Eleanor Joy Colbourne v Kaydot Pty Limited [1995] ACTSC 74 (18 July 1995)

SUPREME COURT OF THE ACT

ELEANOR JOY COLBOURNE v. KAYDOT PTY LIMITED
No. SC97 of 1995
Number of pages - 12
Contract Law - Building and Construction Law - Practice and Procedure

COURT

IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
HIGGINS J

CATCHWORDS

Contract Law - contract for sale of dwelling in course of construction - dispute arising from defects in construction - dispute resolved - costs questions remaining.

Building and Construction Law - question as to level of construction or completion required prior to settlement - duty to construct in a "good and workmanlike manner" - duty to complete as "nearly as practicable" prior to settlement - substantial compliance with contractual completion provisions usually sufficient - trivial or non- essential departure from duty will not entitle buyer to refuse to complete.

Practice and Procedure - contract for sale of dwelling in course of construction - dispute arising from defects in construction - plaintiff issued default notice - defendant issued notice to complete - dispute remedied - costs issues in relation to action taken by parties in course of dispute - defendant ordered to pay plaintiff's costs.

Perry v Sharon Developments Co Ltd (1937) 4 All ER 390 (CA)

Helicopter Sales (Australia) Pty Ltd v Rotor-work Pty Ltd [1974] HCA 32; (1974) 132 CLR 1
van Reesema v Giameos (No. 1) (1977) 17 SASR 353
O'Neall v Barra Rosa Pty Ltd (1989) 96 FLR 436
Barra Rosa Pty Ltd v O'Neall, unreported, Full Federal Court, Australian

Capital Territory, Gallop, Neaves and O'Loughlin JJ, 3 May 1990

HEARING

CANBERRA, 24 May 1995
18:7:1995

Counsel for the Plaintiff: Mr T Johnstone

Instructing solicitors: Farrar and Gralton

Counsel for the Defendant: Mr R Arthur

Instructing solicitors: Hill and Rummery

ORDER

THE COURT ORDERS THAT:

The defendant pay the plaintiff's costs of and incidental to
these proceedings.

DECISION

HIGGINS J On 14 February 1995, the plaintiff issued a writ against the defendant claiming a declaration that a notice to complete given on 8 February 1995 was not a valid notice.

2. The facts of the case were not in any significant dispute. On 11 March 1994, the plaintiff and defendant entered into an agreement for sale for the purchase by the plaintiff of a home unit known as Unit 68, Block 16 Section 1, Division of Phillip. The contract will be referred to as "the agreement". The unit erected on the site is to be referred to as "the unit". The purchase price was $145,000.00.

3. At the time the agreement was entered into, the construction of the unit had yet to be completed. Thus it granted to the plaintiff some choice as to some items such as floor tiles. There was also an obligation cast on the defendant to complete the erection of the unit "substantially" in accordance with the plans and specifications and, implicitly, with appropriate materials and in a good and workmanlike manner.

4. On 29 September 1994 the plaintiff's solicitors wrote to the defendant's solicitors complaining about the floor tiles in the bathrooms and toilet.

5. Her initial complaint had been that, instead of the white tiles she had chosen, dark grey tiles had been laid. She had drawn this error to the agent's attention and white tiles were substituted. However, so her solicitors complained, they had been laid over the grey tiles, excessively raising the levels of the affected floors.

6. There was no response to this complaint despite a reminder letter of 17 October 1994 until an uninformative acknowledgment dated 19 October 1994.

7. On 17 October 1994 the plaintiff received a report from ACT Building Consultants and Managers Pty Ltd (Mr G Burke). That report focussed on the unacceptable state of the floor tiling and recommended its replacement. It was forwarded to the defendant's solicitors with the expectation that a response would be elicited.

8. A letter dated 16 December 1994 was, in fact, sent by the defendant's solicitors to the plaintiff's solicitors. However, it made no reference to the plaintiff's concerns about the floor tiles. It only advised that certain formal conditions necessary for completion of the purchase had been satisfied and concluded by saying:

Please note completion is to occur in accordance with special
condition 8 of the Agreement for Sale and we draw your attention
to the fact that any delay in settlement will attract interest on
the unpaid purchase moneys at the rate specified in the Agreement
for Sale calculated on a daily basis.

9. Preparations were made for completion to take place, initially, on Christmas Eve. However, by mutual arrangement, that time was extended to 6 January 1995. The plaintiff was, in my view, entitled at this stage to assume that her concerns would be addressed and responded to.

10. On 5 January 1995, the plaintiff obtained a "pre-purchase building report". On 6 January 1995, the plaintiff's solicitors forwarded a copy of it to the defendant's solicitors. The covering letter was in the following terms:

We refer to previous correspondence relating to settlement of this
matter.

Faxed herewith is a copy of a pre-purchase building report provided
to our client late yesterday by ACT Building Consultants and
Managers Pty Ltd.

While it conceded that some of the items are relatively minor, Item
27 means that our client cannot use the shower. Item 48 and 49
together mean that our client cannot lay carpet. Item 51 and 54 are
certainly not acceptable.

In addition, we are instructed that there is no power outlet to the
microwave oven nook. While this does not prevent our client from
occupying the property, she cannot use her microwave oven and we
would expect that defect to be repaired within the 90 day period.

Our client reserves the right to add additional matters to the list
to be rectified within the 90 day maintenance period.

We have advised our client that she should not settle whilst Items
27, 48 and 49 remain unattended to. If in fact Items 51 and 54 have
allowed water to enter the premises in the recent bad weather, then
those items must also be fixed prior to settlement.

Accordingly, the settlement arranged for today cannot proceed. We
note that answers to requisition on title are still outstanding.

11. The items highlighted as faults or defects preventing settlement were as follows:

BATHROOM 27. Tile grouting in shower recess not complete.
FLOORS 48. Grind off mortar mounds to living area floors.
49. Fill dent in floor slab to living area.
GARAGE 51. Replace broken roof tiles.
MAIN ROOF 54. Check roof flashing to vent pipe near bathroom,
excessive day light noticeable.

12. There was a further inspection by the plaintiff and her solicitor on 7 January 1995. As a result, the plaintiff, by letter of 10 January 1995, maintained her insistence that items 27 and 48 be attended to before completion. She accepted that item 49 had been "roughly" attended to. She conceded that item 51 could be rectified later.

13. Whilst item 54 could not be checked, she drew attention to a "wet spot in the ceiling". That was said to be a cause for concern but not necessarily an impediment to settlement.

14. However, the relative levels of the tiled floors to adjacent areas was raised as a significant defect. It was said to be "referred to in item 47". Item 47 read as follows:

Feather off "ardite" topping to floors with adjacent floor areas,
if topping is acceptable to Lessee,

15. That does not seem to me to have embraced that complaint. However, the complaint was fully explained in the letter of 10 January 1995 in the following terms:

However, by far the most serious complaint as far as our client is
concerned is the state of the floor in the passage way which runs
from the dining living area to the bedrooms and the state of the
flooring at the entrance to the ensuite from the main bedroom. This
is referred to in item 47 of our client's list.

We enclose a plan of the unit. When one walks from A to B and back
again, a distinct rise in the level of the floor is noticeable and
gives an uncomfortable feeling. In spite of this, there is still a
very large margin of about 5 cm from the floor level of the hallway
to the floor level in the bathroom and the toilet.

Several aspects of this variation of floor level give our client
cause for concern. Firstly, the finish on the additional material
that has been laid along the hallway is too rough to allow carpet to
be laid. Secondly, the rise and fall that one experiences walking
along the passage way gives the feeling of discomfort and surprise.
Whilst a long term resident might get used to it, the re-sale value
would certainly be affected. No purchaser likes the idea of
variable floor levels in a two storey building. Thirdly, the very
high level of the bathroom, laundry and ensuite floors indicates to
our client that the white tiles have simply been laid on top of the
bedding for the previously unacceptable grey tiles. Or maybe even
on top of the grey tiles after the first lot of white tiles were
removed. Is the tiler prepared to give a statutory declaration that
the white and the grey tiles were removed? This matter was
originally raised by us in our letter to you dated 18 October 1994.
In early November, our client spoke to Mr Domazet, who agreed that
the grey tiles would be removed before the white tiles would be
laid. However, it appears that if the grey tiles have been removed,
the bedding onto which they were laid has not been removed but has
been topped up with something else to accept the new white tiles.
The result is an unacceptably high floor level for all of the tiled
areas. This is quite dangerous and could easily trip any person
(especially an elderly person or a young child) entering the various
doorways so affected.

16. The plaintiff offered to exclude the need for the defendant to attend to items 27, 47, 48 and 49, presumably including the complaint as to the tiling, in consideration of a reduction of $5,000.00 in the price. Alternatively she offered rescission of the agreement. Later that day she withdrew the first of those two options.

17. It should be noted that the rescission proposal was an offer not a demand. There was, in any event, no response from the defendant.

18. On 1 February 1995, the plaintiff withdrew all her previous offers and delivered a "default notice" to the defendant requiring satisfaction of her complaints as a pre-condition to completion. The substantive terms of that notice were as follows:

WHEREAS

A On 11 March 1994 ELEANOR JOY COLBOURNE agreed to buy and you
agreed to construct and erect Unit 68 in a units plan then to be
registered in respect of Block 16 Section 1 Division of Phillip on
the terms and conditions provided by the agreement.

B It was an implied term on the agreement that the building would
be built in a good and workmanlike manner and that you would supply
good and proper materials.

C You are in default in the observance or performance of your
obligations under and by virtue of the agreement.

Particulars:

as set out in List 1 and List 2 annexed hereto.

NOW THEREFORE TAKE NOTICE that I, ELEANOR JOY COLBOURNE hereby
require you to rectify each and every default as specified in this
notice by 10.00am on Monday 5 June 1995 and the period of time thus
limited shall be an essential term of the agreement, the breach of
which shall entitle me to terminate the agreement.

The two annexed lists substantially repeated the previously complained of faults and defects.

19. The response, dated 8 February 1995, was not conciliatory. It stated:

Our client repudiates the Notice as on Counsel's advice, your client
is not able to serve a Default Notice pursuant to the Agreement for
Sale.

Our client has advised us that it has attended to all outstanding
items and that the unit has been constructed in accordance with the
plans and is ready for occupation and it expects your client to
fulfil her contractual obligations.

We enclose Notice to Complete.

20. The Notice to Complete was in the following terms:

WHEREAS:

A By Agreement for Sale ("the Agreement") dated the 11th March,
1994 KAYDOT PTY LIMITED (ACN 008 633 029) of C/- Hill and Rummery,
State Bank Building, London Circuit, Canberra City ACT ("the
Seller") agreed to sell to ELEANOR JOY COLBOURNE of 4/139 Port
Jackson Circuit, Phillip ACT ("the Buyers") all the residue
unexpired of the Crown Lease in Register Volume 1441 Folio 24 of the
land being Block 16 Section 1 Unit 114 (formerly described as Unit
B68) Units Plan 1228 in the Division of Phillip in the Australian
Capital Territory and known as Unit 68 Byron Court, Central Park,
Phillip.

B The date for completion of the Agreement as set out in the
Schedule Item 14 of the Agreement was as per Special Condition 8 of
the Agreement for Sale.

C The Agreement was not complied with in accordance with sub-clause
2(3) of the Agreement and the Seller is not in default under the
Agreement and is ready willing and able to complete or could do so
but for some default or omission of the Buyer.

NOW TAKE NOTICE that the Seller requires the Buyer to appoint a time
in accordance with Condition 21(3) of the Agreement for Sale to
complete the Agreement and in this respect time shall be of the
essence. This Notice is given pursuant to Clause 21 of the
Agreement.

Answers to requisitions on title were also enclosed.

21. The plaintiff responded on 14 February 1995 by commencing these proceedings. The plaintiff sought a declaration that the notice to complete of 8 February 1995 was not valid as well as injunctive relief to prevent any steps being taken by the defendant in reliance upon the notice.

22. The solicitors for the defendant, on 15 February 1995, wrote to the plaintiff's solicitors in the following terms:

We have been advised today that your client has no intention of
completing her purchase of the unit. Our instructions are to
terminate the Agreement for Sale if completion does not take place
within the prescribed time allowed pursuant to the Notice to
Complete dated 8th February 1995 and to commence proceedings for
payment of the balance of the deposit pursuant to Special Condition
15 of the Agreement for Sale together with any further loss
occasioned by your client's failure to complete her contractual
obligations.

In an attempt to resolve this matter, our client has advised us that
he is prepared to meet your client on site in an effort to clarify
any problems your client may have.

If your client is not prepared to meet with our client and in the
event that this matter is litigated, we intend to use this letter as
evidence of our client's intention to attempt to resolve this
dispute when the matter of costs arises.

23. The plaintiff replied, asserting that she was prepared to complete the purchase. She agreed to meet the defendant's representatives on site in an endeavour to negotiate an agreement.

24. A meeting took place on site on 16 February 1995. Various defects were noted. Without prejudice to its rights, the defendant agreed to remedy before settlement all the faults noted by the plaintiff's representatives.

25. On 24 February 1995, the plaintiff was advised by the defendant that all faults had been remedied. However, an inspection undertaken by the plaintiff on 24 February 1995, found some items remained outstanding, although most had been attended to.

26. By 27 February 1995, the plaintiff was satisfied that all outstanding items had been satisfactorily attended to. She then offered to arrange completion but reserved her right, if any, to have her legal costs of this action paid by the defendant.

27. Completion occurred on 16 March 1995.

28. Essentially, this action has been continued merely to determine what should be the order for costs appropriate in the circumstances.

Was the defendant entitled to give "Notice to Complete" on 8 February 1995?
29. Time for completion was referred to in special condition 8 of the Agreement for Sale. That provided:

Completion of this Agreement shall take place on the date ten (10)
days from whichever is the later of the undermentioned dates:
(a) The date of written notice to the Buyer of registration of the
Units Plan, or
(b) The date of written notice to the Buyer of the issue of the
Certificate of Occupancy or Use referred to in Special Condition
No. 2 hereof.

30. That date, it is agreed, was 10 days from 16 December 1994. As previously noted, the date for completion was, by mutual agreement, extended until 6 January 1995.

31. The plaintiff claims that the defendant was not, as at 8 February 1995, entitled to insist upon completion because it had yet to complete properly the building works required by the agreement.

32. The right to give notice to complete is conferred by clause 21(2). It provides as follows:

If completion of this agreement is not effected in accordance with
subclause 2(3), either party may on the date fixed for completion or
at any time thereafter (unless in the meantime the agreement has
been rescinded or has become void) give to the other party notice in
writing to complete the transaction in accordance with this clause
but such notice shall only be effective if the party giving the same
at the time the notice is sent is either ready, willing and able to
complete or is not so ready, willing and able by reason only of the
default or omission of the other party to this agreement.

33. As at 8 February 1995, it is apparent that, notwithstanding its claim to the contrary, the defendant had not "attended to all outstanding items".

34. The defendant contends that, even assuming that it had not attended to all items, those not satisfactorily attended to were all items which could have been dealt with under special condition 1. A "defect or fault" so characterised could not, it was submitted, relieve the plaintiff from the obligation she otherwise had to comply with the notice to complete.

35. Completion of the erection of the subject dwelling was required by special condition 2. The items referred to on the appended "inclusions list" were required to be included by virtue of special condition 3. The obligations imposed by both those special conditions were to be satisfied "prior to completion".

36. By contrast, "defects or faults" notified in accordance with special condition 1 were to be attended to within a specified time following the giving of a relevant notice. Such a "fault or defect" might, in my opinion, also constitute a failure fully or properly to provide the specified works. In that case, the purchaser would have the choice of asserting rights under special condition 2 or 3 or of asserting rights under special condition 1.

37. The case of Perry v Sharon Developments Co Ltd (1937) 4 All ER 390 (CA) also involved the sale of a dwelling in the course of construction. There was no express provision for completion of the dwelling before settlement. There was no defects liability period. It was held that there was an obligation to be implied that the dwelling would be completed before completion of the sale could be required.

38. A contract for the sale of land with a dwelling to be erected thereon is, as well as a contract to transfer title to the land, a contract to do the work required to complete the dwelling. Such a contract will normally carry with it an implication that the work done is not only to be complete but also to be done in a good and workmanlike manner and with good and proper materials. The required quality of work and materials may, of course, be specified by express agreement either wholly or partially: see, for example, Helicopter Sales (Australia) Pty Ltd v Rotor-work Pty Ltd and Anor [1974] HCA 32; (1974) 132 CLR 1.

39. The case of van Reesema v Giameos (No. 1) (1977) 17 SASR 353 deals with a factual situation similar to the present. The purchaser claimed that a small portion of the works had not been completed in accordance with the agreement. He refused to complete the sale until all faults and defects were remedied. Only a very small portion of the works remained unfinished. It was held that the purchaser could not require that unperformed work to be done as a pre-condition for settlement. Walters J noted, at 368:

At all events, it seems to me that if the defendant was in breach of
the stipulation to construct edgings to the exits, that default
involved a non-essential term of the contract, the non-performance
of which was relatively unimportant, and that that default did not
operate to prevent the defendant from insisting upon the contract
being completed by the plaintiff.

40. On appeal, Bray CJ, at 373, characterised the work left incomplete, even if completion of it was required by the contract, as "... comparatively trivial and ... certainly non-essential ...".

41. His Honour was also of the view that a wrongful refusal completely to carry out such a term based on a bona fide but mistaken view of the construction of the agreement would not amount to a repudiation of it. A party may well be taken to assert that he or she will perform the agreement according to its true construction, even though it be otherwise than assumed by that party.

42. It is, of course, open to the parties to an agreement to treat an otherwise apparently trivial obligation as if it was an essential term.

43. The case of O'Neall v Barra Rosa Pty Ltd (1989) 96 FLR 436 also bears some factual similarity to the present. There had, in that case, been a purported rescission of the agreement for sale by the vendor following a refusal to comply with a notice to complete issued by the vendor. The purchasers claimed to be entitled to reject the notice because the vendor had not remedied the defects and faults which the purchasers had noted and desired to have remedied before completion.

44. The vendor contended that those matters were trivial and were items it was obliged to complete during the defects liability period. The relevant clause was similar in most respects to special condition 1 in this case. However, the relevant clause did not purport to apply to defects and faults notified before completion or taking of possession. It purported to apply to defects or faults notified within 90 days after completion or taking of possession.

45. There was included in the agreement a clause similar to special condition 2 in this case, requiring completion of the building work "in a good and workmanlike manner" before completion of the agreement. The usual implied term as to quality was, therefore, made, at least partially, express. As to that clause, and its relationship with the usual implied term, Miles CJ said, at 443:

The obligation imposed ... relates both to the standard of
workmanship and to the extent of compliance with the plans and
specifications ... The standard required is that the building be
constructed in a good and workmanlike manner. That standard is
unqualified. Contrast the extent to which the construction of the
building is to be in accordance with the plans and specifications is
qualified: it is sufficient that the construction be
"substantially" in accordance with the plans and specifications.

46. Under the agreement entered into in this matter, adherence to the plans and specifications was to be "as nearly as practicable". There was no express obligation imposed requiring adherence to any particular standard of workmanship or of materials.

47. Further, in Barra Rosa (supra) there was the different circumstance that the maintenance clause did not purport to apply to faults or defects arising or notified before completion.

48. There were two answers given to the objection that, either individually or in toto, the faults and defects alleged were trivial and should not, therefore, relieve the purchaser of their obligation to complete the sale. The first answer was that the agreement as drafted had enabled the purchasers to assert an entitlement to strict compliance with the agreement whether or not the non-compliance was trivial.

49. The second answer was, at 447:

... the seller can hardly claim to be entitled not to comply with a
default notice if the breach is trivial. The more trivial the
breach the easier it is for the seller to rectify it. Arguably,
there may be situations where a trivial breach requires grossly
disproportionate time and cost for rectification.

50. However, his Honour did not find it necessary to consider the consequences of that latter situation. In truth, this second answer was really a justification for the first answer. It tends to answer the argument that the parties could not have intended any fault or defect, however trivial, to be relied upon to delay completion. However, as van Reesema indicates, this is the reverse of the usual implication. Substantial compliance is usually sufficient.

51. The absence from the agreement of any absolute standard for the quality of work to be done is one distinction between the present case and Barra Rosa.

52. There is another distinction. In Barra Rosa, clause 19(5) of the agreement was interpreted so as to enable any party to give notice to the other to remedy any default under the agreement. If there was such default, that clause then made remedial action within "not less than 7 days" an essential term of the agreement.

53. In the instant case, the entitlement to give a default notice is conferred by clause 21(4) of the agreement. That clause provides:

Unless this agreement provides otherwise the Seller shall give
written notice to the Buyer of any alleged default in the observance
or performance of any obligation imposed upon the Buyer under or by
virtue of this agreement (other than failure to complete) in
consequence of which the Seller claims to be entitled to take action
under clause 22 ...

54. The only notice which a purchaser is entitled to give under clause 21 of the agreement is a notice to complete pursuant to clause 21(2). There is, therefore, no absolute requirement to complete construction without any fault or defect in workmanship however trivial. There is, also, no entitlement to elevate the status of any failure to remedy such a fault or defect within a certain time to that of the breach of an essential term.

55. There was an appeal in Barra Rosa to a Full Federal Court, Gallop Neaves and O'Loughlin JJ; sub. nom. Barra Rosa Pty Ltd v O'Neall, unreported, Australian Capital Territory, 3 May 1990. Whilst in agreement with the result arrived at by Miles CJ their Honours differed to some extent on the reasons for that result. In their Honours' opinions, it was irrelevant whether the obligation to meet the usual standard of workmanship and materials arose from an express obligation or the usual implied term.

56. The correct issue, in their Honours' view, was whether the vendor was "in default in the observance or performance of an obligation imposed ... under or by virtue of this agreement". They said, at 16:

In the event of a dispute arising whether that requirement has been
met in a case where the obligation said not to have been observed or
performed is the obligation to carry out the construction work in a
good and workmanlike manner, the question will arise whether, in the
circumstances of the particular case, the departures from the
required standard are sufficient to amount to a default within the
meaning of the sub-clause.

57. This seems to modify the approach taken by Miles CJ to the strictness of the required standard of construction. However, that qualification did not effect the result. There was default under the relevant clause so as to support the "default notice". It was that 'default notice' which then elevated the failure to remedy that default to the status of the breach of an essential term.

58. As I have noted, the present agreement differs substantially from that considered in Barra Rosa. Special condition 1 neither imposes a duty to meet the required standard of construction nor exclusively prescribes a remedy for the breach of such an obligation. It is apparent that, even if, as here, the contract is silent on the existence of such an obligation, the law will presume its existence.

59. In my view, it was impliedly the obligation of the defendant to complete the dwelling before settlement to the required standard. However, there is no mechanism in this agreement to elevate a breach of that obligation to that of a breach of an essential term if it would not otherwise be such. A trivial or non-essential departure will, therefore, not entitle the plaintiff to refuse to complete the agreement.

60. On the other hand, it cannot be said that special condition 1 provides an exclusive remedy for the rectification of faults and defects. It certainly permits a purchaser to give notice of faults and defects noticed before completion of the agreement so as to entitle him or her to the commencement of the rectification period for those faults and defects as from the date of the notice even if that period thus commences before completion of the agreement.

61. In my view, under the agreement, the plaintiff had the right, before completion of the agreement, to insist upon the completion of the construction work "as nearly as practicable" in accordance with the plans and specifications and upon the supply and installation of the items on the "inclusions list". The plaintiff also had the right to insist that such work be at least substantially done to the required standard before completion of the agreement

62. Most of the items notified on 6 January 1995 as faults or defects, were, as the letter accompanying that notice conceded, "minor". The plaintiff became entitled to have those "minor" items remedied within 90 days from the date of the delivery of that notice but did not thereby become entitled to refuse or delay completion of the agreement. The plaintiff did not, however, claim to be entitled to refuse or delay completion because of those matters.

63. She did claim that some of the items complained of were not "minor" but were essential. As previously noted, they were:

27. Tile grouting in shower recess not complete
48. Grind off mortar mounds to living area floors
49. Fill dent in floor slab to living area
51. Replace broken roof tiles
54. Check roof flashing to vent pipe near bathroom, excessive
daylight noticeable.

64. Following the inspection on 7 January 1995, it was noted that item 49 had been attended to. Insistence on item 51 being rectified before settlement was withdrawn.

65. The "default notice" delivered on 1 February 1995 invoked no particular rights under the agreement, in contrast with the Barra Rosa case. It did not enable the plaintiff to insist on rectification of all faults and defects before completion of the agreement unless she could do so in any event.

66. An issue was raised whether the grey tiles had been lifted and white tiles re-laid or the white tiles glued directly onto the grey tiles before the delivery of the notice to complete. I am satisfied from Mr Parson's evidence that when he inspected the premises on 10 February 1995 the height difference between the tiled surface and the surface of adjacent floor areas was 45-50mm. That was a substantial defect whatever its cause. He said that he would not, having regard to that and other faults still existing, have issued a Certificate of Practical Completion as at that date.

67. The height difference was rectified after 8 February 1995 but, in my opinion, it was, at that date, a substantial non-compliance with the implied term as to the standard of completion required in relation to the building works.

68. I also consider that completing tile grouting (item 27) and the unevenness of living area floors (item 48) were matters of substantial non-compliance for the reasons advanced by the plaintiff's solicitors on 6 January 1995.

69. As a result, it was open to the plaintiff, as at 8 February 1995, to have declined to complete the agreement until those matters at least had been attended to. The other items of non-compliance were such as either could not be so described or had been conceded to be so minor as not to prevent settlement.

70. Consequently, in my opinion, the plaintiff, had the action not been compromised, would have been entitled to the relief she had sought. Accordingly, the defendant should pay the plaintiff's costs of and incidental to these proceedings.