VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP619/2020	
CATCHWORDS 	
Claim by applicant Sub-Contractor and supplier of roofing works, for wrongful termination of its Sub-Contract by respondent Contractor; what comprised the Sub-Contract; whether respondent wrongfully terminated the Sub-Contract; engagement by respondent of third-party roofing contractor to rectify and complete the roofing works; whether roofing works were defective; costs to rectify the defects as against costs to complete the works; adequacy of lay evidence and expert evidence; no payment made by respondent for work carried out by applicant  under the Sub-Contract; whether applicant entitled to be paid for work done and invoiced; whether applicant entitled to loss of profits; whether respondent entitled to set off costs paid to rectify the defective roofing work against monies owed to the applicant for work carried out under the Sub-Contract.	

APPLICANT	Greenshift Energy Pty Ltd (ACN: 605 657 841)	
RESPONDENT	Harris HMC Interiors (Vic) Pty Ltd (ACN: 130 177 614)	
WHERE HELD	Melbourne	
BEFORE	Member F Marks	
HEARING TYPE	Hearing	
DATE OF HEARING	11 and 12 March 2021, 16, 17 June, and 5, 6 September 2022	
DATE OF ORDER	10 November 2022	
CITATION	Greenshift Energy Pty Ltd v Harris HMC Interiors (Vic) Pty Ltd (Building and Property) [2022] VCAT 1302	

Orders
1	The respondent is liable to pay the applicant $22,000 for its roofing work carried out at the Monash Health Centre.

2	The applicant’s claim for loss of profits is dismissed.

3	The applicant is liable for defective roofing works.

4	The costs to rectify the defective roofing works are assessed at $21,028.
5	The respondent is entitled to set off the amount of $21,028 assessed by the Tribunal as the costs to rectify the defects, against the amount of $22,000 that the respondent is liable to pay the applicant.

6	Taking into account the set off allowed by the Tribunal, the respondent must pay the applicant $972. 

MEMBER F MARKS			
			
APPEARANCES:		
For Applicant	Dr T Shao, director	
For Respondent	Mr P A Bailey, Project Manager: on 11 and 12 March 2021
Mr B Harris, Operations Manager: on 16 and 17 June and 5 and 6 September 2022	

Reasons
1	The applicant is a commercial supplier and installer of roofing, gutters and associated roofing materials, which carries on business under the name Obsidian Roofing (Obsidian). 
2	The respondent (Harris) is a project manager, which managed the construction of the Monash Health Adult Infusion Centre at the Monash Medical Centre in Clayton (Monash Health AIC).
3	This case concerns contractual issues that have arisen between Harris and Obsidian after Obsidian carried out roofing works on the Monash Health AIC. A lot of work was done by Obsidian prior to the relevant Sub-Contract between the two parties being entered into on 5 February 2020, on the basis of earlier correspondence. 
4	Two days after the Sub-Contract was entered into – on 7 February 2020 - Harris terminated it, and Obsidian never returned to the site. Obsidian has sued for the work that it has carried out. Harris claims that Obsidian’s roofing work was defective and says it does not owe Obsidian anything. 
5	Obsidian claims $22,000 from Harris being the amount invoiced to Harris on 25 February 2020. Obsidian claims that it had carried out 81.63% of the roofing works prior to Harris terminating its Sub-Contract. Obsidian also claims that Harris wrongfully terminated its Sub-Contract and seeks damages of $3,771.20 for loss of profits.
6	Harris denies that it wrongfully terminated the Sub-Contract. Harris says it was entitled to terminate because Obsidian failed to comply with safety laws and regulations. It says it gave Obsidian a series of warnings but that Obsidian’s workers continued to carry out their work without adhering to critical safety requirements. 
7	Harris engaged another company (Consolidated Plumbing) to rectify the alleged defects and complete the roofing works, paying it $46,300 plus GST.  
8	Harris claims that out of the total amount that it paid Consolidated Plumbing, it paid  $30,378.91 to rectify the defects. Harris seeks to ‘set-off’ that amount against any damages Obsidian is awarded.
9	The main issues that arise are:
•	What comprised the contract?
•	Is Harris liable to pay Obsidian for its work done?
•	Did Harris wrongfully terminate the contract?
•	If yes, is Obsidian entitled to loss of profits?
•	Were Obsidian’s roofing works defective, and if yes, what were the costs to rectify the defects?
•	Is Harris entitled to a set off?

THE HEARING
10	The hearing took a long time to be completed, and the written decision took a long time to be finalised for the following reasons.
11	The proceeding came on for hearing on 11 March 2021 via video link because of the COVID-19 pandemic. Some months before the hearing, the Tribunal ordered the parties to file documents which were consecutively numbered so the parties could easily take the Tribunal to the relevant documents on which they wished to rely at the hearing. The Tribunal made the orders to ensure the efficient running of the hearing by video link. 
12	The parties did not comply with the Tribunal’s orders for the filing of documents. The applicant filed hundreds of pages of documents which were not numbered and which were arranged using an alphabetical indexing system. The respondent filed a smaller number of documents which were not numbered and which were set out using a numerical index. 
13	Due to the COVID-19 restrictions, the Tribunal did not have a hard copy of the  parties documents. The failure of the parties to number their documents as ordered, resulted in the Tribunal being unable to easily and efficiently access  the documents on which the parties relied. Consequently, the hearing was adjourned because it could not be completed within the allocated time frame. 
14	A couple of days after the initial hearing I was involved in a major accident which resulted in a substantial delay in resuming the hearing. The hearing was further delayed by the subsequent difficulty in relisting the matter for hearing during the pandemic. The Tribunal offered to list the matter for a compulsory conference, however the parties declined the Tribunal’s offer. 
15	The parties filed documents which were consecutively numbered after being requested to do so. The hearing resumed on 16 June 2022 and the Tribunal heard evidence from the experts. The Tribunal was forced to stand the matter down a number of times during the hearing because of technical difficulties with the applicant’s video link. Again the proceeding could not be completed in the time allocated due to the technical difficulties with the video link and the hearing was adjourned. 
16	The hearing resumed on 5 September 2022 but was again stopped because of ongoing technical difficulties with the applicant’s video link. The hearing was finally completed in two hours the following day. 
17	At the hearing, oral evidence was given by Dr Shao and Mr De Witt, directors, for Obsidian. Mr Bailey, Project Manager and Mr Dillon Conroy, Site Manager, gave evidence for Harris. Harris relied on the memo of Mr Matthew Yanez of PBS Plumbing dated 22 April 2021 and the report of Mr Barry Tanner of Melbourne Building and Waterproofing Consultants Pty Ltd dated 23 November 2020.
18	Mr Yanez and Mr Tanner gave evidence at the hearing for Harris. Obsidian did not call any experts to give evidence for Obsidian. However, it was the extensive documentary evidence that was most relevant in deciding the issues in this case. 
THE FACTS 
19	In 2019 Harris issued an invitation to tender for the construction of the Monash Health AIC at the Monash Medical Centre in Clayton. The tender documents included, amongst other things, the plans and specifications prepared by NTC Architects, and drawings prepared by structural engineers, services engineers and fire engineers. 
20	Harris requested Obsidian to provide a quotation for one part of the construction - the roofing works. 
21	In December 2019 Obsidian sent Harris its quotation Q5352 (the initial quotation) for $26,400 for the roofing works. The quotation included reference to one drawing: 
•	DWG A371: Proposed Roof Plan – Colour Bond Metal Roof Sheeting including Flashings and Cappings (approx 132 m²)
•	DWG A371: Proposed Roof Plan – Box Gutters including All Rain Heads and Downpipes (approx 30 m)
22	On 18 December 2019, Harris emailed Obsidian accepting the contract price, and informed Obsidian that its engagement was subject to a Scope of Work being signed by Obsidian and returned to Harris. 
23	On 10 January 2020, Harris emailed Obsidian a summary of the terms of the proposed sub-contract, and a 3 page document headed “Sub-Contract – Roofing” (the Scope of Works). 
24	In its email, Harris informed Obsidian that the Sub-Contract would be released to Obsidian on it signing and returning the Scope of Works. The email listed 17 items with which Obsidian had to comply. The email referred Obsidian to the documents sent to Obsidian at the tender stage stated to be available for viewing on site or at Harris’ office. The email requested Obsidian to review the construction plans and specifications and advise of any changes immediately. 
25	The Scope of Works included amongst other things, the supply and installation of Colourbond roof sheeting, box gutters, rain heads and flashing. All works were to be carried out as per the project documentation for the Monash Medical Centre. Obsidian was to carry out the roofing works as per the project documents, the Australian Standards and the Building Code of Australia. Occupational Health and Safety work was to be carried out in accordance with the contract documentation, relevant Australian standards and Occupational Health and Safety Acts and Regulations.
26	Obsidian was required to sign and return the Scope of Works, within 24 hours. (In fact, the same Scope of Works was signed separately by Obsidian on 5 February and attached to the signed Sub-Contract dated 5 February 2020).
27	On 24 January 2020, Harris sent Obsidian an email attaching a revised layout for the roofing works for the box gutter and sump. Two days later, Obsidian emailed Harris its second quotation (Q6840 for $550 which included a variation  for two additional stainless-steel sumps).  Harris accepted the quote.
28	Obsidian commenced works at the Monash Health AIC on 28 January 2020. The works did not continue for long.
29	On the afternoon of 5 February 2020, Harris finally sent Obsidian  Sub-Contract Agreement No 7023/1 for the “roofing trade package works”. The email (sent by Ms Draper, Harris’ Contract Administrator) requested immediate return to ensure that there were no payment delays.
30	Obsidian wasted no time. It signed, dated, and emailed the Sub-Contract back to Harris that evening. 
31	In the meantime, on that same afternoon of 5 February 2020, Harris emailed Obsidian on a different issue. Harris’ Mr Bailey emailed Obsidian’s director Dr Shao and directed him to attend a meeting on site the next morning at 9.30am. The purpose of the meeting was to deal with issues concerning completion of the works and non-compliance with occupational health and safety issues. (There had been various concerns raised by Harris prior to this, about problems with Obsidian’s work.) 
32	The day after the Sub-Contract was entered into on the morning of 6 February 2020, Obsidian attended a site meeting with Harris to discuss the state of the works, completion of works and safety issues. After the meeting the Obsidian workers left the site in order to address various safety issues raised by Harris at their site meeting. 
33	Afterwards, Dr Shao returned with his team of workers to Obsidian’s office. He arranged a safety meeting for his workers where he discussed the safety issues raised by Harris at their meeting on the site earlier that day. Following the meeting with his workers, Dr Shao produced signed minutes of the Obsidian safety meeting which listed the various safety issues which he had addressed with his workers. Later that day he emailed those signed minutes to Harris.
34	The next morning, on 7 February 2020, Mr Bailey telephoned Dr Shao and informed him that Harris intended to terminate its contract with Obsidian. Around lunch time, Harris sent Obsidian an email terminating the Sub-Contract. The email stated that termination was effective immediately because of Obsidian’s breaches of the Sub-Contract.  The email did not set out details of Obsidian’s breaches.
35	After receiving the notice of termination, Obsidian did not return to work on the site. On 25 February 2020 Obsidian sent Harris its tax invoice for $22,000 based on completing what it stated to be 81.63% of the roofing works. This invoice remains unpaid.
36	I turn now to the issues.
WHAT COMPRISED THE CONTRACT?
37	Obsidian and Harris disagreed as to what comprised the contract between them. Both agreed that they were bound by the Sub-Contract Agreement which Harris had emailed Obsidian on 5 February 2020, and Obsidian had signed and emailed back that same day (Sub-Contract) 
38	Harris submitted that the Sub-Contract Agreement (which included a Scope of Works dated 5 February 2020 which had originally been sent to Obsidian on 10 January 2020) was the contract binding the parties.
39	Obsidian submitted (somewhat confusingly) that although it was bound by the Sub-Contract, two earlier quotations took precedence. This seemed to be put on the basis that Harris had agreed to the Obsidian quotations before Obsidian started work on site in late January 2020 (and before Obsidian signed the Sub–Contract.)
40	These two quotes were:
•	Obsidian’s initial quotation Q5352 for $26,440
•	Obsidian’s second quotation Q6840 for $550.
41	I find that the contract between the parties is the Sub-Contract, which they both agree they are bound by. The Sub-Contract incorporates:
•	the tender documents for the roofing works package issued for the construction of the Monash Health AIC;
•	the Scope of Works for the roofing works for the Monash Health AIC, sent by email to Obsidian on 10 January 2020 and later signed by Obsidian on 5 February 2020;
•	the project documentation issued for the Monash Health AIC including drawings, plans and specifications; 
•	relevant Australian Standards and the Building Code of Australia relating to roofing requirements;
•	the head contract documentation and relevant Australian Standards and Occupational Health & Safety Acts and Regulations relating to Occupational Health and Safety matters; 
•	the Obsidian roofing – health safety and environment management plan dated January 2017; and 
•	the Obsidian Safe Work Method Statement.
42	I am satisfied that this Sub-Contract (which they both agree binds them) superseded the earlier Obsidian quotations and correspondence. 
43	The tender documents issued by Harris in 2019 for the construction of the Monash Health AIC amounted to an invitation to treat parties who wished to tender for the works. By issuing the tender documents, Harris invited Obsidian to make an offer to Harris for the roofing works. 
44	Obsidian issued its initial quotation in response to the tender documents; this quote therefore must be seen as an offer based on the tender documents issued by Harris. I reject Obsidian’s submission that the Obsidian quotation stands on its own, and that the only drawing that Obsidian was to follow was drawing A371- Proposed Roof Plan listed in the quotation. Obsidian’s quotation Q5352 cannot stand on its own, as it would have no meaning without looking beyond it. This can be seen from the roofing drawings which were included in the tender bundle.
45	I am satisfied that drawing A371 – Proposed Roof Plan- includes, by reference, the other drawings relevant to the proposed roofing works. That drawing is  part of the architectural tender drawings prepared by ATC Architects. No roofing details are provided on this drawing. However the legends on the drawing refer to other drawings. They relevantly provide: 
ROOF LEGEND 
AE.0- access and safety refer to material code list 
RS.0 roof sheets, refer to material code list
ROOF NOTES
refer to material code list and architectural specification for access and safety equipment specification
Refer to hydraulic engineer’s DWGs & 700 series DWGs
46	Clearly, Drawing A371 must be read in conjunction with the other drawings in the tender bundle of drawings that relate to the roof works which include:
•	hydraulic engineers drawings as referenced in drawing A371
•	 the A700 series drawings
•	A702 – wall sections and details sheet 3 - parapet/gutter section- 22/A450
•	A450/22 – general building section - parapet/gutter section – in general building section
•	A450 – colour bond metal deck roofing – Kliplock 700 or equivalent – colour bond flashing
47	Harris responded, with its email of 18 December 2019, which states in the subject header:  “Monash AIC: roofing works LOI.” I accept that “LOI” stands for “letter of intent”. As detailed above, the email states that Obsidian’s engagement was subject to a Scope of Works (to be sent shortly) being signed by Obsidian and returned to Harris. 
48	Obsidian then carried out the roofing works at the Monash site in accordance with the Scope of Works sent to it on 10 January 2020.
49	Each of Harris’s emails sent to Obsidian that raised safety issues referred to “7023 - Monash Health Adult Infusion Centre” and “7023” was the number stated on the Sub-Contract.
50	I am satisfied that Harris brought to Obsidian’s attention the fact that the terms of the contract between the parties would be reflected in a sub-contract agreement to be released to Obsidian, and that that sub-contract agreement comprises the Sub-Contract dated 5 February 2020.
Is harris liable to pay for the work done?
51	Obsidian issued a tax invoice dated 25 February 2020 to Harris for $22,000 for 81.63% of the roofing work that it carried out at the Monash Health AIC before Harris terminated its Sub-Contract. Harris has not paid Obsidian for any of its works.
52	Harris accepts that Obsidian has carried out the roofing works. However, Harris denies that it is liable to pay Obsidian for these works because it claims that the works are defective. 
53	I find that Obsidian has carried out roofing works at the Monash Health AIC and that Harris is liable to pay Obsidian for these works as invoiced by Obsidian on 25 February 2020, less the costs to Harris to rectify the defects, which I will allow as a “set off” and which I set out below.
DID HARRIS WRONGFULLY TERMINATE THE CONTRACT? 
54	Obsidian claims that Harris wrongfully terminated the Sub-Contract (on 7 February 2020) because: 
(a)	Harris terminated the Sub-Contract for safety breaches which occurred before the Sub-Contract was entered into on 5 February 2020;
(b)	Harris did not specifically set out the alleged breaches in its notice of termination;
(c)	Harris did not follow the 3-step procedure set out in the Sub-Contract before terminating Obsidian’s services. This procedure comprised the giving of a warning, the re-induction of the sub-contractor, and removal from site.
55	Harris says it was entitled to terminate the Sub-Contract as it did, and that it did so to ensure the safety of Obsidian’s workforce, and other workers on site. It says that Obsidian failed to comply with its own Safe Work Method Statement, the work place safety legislation and the Occupational Health & Safety Act. 
56	Harris says  that it gave Obsidian multiple safety warnings prior to terminating the Sub Contract. These warnings were set out in emails to Obsidian and on Harris’ online safety portal – the “HammerTech” portal. 
57	Harris says regardless of its warnings, the safety breaches continued to occur. Harris says Obsidian’s safety breaches were of such concern that it had no option but to terminate the Sub Contract as it did on 7 February 2020.
58	Mr Conroy, Harris’ head site manager responsible for work at the Monash Health Centre, gave oral evidence at the hearing for Harris. I accepted his statutory declaration dated 25 March 2020, into evidence at the hearing, and I accept his oral evidence which was consistent with the documentary evidence. He gave evidence about the risk management process, the safety procedures, protocols and safety warning systems in place for the Monash project and Obsidian’s conduct on site. 
59	Mr Conroy said he had 25 years’ experience working in project management on large constructions. He said the Monash Medical Centre project was a high-risk project where they had to work around large numbers of the public coming and going from the Monash Health Centre and that they had to follow Monash’s safety rules, that all contractors were required to have a safety specific manual of safety rules and a risk management process in place. He said Harris accepted Obsidian’s safety manuals and its Safe Work Method Statement which were uploaded onto Harris’ HammerTech online portal.
60	He said the HammerTech online portal was a safety warning system where Harris reported safety breaches and noncompliance issues. The HammerTech portal was at all times available for Obsidian to access on line.
61	Mr Conroy said he observed Obsidian workers failing to comply with their own safety manual, and Safe Work Method Statement while on site. He said they did not comply with safety procedures that had to be followed on site. He issued safety warning notices to Obsidian through the Harris HammerTech online portal and by email. He said these issues required action and resolution by Obsidian.
62	Mr Conroy gave evidence about various safety incidents and non-compliance issues which he logged on the HammerTech portal and which he raised with the Obsidian site representative at various times. Some of the safety breaches and noncompliance issues that he logged included the following.
63	Mr Conroy said that on 23 January 2020, Obsidian loaded materials at the main drop off area at the Monash Health Centre without Harris’ permission. He said the public area was for Monash patients and staff only and not to be used for deliveries. He said a process had to be followed before delivering materials which required approval from Harris and the prior booking of materials into the relevant loading bay. He said this was a major breach of the safety rules. 
64	Mr Conroy said that Harris sent an email to Obsidian on 23 January 2020 alerting Obsidian to the issue. The email listed the matter as critical. He logged this issue on the HammerTech safety portal. He included a photo of the safety issue. His report stated that this safety breach must not happen again and if it did, he would stop all works until a site meeting had taken place between Obsidian and Harris’ upper management.
65	Mr Conroy said he logged another safety incident on 29 January 2020 on the HammerTech online portal and emailed Obsidian. He noted the incident as critical because material had been left in the loading bay when materials were to be taken straight onto site. He said materials had been left in the main delivery dock for the entire hospital where there was high volume of traffic. He said this would affect the hospital’s operations along with creating a safety hazard. 
66	Mr Conroy said that on 1 February 2020 Obsidian incorrectly installed temporary downpipes which resulted in water seeping out onto the slab. He said this endangered nearby works and could have caused major damage to the Monash “Comms room” located below the site which serviced the entire Monash Medical Centre. 
67	Mr Conroy said he tried to contact Obsidian staff after he noticed the water leak but was unable to get a response from them. He immediately engaged the hydraulic plumbers on site who diverted the water and rectified the issue on the spot. He said he sent Obsidian an email on that day noting the incident as critical and noted the incident on the HammerTech online portal. 
68	Mr Conroy said that on or about 5 February 2020 Obsidian had carried out roofing works without the necessary roofing permits and Obsidian workers were on site without having had any induction training. 
69	Mr Conroy said he saw an Obsidian worker climbing the ladder to the roof. He stopped the worker and told him that he did not have a roofing permit in place. He said it became clear on speaking to the Obsidian worker that the worker had not completed his induction, had not signed the site register, and had no knowledge of the site Occupational Health and  Safety rules. 
70	Mr Conroy said he sent an email to Dr Shao on that day and reported this safety incident on the online HammerTech portal. Mr Conroy’s email referred to 3 safety issues. The first related to staff not signing out. The second related to works occurring that required a permit where no approved permit was in place. The third issue related to the need to secure a ladder and for it to extend 1m beyond the roof opening.
71	Mr Conroy said that prior to 6 February 2020, and on more than one occasion, an Obsidian worker had used an unsecured extension ladder on-site which extended above the roof opening. He said the roof opening was approximately 4m above the floor. Mr Conroy said he inspected the ladder which was not secured and did not meet the safety requirements. He said he raised this issue with Obsidian’s representative on site at the time and gave Obsidian every chance to rectify these issues. He later logged the issue on the HammerTech online portal after his site meeting with Obsidian on 6 February 2020. 
72	Dr Shao said although he understood about the ladder incident, this matter was not raised as a matter amounting to a breach of the safety rules until after the site meeting on 6 February 2020. 
The site meeting on 6 February 2020
73	On 6 February 2020 various representatives of Obsidian and Harris attended the site meeting which Mr Bailey had directed them to attend. Dr Shao, Mr De Witt, Mr Moussa and Mr Singh attended for Obsidian. Mr Bailey and Mr Conroy represented Harris. 
74	Mr Bailey said that the purpose of the meeting was to discuss the matters raised in his email dated 5 February 2020, and to see what Obsidian intended to do about rectifying various issues and completing its roofing work. They discussed various safety and non-compliance issues raised in the HammerTech online portal. He said no minutes were taken of the meeting.
75	Mr Bailey said Dr Shao did not see the issues raised by Harris at the meeting, as safety issues but more as administrative issues. He said he directed Obsidian to respond to these issues and Mr De Witt agreed to go back to Obsidian and arrange an internal meeting with the relevant Obsidian workers.
76	Mr Bailey said he told Dr Shao and Mr De Witt that he intended to discuss these issues with the Harris safety team after the site meeting. He said he did not discuss terminating the Sub-Contract at the site meeting. Nor did he fix a date for Obsidian to return to site. He intended to notify Obsidian once he had met with his managers.
77	Dr Shao and Mr De Witt broadly agreed with Mr Bailey’s evidence. Dr Shao said they discussed various safety issues and non-compliance issues at the site meeting. Dr Shao said they also discussed one of the design/construction drawings because a dispute that had arisen over the size and location of some of the downpipes.
78	Dr Shao said he discussed the problems with some of the drawings and informed Harris that some of the drawings lacked the necessary detail required for Obsidian to carry out its work. He said drawing H102 – Hydraulic Service- - Level 2 - sanitary plumbing and roof drainage layout, from LCI Consultants, Consulting Engineers, lacked clarity as to where the downpipes should go and the location of discharge points. 
79	Mr Bailey denied that there were problems with the drawings. He said the drawings were clear. He said Obsidian supplied smaller box gutters than required causing Harris to subsequently request the architect to make changes to the drawings to deal with the smaller box gutters. He said Harris raised the issues of the incorrect sized downpipes in emails to Obsidian. 
80	Mr De Witt said he agreed at the site meeting, to immediately arrange training for Obsidian’s workers and to provide evidence of this training to Harris. He said Obsidian intended to continue work on site and that Harris did not discuss Obsidian stopping its roofing work. 
81	Dr Shao said he agreed to conduct the necessary training as directed by Harris and agreed to wait to hear from Mr Bailey with his further directions after Mr Bailey consulted with his senior management. Dr Shao said that he was aware of the need to train Obsidian workers as a number of them were quite new. 
82	Dr Shao said he intended to reiterate and reinforce safety measures to his workers. However he said the fact that he agreed that further training was needed, was not to be taken as an admission that Obsidian had committed safety breaches in the past.
83	Dr Shao said that although he disagreed with some of the issues raised by Mr Bailey at the site meeting, he agreed to do whatever Harris wanted, to complete the roofing works. He had no expectation that Harris would terminate the Sub- Contract.
What happened after the site meeting on 6 February?
84	Dr Shao gave evidence that he returned to Obsidian after the site meeting. He immediately arranged for his workers to attend a meeting to address the safety issues and non-compliance issues raised by Harris at their meeting so as to ensure that his workers would comply with safety issues in the future. 
85	Dr Shao said he discussed with his workers a number of safety issues. They included the need for all workers to be inducted before working, workers signing in and out each day, roof access permits being obtained before going onto the roof and the permits being closed off after completion. Dr Shao said his workers were informed that extension ladders were to be tied off at the top, secured at the bottom and to extend 1m above the roof opening.
86	Dr Shao said that the Obsidian workers then signed minutes of the meeting which they attended and he sent the signed minutes to Harris later that day. He said Obsidian did not have a scheduled time to go back to site. He said he was waiting for Harris to come back to him. He expected Harris to come back within a couple of days.
87	Mr Bailey gave evidence that when he left the site meeting with Obsidian, he spoke first with his operations manager and then with Mr Conroy’s manager. He said they discussed what took place at the site meeting with Obsidian that morning. Mr Bailey said they also discussed Obsidian’s conduct during the project and the various safety breaches and non-compliance issues which Mr Conroy reported on the HammerTech online portal. 
88	Mr Bailey said they reviewed the contract terms and discussed their options. He said the discussions centred around the seriousness of the breaches of the safety issues, the ongoing risk to Harris and the possibility of further injury or death arising from Obsidian’s conduct. Mr Bailey said his managers told him that allowing Obsidian to continue working on site posed too great a risk to Harris and the project. 
89	Mr Bailey said his managers directed him to immediately terminate the Sub- Contract with Obsidian which he did.  

The termination
90	Mr Bailey’s termination email, sent on 7 October 2020, stated, relevantly:
Further to our site meeting and discussions, we advise that your subcontract agreement number 7023/1 will be terminated effective immediately based on failing to adhere to the following contract clauses:
Clause 3: Acts, By-laws, etc failure to comply with relevant statutes, by laws and regulations; including site safety rules
Clause 8 (a) Termination and take out: default by the subcontractor in the performance or observance of any provisions of the sub-contract
Clause 13: Making Good: works on site were left in an unsatisfactory state with necessary steps not taken to prevent damage to other works
There will need to be arrangements made to complete the works by others, as per clause 11 of the subcontract, the costs to complete the works will be finalised and deducted from the final account.
91	Harris submitted that it legally terminated the Sub-Contract because Obsidian failed to comply with its own Safe Work Method Statement and Health Safety and Environment Plan and the Scope of Works. Harris submitted that Obsidian failed to take notice of, or act on the multiple warnings that Harris gave it by email and through the HammerTech safety on line portal. 
92	Further Harris submitted that Obsidian had also breached the following sections of the Occupational Health and Safety Act 2004:
•	Section 21: which sets out the duty of an employer to provide and maintain plant that is safe. He said Obsidian failed to secure its ladders on a number of occasions;
•	Section 25 (i)(b) which sets out the duties of employees to take reasonable care for health and safety of persons who may be affected by the employee’s acts. He said Obsidian’s conduct comprised leaving materials in certain locations without permission, not having the necessary roofing permits in place and having workers on site who had not been inducted;
•	Section 31: which set out the requirements for installing or erecting or commissioning plant.
93	Mr Bailey said that in the end, Obsidian’s conduct left Harris with no option but to terminate Obsidian’s engagement on the Monash AIC project. 
94	Mr Bailey submitted that Obsidian’s breaches of the safety rules and regulations entitled Harris to terminate the Sub-Contract with immediate effect. Mr Bailey submitted that clause 8(a) of the Sub-Contract allowed Harris to terminate the Sub-Contract if Obsidian defaulted under the Sub-Contract.
95	Clause 8 relevantly provides:
TERMINATION AND TAKE OUT: Upon or at any time after the happening of the following events-
(a)	Default by the Sub-Contractor in the performance or observance of any of the provisions of this Sub-Contract on his part to be performed or observed;
Any notice given hereunder shall be sufficiently served by emailing …the same to the Sub-Contractor…  .and shall be deemed to be effective and to have been received by the Sub-Contractor at the time of.. delivery to the Sub- Contractor.
96	I find that Harris, by sending its notice of termination by email on 7 February 2020, wrongfully terminated the Sub-Contract. I am satisfied that Harris did not follow the procedure for termination set out in the Sub-Contract and the Scope of Works for the following reasons.
97	I accept that Obsidian breached various safety requirements whilst working on site at the Monash AIC, as documented in the HammerTech online portal. The parties then attended the onsite meeting on 6 February 2020 to discuss Obsidian’s conduct and deal with its safety breaches and non-compliance issues. The purpose of the meeting was to address Obsidian’s plan for dealing with the safety breaches and completing the works. 
98	Mr Bailey’s email dated 7 February 2020 referred to clauses 3, 8(a) and 13 of the Sub-Contract without any explanation of, nor reference to, Obsidian’s breaches. Mr Bailey’s email did not identify Obsidian’s conduct which caused Harris to terminate the Sub-Contract. Nor did his email refer to breaches of safety legislation, regulations, or to breaches of Obsidian’s Safe Work Method Statement or any of its safety procedures and protocols. 
99	The Sub-Contract provides for suspension of the works (clause 18). Harris did not formally invoke his process. The Sub-Contract provides for a dispute resolution process (clause 19) which Harris did not follow. Clause 19 provides for written notice to be given by either party of a dispute. The notice must identify and provide details of the dispute. The parties must endeavour to resolve their dispute within 14 days and if the dispute is not resolved within 28 days the matter is to be referred to expert determination.
100	I have found that Obsidian accepted the Scope of Works sent to it on 10 January 2020. I accept Dr Shao’s evidence that the Scope of Works referred to site safety standards which required a 3-step process. First, a warning, second, a re-induction and third removal from site. Mr Bailey’s email did not refer to this 3-step process. Nor did Mr Bailey explain whether Harris had followed this process before terminating the Sub-Contract Agreement.
101	I accept that Harris gave Obsidian a warning via the HammerTech online portal and via email. I also accept that at the site meeting on 6 February 2020, Mr Bailey directed Dr Shao and Mr DeWitt to carry out safety training and induction as well as re-induction. I also accept that Dr Shao and Mr De Witt returned to Obsidian and carried out training as directed. 
102	However I find that Harris did not give Obsidian any formal notice setting out its reasons for terminating the Sub-Contract. At the site meeting on 6 February 2020, Harris directed Obsidian to carry out formal induction and safety training, which Obsidian subsequently carried out on that day. In my view Harris did not have a basis for terminating the Sub-Contract without giving adequate reasons or, as in this case, any reason at all for terminating on the basis of Obsidian’s conduct. 
103	I accept that Mr Bailey did not discuss with Obsidian, suspension or termination of the works at the site meeting on 6 February 2020. In fact there was no evidence to suggest that Harris intended to terminate the Sub-Contract Agreement on 7 February 2020. I find that Mr Bailey’s evidence was to the contrary. He raised the safety incidents with Obsidian which had occurred between about 21 January and 5 February 2020. He directed Obsidian to work through the safety issues and report back to him. 
104	Mr Bailey submitted that Harris followed the terms of the Sub-Contract Agreement in terminating Obsidian’s services. However, Mr Bailey did not address the 3-step safety warning process set out in the Scope of Works. 
105	I am satisfied that Harris’ 3-step safety warning process formed part of the terms of the Sub-Contract Agreement. It was included in the Scope of Works sent to Obsidian on 10 January 2020. The Scope of Works was attached to the Sub-Contract Agreement dated 5 February 2020. I am satisfied that the 3-step process required Harris to address the safety process put forward by Obsidian in its minutes of meeting dated 6 February 2020. On the evidence before me I find that Harris did not do so. 
106	I find that senior management at Harris directed Mr Bailey to terminate the Sub-Contract and that he did so without giving a reasonable explanation to Obsidian. There is no evidence as to what breaches Harris relied on, when terminating under clause 8(a) as all of the breaches reported in the HammerTech online portal had already occurred and were discussed and worked through at the site meeting on 6 February 2020. 
107	Nowhere in Mr Bailey’s email did he identify the conduct of Obsidian entitling Harris to terminate the Sub-Contract with immediate effect.
is obsidian entitled to loss of profits?
108	As the Sub-Contract was wrongfully terminated Obsidian is entitled to claim damages for loss of profits. At the end of the hearing Obsidian reduced its claim to $3,771.20. For the reasons that follow I will not allow any amount. 
109	Harris denies Obsidian’s claim for loss of profits. It says that Obsidian did not carry out the roofing works as required by the Sub-Contract.
110	Obsidian framed its claim for loss of profits in the following way. Dr Shao submitted that Obsidian had one further day of work to complete on 6 February 2020. He submitted that if Obsidian had been allowed to complete the roofing project on 6 February 2020, it would have incurred following labour costs for its 3 employees:
(a)	Rajdeep Singh: 8 hours x $26.44 per hour x 1.25 (loading full time employee) totalling $264.40
(b)	Stephen Yu: 8 hours x $26.44 per hour x 1.25 (loading full time employee) totalling $264.40; and
(c)	Michael Moussa: 8 hours x $25 per hour (casual) totalling $200.
111	Dr Shao submitted that Obsidian purchased items from Design Sheet Metal on 7 February 2020. Those invoices totalled $917.06. Dr Shao also produced two invoices from Bunnings for materials to be used on 6 February 2022 to complete the roofing works. The Bunnings invoices totalled $167.64.
112	Dr Shao submitted that Obsidian’s expected loss of profits for its remaining work was the outstanding contract price, less the materials purchased and the anticipated labour costs.
113	Obsidian bears the onus of proving its claim for loss of profits. I find that Obsidian has not proved its claim for the following reasons.
114	Obsidian calculated its claim for loss of profits as follows. Dr Shao said that Obsidian that he started with $4,000 which he said was the outstanding amount still to be invoiced for works to be completed. He deducted the anticipated labour costs of 3 employees who were to complete the works on 6 February 2020. He also deducted Obsidian’s expenses for materials purchased and to be used on the final day of work. 
115	Obsidian did not provide any evidence of its costs and expenses relating to its entire roofing works carried out at the Monash Health AIC under the Sub-Contract. It did not give evidence of the gross profit that it would have made on completing the project, nor its total expenses incurred on the project. In short, it did not provide evidence of its net profit which it would have made on its roofing works carried out on the Monash Health AIC project. 
116	As I am not satisfied that Obsidian has proved its claim I therefore dismiss Obsidian’s claim for loss of profits.
WERE OBSIDIAN’S ROOFING WORKS DEFECTIVE AND IF YES, WHAT WERE THE COSTS TO RECTIFY?
117	Harris claims that Obsidian’s roofing works were defective. 
118	In February 2020 Harris engaged Siciliano Bros Pty Ltd trading as Consolidated Plumbing, to assess Obsidian’s works. Mr Pat Siciliano inspected and assessed Obsidian’s roofing works. On 1 March 2020 Consolidated Plumbing sent a letter to Harris setting out Mr Siciliano’s assessment of Obsidian’ work and listing the alleged roofing works.
119	Between late February and mid-April 2020 Consolidated Plumbing carried out rectification works and completed the roofing works. Consolidated Plumbing sent Harris invoices dated 5 March, 25 March and 25 April 2020 for its works. 
120	On 25 March 2020 Consolidated Plumbing sent Harris a further letter stating what it had found to be wrong with Obsidian’s works. It listed the rectification works it carried out and its work done to complete the works.
121	At the hearing Harris relied on the two letters from Consolidated Plumbing. dated 1 and 25 March 2020 and its tax invoices in support of its claim that Obsidian’s works were defective. Harris produced a statutory declaration from a person named Dom Siciliano, (from Consolidated Plumbing) dated 25 March 2020, which attached the letters from Consolidated Plumbing. 
122	Harris did not call anyone from Consolidated Plumbing to give evidence at the hearing about the works that Consolidated Plumbing carried out for Harris at the Monash Health AIC.
123	Rather, Harris engaged Mr Barry Tanner of Melbourne Building and Waterproofing Consultants Pty Ltd to produce an expert report and Mr Matthew Yanez of PBS Plumbing Design Solution, to produce a memo of advice about Obsidian’s work and to give evidence at the hearing for Harris about Obsidian’s defective works.
124	Neither Mr Tanner nor Mr Yanez inspected Obsidian’s works. Mr Tanner prepared a report dated 23 November 2020. Mr Yanez prepared a memo to Harris dated 22 April 2021. Both the report and the memo post-dated the rectification works carried out by Consolidated Plumbing. 
125	Mr Tanner and Mr Yanez assessed Obsidian’s work from a review of Consolidated Plumbing’s letters to Harris dated 1 March and 25 March 2020 and a series of documents which Harris gave them. 
126	Mr Tanner and Mr Yanez based their opinions on relevant Australian Standards, the Building Code of Australia and other material referred to in their respective report and memo. They did not provide evidence on quantum. Harris relied on invoices issued by Consolidated Plumbing for its works in support of its estimate of costs to rectify the defective roofing works.
127	On 11 March 2021 the Tribunal adjourned the hearing. Expert evidence had not been given at that stage. At the end of the initial hearing the Tribunal adjourned the hearing to 10 May 2021.
128	The Tribunal ordered Harris to file and serve expert reports from Consolidated Plumbing and Ridge Plumbing setting out the basis on which they claimed Obsidian’s works were defective. The orders required the experts to refer to the relevant Australian Standards, codes and/or Guide to Standards and Tolerances. Harris was ordered to so by 23 April 2021.
129	Harris did not file any reports from Consolidated Plumbing and Ridge Plumbing. 
130	Obsidian did not file any expert reports on liability or quantum. Nor did Obsidian call any experts to give evidence on its behalf. Dr Shao gave evidence and cross-examined Harris’ experts. I accept that Dr Shao has a PHD in physics, however he is not an independent expert. He is the director of Obsidian, the applicant and a party to this proceeding. 
131	The expert evidence from Harris was problematic and no expert evidence was filed or given by Obsidian at the hearing. 
132	At the hearing Dr Shao submitted that Mr Tanner was not a licensed roof plumber and was not allowed to conduct roofing works and did not have the expertise to give an expert opinion on roofing works. 
133	I do not accept Dr Shao’s submission for the following reasons. Mr Tanner included his CV in his report. His CV set out his experience in the building industry dating back to 1968. He stated that he had over 50 years of experience in the building and construction industry, including 25 years’ experience in the waterproofing industry. He had been Managing Director of his own building and waterproofing company. I am satisfied that Mr Tanner is an expert in building and waterproofing industry. 
134	Dr Shao submitted that Mr Yanez did not have the necessary qualifications to give expert evidence on roofing matters. Having heard from Mr Yanez, I do not accept Dr Shao’s submissions for the following reasons. 
135	Mr Yanez said that he had trained as a plumber and gas fitter in New Zealand and that his qualifications included roofing and guttering. He said he completed a Bachelor of Construction and Hydraulic Design and was a registered practitioner in hydraulic services covering roofing, sanitary water and gas supply in Victoria, Queensland and Tasmania. He said was involved in drafting design codes. He used the South Australian code SA HB 39- installation code for metal roof and wall cladding and provided design advice pursuant to AS3500. He said he owned and operated a plumbing design service business .
136	I accept that Mr Yanez has not provided an expert report in accordance with the Tribunal’s Practice Note 2: Expert Evidence. However, I am satisfied that Mr Yanez is an expert in the field of the design of plumbing and roofing works and is able to give expert evidence in this proceeding.
137	Harris gave limited evidence on the costs to rectify the defects. Harris submitted that it has paid Consolidated Plumbing over $47,000 to rectify and complete the defects. I accept this submission. However, Harris has not issued a counterclaim and does seek to set off the additional costs it has paid Consolidated Plumbing to complete the roofing works.
138	Harris says the costs that it has paid Consolidated Plumbing to rectify the defective roofing works amounts to $30,378.96. It has set out the following breakdown of the costs in its Payment Schedule dated 12 March 2020 (Payment Schedule). It says the amount of $30,378.96 comprises:
1	131 m² of colourbond roof sheeting incorrectly installed: $13,009.61;
2	131 m² of medium density foil insulation and safety mesh incorrectly installed: $7,480.10;
3	35.27 m² of RS – 02 colourbond flashing incorrectly installed and not folded up: $2,325.82;
4	30.88 m² of RS – 03 stainless steel box gutters and gutter boards non-compliant installation: $6,364.31;
5	Capping not completed: $710.69;
6	Sump non-compliant and incomplete: $306.08;
7	Rain head installation not completed; $82.43;
8	Plumbing certificate of compliance not provided: $100.
139	Items 7 and 8 above relate to items of incomplete work. They do not relate to defective works. Harris is only entitled to claim the costs of rectifying the defective works. I will not allow these 2 items.
140	Harris and Obsidian made submissions about costs paid by Harris as set out in the Payment Schedule. Harris claims that the costs set out in its Payment Schedule comprised amounts it paid to Consolidated Plumbing to rectify the works. Harris claims that it prepared its costings after engaging Consolidated Plumbing to conduct an inspection and carry out exploratory works to ascertain the status of the works and to identify what was required to rectify and complete the works.
141	Consolidated Plumbing’s invoices set out the dates on which Consolidated Plumbing carried out roofing works. They include labour costs, the number of workers who carried out the works, and materials. Their hourly labour rates ranged from $105 to $148 per hour and included supervision.
142	Harris included a breakdown of its costs estimates in its defence and its submissions. However Harris did not give oral evidence at the hearing about how it came up with these amounts. 
143	Consolidated Plumbing’s invoices did not allocate its labour costs to specific work which it did. Nor did Consolidated Plumbing’s invoices separately identify the costs to rectify the defective work as against the costs to complete the works. 
144	Prior to adjourning the hearing on 11 March 2021, the Tribunal made orders for Harris to provide reports from Ridge Plumbing and Consolidated Plumbing in relation to the defective works. As I have stated, Harris did not file any reports as ordered. 
145	The evidence before me on the costs to rectify the defects was far from satisfactory. Mr Bailey, Harris’ Project Manager at the relevant time, gave evidence at the initial hearing on 11 and 12 March 2021. I accept Mr Bailey’s evidence that Harris paid Consolidated Plumbing to rectify and complete the works. Mr Bailey did not give evidence about the costs to rectify.
146	When the hearing resumed, over a year later, on 16 June 2022, Mr Bailey did not appear to give evidence nor represent Harris. Mr B Harris, Harris’ Operations Manager, represented Harris at the adjourned hearing. Mr Harris did not give direct evidence on the costs to rectify. Rather, he made submissions at the hearing.
147	At the hearing, Harris did not give direct oral evidence about how it calculated the costs to rectify the defects when the invoices issued by Consolidated Plumbing did not distinguish between the costs to rectify and the costs to complete the works. I have assessed the costs to rectify on Consolidated Plumbing’s invoices and the pleadings and submissions.
148	I now deal with the items of alleged defective roofing works.
Item 1 The roof sheeting 
149	Harris claims that the roof sheets were installed without weather folds and that the roof sheets were too long and sat too far into the box gutter (approximately 300 to 400 mm into the box gutter).
150	Harris relied on Consolidated Plumbing’s assessment (as made by their Mr Siciliano). Consolidated Plumbing stated that the roof sheets installed were not folded at the top end of the sheet and Obsidian did not use the correct tooling to bend the sheet to the required angle set out in the manufacturer’s specifications. 
151	Additionally Consolidated Plumbing noted that the sheets were set too far into the box gutter. Consolidated Plumbing stated that some of sheets did not have any fault on high side (approximately 10) and had a silicone bead installed to act as the stop end. 
152	Harris also relied on Mr Tanner and Mr Yanez’s evidence. Mr Tanner referred to Lysaght’s manufacturer’s instructions in his report. At the hearing it was agreed by the parties that Obsidian had installed a Metlock roofing product and not a Lysaght product. Obsidian did not provide expert evidence in response to Harris’ expert evidence. 
153	I find that the roof sheets which Obsidian installed were defective. 
154	Clause 5.3.2 (f) of relevant Australian Standard SAHB 39: 2015 deals with overhang of gutters. Clause 5.3.2 (f) relevantly provides:
Overhang:  Roof coverings discharging into a gutter to overhang the back of gutters by 50 mm and to have the trays turned down 20 mm at 45°. 
Note: roof coverings discharging into the gutter should not overhang the gutter so as to make maintenance of the gutter impracticable.
155	I accept the evidence of Mr Yanez that the roof sheets were defective because they were placed too far into the gutter, extending beyond 50mm into the gutter, and did not comply with the relevant Standard. 
156	In cross-examination Mr Yanez conceded that the roof sheets could be cut and folded to the correct length after installation. He agreed that this could be done by detaching the sheet from the roof, then cutting and folding it and reinstalling the sheet onto the roof. 
157	However, Mr Yanez said that in his opinion, Dr Shao’s suggested method was not the correct method of installing roof sheets. He said the correct method was to cut the roof sheets to the right length before installing them. He said the roof sheets will have to be removed to rectify the defect. I accept his evidence.
158	I also accept Consolidated Plumbing’s findings that the roof sheets were not folded at the top end of each sheet, that they were not folded using the correct tooling to the required angle and that the sheets were too long and set too far into the box gutter. I accept that the roof sheets had to be removed so they could be correctly cut and refolded as required. I accept that the roof sheets were not installed in accordance with the National Construction Code all the relevant Australian standards.
159	I accept that Obsidian installed a Metlock product for the roofing. Dr Shao conceded that Obsidian’s roofing did not comply with the angle of the fold set out in the Metlock guidelines however he said that the roofing could be modified to meet the guidelines. On the basis of Dr Shao’s evidence I am not satisfied that Obsidian installed the Metlock roofing with the required angle of the folds.
160	I reject Dr Shao’s evidence that Obsidian’s work was incomplete and therefore not defective. I accept that the roof sheets could be cut to the right length after installation. However, I prefer the evidence of Mr Tanner and Mr Yanez, to that of Dr Shao. In Mr Tanner and Mr Yanez’s opinion, the correct method of installation was to cut the roof sheets before, and not after they were installed. 
161	I accept Harris’ submissions that the rectification works required the removal of the roof sheets in order to turn them 180° to allow for the sealed machine edge to sit over the box gutter. 
162	Harris submitted that the cost to rectify the defective roof sheets amounted to $13,009.61. Harris based its costing on works carried out by Consolidated Plumbing and it invoices issued to Harris. 
163	Harris relied on Consolidated Plumbing’s assessment of the works done by Mr Siciliano of Consolidated Plumbing. The rectification works stated involved removing the roof sheeting, cutting and folding the roof sheeting as required, and reinstalling the roof sheeting which Consolidated Plumbing was able to reuse. Harris based its estimate of costs on Consolidated Plumbing’s labour and material costs set out in its invoices.
164	Harris submitted that the rectification works involved:
(a)	removing the roof sheets and then turning, trimming, folding and reinstating the roof sheets; the work of 2 tradesmen for 4.5 days at $105 per hour, amounting to $7560 plus GST;
(b)	supervision of those works for 4.5 days at $135 per hour totalling $4,860 plus GST; and 
(c)	fixing and adhesives totalling $589.61 plus GST.
165	Obsidian disputed Harris’ costing. Dr Shao submitted that Harris did not provide any evidence that the works had been carried out to rectify the defects. Dr Shao also submitted that no details were provided as to the quantity of works required to rectify the alleged defects. 
166	I have accepted the opinion of Mr Siciliano of Consolidated Plumbing, Mr Tanner and Mr Yanez that the roofing works were defective. No expert evidence was given by Obsidian to contradict their evidence.
167	 I accept that the rectification works comprised the work set out by Consolidated Plumbing, Mr Tanner and Mr Yanez. I also accept that Harris has provided an estimate of the costs of these works. However, Harris has not explained the basis for allocating 4 ½ days for these works. On the other hand Obsidian did not give evidence in response to Harris’ claim. Rather it made submissions which are not supported by the evidence.
168	I reject Dr Shao submission that the Tribunal should not allow any estimate of costs to Harris to rectify the defective works for the following reasons. I have accepted Harris’ evidence that Consolidated Plumbing assessed and investigated Obsidian’s works. I am satisfied that Harris has paid Consolidated Plumbing over $47,000 to rectify and complete the works. 
169	I am satisfied that Harris has provided an estimate of the time and hourly labour costs to carry out the works. Harris used Consolidated Plumbing’s costings set out in its invoices. However no evidence was given by Harris as to why the hours that it claimed for the supervision of workers, were equal to the number of hours that it claimed for the actual workers carrying out the rectification works. 
170	Harris claimed for labour involved in carrying out of the rectification work and for the supervision of that work. Harris’ claimed the same number of hours for carrying out the work and for the supervision of that work. Harris’ claim is not reflected in, and is inconsistent with, the proportion of hours which Consolidated Plumbing allocated in its invoices, for the actual work as against the supervision of that work. This can be seen from Consolidated Plumbing’s invoices.
171	Consolidated Plumbing’s invoice dated 5 March 2020 sets out the work it carried out between 14 February and 5 March 2020. The labour cost totals $27,168 (115 hours x 2 to 3 tradesmen). The supervision costs and the costs of the initial investigation carried out by Mr Siciliano totals $4,050 (30 hours).
172	Consolidated Plumbing’s invoice dated 25 March 2020 sets out the work it carried out between 6 March and 25 March 2020. It labour costs totals $16,438 (67 hours x 1 to 3 tradesmen) and Mr Siciliano’s costs of supervision (14 hours) total $1,890.
173	Consolidated Plumbing’s invoice dated 25 April 2020, sets out the work it carried out between 25 March and 14 April 2020. It includes labour costs of $2,310 (22 hours x 1 tradesman) and supervision costs by Mr Siciliano amounting to $405 (3 hours).
174	Finally, I accept that an amount should be allocated to fixing and adhesives but I am not satisfied that there is evidence to support Harris’ costings. 
175	On the evidence before me I will allow Harris’ costs for labour for carrying out the rectification works of $7,560 plus GST. I will allow supervision costs of $810 (6 hours x $135 per hour) plus GST and I will allow fixing and adhesives of $300 plus GST. I will allow a total of $9,537.
Item 2 The downpipes 
176	Harris claims that Obsidian incorrectly installed downpipes which were 100 mm in diameter when it was required to install downpipes of 150 mm in diameter. Harris claims that Obsidian did not comply with drawing H102 prepared by LCI, Lehr Consultants International (Australia) Pty Ltd, Consulting Engineers. Drawing H102 was titled – Hydraulic Services – LEVEL 2 SANITARY PLUMBING AND ROOF DRAINAGE LAYOUT.
177	Mr Conroy said the downpipes were to be 150 mm in diameter as noted in drawing H102 and that Obsidian was required to follow the drawings. He said he raised this issue with Dr Shao in his email dated 5 February 2020 and explained that he could only find a reference to 150 mm pipes. He requested Dr Shao to provide evidence as to the basis on which 100 mm pipes were to be used. Mr Bailey’ evidence was consistent with Mr Conroy’s.
178	Dr Shao gave evidence that the down pipes were not clearly set out in the original drawing H102. He said it was difficult to tell which downpipes should go where and what Obsidian was to follow. He said it was unclear as to what the drawing meant and where the discharge points were located. 
179	Dr Shao gave evidence that on 24 January 2020 Mr Bailey sent him an email attaching a copy of marked up drawing A371- headed “Monash Infusion Centre – RFI 40” with hand written mark ups on the drawing. He said the drawing included hand written mark ups which noted 100mm downpipes in specific locations. 
180	Mr Bailey agreed that he sent an email to Dr Shao but disagreed with Dr Shao’s evidence about the required diameter of the downpipes. He said the markups related to downpipes in a different area. He said Obsidian had supplied smaller box gutters than what was specified in the drawings and that the correct sized downpipe was that stated in drawing H102. 
181	Dr Shao said that the site meeting with Harris on 6 February 2020, he disputed the need to change the size of the downpipes but agreed to do so for the sake of completing the project as requested by Harris. Mr Conroy said he did not recall Dr Shao agreeing to change the size of the downpipes at the meeting.
182	I find that the downpipes which Obsidian installed did not comply with drawing H102. I accept the evidence of Mr Conroy and Mr Bailey that drawing H102 specified the size of the downpipes as 150mm in diameter. I accept Mr Conroy’s evidence that downpipes in marked up drawing A371 - headed “Monash Infusion Centre – RFI 40” were marked as 100mm in order to deal with the issue of Obsidian supplying gutters that were smaller than those stated in the drawings. 
183	I am not persuaded by Dr Shao’s evidence that the downpipes referred to in marked up drawing A371 - headed “Monash Infusion Centre – RFI 40” related to the same downpipes in the same location as those referred to in drawing H102. 
184	Nor am I persuaded by Dr Shao’s evidence that the fact that he was unclear as to what the drawing meant and where the downpipes were to be located, removed Obsidian’s obligation to clarify the scope of works and install what was required. 
185	I find that the downpipes as installed did not comply with drawing H102. I am satisfied that the obligation lay with Obsidian to clarify any issues, such as the size of and location of the respective downpipes, before continuing with the installation of the downpipes. 
186	Harris says it was required to remove the downpipes and that Consolidated Plumbing installed the correct sized downpipes. Harris did not provide any separate costing for the downpipes so I am unable to make any award for the costs to rectify the downpipes.
Item 3 - Insulation not installed between box gutter and box gutter board
187	Harris claims that Obsidian failed to install 25 mm thick polyurethane insulation between the box gutter and the gutter board. Harris says NTC Architectural Drawing A702  – Wall Sections and Details - Sheet 3 - Section Detail 22/A450 - Parapet/Gutter - required the insulation to be installed. It says Harris failed to comply with the drawings. Obsidian denies Harris’ claim. 
188	Harris relied on Consolidated Plumbing’s assessment carried out by Mr Siciliano. Consolidated Plumbing stated that Obsidian did not follow the plans and specifications for insulation and that no insulation was installed under the box gutter in accordance with the drawings. Rectification works required the roof sheets and gutter to be removed and the gutter insulation to be installed and the gutter refitted.
189	Dr Shao admitted that the architectural drawings required insulation to be installed under the roof and between the box gutter and the gutter board. However Dr Shao maintained that the installation of the insulation was not part of Obsidian’s works.
190	Dr Shao admitted in cross-examination that Obsidian had installed the insulation under the roof because Mr Conroy asked Obsidian to install it. Dr Shao said Obsidian did not install insulation between the box gutter and the box gutter support because Mr Conroy did not ask him to install it. He said Mr Conroy instructed Obsidian to continue with its work and install the box gutters. 
191	Dr Shao said Obsidian did not charge Harris for installing the insulation under the roof and that it often did work without charging or issuing a variation. He said insulation work was generally done by an insulation contractor.
192	Dr Shao submitted that Obsidian did not install the insulation because it was outside its Scope of Works. Dr Shao submitted that as drawing A702 was not listed in Obsidian’s original quotation Q5352, it did not form part of the Scope of Works.
193	Dr Shao further submitted that the Scope of Works did not state that insulation was to be installed under the box gutter. Further, he submitted that the insulation was to be installed by a third-party insulation installer. 
194	Harris submitted that the insulation formed part of the box gutter system which Obsidian was required to install. Harris submitted that it would not allow a third party to install insulation as part of the works to be carried out by Obsidian.
195	I find that Obsidian was required to install the 25mm thick polyurethane insulation between the box gutter and the gutter board as required by Drawing A702. I make this finding for the following reasons.
196	I reject Dr Shao’s evidence and his submissions on this issue. Dr Shao did not produce any documentary evidence to support oral evidence or his submissions. In fact I found his evidence and submissions to be contrary to the documents. 
197	I have found that the Sub-Contract, including the Scope of Works, comprised the Agreement. I have rejected Dr Shao’s submission that Obsidian’s quotations took precedence over the Sub-Contract and Scope of Works and that Obsidian was only required to comply with Drawing A371.
198	The Scope of Works included the following works:
Supply and install box gutters: all to be formed as per sizes required, includes all gutter support boards and insulation: as per project documents.
199	Clearly, insulation was included in the roofing works.
200	The project drawings for the Monash AIC included Drawing A371: Proposed Roof Plan. Drawing A371 lists the roof legends and roof notes. The roof notes include the “hydraulic engineer’s drawings and the 700 series drawings”. 
201	As I have stated earlier in my reasons that Drawing A371 must be read in conjunction with the other project drawings which formed part of the project documents that related to the roof works. These drawings include amongst others, the following:
•	hydraulic engineers drawings as referenced in drawing A371
•	 the A700 series drawings
•	A702 – wall sections and details sheet 3 - parapet/gutter section- detail 22/A450 
•	A702 – wall sections and details sheet 3 -Detail 19 Boundary West Wall – Head detail.
•	A450/22 – general building section -parapet/gutter section 
202	I have found that the installation of the insulation was included in the Scope of Works. Drawing A702 – wall sections and details sheet 3 -Detail 19 (Boundary West Wall – Head detail) states that metal deck roofing and insulation is to be “as specified.” Obsidian installed the insulation in the roofing as it was required to do. No evidence was given as to what was specified, beyond Dr Shao’s evidence that Mr Conroy directed Obsidian to install the insulation under the roof.
203	I find it implausible that a roofing contractor would install insulation in one part of the roofing works and not in another part, when insulation was required in both locations as specified in the drawings. I also find it implausible that the Sub-Contract can be read in such a way as to require Harris to engage a third party to install the insulation as part of the works being carried out by Obsidian. The Sub-Contract, the Scope of Works and the drawings speak for themselves. They do not support such a contention.
204	Dr Shao cross-examined Mr Conroy and did not raise this issue with Mr Conroy, nor seek his response to the evidence that was later given by Dr Shao. Dr Shao was obliged to inform Mr Conroy of the evidence that he intended to give so as to give Mr Conroy an opportunity to respond. Irrespective of what Mr Conroy may or may not have said to Obsidian, Obsidian had an obligation to comply with the drawings, including Drawing A702, in carrying out its roofing works. It did not do so.
205	I accept the evidence of Consolidated Plumbing and Harris’ experts that the roof sheets had to be removed to allow for the installation of insulation between the box gutter and the box gutter support. However I am not satisfied on the evidence before me that there is any basis for allowing costs to remove and reinstall the roof sheeting each day or for allowing the claimed costs of supervision for the reasons that I have already given.
206	Harris claims $1,124.41 plus GST for insulation materials and additional brackets. No evidence has been provided as how Harris has calculated this cost. I will accept an amount of $620 for polyurethane foam to be installed under the box gutter, as that is the amount allocated for the insulation in Consolidated Plumbing’s invoice dated 5 March 2020. No evidence has been given as to the  number of brackets needed, nor the cost of each bracket. I accept that some amount should be allocated. I will allow $200.
207	On the evidence before me I will allow labour to rectify the works at $6,720, supervision costs of $810 (6 hours at $135 per hour), $620 for the insulation  and $200 for other materials) plus GST. I will allow a total of $9,185.
Item 4 - Box Gutter Sump installation 
208	Harris claims that Obsidian incorrectly installed the sump from the box gutter. 
209	Harris relied on Consolidated Plumbing’s assessment (as made by their Mr Siciliano). Consolidated Plumbing stated that the sump from the box gutter as installed by Obsidian was non-compliant. Obsidian installed the sump from the box gutter “pop riveted” to the top of the gutter and had approximately 5 mm of silicon to hold it in place. This resulted in it holding water. Consolidated Plumbing stated that the proper practice was to retrofit the sump underneath the box gutter so that water freely drained. Consolidated Plumbing rectified these works.
210	 Mr Yanez referred to standard SA HB 39: 2015. Figure 5.7.2 Sump. Mr Yanez said that the box gutter sump had been installed from above, creating a raised lip that caused the gutters to hold water. He said the purpose of Figure 5.7.2 was to ensure that the sump was mounted to the upside so that there was no lip and the gutter did not hold water. 
211	Mr Yanez said the sump and gutter were two separate pieces that needed to be joined together. He said the joining of two pieces did not make them one piece. He said figure 5.7.2 clearly stated that the sump flange needed to be below the sole of the gutter. He said the box gutter sumps need to be removed and reinstalled. 
212	Dr Shao disagreed with Mr Yanez. Dr Shao submitted that no join was needed in figure 5.7.2. He said the joining of the sump to the gutter, resulted in there being a single piece rather than two items. Consequently, he said the sump was not above or below the gutter and figure 5.7.2 was of no relevance. 
213	I find that Obsidian’s work was defective. I find that Obsidian failed to join the sump and the box gutter as required by figure 5.7.2. 
214	There was no dispute that the box gutter and the sump were two separate items that needed to be joined. They were to be joined as set out in figure 5.7.2. Figure 5.7.2 speaks for itself. It states that the sump flange is to be below the sole of the gutter. 
215	I prefer Mr Yanez’s evidence to Dr Shao’s evidence for the following reasons. I accept Mr Yanez’s evidence that the fact that the sump and box gutter were joined did not make them one item. I accept that figure 5.7.2 was relevant and had to be followed.
216	I found Dr Shao’s submission to be non sensical. The fact that the two items ended up being joined cannot somehow result in the two items becoming one item. They remain two items that have been joined and they are to be joined in a specific way as set out in figure 5.7.2. 
217	Harris claims $6,364.31 for the rectification works. It says this amount makes up part of the costs to rectify the insulation. I have dealt with the estimated costing for the insulation.
218	I am not satisfied on the evidence before me that Harris has proved its entitlement to these costs, beyond what I have allowed for the rectification of the installation. 
219	Harris claims the cost of $306.08 to replace the sump. Harris based its estimates on the works identified and carried out by Consolidated Plumbing. Harris submitted that the works (as pleaded in its points of defence)  required the removal and refitting of the sump.
220	Dr Shao submitted that there was no evidence that the rectification works were carried out nor what work was required to rectify the defect. I reject Dr Shao’s submission which is inconsistent with the documentary evidence. I have found that this work was defective. I have found that the Consolidated Plumbing has carried out the rectification work and Harris has paid for the work, including labour and materials. 
221	Consolidated Plumbing’s invoice dated 5 March 2020 states that it has ordered materials to the value of $5,943. I accept that the cost of the sump is included in its costing. I will allow $306.08.
Item 5 - Roof gutter brackets
222	Harris claims that Obsidian installed roof gutter brackets at the incorrect junctions. Harris relied on Consolidated Plumbing’s assessment (as made by their Mr Siciliano). 
223	Consolidated Plumbing stated that the box gutter brackets had been spaced too far apart and needed additional brackets to comply with the VBA regulations. Consolidated Plumbing found that the gutter brackets were installed between 750 to 900 mm apart. And that good practice was to install the gutter brackets no more than 600 mm apart. Consolidated Plumbing removed and reinstalled the gutter brackets.
224	Mr Yanez said that the box gutter brackets were to be spaced, positioned and fastened – between stop-ends - at intervals not exceeding 750 mm for 300 mm and wider gutters as required by SA HB 39:2015 clause 5.3.4.2(d) and Figure 5.3.4. He said they were not. Obsidian did not provide expert evidence in response.
225	I accept Mr Yanez’s evidence that the gutter brackets did not comply with the relevant standard. I accept that the brackets should have been placed closer together than as installed by Obsidian. I find that Obsidian’s works were defective as the box gutter brackets did not comply with SA HB 39:2015 clause 5.3.4.2(d) and Figure 5.3.4. Mr Yanez’s evidence which was not contradicted by expert evidence from Obsidian. 
226	I find that the gutter brackets as installed were defective. 
227	Harris claims $6,364.31 for the costs to rectify the defects. It says that these costs should be included as part of the costs to rectify the insulation.  I have dealt with these costs under the item of insulation and I have allowed $9,185. I am not satisfied on the evidence before me that there is any basis for making a further award of costs.
Item 6 - Rivets
228	Harris claims that Obsidian installed aluminium rivets (instead of stainless-steel rivets) into the stainless-steel box gutter. Harris relied on Consolidated Plumbing’s assessment (as made by their Mr Siciliano). 
229	Consolidated Plumbing stated that incorrect pop rivets had been used on joints which need to be removed and reinstalled with stainless steel rivets. Mr Yanez gave evidence that he could see from the photos Harris gave him that the rivets used by Obsidian were zinc coated and not stainless-steel rivets. 
230	I am satisfied from Mr Siciliano’s assessment of the rivets that Obsidian did not use stainless steel rivets as required and that the rivets are defective. Harris has not provided any separate costings on this item and so I am unable to make any determination on the estimate of costs of this item.
Item 7 - Flashings
231	Harris claims that Obsidian did not install the flashings in accordance with Drawing A702 – Detail 19 (BOUNDARY WEST WALL HEAD DETAIL). Detail 19 required the flashing to be fitted and sealed into the structure of the adjoining building. 
232	Mr Tanner and Mr Yanez gave evidence that Obsidian had incorrectly installed the flashing and that the flashing did not comply with drawing A702. 
233	Dr Shao agreed with Mr Yanez that the apron flashing was incorrect. Dr Shao said that Obsidian got it wrong. He said Obsidian ordered apron flashing which was the incorrect shape and size and should have ordered what was noted in the drawing. However he said that the flashing could be modified and brought into line with the drawing. 
234	In cross examination Dr Shao said that before working with Mr Conroy Obsidian was using an apron flashing and a cap over the parapet. However he said that because of issues that arose, Obsidian modified the apron flashing and installed the K pressure flashing. 
235	Dr Shao admitted that Obsidian intended to put a cap over the top of the parapet but was unable to do so in this location. Dr Shao said that half of the flashing that Obsidian ordered was correct and that half was not. Dr Shao has admitted that the flashing was defective. 
236	I find that the flashing installed by Obsidian was defective. I make this finding accepting the evidence of Harris’ experts and the admission of Dr Shao that Obsidian purchased the wrong flashing and attempted to modify the flashing to comply with the project documents.
237	Harris estimated the costs to rectify Obsidian’s defective flashing at $2,325.82 which comprised: 
(a)	removal of flashing: (1 tradesmen for 8 hours at $105 per hour) plus GST;
(b)	existing flashing unable to be re-used.
238	Harris set out its estimates in its points of defence and submissions. Its estimates are calculated on the rectification works suggested by its experts which required the removal and replacement of the flashing. It says it has paid Consolidated Plumbing for this work. However it did not provide a detailed costing from Consolidated Plumbing for these works.
239	Obsidian did not provide expert evidence as to the cost to rectify the defective flashing. Obsidian disputed the amount claimed by Harris to rectify the defective flashing. Dr Shao submitted that there were only 6 linear metres out of 30 sheets which had not been folded up. It submitted that Harris had not justified its cost to rectify.
240	On the evidence I am satisfied that Harris has paid an amount to Consolidated Plumbing for the rectification works and is entitled to compensation for those works. 
241	I reject Dr Shao’s submission which was drafted before the hearing and which is not consistent with the documents. Further, the submissions are not consistent with Dr Shao’s admission which he made at the hearing. That was that part of the flashing Obsidian supplied, was not the correct flashing and did not comply with the plans and specifications. 
242	Harris has the onus of proving its costs to rectify the defects. I am not satisfied that Harris has explained the basis of its calculation. However I have found that Harris is entitled to costs to rectify and on the evidence before me I will allow an amount of $2,000 for labour and material costs. 
IS HARRIS ENTITLED TO A SET OFF?
243	Harris seeks to set off the amount of $30,378.96 which it says it has paid Consolidated Plumbing to rectify the roofing works, against any amount that the Tribunal finds Harris is liable to pay Obsidian for the work that it has done under the Sub-Contract. 
244	Obsidian issued a tax invoice dated 25 February 2020 for $22,000 for the roofing work that it said it did at the Monash Health AIC before Harris terminated its Sub-Contract.  Obsidian claims that it had carried out 81.63% of the roofing works at the time Harris terminated its Sub-Contract.
245	I have found that Harris is liable to pay Obsidian $22,000 for the roofing work that it did as claimed in its tax invoice dated 25 February 2020. I have dismissed Obsidian’s claim for loss of profits.
246	I have allowed a total of $21,028.08 as the costs to rectify Obsidian’s defective roofing works. I have done so having accepted that Harris has paid Consolidated Plumbing over $47,000 to rectify and complete the works. 
247	I find that Harris is entitled to “set off” the amount of $21,028.08 allowed for the costs to rectify the defects, against the amount of $22,000 that Harris is liable to pay Obsidian for its work done, as set out in Obsidian’s Tax Invoice dated 25 February 2020.
CONCLUSION
248	I find that taking into account the “set off”, Harris must pay Obsidian $972. I will make orders to that effect. 

MEMBER F MARKS