Australia: Case Note - BAK v. Glenleigh Homes Pty Limited [2006] NSW CA 10

Last Updated: 29 October 2006
Article by Scott Kennedy

In Brief

  • This appeal was allowed because fresh evidence came to light after the appeal had been argued but before the decision had been handed down.
  • Nevertheless, the Judges engaged in some useful discussion of the extent to which a Plaintiff must prove causation on the balance of probabilities in a case involving a "loss of chance" claim.


  • On 21st October 1997, Mr Bak (the Plaintiff) and Glenleigh Homes Pty Limited (the Defendant) entered into an agreement for construction of a house on Mr Bak’s property in the terms of the Housing Industry Association (NSW division) Building Agreement Edition 9. On the same day, Mr Bak also signed a document acknowledging the Master Builders Australia’s "Homeowner’s Guide for protection from Termites (July 1995 Edition)" and acknowledging that an "Evencure XD5 Granitgard" system would be installed.
  • Building work commenced on the house in November 1997 and reached practical completion in May 1998. Mr Bak moved into the house on 1st July 1998.
  • In early December 1998, Mr Bak first observed nineteen (19) termite mud tracks on the brick walls of his house from ground level to the weep holes. Mr Bak removed the mud tracks manually and then applied a solution of creosote and kerosene around the brick perimeter of the house.
  • In January 2000, Mr Bak saw more termite mud tracks inside the house and the following day he notified the Defendant. The Defendant called in recognised pest experts. Their inspection revealed extensive termite damage inside the house. In March 2000, an expert treated the property for termites extensively, including arsenic and liquid chemical treatment both internally and externally.

Proceedings at first instance

  • In May 2002, Mr Bak commenced proceedings in the District Court of New South Wales against the Defendant. The Judge at first instance accepted a submission from the Defendant, on the balance of probabilities, that the internal damage to the house was caused via a single termite mud trail behind the hot water tank near the house wall. Mr Bak had not found this termite mud track when he destroyed the other mud tracks in December 1998.
  • Mr Bak contended that this particular mud track was a concealed point of entry to anyone other than a trained person. The Trial Judge rejected this contention and found for the Defendant.

The appeal and discovery of fresh Evidence

  • Mr Bak appealed to the New South Wales Court of Appeal. The Appeal was argued at a hearing and the Court of Appeal reserved its decision.
  • Whilst the decision on appeal was reserved, Mr Bak made an application to lead further evidence. The Court of Appeal arranged a further hearing at which evidence was led that, in late October 2005, after the hearing of the appeal, Mr Bak discovered fresh termite activity inside the house. A recognised pest expert opined that this termite activity was due to defects in the Granitgard system at several points in the wall.

Decision on fresh evidence

  • The Court of Appeal held unanimously that the fresh evidence must be admitted and that the appeal must be allowed. The matter was remitted to the Trial Judge for further hearing.

Obiter dicta re causation and breach of contract

  • Hodgson JA (with whom McColl JA agreed) indicated that he would have allowed the appeal. He would have found that the Defendant had breached the construction agreement by failing to adhere to Australian Standard 3.660.1- 1995 which deals with the protection of buildings from subterranean termites. Clauses 2.6 and 3.4 of the Standard provide:

"2.6 Attachments to buildings steps, verandas, porches, access ramps, claddings, carports, trellises, decks or similar structures should be protected by one of the methods described in this Standard or separated by a clear gap of at least 40mm from the main structure.

3.4 Slab edge exposure where slab edge exposure is used as part of a termite barrier system, the vertical face of the perimeter of all raft and footing slabs shall be smooth off-vPage

form and shall not exhibit areas of rough surface, honeycombing or ripples. It shall be exposed for a minimum of 75mm to permit ready detection of termite entry and shall not be rendered, tiled, clad or concealed by flashings, adjoining structures, paving or soil. See figure 3.1"

  • Hodgson JA would have held on the facts that the hot water tank was not separated by a clear gap of at least 40mm from the main building and that the proximity of a downpipe both "concealed" the area where the termite track passed, and did not "expose" it for a minimum of 75mm. His Honour thus would have held that the Defendant breached both clauses 2.6 and 3.4 of the Australian Standard.
  • On the issue of causation, Hodgson JA would have held that the Plaintiff’s claim should be treated as a "loss of a chance" in accordance with the principles discussed in Malec v. JC Hutton Pty Limited (1990) 169 CLR 638. Therefore, once breach of contract was proved, the Courts should consider the amount of damages that should be awarded in accordance with the probability of that occurring. It was not necessary for the Plaintiff to prove on the balance of probabilities that the damage would not have occurred but for the breach. His Honour distinguished Sellars v.

Adelaide Petroleum NL (1994) 179 CLR 332, on the basis that that was a case where loss or damage was the gist of the action.

  • Handley JA would have dismissed the appeal (if not for the admission of the fresh evidence). Contrary to the majority, he would have found as a question of fact that the area behind the hot water tank was not "concealed". Even if the water tank had been within 40mm, in breach of the Australian Standard, he considered that the Court of Appeal should not draw an inference that the Appellant would otherwise have noticed a termite mud track in this area. Further contrary to the majority, Handley JA would have held that the Plaintiff was obliged to prove that, but for any breach of contract, the damage would not have occurred.


  • This appeal was allowed on the basis of fresh evidence which was admitted after the appeal had been heard but before a decision had been rendered. The matter was remitted to the Trial Judge for a fresh trial. As such, the balance of the judgments are obiter.
  • Whilst much of their Honours’ reasoning concerns factual matters, the judgments do highlight a difference of opinion as to the manner in which the authorities of Malec v. JC Hutton Pty Limited (1990) 169 CLR 638 and Sellars v. Adelaide Petroleum NL (1994) 179 CLR 332 are to be reconciled in a case involving breach of contract leading to a "lost chance". The precise point of disagreement between their Honours in relation to whether a Plaintiff who shows breach of contract is also required to prove causation remains undecided.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.