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Ultra Developments Pty Ltd v Nagle (Home Building) [2012]
NSWCTTT 518 (12 December 2012)
CONSUMER, TRADER AND TENANCY TRIBUNAL
Home Building Division
APPLICATION NO: HB 10/52785
APPLICANT: Ultra Developments Pty Ltd
RESPONDENTS: Robert Nagle and Kelly Nagle
APPLICATION NO: HB 11/28376
APPLICANTS: Robert Nagle and Kelly Nagle
RESPONDENT: Ultra Developments Pty Ltd
HEARINGS: 21 and 22 June 2012
APPLICATION: Claim for unpaid money under building
contract, damages for breach of contract and
damages for negligent mis-statement
APPEARANCES: For Robert and Kelly Nagle:
DA Lloyd of Counsel
Instructed by Whiteley Ironside and Shillington
For Ultra Developments Pty Ltd:
John Carpenter- Blackwell Short Lawyers
LEGISLATION: Home Building Act, 1989
KEYWORDS: Damages for breach of contract
Damages for negligent mis-statement
____________________________________________________________
Pursuant to Section 50 of the Consumer, Trader and Tenancy Tribunal
Act 2001, orders published on 12 December 2012 are amended on 5
February 2013 to read as follows:
ORDERS
1. I give leave for Darian Percy to be joined as a respondent in application
HB 11/28376.
2. Order that the claim against Ultra Developments Pty Ltd and Darian
Percy in application HB 11/28376 be dismissed.

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3. In application HB 10/52785, Order that Robert Nagle and Kelly Nagle
pay to Ultra Developments Pty Ltd the sum of $59,320.55, such sum
is to be paid immediately.
4. Order that any application for an order for costs is to be notified to the
Registrar within 28 days of the date of these reasons and to be
accompanied by any submissions and evidence in support of such an
application.
5. Order that the party against whom any application for costs is made
may file and serve submissions and any evidence in reply within a
further 28 days from order 4.
6. Within 7 days of order 5 the party claiming and order for costs is to
write to the Registrar and advise whether the application for costs can
be dealt with on the papers and, if not, request a hearing date for any
application (unless consent orders are filed).
REASONS FOR DECISION
Introduction
1. There are two applications for determination.
2. Firstly, Ultra Developments Pty Ltd (Ultra/Builder) commenced
proceedings HB10/52785 against Robert and Kelly Nagle (Nagles)
seeking recovery of unpaid monies under a contract to carry out home
building work.
3. Secondly, the Nagles commenced proceedings against the Builder
being application number HB 11/28376, in which the Nagles claim that
they have suffered loss and damage by reason of the negligent
misrepresentation of the Builder, in consequence of which the Nagles
contend that they have overcapitalised their property.
4. The disputes concern building work carried out to a residence at
Orange.
5. The owners, Mr and Mrs Nagle, entered into a contract with Ultra
Developments Pty Ltd, the director of which was Mr Darian Percy.
6. Ultra claims that it has not been paid all monies due under the contract
between the parties and is owed an amount agreed at $54,896.30.
7. This amount was set out in a reconciliation prepared by A Rendell &
Associates (Reconciliation) handed to the Tribunal at the hearing on 22
June 2012 which I initialled and placed with the papers.

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8. The Nagles say that they are not liable to Ultra for the work by reason
of negligent misstatements made by Ultra and/or Mr Percy about the
cost of the works to be performed. In short, the Nagles make a claim
for the loss occasioned by Ultra in carrying out building works, their
damage being the overcapitalisation of their property in consequence
of entering into the contract.
9. In regards to Mr Percy, an application was made at the hearing that he
be joined as a respondent to the Nagles’ claim application HB
11/28376. The basis of the claim is set out in these reasons and in
points of claim filed by the Nagles.
History
10. The Nagles wanted to renovate their premises and in late 2009
commenced the process of obtaining quotations to carry out various
works.
11. One of the companies providing a quotation was Ultra.
12. It is common ground that the parties entered into a Housing Industry
Association form of contract entitled New South Wales Residential
Building Contract for Renovations and Additions dated 18 March 2010.
13. It is the communications between the parties prior to the entry of the
contract and the terms of the representations said to be made which
the Nagles contend were negligent.
14. At the commencement of the hearing, the Nagles handed up points of
the claim which I signed and dated 21 June 2012.
15. In the points of claim, the Nagles made various assertions about the
conversations between the parties, including making claims in
negligence and claims under the Trade Practices Act/Fair Trading Act.
16. The claims under the Trade Practices Act and Fair Trading Act were
abandoned by the Nagles in their submissions (see paragraph 30 of
the submissions dated 10 July 2012).
17. The only issue for determination on the Nagles’ claim is whether or not
Ultra itself or by its director Mr Percy made negligent misstatements in
the manner contended and, if so, whether the Nagles are entitled to
pursue such a claim and recover the loss and damage alleged.
18. The representations which the Nagles assert Ultra is alleged to have
made are contained in paragraphs 2 and 9a of the points of claim. In
relation to paragraph 2, the Nagles say that the representation was in
the following terms:

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“Darian Percy advised the Nagles that he could perform the work for
$260,000 or less”.
19. In relation to the representation in paragraph 9a, it was in the following
terms:
“At the time of signing the contract, Darian Percy said to Kelly Nagle that he
had kept the provisional sums down so as to keep the contract price down to
$260,000 and that the price could be kept down to $260,000 through the
provisional sum”
20. The conversations relied upon as constituting the representations are
found in paragraphs 6, 9 and 11 of Mr Nagle’s statement dated 21
September 2011 and in paragraph 6 of Mrs Nagle’s statement dated 22
September 2011.
21. In relation to Mr Nagle’s affidavit, he says as follows:
“6. On a number of occasions in November and December 2009 I said to
Darien (sic) Percy words to the effect: ‘We can only spend $260,000
on this renovation. We are going to borrow $250,000 from the bank
and we have got $10,000 in savings that we can use so $260,000
has got to be it. If you can’t do it for that amount we will go with
someone else’. On each occasion that I would refer to the sum of
$260,000 Darien (sic) Percy would respond with words to the effect:
‘Yes, no worries, I know that $260,000 is your limit. I have a lot of
experience with working with people who have a budget. I will make
sure that you don’t have to spend any more than that. I am in the
business of making people happy
…
9. I continued to deal with Darien (sic) Percy through January and
February 2010 and at the same time I discussed the work with other
builders in the Orange district. It was not until March 2010 that myself
and Kelly agreed to proceed with Darien (sic) Percy performing the
renovations at our home. Through January, February and March
2010 I had further conversations with Darien (sic) Percy to the effect
that the limit of our budget for the job was $260,000 and on each
occasion Darien Percy acknowledged this figure and said words to
the effect: ‘Yes I know. I can do it for $260,000’. I estimate that
Darien Percy and I discussed the $260,000 figure on ten occasions
…
11. On a number of occasions from November 2009 to March 2010
Darien (sic) Percy said to me words to the effect ‘because you have
got your own transport business you will be able to keep the price of
the project down to under $260,000. I have a number of contacts in
Sydney and a contact in Rylstone for raw materials such as
tallowwood and sandstone and you guys can use your transport
company to deliver it and keep the costs down.”
22. In relation to the evidence of Mrs Nagle, paragraph 6 of her statement
says:
“6. At the same meeting we were shown a copy of a contract and we all
went through it together. I noticed there was a part of the contract
relating to provisional sums. I said to Darian Percy words to the

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effect: ‘what are these provisional sums all about? What does this
mean?’ He said words to the effect: ‘I have kept those down so we
can keep the price under $260,000. We will be able to keep it all
under $260,000 through the provisional sums because you guys will
be able to help using your transport business. You will be able to
deliver them and collect them and it will keep the costs down. The
provisional sums are there as provisionals so we can keep the price
down.’ I then observed Darian Percy to scratch out some sums on
page 48 of the document that is Annexure 1 to his statement dated
30 March 2011. He was using a black texta and the figures there
depicted of $9,000 and $12,000 are in his handwriting. He asked us
to initial these changes. These changes were made so the price
could come under $260,000. Darian Percy then said words to the
effect: ‘I have put these figures in (he referred to page 48 of the
document that is Annexure 1) as provisional sums so I can reduce
them. You guys have the ability to reduce them by using your
transport business and I can use my various contacts in the industry
to keep the prices down.’ He did not say anything about these prices
being estimates.”
23. At this point it should be noted that it is not asserted that that part of the
contract unrelated to provisional sums was exceeded. Rather, as the
reconciliation document prepared by A Rendell and Associates to
which I have referred above makes clear, the different prices charged
arose from variances in the provisional sum items between the amount
included in the contract and the actual cost of those items.
24. It is also relevant to note that the actual adjusted contract sum for work
done by the builder (including PC items and provisional allowances)
was less than $260,000.00. The adjusted contract price agreed
between the parties was $238,934.47. As the reconciliation shows, the
position is that some allowances for provisional sums were exceeded,
for example in relation to the stairs (see item 14 -B and 18-B) and the
timber floors (see item 14-J and 18-J), other items the prices were less
such as the JetMaster fire and flue (see item 14-I and 18-I) and some
work was not performed such as the joinery including kitchen (see item
14-P and 18-P).
25. The final matter to note in connection with the Reconciliation is that
adjustments and reductions are made to the adjusted contract sum to
allow for the cost to complete works and/or rectification of various
items, this amount being agreed at $4,374.34.
26. Accordingly, the adjusted contract sum less the cost to complete has
been agreed at $239,923.32 of which Ultra has been paid the sum of
$195,000.00 leaving an amount payable of $44,923.32 together with
interest of $9,972.98, a total of $54,896.30.
27. In relation to interest, pursuant to Clause 16 of the contract, interest
accrues at a rate of 15% per annum. The parties have agreed that up
until 12 April 2012, the amount of interest payable is $9,972.98. From
12 April until 21 April 2012 the parties have agreed that the amount of

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interest payable $1,295.86 and that from 21 June 2012 interest on the
unpaid sum amounts to $18.51 per day.
Nagles’ Claim for Negligent Misrepresentation
28. There is no dispute in the present proceedings that the Tribunal has
jurisdiction to hear this particular claim. In this regard the parties have
referred to the decision of Grygiel v Baine [2005] NSWCA 218.
29. Where the negligent misrepresentation alleged against Ultra is in
connection with promises made by Ultra as to the price payable for
building works, it seems to me that such a matter is a building claim
within the meaning of Section 48A of the Home Building Act 1989 as it
arises from the supply of goods and services whether or nor under a
contract.
30. There is a secondary issue which is whether or not the claim made
against Mr Percy is also a building claim. The claim against Mr Percy is
brought in accordance with the principles in Rexstraw v Johnston
[2003] NSWCA 287 which relates to the liability of a director for
corporate torts.
31. While the respondents deny any liability of Mr Percy, nonetheless they
accept that a claim against Mr Percy is a building claim within the
meaning of the Home Building Act by reason of the decision of Grygiel
(above).
32. I accept the claim against Mr Percy is a building claim as the claim
gives rise to a dispute concerning the nature of the supply of building
goods and services or the terms on which those services were to be
supplied: see Basten J at [62] in Grygiel.
33. However, the matter to be determined is whether or not such negligent
misstatements have been made in the circumstances of this case and
whether the claim for damages for overcapitalisation of the Nagles’
property can be maintained.
34. The Nagles’ submissions in connection with the claim for negligent
misstatement can be summarised as follows:
a) The Nagles have given unchallenged evidence as to
conversations with Mr Percy as to the representation alleged to
have been made. These conversations are set out above.
b) The Nagles were not challenged in cross-examination about
their version of the events nor was any suggestion made that
they were not telling the truth about what they contended Mr
Percy had said. It should be accepted by the Tribunal that the
Nagles said to Mr Percy on a number of occasions that they
could only spend $260,000.00 and that Mr Percy knew

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$260,000.00 was their limit and that he said he would make sure
the Nagles would not spend any more than that.
c) These conversations occurred on a number of occasions before
the contract was signed.
d) On the day the contract was signed, Mr Percy made a statement
to the effect that he had kept the provisional sums down so that
the price could be kept at $260,000.00.
e) Mr Percy had prepared a trade break-up of the estimate of costs
at $264,000.00 which had seen the provisional sums reduced by
$4,000.00 to keep the work to $260,000.00 in accordance with
the contract.
f) Mr Percy’s evidence that he had reduced the provisional sums
to meet the bank demands should be rejected as “preposterous”
- this statement being provided in cross-examination and not
once before mentioned in four detailed statements previously
provided.
g) A prediction as to price would constitute a negligent
misstatement if the person making the prediction either knew it
to be false or made it with reckless disregard for whether it was
true or false: Thompson v Mastertouch TV Service Pty Ltd (No.
3) (1977) 29 FLR 270.
h) All that was necessary to find liability was that the statement be
of such a character to engender in the Nagles reasonable
reliance.
i) The estimation provided by the quantity surveyor, Newton, in
July 2009 was provided without Newton being given the agreed
scope of works or detailed drawings or layouts.
j) There is no evidence that Percy told the Newtons about the
detailed conversations concerning price.
k) In these circumstances, by March 2010 Percy knew that the
estimation of provisional sums was a critical matter in relation to
the contract price of $260,000.00. The subject of the provisional
sums in the contract had been included as provisional sums so
as to allow the builder the ability to increase the amounts Ultra
and/or Percy were reckless in the statements made that the cost
of the works and the allowances for the provisional sums and
that these statements were made in breach of their duty to the
Nagles.
35. Consequently, the Nagles claim they are entitled to recover the sum of
$87,500.00 (being home owners claimed loss in paragraph 6 of the

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Home Owners Schedule of Damages headed up 21 June 2012) less an
amount of $40,000.00 by which the Nagles have reduced their claim so
as to avoid any issue in relation to the defence of betterment.
36. Alternatively, the Nagles contend that they have incurred an
expenditure of $40,000.00 in excess of the contract sum which the
Nagles say, but for the builder’s misrepresentation, they would not
have incurred.
37. The damages calculated are the difference in the present value of the
land and improvements on the property after the construction works,
being $622,500.00 and the value of the property prior to the building
works have been undertaken, namely $450,000.00.
38. In this regard the Nagles rely on an opinion of Staniforths providing
valuations of the property at various times.
Submissions of Ultra and Percy about Negligent Misrepresentation
39. In relation to the making of the representations, Ultra and Mr Percy say
that Mr Percy’s evidence should be accepted that he never stated he
could keep the price to $260,000.00 (respondent’s submissions
paragraph 11).
40. Further, the respondents make the following submissions:
a) by reason of the removal of various trades such as painting,
tiling etc., Ultra no longer had the opportunity to control or
supervise the cost of the sub-trades which became and remain
the responsibility of the Nagles.
b) a difference in some of the prime cost items arose by reason of
latent site conditions including the need to relocate sewer and
storm water, the existence of concrete under existing stairs
which was required to be removed and the need for
underpinning required by engineers so as to increase the costs
of concreting.
c) the provisional sum allowances were exceeded by reason of
additional work pursuant to instructions given by the Nagles.
These included changes to the stairs, plumbing, windows and
doors, electrical work, JetMaster fire and the timber floors and
heating/cooling ducting. The detail of these additional works is
set out in Item 16.1 - 16.7 of the respondent’s submission.
41. In relation to the alleged negligent misstatements, the respondents
made the following submissions:
a) The cases of Rexstraw etc. referred to in the Nagles
submissions are cases related to particular legislation and “none

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of these cases are particularly relevant to the facts of this
matter”.
b) the issue is whether or not the actions of Mr Percy could have
been said to be made in his own right as principal and that any
representations made by Mr Percy were made on behalf of Ultra
(respondents’ submissions paragraph 30.7 - 30.8)
c) Mr Percy’s evidence is that the budget of $260,000.00 was not
discussed until the week prior to signing the contract
d) The respondents accept that there were numerous discussions
regarding the project being on a tight budget but say there were
no specifications, scope of work or schedule of finishes in
relation to prime cost and provisional sum items, the cost of
which would depend on the Nagles choices in relation to the
scope of work and schedule of finishes.
e) Mr Percy denies ever saying that he could keep prices below
$260,000.00 by the Nagles using their own transport business
and “does not admit” that the builder discussed with the owners
that the provisional sums could be reduced by the owners using
their own transport business (submissions paragraph 36.6)
f) The respondents rely on the fact that Mrs Nagle concedes in
paragraph 3 of her witness statement date 22 September 2011
that Mr Percy did not specifically state at that meeting she
attended that he would keep the price to $260,000.00. In that
statement Mrs Nagle expresses her concerns about provisional
sums and that the documents provided stated they are “only
estimates”. Clearly the Nagles understood the nature of
provisional sums.
g) The Nagles were advised prior to the contract, both verbally and
in writing that prime cost items and provisional sums were
subject to rise and fall.
h) Items removed from the contract which were PC items or
provisional sums, being works separately carried out by the
owners were also exceeded.
i) The Nagles made PC and provisional sum selections
substantially exceeding the allowances in the contract.
j) After their “repudiation” of the contract, the Nagles continued to
spend substantial sums on finish items and fixtures never
contemplated by the contract price or provisional sum.

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k) Having regard to what occurred the evidence indicates that the
Nagles were not concerned about any budget or spending
beyond the amount of $260,000.00.
42. In relation to the submissions by the Nagles in relation to recklessness,
the respondents say such submissions are effectively an allegation of
fraudulent conduct to entice the Nagles to sign the contract.
43. However, the respondents then submits that:
a) as of February 2010 Ultra was still proposing a cost plus
contract, not a fixed price contract with provisional sum items
(respondents submissions paragraph 41);
b) after then, the Nagles had request a fixed price contract
however what was proposed by Ultra was a fixed price with
provisional allowances;
c) the Nagles had an opportunity of carefully considering the
costings provided by Ultra and testing them against quotations
they had received;
d) the plans had changed little and therefore there was no need to
refer them back to Newton for additional costing. Therefore the
failure to do so could not be considered reckless.
44. Therefore the respondents say any statements made were not reckless
and in any event changes were made in respect of provisional amounts
following signing the contract at the request of the Nagles.
45. In relation to the issue of damages/overcapitalisation, the respondents
made the following submissions:
a) Mrs Nagle in cross-examination said she expected her house to
be worth $800,000.00 after completion of the work. Mr Nagle
thought it would be worth $710,000.00.
b) Both indicated they had no immediate intention of selling their
house.
c) The Nagles had no appreciation of the fact that the value of their
home would not necessarily increase by the amount of money
spent under the building contract - they believed that spending
on the extensions would increase the market value by a sum
greater than the contract price.
d) This evidence indicates that they were not truly concerned about
the money spent on the extensions, believing that any money
spent would be reflected in the increased market value. Further,

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the evidence shows the Nagles were prepared to spend an
amount in excess of $260,000.00 and in fact did so.
e) The fact their house was only valued at the $622,500.00 (if the
Staniforth valuation is accepted), and may be overcapitalised is
not a loss for which Ultra can be held liable.
f) Further, by their actions and expenditure on prime cost items
and provisional allowances for work not carried out by the
builder, they have further overcapitalised their house which they
also did by requesting variations during the course of carrying
out the contract works.
g) The Nagles failed to mitigate their loss and damage by
restraining their spending on the works.
In relation to the expert evidence, from Staniforth, the respondents say:
a) the extent of overcapitalisation cannot be assessed due to the
inadequacy of the valuation evidence. The valuation of the
original house was done on 24 November 2011 to determine the
value of the building at 12 March 2010. Despite the assertion in
the report, Mr Staniforth could not have inspected the house on
12 March 2010, contrary to his statement made in the valuation
report that he did so.
b) Mr Staniforth did not adopt the Chairperson’s code of conduct at
the relevant time - his declaration being made seven months
subsequent to the service of his report and at the time the report
was repaired he had no understanding of his obligations.
c) at the time he performed his valuation to estimate the home’s
value as at 12 March 2010, Mr Staniforth did not have before
him details of the extent and cost of the actual work performed
by Ultra, the additional works either by variations to the contract
or by expenditure or PC items and furnishings installed by the
Nagles. While these works would have been completed at the
time of his inspection, no information as to the physical state of
the property would have been available to Mr Staniforth as to the
original, pre-construction, value.
Decision Regarding Negligent Misrepresentation Claim
46. A claim for negligent misrepresentation requires that the party to whom
the statement is made be in a special relationship with the maker of the
statement and that the maker of the statement knew or ought to have
known that the statement being made or the skill and competence
being provided in connection with the statement would be relied upon
by the recipient.

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47. For present purposes, it is unnecessary to set out the cases relating to
claims in negligent misstatement.
48. Reliance by the recipient of the statement must, in all the
circumstances, be reasonable: see San Sebastian Pty Ltd and another
v Minister Administering the Environmental Planning and Assessment
Act 1989 and Anr 89 ALR 161 at [169].
49. Finally, the nature of the representation that is made needs to be
considered in all the circumstances of what has occurred.
50. In the present case, the Nagles rely on the conversations found in
paragraphs 6, 9 and 11 of Mr Nagle’s statement dated 21 September
2011 and in paragraph 6 of Mrs Nagle’s statement dated 22 September
2011, the details of which are set out above.
51. In relation to paragraph 6 of Mr Nagle’s statement, the statements
alleged to constitute the representations were made in November and
December 2009. In relation to those in paragraph 9, the statement was
made in January and February 2010. In relation to paragraph 11, Mr
Nagle’s evidence is that these statements were made between
November 2009 and March 2010.
52. In relation to paragraph 6 of Mrs Nagle’s statement, this statement
appears to have been made on the day the contract was signed.
53. The essence of what constitutes the representations in these
conversations can be found in the words attributed by Mrs Nagle to Mr
Percy. Mrs Nagle says (in paragraph 6) that Mr Percy said:
“I have kept these down so we can keep the price under $260,000. We will be
able to keep it all under $260,000 through the provisional sums because you
guys will be able to keep using your transport business. You will be able to
deliver them and collect them and it will keep the cost down. These
provisional sums are there as provisionals so we can keep the price down.”:
And later in the same paragraph:
“I have put these figures in (he referred to page 48 of the document that is
annexure 1) as provisional sums so I can reduce them. You guys have the
ability to reduce them by using your transport business and I can use my
various contacts in the industry to keep the prices down.”
54. On the balance of probabilities, it seems to me that the conversations
set out by Mrs Nagle in paragraph 6 of her statement dated 22
September 2011 in fact took place.
55. Mrs Nagle goes on to say in her written statement that Mr Percy “did
not say anything about these prices being estimates”.
56. When cross-examined in relation to paragraph 6, Mrs Nagle did say
that Mr Percy advised her that she could buy provisional sum items at

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cheaper prices and transport them to the building site to keep the costs
down.
57. However, Mr Percy did not say the prices were fixed or that the cost of
individual items would not exceed the particular allowances made. The
Nagles do not assert otherwise.
58. The estimate for PC items and provisional sum amounts allowed for in
the contract were adjusted so as to reduce the price of the contract to
$260,000.00. The amount of the adjustments can be found on page 48
of the contract where Item 19 - Timber Floors and Item 25 - Joinery and
Kitchen have been reduced in amounts from $10,000.00 to $9,000.00
and $15,000.00 to $12,000.00 respectively.
59. When considered against the trade break-up information Mr Percy had
obtained, I am not satisfied that the alteration of these amounts or the
estimates otherwise made in the contract were unreasonable, let alone
recklessly made by Mr Percy.
60. However, the question is whether or not these reductions, when
considered in the context of the whole surrounding circumstances
support the view that a representation was made that the cost of the
works including PC items and provisional sum amounts would not
exceed $260,000.00, and if so was any reliance on that representation
reasonable.
61. It seems to me that such the representation alleged carries with it the
concept that regardless of:
e) the choice of PC items and provisional sum amounts which were
to be selected at the owners’ option; and
f) the circumstances encountered for particular work to which the
provisional sum items relate
the contract price of $260,000.00 (including PC items and
provisional sum amounts) would not be exceeded.
62. There are a number of matters which count against the conclusion that
representations in such categorical terms were made by Ultra and/or
Mr Percy.
63. Firstly, the Nagles, or at least Mrs Nagle, were at all times aware that
provisional sums were estimates only. She had a conversation with Mr
Percy to this effect: see paragraph 2 of her statement dated 22
September 2011.
64. Secondly, Mr Percy sent to the Nagles an email dated 3 March 2010
(shortly before the contract was signed) in the following terms:

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“Basically I can do a contract with all brickwork, carpentry, roofing,
waterproofing and Ultra overheads, preliminaries, supervision etc. included
with only the items on the list attached subject to rise or fall. If they decrease
they (sic) difference will be refunded, if they increase the difference will be
payable (plus margin only on the extra over the allowance).
The cost of this contract is $227,011 incl GST” (see annexure 5 of Mr Percy’s
statement dated 30 March 2011).
65. In his statement dated 21 September 2011, Mr Nagle acknowledged
that he had received this email (Mr Nagle’s affidavit paragraph 14),
although Mr Nagle also says in paragraph 14 that “apart from this email
I do not recall Darian Percy any providing any warning about
provisional cost items increasing and the only discussions I had about
this issue were to the effect that the prices would be kept down.”
66. This conversation, that “the prices would be kept down”, is to the same
effect as Mrs Nagle says took place.
67. However, “keeping the prices down” is a matter entirely different from
the prices not, in any circumstances, being exceeded.
68. Thirdly, the alleged representations are contrary to the terms of the
contract which is clear and unambiguous. The contract was signed by
both Mr and Mrs Nagle and contains the following provisions:
a) Clause 21 provides for adjustment of prime cost items and
provisional sum items (also, see warning on page 1 of 48)
b) Each of the prime cost items and provisional sum items are to
be adjusted to the actual price, and the contract price will be
adjusted accordingly (see Clause 21.6 and 21.7 - pages 21 and
22 of 48 of the contract).
c) Prime cost items were to be selected by the Nagles (Clause
21.1)
d) There is a warning not to sign the contract unless the Nagles
had read and understood the contract (page 11 of 48). While the
boxes are not ticked, the page has been initialled.
There is no evidence that the contract as a whole or the particular
pages to which I have referred were not read and understood by the
Nagles. I infer from their signature at the bottom of each page that this
occurred and the terms were accepted without disagreement. Further,
having regard to the concerns expressed by the Nagles and their
passed experience, it seems improbable that they did not understand
what the contract said, including that PC items and provisional
allowances were to be adjusted based on the cost as provided in the
contract.

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69. Therefore I do not accept that representations were made in
categorical terms that under no circumstances would the total amount
for prime cost items and provisional sum items allowed in the contract
be exceeded. The conversations alleged to constitute the
representations were not so expressed and when put in the context of
what the parties knew and what occurred up to the time of the contract
they could not reasonably be construed in this manner. The mere fact
the Nagles want to keep the price down and have a conversation with
the builder who expresses an intention to try and do so is not sufficient
to elevate such a conversation to effectively a promise that the price of
$260,000.00 would not be exceeded in any circumstance. Much more
would be required to establish an actionable wrong.
70. The unlikely nature of this contention is further demonstrated by
examining the trade break-up document which was tendered at the
hearing and became part of Annexure 5 to the statement of Mr Percy
dated 30 March 2011.
71. In that document, timber floors to the rumpus room were shown as a
provisional item of $4,300.00. Item 19 in the form of contract became
“Timber floors complete - $9,000” (a reduction of the originally listed
price of $10,000.00 in the draft annexure at page 48) in the terms set
out.
72. Items such as joinery including kitchen and appliances were not
completed on the trade break-up sheet although an allowance for this
item was included in the draft contract (item 25) at $15,000.00 and
subsequently reduced to $12,000.00 as shown on the annexure).
73. There is no evidence to suggest that between when the date when the
email of 3 March 2010 (Annexure 5 to Mr Percy’s statement) and the
PC and provisional sum attachment were sent and the date the
contract was signed, namely 18 March 2010, that the exact nature and
extent of the works to be completed as provisional sum items were
known nor had appliances, fitments or finishes been selected or
otherwise detailed.
74. The Nagles accept that conversations at this time occurred to the effect
that there may be the possibility of savings to be achieved by reason of
purchasing and/or transport opportunities, presumably because
selections were to be made in the future that may affect the price.
75. Once it is recognised that individual items and finishes were still to be
selected it seems to me inevitable that the price is uncertain- certainly
not fixed.
76. Similarly, in carrying out the works where provisional sum allowances
were provided, problems might be experience which altered the scope
of the works and increased the cost. Again, this possibility was in the

16. 16
contemplation of the Nagles who recognised these amounts were also
“estimates”.
77. An example of extra work that was in fact required concerned the
decision not to pull up the tiles and to lay the timber floor on particle
boards rather than removing the tiles. In cross-examination Mr Nagle
conceded that there may be an extra cost which he did not think about
associated with this change of work. In cross-examination, Mrs Nagle
gave evidence to the same effect.
78. The relevance of these issues, which occurred after contract, is to
show that the works, when executed, may change in their nature or
scope and, insofar as there were provisional allowances referrable to
these items of work, those amounts would necessarily change having
regard to the contractual provisions about how the price payable for
these items is to be determined.
79. Once it is accepted that individual prices might change and that the
change might be an increase or a decrease, in order to succeed in their
claim, the Nagles would need to show that the representation made by
the builder was that the net effect of any adjustments to the PC sum
items would not lead under any circumstances to an increase above
$87,500.00.
80. None of the evidence suggests that a statement to this effect was ever
made by the builder.
81. Rather, the evidence points to the builder communicating with the
Nagles that, if the PC items and provisional sum amounts are managed
appropriately, the contract works can be completed for the sum of
$260,000.00. However no representation was made to the effect that
the amount of $260,000.00 would not be exceeded.
82. In these circumstances the Nagles have failed to establish the
representation in the terms alleged nor that the statements made by
Ultra misrepresented the situation as to the cost of the works or that the
Nagles may be liable to the builder:
a) for PC Items and provisional allowances in an amount
exceeding $87,500.00; or
b) for more than $260,000.00 in total.
83. Further, in the circumstances of this case and having signed a contract
to the contrary effect, it would be unreasonable for the Nagles to rely
on the statements said to constitute the representations (assuming they
were to the effect alleged in the points of claim) because the works the
price payable under the contract for PC Items and provisional
allowances was subject to change by reason of selections made by the
Nagles and the works actually required. Matters such as site conditions

17. 17
and directions given when the works were performed would also affect
the price payable. Lastly, the items were known to be estimates – that
is the amounts payable were not fixed nor was the actual work required
at the time of contract known.
84. There is another problem with the claim by the Nagles. The total sum of
$260,000.00 was not in fact exceeded. The agreed adjusted contract
sum is $244,297.66. Regardless of the reasons for additions and
deletions from the contract work, once removed from the builder’s
contract, the overall price of the works is no longer in the control of the
builder and not something for which it can be blamed.
85. As to the claim against Mr Percy, I am not satisfied that any statements
made by Mr Percy could be categorised as “reckless”.
86. The nature of the discussions that occurred was about providing for
estimates of PC items and provisional sum items to be included in the
contract. The Nagles, in their pleading, accept that the amounts
provided for PC items and provisional sum items were not fixed or
exact amounts, but rather were subject to adjustment. The points of
claim assert that they were “estimates”.
87. The Nagles’ points of claim assert that the price could vary and be less
than the sums provided.
88. The evidence does not establish that Mr Percy knew the provisional
sum items would be, in any event, exceeded. As indicated above, the
nature of the PC items and provisional sum allowances, means it is
almost inevitable that the actual cost would vary to the amounts
allowed. Whether or not the price for individual items would be more or
less could not be known until selections were made and the works on
site for which allowance was made were completed. No evidence
suggests Ultra or Mr Percy agreed to accept the risk for price variances
under the contract.
89. Further, while the Nagles point to actual variances in individual prices,
it seems to me that, having regard to the particular items identified in
the schedule in paragraph 27 of the Nagles’ submissions that the
differences are not so extreme in any particular case to lead to the
conclusion that the original estimation process and information
provided to the Nagles was provided in circumstances of recklessness.
While it may be true that the cumulative effect of differences, relative to
the PC and provisional sum allowances may be a significant amount,
nonetheless in my opinion this fact is not sufficient to establish the
Nagles’ claim in this regard.
90. Even if I am wrong in relation to the conclusions that there was no
relevant representation made and/ or that any reliance upon such
representation was unreasonable, there are a series of further
problems in the Nagles’ claim.

18. 18
91. Firstly, they assert that their damages relate to “overcapitalisation” of
their house.
92. The effect of their oral evidence is that each of Mr and Mrs Nagle
expected that after carrying out of construction work their house would
be worth more than the original value of the premises plus the contract
sum of $260,000.00.
93. At no time was any representation made by Ultra of a type which would
result in an award of damages for the difference in value arising from
overcapitalisation.
94. The nature of an award for damages in negligence is one of restitution.
Such a claim is not measured by awarding expectation damages. In
essence, the Nagles determine their loss by claiming that their house,
after carrying out $300,000.00 worth of building works, should have
been worth $750,000.00. By reason of it only being valued at
$622,500.00, they claim to have suffered a loss of $127,500.00.
95. From this, the Nagles then deduct a further $40,000.00, being the
amount spent on renovations of $300,000.00, less the original contract
sum of $260,000.00, in order to make an adjustment to avoid the
respondent’s betterment argument (see paragraph 31 of the Nagles’
submissions).
96. It seems to me illogical that a builder who negligently misrepresented
that the price of the contract works would not exceed $260,000.00 is
liable for damages of $127,500.00 as outlined above. If the building
works had in fact been completed for $260,000.00 (instead of
$300,000) the value of the house would still have been $622,500.00
although the total “capitalised” sum would have been $710,000.00
(being $450,000.00 plus $260,000.00).
97. In relation to the alternative claim of $40,000.00, there is no evidence
sufficient to support an award for this amount.
98. Further, any award for restitutionary damages would require that the
value of the building works actually completed be taken into account.
The Nagles are not entitled to retain the benefit of the value of the
works actually performed without allowance for this benefit. There is no
evidence before the Tribunal in order to assess the actual value of the
works performed.
99. It is conceded by the Nagles that the amount of $300,000.00 “may
include some items of work which the Nagles decided at a later time to
do that were not the subject of the contract”.

19. 19
100. Therefore, the comparison of the $300,000.00 to the alleged
represented maximum price of $260,000.00 provides no basis for a
restitutionary award for damages.
101. There is a final reason why the claim in relation to damages would
otherwise fail. That reason relates to the valuation by Staniforth of the
value of the house prior to any construction work being carried out.
102. There is no evidence provided by the Staniforth report which would
justify a conclusion that the author of the report had before him at the
time of forming his opinion any material that would allow him to assess
the state or value of the building in March 2010. The Staniforth
valuation is an unsubstantiated assertion.
103. Unlike the valuation carried out after the works were complete, no
inspections had been carried out and no assessment of the state of the
house at 2010 was made by the valuer. Aside from comparative sales,
an examination of these matters and the then physical state would be
critical to determining the 2010 value. In my opinion, the evidence does
not disclose a proper process having been undertaken in order to
substantiate the valuation opinions therein expressed.
104. In these circumstances, the Nagles have not discharged their
obligations to prove the amount of any loss or damage suffered.
105. Having regard to the above conclusions, the claim by the Nagles is
dismissed.
Nagles’ Submissions in relation to Builder’s Claim
106. In relation to the builder’s claim, as indicated above the amount of that
claim is agreed.
107. However the Nagles say that Ultra had not in fact completed all works
under the contract and therefore was not then due the balance of the
contract sum. In this regard, the Nagles say they were entitled to
terminate the contract, Ultra having admitted there was defective work
and in circumstances where there was no evidence provided by the
builder that he had in fact performed the value of the last progress
claim, the builder has failed to make out its entitlement for the balance
of the contract sum.
Ultra’s Submissions in relation to Ultra’s Contract Claim
108. The builder’s position is that it is not bound by any negotiations in
connection with its attempt to resolve the final claim of $23,317.00. The
builder says that negotiations in connection with the final claim do not
prevent it from recovering the whole of the balance of the contract sum
outstanding.

20. 20
109. Further, the respondent says that it never admitted there were defects.
While there is an allowance for incomplete or alleged defects, these
amounts are small having regard to the matters set out in the Dillon
report.
110. The respondents also say that the fact the roof was not built in
accordance with the plan was by agreement between the parties - the
respondents refer to an email being Annexure 12 to Mr Percy’s
statement dated 30 March 2011 which records the proposed
modification to the roof being constructed “only over the addition area
with a apron flashing/gutter around where the existing roof meets the
new wall”. In any event, in responding to paragraph 41 of the Nagles
submissions (which relates to the roof) the respondents say that no
complaint was made about this matter by Mr Dillon in his report.
Decision on Contract
111. There is a dispute concerning whether the contract was properly
terminated by the owner under Clause 33 or whether the actions by the
owner in seeking to terminate the contract constitute a repudiation of
the contract by the Nagles which was accepted by Ultra.
112. The entitlement to terminate the contract under Clause 33 arises where
there is a “substantial breach” by the builder. Substantial breaches are
not defined.
113. The contract may be ended 10 working days after notice is given if “the
breach is not remedied”.
114. The evidence about what occurred after the notice had been given is
somewhat unclear. However, it would appear that after notice was
given the builder in fact returned to site or at least attempted to return
to site.
115. The Nagles, by their solicitor, served their notice pursuant to Clause
33.3 of the agreement dated 29 October 2010 (tab 21 to Mr Percy’s
statement dated 30 March 2011).
116. The basis for the issue of the notice was as follows:
a) Failure to perform works in a proper and workmanlike manner in
breach of the warranty in Clause 31(a) of the contract, in
particular by reason of problems with a sliding door, the need to
reinstall windows which were leaking, the need to properly line
the alfresco area and the need to remove and replace a back
sliding door;
b) Failure to carry out works in accordance with Clause 2.1 of the
contract in that the roof line was not constructed in accordance
with the contract and needs to be rebuilt;

21. 21
c) Failure to properly estimate provisional sums as required by
Clause 21.5;
d) Failure to complete the contract within the stipulated 20 week
period; and
e) The builder has demonstrated an intention not to be bound by
the contract and has failed or neglected to complete the works
and demanded money.
117. By letter dated 11 November 2010, Ultra advised the solicitors for the
Nagles that they had been told by Mr Nagle not to return to site
however they offered to continue working and noted that they had had
tradesmen attending the site but had been delayed, including by
reason of the Nagles refusing to take calls, return calls or respond to
emails which was hindering completion of the works (Percy’s statement
tab 29).
118. By notice dated 15 November 2010, the Nagles served a notice
pursuant to Clause 33.4 stating that “the contract is now at an end”
(Percy’s statement tab 30). Thereafter, Ultra served its own notice
treating the actions of the Nagles as repudiation, accepting the
repudiation and terminating the contract (Percy’s statement tab 31).
119. Some of the grounds under in the notice, such as the breach of clause
26.5, are not made out. However it seems to me that it is unnecessary
for present purposes to resolve the issue of whether the termination
was valid.
120. This is because if the agreement has been properly terminated by the
Nagles in accordance with the contract, the unpaid balance of the
contract price must be brought to account between the parties (Clause
36.4 of the contract).
121. Alternatively, if the contract has been repudiated by the owner, the
builder is entitled to claim damages unless the provisions of Clause
35.1 apply in which case there is an election of remedies available
pursuant to Clause 35.1.
122. In the present case, no claim is made by the Nagles relating to
adjustments that should be made pursuant to Clause 36.4. Rather, the
Tribunal was informed of an agreed position concerning the net amount
unpaid to Ultra after allowance for costs to complete/rectification and
other matters set out above.
123. Either way, the entitlement of the builder is the same, namely the
builder is entitled to be paid the unpaid balance of the contract price,
after allowance for incomplete or defective works not carried out.

22. 22
Claim by the Builder for Unpaid Fees
124. On day two of the hearing, the Nagles withdrew the tender of the Dillon
reports. At this time, Ultra also withdrew the tender of the Rendell
report. The Tribunal was advised that there was an agreement
concerning defects within the scope of works in an amount of
$4,374.34. This amount is recorded in the reconciliation prepared by A
Rendell and Associates handed up on 22 June 2012 referred to above.
125. I am satisfied that the builder is entitled to be paid the amount of the
contract for work performed, less deductions for incomplete or
defective works as set out in the reconciliation together with interest
thereon as agreed between the parties. Accordingly I order the Nagles
to pay Ultra the sum of $59,320.55 made up as follows:
a) Balance of contract sum and interest up until 12 April 2012:
$54,896.50.
b) Interest from 12 April 2012 to 21 June 2012: $1,295.86.
c) Interest from 21 June to the date of these reasons (7 December
2012), being 169 days at a rate of $18.51: $3,128.19
ORDERS
1. I give leave for Darian Percy to be joined as a respondent in application
HB 11/28376.
2. I order that the claim against Ultra Developments Pty Ltd and Darian
Percy in application HB 11/28376 be dismissed.
3. In application HB 10/52785 I order that the Nagles pay to Ultra
Developments Pty Ltd the sum of $59,320.55, such sum is to be paid
immediately.
4. I order that any application for an order for costs is to be notified to the
registrar within 28 days of the date of these reasons and to be
accompanied by any submissions and evidence in support of such an
application.
5. I order that the party against whom any application for costs is made
may file and serve submissions and any evidence in reply within a
further 28 days from order 5.

23. 23
6. The parties are to write to the registrar and advise whether the
applications for costs can be dealt with on the papers and, if not,
request a hearing date for any application unless consent orders are
filed.
Mark Harrowell
Senior Member
Consumer, Trader and Tenancy Tribunal
12 December 2012