Problem
White Design & Construction Pty Ltd is a licenced residential building company with Warren White as the sole director and sole shareholder. White Design & Construction Pty Ltd has been building residential homes in New South Wales for over 17 years.
Mr White met the property owners Elly and Jay Devine on 20 November 2020 to discuss the demolition of Mr and Mrs Devine's existing home and to build a duplex on the property. Mr White said to Mr and Mrs Devine "leave everything to me I will obtain the approval for your two houses, build them for approximately $1.2 million and I guarantee you will be in your new house, with the second one ready to sell by Christmas 2021."
Mr White and Mr and Mrs Devine had several meetings to discuss their requirements which included, that all bedrooms have to be large enough to take double beds, the garages would have to be oversized to fit Mr Devine's two 1948 American Plymouth motor vehicles, and the second house would have to be sold to pay down most of the loan.
Mr White said "no problem leave it all to me".
Mr and Mrs Devine paid Mr White $7,000 as a deposit, and Mr White arranged for his office to prepare plans, copies of which were sent to Mr and Mrs Devine.
Mr and Mrs Devine signed a consent for White Design & Construction Pty Ltd to lodge the development application with Blacktown Council.
The application was approved by Blacktown Council on 2nd February, 2020, a copy of the approval was sent by White Design & Construction Pty Ltd to Mr and Mrs Devine for their information, together with a HIA Residential Building Contract which had been completed. Some of the conditions in the contract were;
a) Construction time would be 10 months from commencement;
b) Contract price was $1,245,000;
c) Liquidated damages was $110 per week;
d) The plans approved by Blacktown Council were annexed to the contract;
e) A deposit of 15% was required.
Mr and Mrs Devine signed the contract and returned it together with a cheque for $186,750 payable to White Design & Construction Pty Ltd on the 12th February, 2021.
White Design & Construction Pty Ltd obtained a construction certificate from Jackson Consultants Pty Ltd on the 28th of February, 2021 and commenced construction on 5th March, 2021.
During constructions Mr and Mrs Devine said to Mr White "We think it would be best if we put a gazebo at the rear of both these dwellings." Mr White said "no problem, it will cost about $3,000".
The progress of the work was very slow even though Mr and Mrs Devine constantly phoned Mr White and by 31 December 2021 the property was not finished.
When the property was finished on 3rd March, 2022, White Design & Construction Pty Ltd submitted an invoice for for $7,300 for the gazebos.
Once Mr and Mrs Devine took possession they realised the garages were not the size as discussed nor were the bedrooms. The major problem was when Mr and Mrs Devine contacted Blackrown Council regarding subdivision so they could sell the second premises the Council officer advised, "no approval has been given for subdivision into two lots, and Blacktown Council's planning provisions prohibit a subdivision of this land due to the size of the land being under 700 m²".
Advise Mr and Mrs Devine of the following:
a) Is the payment for the gazebos due to White Design & Construction Pty Ltd?
b) Can Mr and Mrs Devine claim liquidated damages for delay in construction, and if so for what amount?
c) What claim does Mr and Mrs Devine have in relation to the undersized garages and bedrooms?