr Chen put to Mr Tofaris that as it was the Builder’s responsibility to widen the crossover, it was also its responsibility to move the Telstra pit. Mr Tofaris disputed that, saying that the original pit was in the footpath, not in the crossover or nature strip. If Telstra required it to be moved, then that is a matter for the Developer.
185	The Owner has the burden of proving this claim. The description in the contract is unclear. I accept Mr Tofaris’ evidence that the Builder installed two Telstra pits within the property. Whether the third pit was in the nature strip or the footpath, this is outside the property boundary. Accordingly, I consider it more likely than not that this work was outside the Builder’s scope. The Owner has not satisfied me on the balance of probabilities that the Builder was liable for this cost. The claim is dismissed.
Overpayments to Builder
Intercom – $6,105
186	Mr Chen claimed a refund of $6,105 as this was the PC amount allowed in the contract for “11 coloured intercom supply and installed”. As none were supplied or installed, the contract price should have been adjusted down.
187	The Builder conceded this claim. It noted that the Architect had allowed $9,090.91 for incomplete works as part of PPR11. Mr Tofaris was not aware whether that included the intercoms. In the absence of any evidence about the Architect’s sum, and in light of the Builder’s concession, I will allow this amount to the Owner.
Claim 11 adjustment – $3,525.21
188	This item relates to an alleged accounting discrepancy in the return of the retention monies from the NAB to the Builder and the amount assessed in PPR11. 
189	In its Amended Points of Defence dated 12 December 2019, the Owner pleaded at paragraph 10(b)(ii): 
(ii) NAB has made a separate payment of $68,590.91 (which constitutes 50% of the retention amount) due to administrative error. Due to such overpayment, the Applicant owed $3525.21 to the Respondent (being the difference between the payment recommended by the QS report and the separate payment made by NAB).
190	Mr Chen said at paragraph 22 of his witness statement:
On or April 2017, The Lender later, made a separate payment of $137,181.82 (which constitutes 100% of the retention amount) due to administrative error (the Wrong Payment). Even if 50% of the Wrong Payment is made towards the Progress Claim No.11, the Applicant still owed $3,525.21 to the Respondent (being the difference between the payment recommended by the QS report and the separate payment made by the Lender).
191	During the hearing Mr Chen repeated this claim but without providing any further explanation. The Builder did not comment on it other than to say its calculations were based on the amounts due under the contract and the monies actually received. The difference between the two is the Builder’s claim.
192	It is difficult to understand the Owner’s claim. The Builder agreed that the NAB returned the retention of $137,181.81 to it (in its Schedule of Claims filed on 11 August 2023). 50% of the retention amount is $68,590.91 and this amount was stated in RRP11. There is no evidence that the NAB paid any more than this to the Builder.
193	I also note that the NAB returned the retention monies only after the Financial Ombudsman Service ordered it to do so. The FOS order included payment of two lots of interest and other monies in the retention account. Accordingly if the NAB did pay more than $137,181.81 this may be the explanation.
194	In any event, I have assessed the claim and counterclaim in the same manner as the Builder: that is, the total of the amounts I have found were due under the contract less the monies actually received. If there is any accounting discrepancy, it will have been remedied by this approach. 
Timber floor – $9,266.81
195	There was no dispute that Mr Chen asked the Builder directly to install timber floors in some units, at the request of a purchaser, as a variation. The Builder agreed to do this and the Owner reimbursed the Builder directly for this timber on or about 6 March 2015. Mr Chen did not tell the Quantity Surveyor or the Architect that he had made this payment.
196	The Builder included a claim for the timber flooring variation in its progress claim 9, and the amount was noted, although not approved, by the Quantity Surveyor as a variation. It was ultimately approved by the Architect on 28 May 2015. The Owner submitted that it was paid under Claim No 10, although I note that the PPR10 is dated 18 February 2015 and thus predates the payment made on 6 March 2015. I presume that the Owner means that the variation was approved by the Architect in PPR11.
197	The Builder has conceded this claim and has allowed it as a credit to the Owner in its Schedule of Claims filed on 11 August 2023. 
198	For the sake of completeness, I note that the Builder’s bank statements demonstrated that more than one unit had a timber flooring variation. The others were reconciled between the Owner and the Builder with credits and refunds. The Builder’s updated Schedule is consistent with this process.
Variations 1 and 3 – refund sought
199	I have addressed and determined this item above as part of the Builder’s claim for the balance of PPR4. 
Labour for repair of plaster – $1,700
200	Mr Chen gave no evidence about this claim either in his witness statement or in the hearing. In his written submission filed after the evidence had closed, he stated “the hole I brocken [sic] on the plaster was only 3cm, the cost to repair was under $300, but builder claimed $2000”. He also referred to the Variation Summary dated 22 December 2014, assessed by the Quantity Surveyor and approved by the Architect, where item 20 is “labour to repair plaster” of $2,000. If Mr Chen is saying that he has paid $2,000 on the direction of the Architect, but should only have paid $300, then he has provided no evidence that the amount claimed was too high. He has also not provided any legal basis on which I could review the Architect’s assessment under the Second Contract or otherwise. Therefore this claim is dismissed. 
Stormwater works – $13,800
201	Mr Chen gave no evidence about this claim either in his witness statement or in the hearing. In his written submission filed after the evidence had closed, he stated “included in the contract price, no any requirement. also claimed extra variation of  pits upgrade $4736 abov.”. He also refers to the Variation Summary dated 22 December 2014, assessed by the Quantity Surveyor and approved by the Architect, where item 21 is “additional stormwater works” of $13,800. Mr Chen has provided no evidence that the amount claimed was allowed in the original contract price and should not have been a variation. On the other hand, I note that the evidence given regarding the need to upgrade the stormwater pits (above) would indicate that the stormwater pipes may also have needed to be upgraded as a variation. Mr Chen has also not provided any legal basis on which I could review the Architect’s assessment under the Second Contract or otherwise. Therefore this claim is dismissed.
Downpipe – $1,010.91
202	Mr Chen gave no evidence about this claim either in his witness statement or in the hearing. In his written submission filed after the evidence had closed, he stated “all down pipes are included in the contract price”. He also referred to the Variation Summary dated 22 December 2014, assessed by the Quantity Surveyor and approved by the Architect, where item 22 is “cost escalation – 750mm pipe” of $1,010.91. Mr Chen has provided no evidence that the amount claimed was allowed in the original contract price and should not have been a variation. He has also not provided any legal basis on which I could review the Architect’s assessment under the Second Contract or otherwise. Therefore this claim is dismissed.
Additional electricity works – $5,437.60
203	Mr Chen gave no evidence about this claim either in his witness statement or in the hearing. In his written submission filed after the evidence had closed, he stated “owner only asked for 4 powerpoints extra in unit1&2, extra cost is $200, builder claimed $5657.60, overclaimed $5437.6”. He also referred to the Variation Summary dated 26 August 2015, assessed by the Quantity Surveyor and approved by the Architect, where item 24 is “electrical extras as requested by owner” of $5,657.60. If Mr Chen is saying that he has paid $5,657.60 on the direction of the Architect, but should only have paid $200, then he has provided no evidence that the amount claimed was too high. He has also not provided any legal basis on which I could review the Architect’s assessment under the Second Contract or otherwise. Therefore this claim is dismissed.
Sanitary items – $15,000
204	I have addressed and determined this item above as part of the Builder’s claim for the PC allowance. 
Conclusion 
205	In its updated Schedule of Claims filed on 11 August 2023 the Builder has listed all payments it has received, including the return of the retainer. The Owner was asked if he disputed these figures and he did not. The Builder has also listed the original contract price, and the variations, the PC adjustments and GST. The Builder has also allowed some credits to the Owner. The balance of those items is the sum the Builder says is due to it at the conclusion of the project. I adopt the same methodology in calculating the amount to be paid to the Builder and include the items I have allowed above.
Contract price		
Contract sum (incl. GST)	3,018,000.00		
First part of site works variation (incl. GST)	50,000.00		
Variations approved by Architect	162,107.00		
GST on Variations approved by Architect	16,210.70		
Subtotal	3,246,317.70	
Plus variations / PC sums due to Builder (incl. GST)		
Building Surveyor letters	2,750.00		
Fence 	4,422.00		
Relocation of gas meter 	1,950.00		
Pit upgrade	4,736.00		
Landscaping PC	17,327.66		
Appliances PC	9,136.00		
Sanitary items PC	29,970.10		
Tiling PC	49,486.54		
Water tapping PC	8,850.00		
Subtotal	128,628.30	
Less Monies due to Owner (incl. GST)		
Timber floor variation	(9,266.81)		
Water tank	(910.00)		
Intercom	(6,105.00)		
Agreed liquidated damages 	(42,000.00)		
Subtotal	(58,281.81)	
Total adjusted contract price (A)	3,316,664.19	
Less payments received		
From Owner /NAB	(2,941,222.99)		
Retainer received	(137,181.81)		
Total payments received (B)	(3,078,404.80)	
Balance A – B 	$238,259.39	

206	For the reasons set out above the Owner must pay the Builder $238,259.39.
Interest
207	The Builder has claimed interest on the payment shortfalls pursuant to clause N16 of the Second Contract at 10% per annum from 9 September 2015 to today. The rate is set out at item 34 of Schedule 1 of the Second Contract.
208	I am satisfied that the Builder is entitled to simple interest of 10% per annum under the contract on the judgment sum of $238,259.39. 
209	I will order the Owner to pay interest of $190,020.58, being 2,913 days from 9 September 2015 to 31 August 2023.
Costs
210	The question of costs (including reimbursement of fees) is reserved. An order will be made giving liberty to apply. 

S Kirton
Senior Member