ACT Builders Pty Ltd v Haridemos

NCAT Appeal Panel|2015-06-26

Solicitors: Baker Deane & Nutt (appellant) Colquhoun Murphy (respondent) File Number(s): AP 15/06229 Decision under appeal Court or tribunal: New South Wales Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: [2014] NSWCATCD 256 Date of Decision: 13 November 2014 Before: D Goldstein, Senior Member File Number(s): HB 12/27097

Background

In this matter the appellant seeks to appeal against a decision of the Consumer and Commercial Division of the New South Wales Civil and Administrative Tribunal (the Tribunal) of 30 December 2014. The builder (the appellant) was a licensed builder who carried out residential building work at a property at Jerrabomberra.
The appellant commenced proceedings HB 12/27097 against the owner of the property (referred to as the respondent in these reasons) for payment of the final instalment payment under a building contract. The owner commenced proceedings HB 12/23972 against the appellant seeking damages of $500,000.00 for alleged defective works and other consequential losses. The appellant's application and the respondent's application were heard together.
On 30 December 2014 the Tribunal made the following orders: 1. In the appellant's application, the owner (respondent) to pay the builder $157,847.83; 2. In the respondent's application, the builder (appellant) to pay the owner $179,973.93.

The Notice of Appeal

The Notice of Appeal is dated 4 February 2015. It was filed on 6 February 2015 as recorded on the stamp on the original document lodged with the Tribunal.
The Notice of Appeal was lodged under cover of a letter dated 4 February 2015 that was sent by the appellant's lawyer, who is located in Queanbeyan, to the Wollongong Registry of the Tribunal.
The Notice of Appeal says the decision from which the appeal is made was received by the appellant on 7 January 2015. The appellant does not seek leave to appeal out of time in the Notice of Appeal. However the respondent raised the issue of time in the Reply to Appeal.
At a call over of the Appeal Panel held 19 March 2015, the Appeal Panel directed that all issues of leave, including whether time should be extended if the appeal was out of time, should be dealt with at the final hearing of the appeal: see Order 8.
Item 11 B of the Notice of Appeal records the grounds of appeal as follows: the Tribunal erred in finding that fill extended to within 1 m of the boundary of the property; The Tribunal erred in finding that there was non-compliance with condition 19 of the Development Consent; The Tribunal erred in interpreting condition 19 of the Development Consent as requiring terracing across the rear yard of the property; There was a denial of procedural fairness in that the Tribunal determined that condition 19 of the Development Consent required there to be terraced walls in the rear yard in circumstances where the Owner's expert gave evidence that the Development Consent did not contemplate terraced walls in the rear yard. Consequently, the Tribunal erred in determining the issue adverse to the builder on a basis other than that contended by the Owner.
As set out in item 12 A of the Notice of Appeal, the appellant seeks to appeal on a question of law "to the extent that the Tribunal misconstrued the contractual obligations of the appellant and denied procedural fairness" and says Leave should be granted for the balance of the appeal grounds because: It is appropriate that all relevant matters be determined so that the question of law can be determined properly. A substantial amount is in dispute. A substantial injustice will be caused if leave is not granted.
On the question of leave, the appellant states that the decision was not fair and equitable and/ or was against the weight of evidence. On the first ground the appellant said: There has been an error in construing the contractual obligations of the appellant. It is a fundamental principle of the common law that a party cannot have imposed on it contractual obligations which it did not assume. There has been a denial of natural justice. There is a statutory obligation on the Tribunal to give a party a reasonable opportunity to be heard before an issue is decided in a manner adverse to it.
On the second ground, the appellant referred to evidence that had been filed and said "(t)he Tribunal should have decided that there was no contractual obligation on the part of the Appellant to install terrace walls in the rear yard".

The submissions

The parties provided oral and written submissions.
Neither party made submissions on the issue of whether time should be extended. The only statement made on this issue was by the respondent in the Reply to Appeal who said: The sealed Notice of Appeal indicated that the Appellant received the notice of decision on 7 January 2015. The general rule is that the appeal must be lodged within 28 days from the date on which the Appellant was notified of the decision appealed against or was given reasons for the decision (whichever is later), that is by 4 February 2015. The sealed Notice of Appeal confirmed receipt of the Notice of Appeal on 9 February 2015, that is five (5) days after it was due.
The appellant challenged only one aspect of the Tribunal's decision of 30 December 2014. That is that the appellant was in breach of the building contract in relation to the yard levels and was in error in awarding the respondent the sum of $55,170.00 as rectification costs.
In written submissions the appellant said; 1. The Tribunal found that the appellant did not comply with condition 19 of the Development Consent. There was no evidence to support this finding, thus constituting an error of law 2. There was no evidence, including in the report of the appellant's expert Mr Hickey, to support the finding that the fill placed in terraces in the rear yard extended from boundary to boundary; 3. Mr Hickey prepared a Scott Schedule itemising allegedly defective or incomplete work. This evidence did not refer to condition19 of the Development Consent and it was not until re-examination that Mr Hickey said that there was a requirement for retaining walls arising from this condition. By the Tribunal relying on this evidence, the appellant submitted it had been deprived of an opportunity to prepare and provide evidence in response;
The appellant also submitted that Mr Hickey stated in his evidence that the contract and conditions of Development Consent did not provide for the rear yard to be terraced. That is, the terraces as constructed were not works required by the contract. Consequently, the award of damages made being the cost to stabilise the terraces was contrary to the principle in Bellgrove v Eldridge (1954) 90 CLR 613, because it was not the "cost of making the work or building conform to the contract".
In oral submissions, the appellant reaffirmed its written submissions that it had been denied procedural fairness because the Tribunal had decided the dispute by reference to condition 19 of the Development Consent, a case which had never been raised until re-examination of the respondent's expert, Mr Hickey. In this regard the appellant said that the respondent had never presented a case that terracing was required under the contract.
The appellant submitted that the Tribunal was required to first consider the terms of the contract and that the Tribunal was in error in deciding that terracing was required in order to comply with the Development Consent. Further, the Tribunal was in error in awarding the amount of $55,170.00 because this award was not consistent with the fact that the contract did not require terracing.
In making these submissions, the appellant said that it was common ground that terraced walls were not shown on the contract drawings and that terraced walls had in fact been constructed. Inter alia, the appellant relied on the landscape plan referred to as "sheet 19" found that the appeal book bundle AB 242. Also, the appellant did not dispute that the terracing that had been constructed was not in accordance with the contract and that the contour plan shown at AB 156 depicted the final terraced works, not sloping grass.
The appellant again submitted that the award made by the Tribunal was not an award to bring the defective work into conformance with the contract. The appellant said that the evidence from the respondent's expert Mr Hickey did not suggest rectification costs had been calculated on this basis nor did the evidence suggest that the works proposed were necessary for the purpose of bringing the works into conformance with the contract. In this regard the appellant relied on the evidence from Mr Hickey that the contract did not require terracing as acknowledged by him in cross examination: see AB 330 transcript lines 1- 3.
In relation to the evidence of Mr Hickey, the appellant also submitted that Mr Hickey did not opine that the site had been destabilised. Rather, the appellant said Mr Hickey only concluded that the works he proposed were necessary to stop soil migrating. In making these submissions, the appellant's counsel advised the Appeal Panel that no evidence had been provided by the appellant's expert Mr Hanrahan that soil was migrating and the appellant did not accept this fact. Further, the appellant did not accept that the amount of $55,750 was the reasonable cost of stabilising the site or stopping the fill migrating.
In reply, the respondent made the following submissions: 1. The Tribunal did not err in relation to its findings on condition 19. 2. There was no denial of procedural fairness. The matter was raised in cross-examination and was the subject of re-examination. The homeowner's counsel legitimately clarified evidence given by Mr Hickey in re-examination in relation to whether or not there was a requirement in the Development Consent for retaining walls for fill. 3. The contour plan provided evidence to support a finding that fill had been placed on the boundary. The contour plan was the only evidence tendered on point. There was no cross examination on the issue and the evidence was admitted untraversed and unopposed. The ground of appeal that there was no evidence to support the Tribunal's finding cannot be maintained. 4. It was not in dispute that the fill had been placed in the rear yard, and the experts had agreed that excavated spoil was retained on site as terraces. The terracing issue was extensively explored by both experts and the appellant was on notice that the owner's expert alleged that extensive terracing was required. The cost of terracing formed the single most expensive head of damage claimed. The fact that the original approved plans did not contemplate terracing is irrelevant. Once natural ground levels were built up, the proper question for determination was whether the terraces required retention.
In oral submissions the respondent also relied on the points of claim found at AB 119, particularly paragraph 12, which alleged a failure to comply with Development Approvals and upon the agreed statement of facts and contentions found at AB 123 and following.

Consideration

The Civil and Administrative Tribunal Act 2013 (NSW) (NCAT) sets out the basis upon which appeals from decisions of the Tribunal may arise. Under section 80(2)(b) an appeal may be made as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.
The appeal seeks to raise questions of law and matters for which leave is required.
There is also a question as to whether the appeal is out of time. In this regard Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (Rules) requires any appeal to be lodged with 28 days of when the appellant "was notified of the decision or given reasons of the decision (whichever is later)".
In relation to the matters requiring leave, because the appeal is from proceedings in the Consumer and Commercial Division, clause 12 of Schedule 4 of the NCAT Act applies. This clause provides the Appeal Panel may grant leave to appeal if satisfied that the appellant may have suffered a substantial miscarriage of justice. In the present case, the appellant asserts the decision was not fair and equitable and was against the weight of evidence.
As indicated above, there are four grounds of appeal recorded in item 11 B of the Notice of Appeal. Some of these raise questions of law and some are said to raise questions for which leave is required. However, a review of the matters for which leave was sought, as recorded in items 12 A and 12 B of the Notice of Appeal, appear to raise questions of law. In this regard the issues for which leave is sought appear limited to: 1. Whether the appellant was denied procedural fairness; and 2. Whether the Tribunal was correct in its construction of the contract; and 3. Whether the award for damages was in accordance with the applicable legal principles
Having regard to the view we have formed and having regard to the fact that some of the issues relate to the evidence of the experts and the effect of that evidence, it is unnecessary to dissect individual issues which may give rise to mixed questions of fact and law. Rather, it is sufficient to identify the issues to be addressed for the purpose of determining this appeal and deal with each in turn.
For the purpose of these reasons, the Appeal Panel will address these matters under the following headings: 1. Denial of procedural fairness- determination of an issue not in contention (Appeal Ground 4); 2. Error in finding that fill extended to within 1 m of the boundary, proper construction of condition 19 and requirement for terracing across rear yard (Appeal Grounds 1, 2 and 3);
However firstly the Appeal Panel must deal with the question of whether the appeal was lodged out of time.

Leave to appeal out of time

The Tribunal made orders on 30 December 2015. The reasons for decision were received by the appellant on 7 January 2015 as recorded in the Notice of Appeal. The appeal was lodged on 6 February 2015 and in therefore 2 days out of time.
Neither party made submissions about why time should not be extended. Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 sets out the principles for the grant of leave.
The relevant facts in the present case are that: 1. The Tribunal made its decision on 30 December 2014 during the Christmas period in 2014; 2. The decision was received by the appellant on 7 January 2015; 3. The decision is lengthy and would have required detailed consideration. 4. The grounds of appeal are limited and precise, rather than being a general appeal subsequently refined during the submission and hearing process; 5. The notice of appeal is dated the last day for lodging an appeal and was sent by Document Exchange for filing on that day; 6. No issue of prejudice has been raised by the respondent.
While it is true that time limits apply and a party seeking leave must satisfy the Tribunal that leave should be granted, in the present case the Appeal Panel has had regard to the fact that no serious challenge was made by the respondent, the delay is minimal and the parties appear to have addressed the substance of the matters in the appeal rather than taking time to debate the extension of time issue.
Where no prejudice is identified, it is therefore appropriate to extend time to lodge the appeal up to and including 6 February 2015, being the date the Notice of Appeal was filed.

Denial of procedural fairness- determination of an issue not in contention

(Appeal Ground 4)

There is no dispute that a failure to afford procedural fairness may amount to an error of law: see eg Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13].
The appellant appears to challenge the Tribunal's decision on two bases.
Firstly, the appellant says the respondent "did not identify the contractual requirement for the claim for terracing of the rear yard, that is, item 38 of the Scott Schedule, as being condition 19". Secondly, that condition 19 was first referred to by Mr Hickey in re-examination having had the matter drawn to his attention by the respondent's Counsel. The evidence was to the effect that there was a requirement in the Development Consent for retaining walls for fill.
Consequently the appellant was denied an opportunity "to present evidence to meet a contention that the rear yard required terracing or retaining walls by reference to condition 19".
In relation to the first matter, the Appeal Panel does not accept that the claim in relation to placement of fill in the rear yard and non-compliance with condition 19 had not been raised as an issue in dispute by the respondent prior to the hearing. As we have set out above, the agreed statement of facts and contentions found at AB 123 and following clearly sets out the claim being made in relation to the backyard of the property. At AB 134- 135 the agreed statement of facts and contentions says: (a) The works were not built in accordance with the Building Contract and the Timber Deck Variations. In particular: ….. The backyard of the property was very steep and no retaining walls had been built to retain the quantity of the fill that existed in the backyard. The existence of the fill placed on the land by ACT Builders was in breach of the 2007 Notice of Determination and 2008 Notice of Determination.
Under item (b) of that document the respondent, inter-alia, identified condition 19 as one of the provisions of the Development Consent which the respondent said had been breached.
In addition, the issue for determination recorded in paragraph 6.11 of the agreed statement of facts and contentions (found at AB 144) was as follows: 6.11 Has ACT Builders breached the statutory warranties contained in s18B of the Act.
The contract required the work to comply with "the conditions of any relevant development consent or complying development certificate or any construction certificate": see clause 1(c)(i)(c) of the contract- AB 204.
Also, the warranties under section 18B of the Home Building Act, 1989 (HB Act) include warranties that that the work will be done: 1. in accordance with the plans and specifications set out in the contract: see s18B(1)(a); and 2. in accordance with, and will comply with, the (HB) Act and any other law": see s18B(1)(c).
Quite clearly, compliance with the conditions of Development Consent, including condition 19, was an obligation arising under the contract and under the statutory warranties imposed by section 18B of the HB Act and was an issue that was raised prior to the hearing.
The second aspect of challenge on this ground relates to the evidence provided in re-examination by Mr Hickey and whether the manner in which his evidence was raised denied the appellant an opportunity to respond.
A consideration of this aspect requires an analysis of the evidence presented in the proceedings by the experts and what occurred during the hearing and after the hearing, prior to the Tribunal publishing its reasons for decision.
The evidence of Mr Hickey was prepared in the form of a written report found at AB 146-167. The claim in relation to the rear yard levels is found at AB 154 and following. At AB 154 Mr Hickey says: The rear yard $55,750.00 6.38 yard levels - the rear (northern) yard has been terraced The rear yard has been terraced in contravention of the approved plans. There is a significant amount of fill in this yard which has been shaped into large terraces which will require retaining or significant landscaping to prevent the fill from migrating towards the rear boundary. I have not calculated the quantities of fill that would have been excavated from the house site however based on my experience in the industry I would estimate that the quantity of fill required to create the terraces in the rear yard would be consistent with the quantity of fill which was excavated from the side of the house.
Then at AB 155 Mr Hickey says: There is a contour survey of the site prior to any construction, that plan is shown in the stamped approved plan as Sheet 3 Existing Site Plan. The levels shown on that plan are very regular from the bottom of the site to the top of the site; the original contour plan is scanned in hereunder and is shown on the left side of the page; beside it on the right side of the page is an extract of the site plan from the stamped approved plans Sheet 4 Proposed Site Plan. Comparison of the two plans side by side shows the contours do not change and therefore there was no approval to fill and or terrace the yard.
Below that narration are images of the plan to which Mr Hickey refers.
At AB 156 Mr Hickey continues: A later contour survey was undertaken on 20/07/2011 for the owners. A copy of that plan is scanned in hereunder beside the stamped approved site plan - the difference in the levels is marked and readily identified, the later plan on the right reveals three significant groupings of contours which are typed together indicating the steepness of the yard at that point. In my opinion these terraces require extensive retaining and will lead to ongoing issues associated with the maintenance and amenity of the yard. The stamped and approved Landscaping Plan Sheet 19 shows that these terraced areas in the middle of the yard were originally intended to be a sloping grass area which by comparison would have been relatively easy to maintain.
The appellant, by its expert Mr Hanrahan, provided evidence in reply. In a report dated 1 October 2012, Exhibit D in the appeal, Mr Hanrahan's evidence in relation to this matter is recorded in a table and is identified as item 38 in the following terms: Item number Classification Identification Budget Estimate 38 S of W not indicated on drawings nil

The expression "S of W" is identified as meaning "scope of works - identify works not included in contract". That is, Mr Hanrahan was contending that the construction of the terraces which had occurred was not works within the scope of work required by the contract. This is made clear by Mr Hanrahan's comments in the joint Scott Schedule document found at AB 181 where he records in respect of item 38 "S of W - not indicated on the drawings". Also indicated in the same column of AB 181 under that entry is the following words: The drawings included in the contract drawings show a graded site and landscaping and no terracing. The inclusion list does not refer to terracing or landscaping. The experts agree by observation the excavated soil was retained on site as terraces. If found the experts agree the amount of $55,750.00 is an appropriate amount to complete the works in item 38.
Mr Hickey was cross-examined concerning his report. The cross-examination is set out in the transcript found at AB 324 and following. At AB 325, lines 10- 21 of the transcript Mr Hickey provided the following evidence: Q. But you're saying that the terraced walls should be placed on site? A. I'm saying they should be placed on, on site now because they weren't shown on the plan but the yard has, in fact, been terraced and, therefore, it needs to be retained. Q. Yes, I understand that, and I'm just asking you to show on this plan so I can understand where it is that you're saying those terraced walls should be placed, if you can mark the boundary of the area where those terraced walls are to be placed. A. I'm, I'm sorry, counsel, I'm, I'm not - the, the terraces come across the yard in this fashion and I've allowed to retain those with, with the walls described in the Scott Schedule, to retain what is currently we. We, we may be at different purposes.
At AB 326, line 30-35 Mr Hickey gave the following further evidence: Q. Do those plan show terraced walls in the rear yard? I withdraw that. Do those plans show the terraced walls in the rear yard that you have allowed for as item 38 of your Scott Schedule? A. No, they don't counsel. They, there is a proposed site plan on page 327 which clearly shows that the yard is to be evenly graded, which you can see by the regular spacing of the contours on that yard, on the yard -
At AB 327, lines 24-28 Mr Hickey was asked questions concerning the Development Consent issued in 2007 and gave the following answers: Q. Now, Mr Hickey, do any of the conditions of the development consent specify terraced walls in the rear yard as you've provided for in item 38 of your Scott Schedule? A. No, the consent did not contemplate that the yard would become terraced. It showed the ground level being left as the natural ground level.
Similarly, when asked questions concerning the amended approved plans dated for August 2008 Mr Hickey gave the following further evidence at AB 328, line 8-11: Q. And, Mr Hickey, are you able to say whether these plans show terraced walls in the rear yard? A. these plans, counsel, show the rear yard remaining as the natural ground levels. So, so the answer to your question is no, no terracing was shown.
Mr Hickey was then asked a series of questions concerning variations to the contract and what was required to be built having regard to the 2007 approved plans and the 2008 modified approved plans and conditions thereto. At AB 329-330 line 47, AB 329 line 3, AB 330 he gave the following evidence: Q. So, Mr Hickey would it be a fair summary of your evidence that you are not able to identify in the 2007 approved plans, the 2007 conditions of development consent, the 2008 modified approval plans, the 2008 modified development consent or the contract or in any written variation you cannot identify any provisions for terraced walls in the rear yard of the nature that you have specified as item 38 of your Scott Schedule? A. That is correct, counsel.
As is apparent from the above, the appellant was seeking to establish by cross-examination that the constructing of retaining walls was not works approved by the contract or required by the Development Consent.
Re-examination of Mr Hickey is recorded in the transcript found at AB 334 and following. Having been re-examined concerning the contours and the change in the backyard slope to that shown on the council approved plans, Mr Hickey was asked a question in relation to the Development Consent and whether there was a requirement in that consent concerning retaining walls. The transcript at AB 336 records the objection of the appellant which was overruled. The question and answer in relation to this aspect are found at AB 337, lines 5-10 where Mr Hickey said: Q. Mr Hickey, paragraph 19 and 20 relate to retaining walls for fill? A. Yes. Q. Yes, so there is, in fact, a requirement in the development approval for retaining walls for fill; is that correct? A. Yes.
Thereafter, the transcript at AB 337 records the following matters: 1. The witness withdrew (see line 25); 2. The Member asked whether "that is all the evidence in each of the respective cases": lines 28- 29; 3. Appellant's counsel indicated that there were "some housekeeping matters" including the tender of diary extracts, documents not relevant to this appeal.
Notably however the appellant did not seek leave to adduce any further evidence.
It would appear that the matter thereafter proceeded by written submissions which are found at AB 338 and following. The parties exchanged submission on each of their respective claims.
The appellant's submission in support of its claim are found at AB 367 following. At AB 479, paragraphs 4.22 and 4.25 the appellant made the following submissions: 4.22 Fill placed on the land: The Owner contends that the Builder placed fill on the land in breach of the 2007 and 2008 Development Consents. This contention should be rejected by the Tribunal. 4.25 Landscaping: The evidence establishes that the landscaping works were not defective or incomplete in any way, let alone defective or incomplete in such a way as to prevent the works from being reasonable fit for their intended use.
In reply to the respondent's submissions on the respondent's claim the appellant made the following submissions at paragraphs 3.21- 3.24 (AB 398- AB 399): 3.21 As stated above, the starting point for determining the measure of damages for any alleged breach of a building contract is the amount reasonably necessary to bring about conformity with the contractual requirements. Here, the Owner's claim fails at a threshold level as she cannot identify the contractual requirement for terraced walls in the rear yard. 3.22 Both experts (Mr Hanrahan for the Builder and Mr Hickey for the Owner) who participated in the expert's conclave agreed that the Contract does not provide for terraced walls in the rear yard: BD Tab 5.1, p253. 3.23 In cross-examination, Mr Hickey confirmed, unequivocally and without qualification, that there is no contractual requirement for the terraced walls of the type which he allowed for in item 38 of the Scott Schedule prepared by him. At Day 5,p30/47-31/2, He said: Q. So, Mr Hickey would it be a fair summary of your evidence that you are not able to identify in the 2007 approved plans, the 2007 conditions of development consent, the 2008 modified approval plans, the 2008 modified development consent or the contract or in any written variation you cannot identify any provisions for terraced walls in the rear yard of the nature that you have specified as item 38 of your Scott Schedule? A. That is correct, counsel. 3.24 In re-examination, Mr Hickey said that clause 19 of the Development Consent related to retaining walls. Significantly, however, the retaining walls referred to in clause 19 are not the terraced walls which Mr Hickey allowed for in item 38 of the Scott Schedule.
In our view, the above evidence establishes that: 1. There was before the Tribunal an issue about whether or not the works constructed complied with the plans and specifications for the contracts; 2. There was evidence by way of separate and joint reports from each of the experts concerning the scope of works required under the contract and the nature and extent of the landscaping of work and/or whether the placement of fill on site was in accordance with the contract; 3. Mr Hickey was cross examined and re-examined concerning the conditions of the Development Consent relevant to these issues; 4. At the conclusion of re-examination the appellant did not seek to adduce further evidence and closed its case despite being afforded an opportunity by the Tribunal to put forward any further evidence; 5. Thereafter the appellant made submissions about the effect of the evidence, including the obligation which arose by reason of condition 19 of the Development Consent.
The Tribunal made rulings in relation to the proper construction of condition 19 and the obligations it imposed under the contract. The correctness of the Tribunal's decision in this regard is dealt with by the Appeal Panel in the grounds of appeal set out below.
However, what is clear from the evidence produced on appeal is that the issue was raised by the respondent and the appellant had a chance to respond. No application was made by the appellant, even after its case had closed, to reopen the case or seek leave to adduce further evidence. Rather, the appellant chose to make submissions about condition 19 of the Development Consent, its construction and how the issues in dispute between the parties should be resolved in relation to this matter.
Accordingly, the Appeal Panel is not satisfied the appellant was denied procedural fairness or a reasonable opportunity to be heard in the present case.

Error in finding that fill extended to within 1 m of the boundary, proper construction of condition 19 and requirement for terracing across rear yard and the challenge to the amount awarded (Appeal Grounds 1, 2 and 3)

The Tribunal's decision on this aspect of the case is found in paragraphs 132-157. At paragraphs 133-134 the Tribunal recorded the agreement of the experts in conclave, which we have set out above, that the fill was retained on site, that the contract drawings showed a graded site and landscaping with no terracing, that excavated soil was retained on site as terraces and that the cost of retaining those terraces would be $55,750.00.
There was a dispute concerning who was responsible for placing the fill in terraces on the site. At paragraphs 140-142 the Tribunal resolved this dispute in favour of the respondent and found that excavated soil had been placed by the appellant, not a Mr Tokaji, who had apparently placed other "dirt" on site where the swimming pool was to be constructed. That finding was not challenged on appeal.
The Tribunal also concluded at paragraph 139 that the contour plan attached to Mr Hickey's report "shows contours of the fill extending from boundary to boundary" and that "the contour plan shows fill at the rear of the residence that extends from boundary to boundary". That finding was challenged on appeal.
Consequently, the Tribunal made the following findings at paragraph 143-145: 143 I find that the builder was contractually obliged to provide a retaining wall at the rear of the residence to retain the fill exiting (sic) there which extends to within one metre of the boundaries. 144 The builder has failed to discharge this contractual obligation and is therefore in breach of contract. 145 The owners will be entitled to an order in their favour in the agreed sum of $55,750.00 in connection with this item.
The applicant challenges the conclusion concerning the proper construction of condition 19 and the award of $55,750.00.
In relation to the issue concerning fill, the appellant says that the Member found that the "the contour plan shows fill at the rear of the residence which extends from boundary to boundary". However, the appellant says this was not the critical issue. Rather, the Tribunal was required to determine whether the placed fill extended to within one metre of the boundary. In this regard the appellant asserted that Mr Hickey's report provided no evidence in relation to this and there was no evidence to otherwise support the Tribunal's finding that fill extended to within one meter of the boundary.
In relation to the award, the appellant says: 1. The amount does not represent the costs to bring the works done in breach of the contract into conformance with the contract provisions; 2. The work required under the contract was a grass slope that was not terraced; 3. The Tribunal should not have allowed the cost of retaining the terraced fill because that decision "has foist on the (Appellant) builder an obligation the builder did not assume as part of the contract".
In our view, on a fair reading of the Tribunal's reasons, particularly paragraphs 136-143 inclusive, the Tribunal found: 1. that the appellant and not Mr Tokaji placed excavated material on what was an original gradually sloping site that was not terraced; 2. That the fill extended from boundary to boundary and was placed in terraces; 3. fill placed within one meter of the boundary was required to be supported by retaining walls by reason of condition 19 of the Development Consent; and 4. The failure to construct these retaining walls constituted a breach of the contractual obligation to comply with condition 19 of the Development Consent.
The appellant submitted that there was no evidence to support the conclusion that fill had been placed within one metre of the boundaries.
In our view, this submission must be rejected.
Paragraph 6.38 of Mr Hickey's report records that fill had been in contravention of the approved plans and that there was a "significant amount of fill in this yard which had been shaped into large terraces". Mr Hickey also said that the fill which had been placed needed to be retained to prevent the fill "migrating towards the rear boundary". The placement of the fill is depicted on the contour plan shown on the right hand side of the two plans set out on page 74 of Mr Hickey's report: AB 156. It shows placement of fill right up to the boundaries depicted on the left side of the drawing and adjacent to the boundary on the top side of the drawing (approximately the north east boundary having regard to the orientation of the property as shown by reference to the site plan found at AB 288).
There was no challenge to the finding on the appeal that the appellant was responsible for the placement of the fill. Further, it is evident from a comparison of the contour lines of the original site with the contour lines of the site after fill had been placed that there had been a substantial alteration of the contours of the site across its whole length right up until the boundaries: see drawings depicting "comparison contours" of the stamped plan (left side) and the existing terrace yard (right side) at AB 156. The photographs found at AB 157 and AB 158 depicting the terraces constructed by the placed fill support this fact.
The respondent's expert, Mr Hanrahan, provided limited evidence in response. It would seem that the sole challenge to Mr Hickey's evidence in the opposing expert's report was that stabilisation of the fill which had been inappropriately placed in the backyard was not an appropriate method of rectification because such works were not otherwise required by the contract (which contemplated a relatively evenly sloping backyard from the proposed premises to the boundary on the north east side of the property).
In our view, the evidence provided by Mr Hickey at paragraph 6.38 was sufficient to prove there was fill placed within one metre of the boundaries and the Tribunal was entitled to rely on this unchallenged evidence and make that finding of fact.
Accordingly, the challenge to the Tribunal's decision on the basis that there was no evidence to support the conclusion that fill had been placed within one metre of the boundary must fail.
In relation to the construction of the contract and condition 19 of the Development Consent, it is necessary to consider the provision of condition 19 which is in the following terms: Excavations or fill extending to within one (1) metre of boundary or adjacent to an easement must be supported by retaining wall/s. Erection of retaining walls is not permitted within an easement. REASON: To ensure that excavated areas are adequately retained.
In our opinion, this condition is unambiguous in its terms. That is it requires that "excavated areas" (being areas of excavation or fill) are to be adequately retained.
Condition 1(c)(i)(c) requires that any work done under the contract must comply with the conditions of any relevant development consent.
Where a contractor constructs the works in a manner different to that detailed in the plans and specifications, the work is still done under the contract and is still required to meet the conditions of any relevant Development Consent, including in this case condition 19.
The construction of the contract advanced by the appellant would mean that a builder could construct the works under the contract other than in accordance with the plans and specifications and thereby be relieved of any obligation to comply with the terms of the Development Consent. This is an illogical submission and should be rejected.
Inter alia, such an interpretation would mean that non- conforming work that was subsequently accepted by a homeowner or was not required to be rectified would not need to comply with any relevant conditions of Development Consent.
Further, there was no dispute on appeal that the appellant was responsible for carrying out the landscaping work. Consequently, to the extent that any landscaping in the rear of the yard had been altered by the appellant's work or affected by what the appellant had done, those works needed to be undertaken in a manner required by the Development Consent, including complying with condition 19 in the event there was excavation or fill works extending to within one metre of the boundary or adjacent to an easement.
Accordingly, to the extent that retaining walls were required to retain fill extending to within one metre of the boundary or adjacent to an easement, in our opinion the Tribunal was correct to conclude that condition 19 obliged the appellant to support such excavation or fill material with retaining walls.
It follows that this ground of appeal fails.
The final ground of appeal on this issue relates to the award of $55,750.00 and the submission that this amount does not represent the costs to bring the works done by the appellant in breach of contract into conformance with the contract revisions.
In this regard, the appellant relies upon the decisions of the High Court in Bellgrove v Eldridge (1954) 90 CLR 613.
In our view this submission should be rejected.
As indicated above, there was no dispute in this appeal that fill had been placed by the appellant in the rear yard and that this constituted a breach of contract. Further, it is clear from the evidence provided by Mr Hickey on behalf of the respondent that the material which had been placed in the backyard needed to be retained so as to prevent migration of the fill. There was no evidence to the contrary from the appellant's expert Mr Hanrahan.
There was no evidence to suggest that an appropriate rectification method to maintain stability of the site was to remove the fill that had been placed in breach of contract and undertake any other necessary remedial work.
The appellant offered no evidence concerning the nature and extent of the fill which it had placed in contravention of the contract and simply sought to argue that the claim for the costs of stabilising the site should be rejected because the placement of fill was not works originally contemplated by the contract. The appellant chose not to provide any evidence as to the costs that would have been incurred in removing the fill placed in breach of contract and carrying out any necessary remediation work so as to reinstate the site to its original state. The appellant provided no evidence that such a rectification method was possible or appropriate.
There was agreement between the experts that a way to rectify the damage caused by the placement of the fill in terraces was to construct works to stabilise the terraces and that the amount to do so would be $55,750.00. As recorded in the Tribunal's reasons at [133], the hand written notes of a conclave held 15 October 2012 indicate the experts "agreed with the value of $55,750.00 to rectify". In this regard the experts have qualified this opinion by inserting the words before it "if found" and appear to have agreed that the works under the contract did not require terracing. However the experts do not otherwise suggest that if found that the fill has been placed by the appellant in terraces at the rear of the site and the appellant is responsible for that work that some other method of rectification to that proposed by the respondent's expert, Mr Hickey was appropriate.
As the parties are well aware, the obligation of experts is to assist the Tribunal as required by the current Procedural Direction 3 - Expert Witnesses and the Expert Code of Conduct which previously applied to proceedings commenced in the Consumer, Trader and Tenancy Tribunal. The joint report records areas of agreement and disagreement.
The only "disagreement" appears to be a legal question about whether or not a reasonable method of rectification of the appellant's breach of contract in placing fill in terraces within one metre of the boundary without adequate retention was to stabilise the existing site rather than remove the fill and restore the site to the state contemplated by the original plans and specifications.
In the absence of any evidence to the contrary and in the absence of the experts providing an opinion that some other method was reasonable and appropriate to rectify the damage caused by the appellant by reason of placement of fill material in terraces, in our view there is no basis to conclude that the Tribunal was in error awarding $55,750.00 as the reasonable cost to rectify the damage which had been caused by the appellant. Further, to the extent the terraces were to be retained, no error is shown by including in awarding an amount for the cost of constructing any necessary retaining walls as required by condition 19 of the Development Consent.
Accordingly, this ground of appeal also fails.
It follows that in so far as these grounds of appeal require leave that leave should be refused as it is not shown the appellant may have suffered a substantial miscarriage of justice.

Orders

The Appeal Panel makes the following orders: 1. The time to lodge the appeal is extended to 6 February 2015; 2. Leave to appeal is refused; 3. The appeal is otherwise dismissed; 4. Any application for costs is to be filed and served within 14 days from the date of these orders. Any application is to include written submissions and any other material to be relied upon in support of the application; 5. The party against whom any application for costs is made must file and serve any submissions and material in reply within 21 days from the date of these orders; 6. The applicant for costs is to file any submissions in reply within 28 days from the date of these orders; and 7. The submissions by the parties are also to address the question of whether or not any application for costs should be dealt with on the papers and whether the Tribunal should make an order to allow this to occur.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 November 2015

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Judgment (12 paragraphs)

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Legislation Cited (1)

Cases Cited (4)