Anel Kurtovic v Irfan Durmo

NCAT Appeal Panel|2015-03-17

Introduction

Between March and about July 2013, the Appellant, Mr Kurtovic (the Builder) carried out some residential building work toward the construction of Mr Durmo's proposed new home in Marayong, Sydney. Mr Durmo (the Owner) is the Respondent in this appeal.
The work was carried out under a contract dated 26 March 2013 (the Contract). It was common ground on the appeal that in breach of the Contract the Builder refused to continue with the work and as a consequence was liable for the increased cost of the contracted works resulting from this breach. However, there was a dispute about the quantum of such cost, as well as disputes about the Builder's liability for defective wall work and the quantum of the Owner's liability to the Builder for soil removal.
In the Tribunal below, the Owner was awarded damages in the sum of $34,129.24. That sum was made up of three components: 1. cost to complete the work in the sum of $46,869.24, 2. cost of rectification of defective wall work in the sum of $4,510.00, 3. deduct from the total of the amounts in (1) and (2) the sum of $17,250.00 paid to the Builder for soil removal which was extra to the fixed contract price of $115,720.00.
The Builder now appeals against the damages award. For various reasons he takes issue with aspects of each of the components making up the award of damages.
The most significant issue concerning the size of the damages award concerns the Owner's liability for soil removal. With respect to that issue, in our opinion there are no valid grounds for appeal.
However, we uphold the appeal in respect of some aspects of the decision of the Tribunal below. In our opinion, those aspects should be reconsidered by the Tribunal below constituted by the member who made the decision.
It is clear that the Owner is entitled to damages in an amount adjusted to take account of the errors we have identified. Reconsideration by the Tribunal below of certain aspects of the decision can only result in the adjusted amount of damages increasing or staying the same. In the circumstances, it is appropriate that orders be made which provide for the Builder to pay the Owner the adjusted amount of damages which amount may or may not be increased following a reconsideration by the Tribunal below.

Grounds of Appeal

The Builder's grounds of appeal consist of a brief identification of each aspect of the reasons below that he disputed. There was very little explanation of the basis for his dispute.
In his document supporting his Notice of Appeal there was no outline of a case for leave to appeal directed at trying to show that the decision below was not fair and equitable or against the weight of the evidence. Understandably, given that he was unrepresented, there was no identification of any question of law raised by his appeal.
An appeal from a decision of the Consumer and Commercial Division of the Tribunal is not permitted in all cases. There must either be a question of law involved or the Appeal Panel must be satisfied that a substantial miscarriage of justice may have occurred because the decision below was not fair and equitable or was against the weight of the evidence or new significant evidence had arisen that was not reasonably available at the time of the hearing in the Tribunal below: s 80 of the Civil and Administrative Tribunal Act (the Act) and cl 12(1) of Schedule 4 of the Act.
In this appeal the Builder does not rely on any new evidence. Nor do we think that any of his points are properly categorised as attempts to demonstrate that any part of the decision was against the weight of the evidence.
However, we have discerned that in limited respects his points expose an absence of reasons from the Tribunal below. In those respects his appeal is on a question of law in respect of which he has an appeal as of right: s 80(2)(b) of the Act.

Facts, findings and issues

Although not identified with precision, the works the subject of the Contract included such items as demolition, footings, supply of concrete, formwork and steel for slabs and construction work in relation to a retaining wall and inside walls.
The Builder was an unlicensed contractor. As such, he was prohibited from contracting to do any residential building work: s 4(1) of the Home Building Act 1989. As a consequence, the Contract was unenforceable by the Builder but the Builder was liable for damages for breach of contract: s 10(1) of the Home Building Act 1989.
The Contract provided for a fixed price of $115,720.00, inclusive of GST. However, soil removal was expressly excluded from this price and was to be charged at an "extra cost of $250 + GST". Progress payments were to be made.
Over the period from 26 March 2013 to 27 May 2013 the Owner made eight payments to the Builder totalling $108,250.00. Some amount of this total was for soil removal. Hence, such latter payment was not made in respect of work the subject of a fixed price.
It was implicit in the decision of the Tribunal below that the Contract was lawfully terminated by the Owner after the Builder refused to return and complete the works. There was no challenge to that positon on appeal. The time when this occurred seems to have been in November 2013, after considerable work had been done by the Builder and after the inspecting engineer would not certify the works.
The work required to complete the contracted works was done by other contractors. This consisted of formwork for a suspended slab and the supply and fixture of that suspended slab.
The Tribunal below found on the "only evidence before it" that the Owner's cost to complete the works was $46,869.24, inclusive of GST: at [8] and [9]. This was the total of two invoices - one from Slavco Duric and the other from Kadric Building Services.
The invoice from Kadric Building Services included charges totalling $4,108.40 under the category of "Extra charges …". These charges were additional to a charge of $24,000.00 for the supply and fixture of a suspended slab. In the Tribunal below, and on appeal, the Builder disputed the Owner's entitlement to these extra charges on the basis that they were for work that was additional to the contracted works (Issue 1).
The other element of the Owner's claim in the Tribunal below was for rectification work to walls that the Owner claimed were installed by the Builder. The claim here was for the amount of $4,510.00, inclusive of GST. This was the subject of an invoice from Hills Stonemasonry dated 25 January 2014.
In respect of this claim, the Builder did not dispute the Tribunal's finding at first instance that the "brickwork was defective" (at [7]) nor did he dispute the quantum of the cost of rectification. His argument was that "brickwork" was not part of the contracted works (Issue 2).
The Owner's claim for $46,869.24 for the cost to complete the fixed price component of the contracted works was based upon the premise that the fixed price for those works had already been paid to the Builder. Hence, the whole of this additional cost was the financial loss to the Owner of not having these works carried out at the fixed price of $115,720.00.
However, it was accepted by the Owner in the Tribunal below, and on appeal, that soil had been removed, and that if invoices were provided for such work money was owing to the Builder for that removal and that money had to be deducted from the damages the Owner was entitled to receive. This was because soil removal was separate from the fixed price component of the contracted works.
When the Builder belatedly supplied invoices for the soil removal there were three invoices totalling $39,930.00, inclusive of GST (this excludes a separate charge for excavation).
The Owner disputed the quantum of these charges for soil removal. The Tribunal below upheld the Owner's objection. The Tribunal below found that the amount for soil removal that the Builder was entitled to was only $17,250.00.
The Tribunal below also found that part of the amount actually paid to the Builder by the Owner had been for soil removal and that the sum of $17,250.00 "be allowed in the amounts paid" by the Owner: at [9] and [12(iv)].
On appeal, the Builder contended that it was entitled to the above sum of $39,930.00, inclusive of GST, for soil removal and that this sum had, in fact, been covered by the payments made by the Owner on 17 April 2013, 1 May 2013 and 8 May 2013 (Issue 3).
A fourth issue on the appeal concerned five payments totalling $5,204.68 made by the Owner to suppliers in July 2013. The Tribunal below found that these were paid to suppliers "at the request" of the Builder and formed part of the total amount of $118,448.68 paid by the Owner in respect of the contracted works: at [6].
On appeal, the Builder disputed that the payments were made at his request and claimed that these payments were for items additional to the contracted works (Issue 4).
In determining the damages award the Tribunal below proceeded on the basis that following the termination of the Contract, the whole of the cost to complete the fixed price component of the contracted works, namely $46,869.24, was recoverable by the Owner. However, such cost was only recoverable to the extent that the total cost to the Owner of the fixed price component of the contracted works exceeded the agreed fixed price of $115,720.00. The Builder contended that the Tribunal below erred in failing to carry out this calculation (Issue 5).

Issue 1 - Extra charges in cost to complete following termination

In relation to Issue 1, in our opinion, the Tribunal below erred because in finding that the cost to complete was $46,869.24 it did not explain why it found that the Owner was entitled to the extra charges of $4,108.40 included in this figure.
It is apparent from the Scott Schedule before the Tribunal below that the Builder was disputing these extra charges. The invoice raised a question about whether these extra charges were for work to complete the contracted works. For instance, there is work referred to in these extra charges relating to a back verandah which does not appear to be part of the work described in the Contract.
At the hearing of the appeal, the Owner indicated that these extra charges were for work he had been advised to undertake as part of the rectification of the defective retaining wall (see Issue 2 below). If that is the case, then it fell to be considered and relevant findings made within the defective wall category of loss.
Whether there is an absence of reasons that should have been provided raises a question of law: Campbelltown City Council v Vegan (2006) 67 NSWLR 372 at [130]. The necessity for the Tribunal to provide adequate reasons is now well established: Collins v Urban [2014] NSWCATAP 17 at [49]-[57].

Issue 2 - defective wall

In the Tribunal below, the Owner claimed that the retaining wall of the basement was not done according to the engineering plan: Scott Schedule, item 1. The Owner supported this claim with an invoice from Hills Stonemasonry, dated 24 January 2014 in respect of "Repair to existing concrete block wall" (our emphasis). The invoice described the various defects with the existing work.
In the Tribunal below and on appeal the Builder's position was that this work was not part of the contracted works. Pertinent to this claim, the Tribunal below made findings that the contracted works covered, amongst other work, "brick and block work" (at [2]), that the "brickwork" was defective and that the amount in the Hills Stonemasonry invoice of $4,510.00 should be awarded as the cost of rectification: at [7].
On appeal, the Builder argued that he had no responsibility for brickwork. The Builder may be correct about this. It may be that the Builder's responsibility in respect of the retaining wall extended to the concrete block wall component of that wall but not to the brickwork. In this respect, we note: 1. a version of the engineering drawings for the retaining wall shows an outer layer for a brick wall which is distinct from a concrete block wall, 2. the breakdown of work on the final page of the Contract contained no reference to brickwork and the only reference to the retaining wall is under the section headed "Concrete".
It is clear that the Contract covers, at least, some construction work in relation to the retaining wall. In addition to what we have referred to in paragraph 39 above, the third progress payment is to be made when "the retaining wall and inside walls and form work for the second slab are completed". In our opinion, it is clear enough that the work under the Contract includes, at least, the construction of the concrete wall component of the retaining wall.
In these circumstances, in our opinion, any error by the Tribunal concerning the extent of the Builder's responsibility and description of the defect as concerning the "brick work" is not material. This is because it is apparent from the Hills Stonemasonry invoice that the defects rectified were in the concrete block wall component.
In these circumstances, we do not uphold the appeal in respect of the defective wall issue.

Issue 3 - soil removal

The Builder's appeal in respect of soil removal was based on his contention that the quantity of loads in two of the invoices for soil removal, namely those from Allams Landworks P/L and Sudi Excavation, needed to be doubled from that found by the Tribunal below. His argument was that for each "load" stated in these invoices a truck and a trailer had been loaded and this amounted to two loads, not one, each chargeable at the contract rate of $250.00.
This point was not raised by the Builder in the Tribunal below.
If the point had been raised evidence could have been given which may have prevented the point from succeeding. The Contract was unclear as to how the charge of $250.00 was to be applied. Evidence could have been given about that subject. Other evidence could have been given about the extent to which a truck and a trailer was, in fact, used.
The considerations preventing new points being raised on appeal should be applied to internal appeals to the Appeal Panel: Hudson v Arp 1 (NSW) Pty Ltd [2014] NSWCATAP 61; Drivas v Burrows [2014] NSWCATAP 87 at [30]-[33].
For this reason we reject the appeal in relation to this issue. We do so whether or not a question of law is involved or leave to appeal is required.

Issue 4 - payments made at the Builder's request

In the Tribunal below the Builder took the position that the Owner had paid the sum of $113,244.00 under the Contract made up of the amount paid to him of $108,250.00 and a payment of $4,994.00 paid by the Owner to a supplier. The Owner claimed that the correct amount was $118,448.68. The difference between the Builder and the Owner arose because the Builder disputed that some of the payments made by the Owner to suppliers before the Contract was terminated were for the contracted works.
The Owner's claim for these disputed payments was supported by the identification of these payments in his bank statements. However, these entries on their own did not establish that they were for the contracted works.
The Tribunal below found that these disputed payments were part of the payments made at the Builder's request - the payments in issue are the five payments identified in paragraphs 6x, xi, xii, xiii and iv of the reasons below. However, the basis for that finding was not identified. It was a finding on a material question of fact in respect of which the evidence or other material upon which it was based needed to be set out: Collins v Urban at [31]-[32].
For this reason, we uphold the appeal in relation to this issue.

Issue 5 - calculation of the additional cost of the fixed price component of the contracted works

In our opinion, the Tribunal below made an error in its final calculation of damages. In determining the Owner's loss resulting from the Builder's refusal to complete the works the difference between the total cost to the Owner of the fixed price component of the contracted works and the agreed fixed price of $115,720.00 needed to be calculated.
On the findings of the Tribunal below this difference, if calculated, would have been $32,347.92 arrived at as follows: 1. $46,869.24 paid to Slavco Duric and Kadric Building Services, plus 2. $101,198.68 paid to the Builder or to suppliers at his request, being the sum of $118,448.68 less $17,250.00 for soil removal, 3. Total of (1) and (2) is $148,067.92, less 4. $115,720.00, being the fixed price.
To this figure, would then be added the damages to rectify the defective wall in the sum of $4,510.00 resulting in a total award of damages in the sum of $36,857.92.
Instead of making this calculation, the Tribunal below proceeded on the basis that it was the whole of the cost to complete the fixed component of the contracted works that was recoverable, from which it then deducted the amount the Builder was entitled to receive for soil removal: at [12].
In working through the outcome of the appeal below we have followed the method referred to in paragraphs 52 to 54 above.

Outcome of appeal

In limited respects, the appeal has succeeded. The following parts of the quantum of the Owner's damages need to be reconsidered by the Tribunal below: 1. whether the extra charges totalling $4,108.40, plus GST, set out in the invoice from Kadric Building Services dated 23 December 2013 is recoverable by the Owner; 2. whether the Owner's payments in paragraph 6x, xi, xii, xiii and xiv of the reasons below were made at the request of the Builder in part payment of the fixed contract price of $115,720.00.
The Owner's entitlement to damages can now be recalculated, although those damages may be increased (but not reduced) depending upon the outcome of the reconsideration by the Tribunal below of the above two issues.
That recalculation is as follows: 1. additional cost of $22,624.00 to carry out the fixed price component of the Contract as a result of the Builder's breach in refusing to complete these works. This sum is arrived at as follows: 1. $42,350.00, being the total of the invoices from Slavco Duric and Kadric Building Services, inclusive of GST, less the disputed amount of $4,108.40 in respect of the extra charges; 2. deduct from $42,350.00 the sum of $19,726.00 being the amount of $115,720.00 (the fixed price component of the Contract) less $95,994.00, which amount is calculated as set out in (2) below; 1. the sum of $95,994.00 is the amount paid by the Owner in respect of the fixed price component of the Contract. That sum of $95,994.00 is arrived at by deducting from the figure of $118,448.68 (the Tribunal's finding at [6] as to the total amount paid) the amount of $17,250.00 in respect of soil removal and the disputed amount of $5,204.68 being the total of the amounts paid to suppliers in paragraphs 6x, xi, xii, xiii and xiv of the reasons below; 2. to the additional cost to carry out the Contract of $22,624.00 add the cost to rectify the defective wall of $4,510.00 resulting in a total amount of damages of $27,134.00.
Therefore, the Owner has suffered damages in the sum of $27,134.00 which sum may be increased depending upon the outcome of the Tribunal's reconsideration of the issues referred to above.
In these circumstances, in our opinion, it is appropriate that orders be made reflecting this outcome by ordering that the Builder now pay the Owner this adjusted amount of damages whilst recognising that the amount of damages may be increased as a result of the reconsideration by the Tribunal below of these two items affecting the quantum of damages: s 81(1) of the Act.

Orders

For the above reasons, the Appeal Panel makes the following orders: 1. The appeal is allowed; 2. The orders made by the Tribunal below requiring that the Appellant pay the Respondent the sum of $34,129.24 be set aside; 3. In substitution for the order made by the Tribunal below order that the Appellant pay the Respondent the sum of $27,134.00 and such further damages, if any, as may be determined by the Tribunal below as a result of its reconsideration of the issues concerning quantum of damages referred to in (4) below; 4. The following parts of the Respondent's case in respect of the quantum of his damages be reconsidered by the Tribunal constituted by the member who made the decision below: 1. whether the items described as extra charges in the invoice from Kadric Building Services dated 23 December 2013 is part of the damages recoverable by the Appellant; 2. whether the payments in paragraph 6x, xi, xii, xiii and xiv of the reasons below were paid by the Appellant at the request of the Respondent in part payment of the fixed price component of the contracted works. 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: 05 May 2015

At a glance

Court

Decision date

Source

Judgment (10 paragraphs)

Parties

Cases Cited (5)