B & W Windows (Residential) Pty Ltd v Sibilia

B & W Windows (Residential) Pty Ltd v Sibilia - [2021] NSWCATAP 271 - NSWCATAP 2021 case summary — Zoe

Background

By a contract entered into on 29 January 2018 the appellant agreed to manufacture, supply and install windows, doors and screens at the respondents' principal place of residence at Marrickville. The contract included terms: 1. "waterproofing membrane to sill to be provided by builder"; 2. [The appellant] "is responsible for waterproofing of our windows only. If structure is not waterproofed correctly, warranties are voided"; and 3. "B & W's liability is limited to replacing the goods or repairing the goods".
The appellant installed the windows and doors in June 2018. A dispute arose in respect of an allegation by the respondents that three of the windows leaked through the window frames and sills.
On 14 January 2019 the parties entered into a Deed of Settlement and Release (Deed). By clause 2(a) of the Deed the appellant agreed "without admission of liability" to perform and complete rectification work which included the removal of three windows from site, identified as the pool window, the en-suite window and the master bedroom window, the refabrication of those windows and the re-installation of those three windows to the site.
Pursuant to clause 10 of the Deed, the appellant agreed that the statutory warranties set out in the HBA applied to its work and would apply for two years from the date of practical completion in respect of all defects and for six years for a breach that results in a major defect within the meaning of the Act.
Clause 2(b) of the Deed also provided: "The owners have agreed that, in respect of the above rectification work, the Owners will pay or be responsible for all scaffolding charges; the cost of temporary boarding up of the openings on site; and the cost of repairs that will be required to the material surrounding the openings that are damaged in the removal or installation process".
Clause 7 of the Deed provided: "Rectification work not creating a new contract. It is agreed by the Parties that the rectification work done by B & W was within the scope of works of the original contract. Neither the doing of the rectification work by B & W nor this Deed amount to a new contract between the parties to do residential work."
The windows were removed by the appellant on or about 21 January 2019 and were re-manufactured at the appellant's factory. The windows were then installed by Reza, a sub-contractor contracted to the appellant, on 29 and 30 January 2019.
On 31 January 2017 the windows were tested with a hose. The respondents asserted that all three of the windows still leaked. The appellant conceded that at the time of the test on 31 January 2019, the kitchen pool window and the master bedroom window leaked.
Reza returned on the morning of 1 February 2019 and applied silicone to the pool kitchen window and the master bedroom window.
A meeting occurred on site on 6 February 2019. The appellant's installation manager, Mr Pawa, who attended that meeting asserted that the parties had reached an agreed position which was that: the master bedroom window leaked because the sub-sill was defective; the kitchen pool window had leaked but that leak had been stopped by the silicone, however the application of the silicone was untidy; and the en-suite window did not leak.
The appellant claimed that they had offered to remove the master bedroom window and repair the sub-sill and to tidy up the silicone on the kitchen pool window. The appellant maintained that it had then been excluded from the site and had been denied the opportunity to undertake repair of the leaking windows.
The respondents maintained that all three windows required replacement because they were missing "gaskets or small joint sealer" and by reason of the absence of flashing of the window openings. The respondents relied upon the expert report of Mr Brennan who had inspected the windows on 28 February 2019.
The respondents' case was that they refused the appellant access to repair the windows because the appellant would not disclose the manner in which it proposed to rectify the issues.
The respondents subsequently employed a different window contractor to manufacture replacement windows and to install those windows in place of the windows manufactured and supplied by the appellant.
The respondents brought proceedings in the Tribunal seeking from the appellant the cost of the replacement windows, the amount of three invoices from the respondents' builder, and the cost of scaffolding.

[4]

The Decision

By a decision delivered on 2 October 2020, the Tribunal concluded that all three windows were leaking and defective because the appellant had not utilised small joint sealer in the re-manufacture.
The Tribunal reached that conclusion in reliance on the evidence of Mr Brennan and a Jones v Dunkel inference (Jones v Dunkel (1959) 101 CLR 298) arising from the absence of evidence from any witness involved in the re-manufacture (Decision paragraph [52]).
The Tribunal determined that the appropriate method of rectification was the replacement of the windows because they were missing gaskets or small joint sealer and that the use of silicone to stop leaks was not appropriate. The Tribunal further determined that because the appellant had already replaced the windows once, the replacement of the appellant's windows with windows from a different manufacturer was a reasonable course to adopt.
The Tribunal accepted that the respondents could not afford to wait, that the parties were "unlikely to narrow the issues in dispute" and that the appellant rejected the proposition that the windows had been defectively re-manufactured. The Tribunal determined that in those circumstances it was reasonable for the respondents to order new windows from a third party supplier and rejected the appellant's submission that the respondents had failed to mitigate their loss.
The Tribunal accepted the evidence of Mr Brennan over that of Mr Sim (the expert called by the appellant) because Mr Brennan was the more experienced expert in respect of window manufacture and installation. The Tribunal also found that Mr Sim's opinion should be given lesser weight because he had "adopted the Schlegel test" which the Tribunal accepted is not the appropriate test for windows "fitted on site into a timber frame with lightweight external cladding".
The Tribunal generally found the evidence of the lay witnesses, Mr Sibilia and Mr Pawa (who gave evidence on behalf of the appellant) not to be persuasive in relation to the cause of the leaks.
The Tribunal found the appellant liable for the reasonable cost of rectification of the leaking windows and awarded the respondents: 1. The amount of an invoice from Wideline Pty Ltd for the supply and installation of the replacement windows. 2. $29,601.69 in respect of "loss and damage in connection with the removal and replacement of the windows" reflecting three invoices issued by Mr Bannister, the respondent's builder. 3. $9,420 for the supply of scaffolding which the Tribunal found was evidenced by the "invoice at Y4".
The total amount awarded by the Tribunal was $50,771.69. The Tribunal also ordered the appellant to pay the respondents' costs.
The appellant filed a Notice of Appeal from the decision and an application for a stay of the orders on 19 October 2020.
On 4 November 2020 the Appeal Panel stayed the operation of the Tribunal's orders until further order, on condition the appellant paid the amount of the judgment to the trust account of the respondents' solicitors, to be held by the respondents' solicitor on his undertaking not to disburse the funds except as agreed in writing by the parties or to give effect to an order of the Appeal Panel.

[5]

The scope and nature of internal appeals

By virtue of s 80(2) of the NCAT Act, internal appeals from decisions of the Tribunal may be made as of right on a question of law, and otherwise with leave of the Appeal Panel.
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question. 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. The decision of the Tribunal under appeal was not fair and equitable; or 2. The decision of the Tribunal under appeal was against the weight of evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; or 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.

[6]

Grounds of Appeal

The appellant's Notice of Appeal stated that the appellant appealed on a question of law and also sought leave to appeal on the grounds that the decision is not fair and equitable and that the decision is against the weight of evidence.
The appellant set out in an annexure to the Notice of Appeal, under the heading "Grounds of Appeal", forty paragraphs. In relation to the application for leave to appeal the appellant set out eleven paragraphs directed to the proposition that the decision was not fair and equitable, and twenty one paragraphs directed to the proposition that the decision was against the weight of evidence.
The Notice of Appeal did little to narrow the issues or identify for the Appeal Panel the questions of law which the appellant sought to raise. The written submissions filed by the appellant did not provide any clarification.
In the course of oral submissions on the first day of hearing before the Appeal Panel, Mr Dalgleish, counsel for the appellant, indicated that two grounds encompassing allegations of denial of procedural fairness, arising from the fact that Mr Sim had not seen a video relied upon by Mr Brennan, and in relation to the Tribunal drawing inferences from a failure to cross-examine Mr Brennan, were no longer pressed.
After the first day of the hearing of the appeal, at the conclusion of which Mr Dalgleish had not completed his submissions, the Appeal Panel directed the appellant to file a document setting out the specific errors of law and the grounds on which leave was sought, cross-referencing each ground with the relevant submissions.
The appellant filed a document on 3 February 2021 purporting to comply with that direction. Although the document did not provide the clarity which the Appeal Panel was entitled to expect, it is possible to identify from that document the following grounds of appeal: 1. The Tribunal erred in law by failing to apply or by misapplying the terms of the contract requiring "waterproofing membrane to sill to be provided by builder" and providing that the appellant "is responsible for waterproofing of our windows only". 2. The Tribunal erred in law by failing to apply or misapplying the term of the contract limiting the appellant's liability to repair or replacement. 3. The Tribunal erred in law by failing to apply or misapplying the term of the Deed of Settlement allocating to the respondents the obligation to make good any damage caused by the removal of the windows. 4. The Tribunal erred in law by failing to take into account the policy behind ss 18BA and s 48MA of the HBA, and the fact that the respondents had refused access to the appellant to rectify the windows, in concluding that it was reasonably necessary to use another contractor to supply replacement windows. 5. The Tribunal erred in law by awarding the respondents the amount of the builder (Mr Bannister's) invoices, when the evidence did not establish that the work the subject of those invoices was required in consequence of any breach of warranty on the part of the appellant. 6. The Tribunal erred in law by finding, contrary to what the appellant submitted was a concession by Mr Brennan, that the appellant had failed to install small joint sealer within the re-manufactured windows. 7. The Tribunal erred in law by awarding the respondents a greater sum for the provision of scaffolding than the respondents had claimed.
The appellant also asserted that the Tribunal's reasons were inadequate in respect of each of the issues the subject of the grounds identified above as (1), (2), (3), (4) and (5).
A number of the above grounds do not at first blush involve questions of law. We will address this issue to the extent necessary when considering each ground.
The appellant also relied upon each of the above allegations in support of its application for leave to appeal.

[7]

Ground 1 - Contractual obligations regarding waterproofing

The appellant's case was that, by reason of the specific contractual terms: "waterproofing membrane to sill to be provided by builder"; and that the appellant was "responsible for waterproofing of our windows only. If structure is not waterproofed correctly, warranties are voided", the appellant was not responsible for the installation of flashing around the windows.
The respondents submitted that the terms of the contract were superseded by the Deed. The respondents relied upon clause 14 of the Deed which provided: 14. Entire agreement This Deed 14.1 constitutes the entire agreement between the parties as to its subject matter; and 14.2 in relation to that subject matter, supersedes any prior understanding or agreement between the parties and any prior condition, warranty, indemnity or representation imposed, given or made by a party.
In reply, the appellant referred to clause 7 of the Deed which we have set out at [6] above. The appellant submitted that clause 7 preserved the terms of the original contract, and that clause 14, properly construed, was intended "to avoid arguments that pre-Deed negotiations, oral representations and correspondence could form part of the Deed or affect its construction".
The Tribunal addressed the appellant's submissions regarding the contractual obligations relating to waterproofing at [57] as follows: The respondents raise, by way of defence, that the windows failed because the builder, Mr Bannister, failed to install the window flashings in accordance with good building practice and that the builder's failure to install flashing is causative of the leaks in all three windows and therefore causative of the applicant's loss. I accept and prefer the expert evidence of Mr Brennan in his report of 17 May 2020 that it was the responsibility of the window supplier to "flash the building element to avoid moisture egress between the window frame and the house frame" and accept that the report of Mr Sim in respect of the flashing should be disregarded because the Schlegel Test Mr Sim considered is "irrelevant to the windows fitted on site into a timber frame with light weight external cladding". On balance where Mr Brennan and Mr Sim differ on the issue of flashing, I accept and prefer the opinion of Mr Brennan as the more experienced expert in respect of window manufacture and installation. I also find that as Mr Sim adopted the wrong Schlegel Test, his opinion is not as persuasive.
Reference to the respective experts' reports is necessary to understand that conclusion.
Mr Brennan's opinion was that the windows leaked both by reason of the absence of small joint sealer and by reason of the absence of flashing around the windows.
Mr Sim's opinion was that there was small joint sealer and that flashing of the windows was unnecessary. In support of the proposition that flashing was unnecessary Mr Sim stated that "the windows [are] manufactured from commercial grade sections and used sub-heads and sub-sills which act [as] a flashing".
Mr Sim also stated "there is no requirement for additional flashing to the head, jambs or sills of this type of window, if installed in the correct manner as per the Schlegel Test Report."
The Schlegel Test Report was a test report issued by Schlegel Pty Ltd, an NATA accredited laboratory, which certified the performance of a sample window. The test was carried out in 2010.
Mr Brennan's evidence in reply was that testing in a "Schlegel portable test rig" did not extend to flashing as: …there are many varied building structures by which windows and doors need to be assembled into, so it is impossible to test in all building envelope constructions…
The Tribunal's conclusion that Mr Brennan's evidence should be preferred to the evidence of Mr Sim was a finding of fact. Clearly the Tribunal determined that the windows required flashing and that flashing had not been installed.
The conclusion that it was the responsibility of the window supplier to "flash the building element to avoid moisture egress between the window frame and the house frame" was based upon the statement in paragraph 4.5 of Mr Brennan's reply report that: …Sub heads, sub jambs, and sub/sump sills are a means of installation usually used in commercial shop front and residential concrete construction. They do not substitute for flashing at any time, but especially when a cavity wall construction or timber frame light weight cladding is used. If you are using all these elements to install, you still need to flash to the building element to avoid moisture egress between the window frame and the house frame, through to internal wall surfaces.
Mr Brennan did not state that it was the responsibility of the window supplier and installer to "flash to the building element", only that it was necessary to install flashing. However, Mr Brennan did state in his oral evidence that the flashing of a window was part of the installation of the window rather than preparation of the opening for the installation of the window.
In rejecting the appellant's submission that any leakage arising from the absence of flashing was the responsibility of the builder and not the appellant, the Tribunal does not appear to have considered the question whether the contractual provisions relating to responsibility for waterproofing cast the responsibility to install flashing on the builder, or if so, whether those provisions were superseded by the Deed.
However, the Tribunal determined that the windows leaked by reason of the absence of small joint sealant and concluded on that basis that the windows were defective and required replacement.
Accordingly, the question who was responsible for the installation of flashing was not relevant to the question whether the appellant was responsible for the cost of replacement of the windows. The fact that the absence of flashing might have contributed to the extent of leakage could not alter the conclusion that the windows were defective.
Accordingly, ground 1 must be rejected. It involves neither an error of law nor a conclusion that was not fair and equitable or against the weight of evidence.
We reach this conclusion independently of the question whether clause 14 of the Deed, properly construed, excluded reference to the terms of the original contract. However, it is clear in our view that, in light of the explicit provision in clause 7 of the Deed, clause 14 cannot be construed as excluding reference to the terms of the original contract in ascertaining the extent of the appellant's obligations.

[10]

Ground 4 - failure to take into account Sections 18BA and 48MA of the Home Building Act

Sections 18BA and 48MA of the HBA provide: 18BA Duties of person having benefit of statutory warranty (1) Breach of a statutory warranty implied in a contract constitutes a breach of the contract and accordingly - (a) a party to the contract who suffers loss arising from the breach has a duty to mitigate their loss, and (b) the onus of establishing a failure to mitigate loss is on the party alleging the failure. (2) The duty of a party to a contract to mitigate loss in respect of a breach of a statutory warranty extends to a person who has the benefit of the statutory warranty or who is entitled to the same rights as those that a party to the contract has in respect of the statutory warranty. (3) The following duties apply to a person who has the benefit of a statutory warranty but do not limit any duty the person has to mitigate loss arising from breach of a statutory warranty - (a) when a breach of the statutory warranty becomes apparent, the person must make reasonable efforts to ensure that a person against whom the warranty can be enforced is given notice in writing of the breach within 6 months after the breach becomes apparent, (b) the person must not unreasonably refuse a person who is in breach of the statutory warranty such access to the residential building work concerned as that person may reasonably require for the purpose of or in connection with rectifying the breach (the duty to allow reasonable access). (4) A breach of warranty becomes apparent for the purposes of this section when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach. (5) If a failure to comply with a duty under this section is established in proceedings before a court or tribunal concerning a breach of a statutory warranty, the failure is a matter that the court or tribunal may take into account. If the failure is a failure to comply with the duty to allow reasonable access, the court or tribunal must take the failure into account. 48MA Rectification of defective work is preferred outcome in proceedings A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
The appellant submitted that the respondents had failed to comply with s18BA and that the Tribunal had failed to address the issue. The appellant's submissions to the Tribunal regarding s 18BA were as follows: Mr Sibilia unreasonably refused BW access to site to rectify, however much this was dressed up in conditions to make it look like something else. Refusal of access is something that the Tribunal must take into account and should be fatal to the claim.
Although the Tribunal did not specifically refer to s 18BA, it did address the question whether it was reasonable for the respondents to contract an alternative supplier in the following terms (at [54]-[55]): …In light of the fact that the applicants had already agreed to the remanufacturing process once, and as that had failed, I find that the replacement with Wideline windows was a reasonable course to adopt. … I accept the evidence of Mr Sibilia that the applicants were not in a position to wait any longer as the building project was going over time and over budget. It was apparent from the 6 February 2020 site meeting that the respondent was rejecting Mr Sibilia's contention that the windows were internally defective, and insisting that external factors, such as defective sub sill installation by Raza (the respondent's contractor) and lack of flashing (by the builder) was to blame. Given the parties views about the underlying cause of the leaks, I am of the view that the parties were, as of 6 February 2020, unlikely to narrow the issues in dispute, and the respondent rejected then, as it does now, that the windows were defectively re-manufactured. I therefore find it was reasonable that by 8 February 2020, Mr Sibilia took steps to order new windows. I reject the contention that the applicants, by ordering new windows were the authors of their own loss, or failed to mitigate losses by refusing a further application of silicone or further removal of the windows to inspect sub-sill defects.
In relation to s 48MA, the Tribunal held: In respect of s48MA I find that the rectification work has been completed and that there is no possibility for the builder to return. For the reasons set out above, I find that it was not unreasonable of the applicants to refuse further rectification work by the builder. As found above I reject the contention that the applicants failed to mitigate their losses.
In our view, notwithstanding that the Tribunal did not specifically refer to s 18BA, it did address the question whether the respondents had failed to mitigate their loss and whether the respondents had acted reasonably in using a different supplier to replace the windows.
The Tribunal specifically addressed the question whether, if the respondents had permitted the appellant further access, that would have resulted in a satisfactory outcome. The Tribunal concluded that, because the parties were at odds over the underlying cause of the leaks, it was reasonable for the respondents to order new windows from another supplier.
The Tribunal found that the respondents had not unreasonably refused the appellant access to rectify the breaches of statutory warranties in relation to the windows. Consequently s 18BA(5) did not make it mandatory for the Tribunal to take into account the refusal of the respondents to allow the appellant access to undertake rectification.
As the Tribunal made factual findings which meant it was not required to address the requirements of s 18BA(5), it cannot be said that the Tribunal made an error of law in failing to refer to s 18BA. Nor can it be said that the conclusion that the respondents had not unreasonably refused the appellant access was against the weight of evidence or not fair and equitable.
The Tribunal did explicitly refer to s 48MA and determined that, the windows having been replaced, there was no basis to make a work order.
Ground 4 must be rejected.

[11]

Ground 5 - the award of damages in respect of the amount of the builder's invoices

The Tribunal dealt with the builder's invoices as follows (at [59]): …Mr Bannister provided a breakdown of costs, and I have received no break-down of costs to the contrary and he was not cross-examined in a way that causes me to reject his evidence. In the absence of any expert building evidence to the contrary, I make orders in accordance with the total contained therein. I award $29,601.69 in accordance with three invoices (Y1-Y3) for loss and damages in connection with the removal and replacement of the windows.
The appellant submitted that, in finding the appellant liable to the respondents for the amount of the three invoices from the builder, the Tribunal had: 1. Placed the onus of proof on the appellant in respect of proof of damage; 2. Failed to take into account the contractual provisions regarding responsibility for waterproofing; and 3. Failed to give adequate reasons for concluding that the work referred to in the invoices was work required in consequence of the appellant's breach of contract, that is "work required in order to bring the work into conformity with the contract".
The appellant submitted that the only evidence that the builder's work, the subject of the invoices, had anything to do with the windows, was in the wording of the invoices themselves and in contemporaneous emails from Mr Bannister's father, who had apparently prepared the invoices.
The appellant submitted: The fact that the invoices provide some sort of 'breakdown of costs' does not mean that any of those costs were incurred as a result of BW's breach of contract. The Tribunal made no attempt to analyse the content of the invoices in terms of BW's contractual obligations.
Although the Tribunal referred to the invoices as Y1-Y3, they were in fact identified as Annexures Y-7, Y-8, and Y-9. The three invoices were: 1. Annexure Y-7, in the amount of $10,908.70. The narration on this invoice described the work the subject of the invoice as "Remove existing defective windows, existing external blinds, cladding etc, and prepare openings for the new windows; Provide adequate flashing and install windows to openings. The invoice recorded that the work involved 68 hours of labour, and also included charges of $2,485 in respect of materials, the nature of which was not specified, and $250 for pump hire. 2. Annexure Y-8, in the amount of $10,007.39. The narration on this invoice described the work the subject of the invoice as "Continue installation of sheeting, cappings, moulding etc". The labour involved was 83 hours over a period of about two weeks. The invoice also included a charge of $653.63 in respect of "materials" with no further detail. 3. Annexure Y-9, in the amount of $9,092.16. This invoice included two narrations describing the work the subject of the invoice. The first narration was "Complete remainder of external flashings, cappings, fix blinds, removal of scaffold" in respect of which 59 hours were charged. That narration was followed by a charge of $480 for unspecified materials. The second narration was "Relocated fan position, including blocking and support, relocating door handles to wet areas and patching". The invoice included a further charge of $339 in respect of unspecified materials" and a second charge for labour of 14 hours. It was not clear from the invoice whether that labour related to the second narration as it appeared above the second narration.
The appellant acknowledged that the first invoice (Annexure Y-7 in the amount of $10,908.70) included the removal of existing windows and "prepare openings for the new windows" but submitted that "there is no breakdown in the invoice (or any other evidence) as to how many of the 68 hours [recorded on the invoice] was spent on these activities".
The appellant submitted that "the cost of repairing or replacing cladding surrounding the window openings cannot have been the result of BW's breach of contract", and that there is no indication in the invoice as to how much labour was involved in this activity. The appellant noted that it cannot be inferred that the charge for pump hire resulted from any defect in the windows installed by the appellant.
The appellant submitted that the second invoice "on its face has nothing to do with replacing the BW windows with Wideline windows".
The appellant submitted that the third invoice was dated 26 September, which was two and a half months after the last of the replacement windows had been installed. The appellant referred to evidence given by Mr Bannister that the reference to flashing in the invoices was a typographical error. The appellant further submitted that that there was "no evidence of any causative link" between the work identified in the invoice and a breach of contract by the appellant.
The appellant further submitted that, insofar as the Tribunal had held that Mr Bannister "was not cross-examined in a way that causes [the Tribunal] to reject his evidence" that was not to the point, as Mr Bannister had not given evidence drawing any connection between the invoices and the windows installed by the appellant.
The respondents submitted: No evidence to counter the Respondents' claim was tendered by the Appellant at the hearing at first instance or in this appeal to challenge the invoices, the scope of work of the builder or its relationship to any contractual obligations of the Appellant, whatever they may have been at the relevant time. The Member could only decide on the matters and evidence put before her and therefore this cannot be an error of law. Further, the Appellant has not adduced any evidence to support its assertion that the Tribunal made no attempt to analyse the content of the invoices in terms of BW's contractual obligations. The Appellant's legal representative had the opportunity to cross examine Jackson Bannister in relation to the invoices if the Appellant had concerns with these invoices. The Respondents submit that in such circumstances and in the absence of rebuttal evidence from the Appellant there is no error or law.
In reply, the appellant submitted that the appellant's challenge to the award of the amount of the invoices was not on the basis of their quantum (amount) but rather on the basis that the work set out in the invoices was not the result of the appellant's breach of contract; that is, it was not the cost of rectifying work for which the appellant was responsible and was not work required to achieve "conformity with the contract".
The appellant submitted that, even though work which was clearly part of the rectification of the appellant's work, such as removing the windows installed by the appellant, was included in the first invoice, "the respondents bore the onus of proof in respect of the necessary apportionment of the invoice" and noted that the Tribunal had not attempted any apportionment exercise.
The appellant further submitted that the installation of the new windows had been carried out by Wideline in accordance with its contract to "supply and install". The appellant referred to an email from Mr Bannister's father, Neil Bannister, dated 28 June 2019, which stated "so far our teams have not really assisted in the installation as there is not much to this work".
The appellant finally submitted that it was impossible to tell from the invoices whether the work done by the builder was in consequence of the removal and reinstallation of windows in January 2019 or the removal of the appellant's windows and the installation of the Wideline windows in June or July 2019. The appellant referred to the evidence of Mr Sibilia that "due to the extensive damage caused by the respondent in reinstalling the three replacement windows, building rectification work was required" and pointed out that clause 2(b) of the Deed made this damage the respondents' responsibility.

[12]

Consideration - Ground 5

The measure of damages for breach of contract is the amount required to put the innocent party into the position they would have been if the contract had been performed. In respect of defective building work, the measure of damages is the amount required to bring the work into conformity with the contract, provided that is a reasonable course to adopt: Bellgrove v Eldridge (1954) 90 CLR 613 at 617-618.
The onus of proving that measure of damages lies upon the party seeking to recover damages.
We consider that the Tribunal made an error of law in finding the appellant liable for the amount of the builder's invoices. The Tribunal did not acknowledge that the onus of proving that the invoices reflected costs incurred by reason of the appellant's breach of statutory warranties lay upon the respondents.
The invoices did not of themselves establish that they reflected such costs and Mr Sibilia's, evidence, to which the appellant referred in its submissions in reply, suggested otherwise.
Although the first invoice clearly includes the removal of the windows, it also includes other work and does not identify the cost of the work involved in removing the windows. As the appellant submitted, the onus of establishing the appropriate apportionment of that invoice lay upon the respondents.
The balance of the first invoice and the second and third invoices do not indicate how any of the work for which payment was claimed was related to the replacement of the defective windows.
There was no onus on the appellant to undertake cross-examination of Mr Bannister, the builder, to clarify the extent to which the invoices reflected work necessary to "bring the work into conformity with the contract". Rather, the fact that the respondents did not lead evidence from Mr Bannister to clarify the content of his invoices, and to identify specifically what parts of the invoices related to work involved in the removal and replacement of the windows, gave rise to an inference that Mr Bannister's evidence on that topic would not have assisted the respondents.
As Handley JA held in Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 11 NSWLR 389 at 418F-G: … I can see no reason why those principles [arising from Jones v Dunkel] should not apply when a party by failing to examine a witness in chief on some topic, indicates "as the most natural inference that the party fears to do so". This fear is then "some evidence" that such examination in chief "would have exposed facts unfavourable to the party": see Jones v Dunkel (at 320-321) per Windeyer J. Moreover in Ex parte Harper; Re Rosenfield [1964-5] NSWR 58 at 62, Asprey J, citing Marks v Thompson 1 NYS 2d 215 (1937) at 218, held that inferences could not be drawn in favour of a party that called a witness who could have given direct evidence when that party refrained from asking the crucial questions.
Mr Bannister's affidavit addressed only the testing he had undertaken to assess whether the windows installed by the appellant were leaking. The entirety of his evidence in chief concerning the invoices was given in response to a question from Mr Stack, the respondents' solicitor: MR STACK - Okay. Now, did you or someone on your behalf prepare a series of invoices for work performed and the dates of 27 June, 12 July, and 27 September 2019? MR BANNISTER - Yes.
In our view, it is clear that the evidence tendered by the respondents was not sufficient to establish that the work the subject of the invoices was work which was required to bring the work into conformity with the contract or to establish the value of the work which was such work. That conclusion is strengthened by the inference to be drawn by reason of the fact that Mr Bannister was called to give evidence and was not asked questions to establish that the work the subject of the invoices was related to the replacement of the windows.
Accordingly, the Tribunal's decision to the extent that it awards the respondents the amount of the invoices must be set aside. In light of that conclusion it is not necessary to deal with grounds 2 or 3, which, as we have noted above, were limited to a challenge to the award of the amount of the invoices.
Sections 80 and 81 of the Civil and Administrative Tribunal Act 2013 (NSW) permit the Appeal Panel to exercise all the functions of the Tribunal at first instance and to vary a decision rather than remitting it for further hearing.
We do not consider it appropriate to remit the matter to the Tribunal for re-determination, as it would not be appropriate to allow the parties to file further evidence on any remittal hearing and, in our view, the evidence which was before the Tribunal was clearly insufficient to establish any causal link between the defects in the windows installed by the appellant and the amounts charged by the builder in the three invoices. In those circumstances it is, in our view, appropriate to vary the judgment to exclude the amount of the three invoices, that is $29,601.69.

[13]

Ground 6 - failure to install small joint sealer

The appellant submitted that, in making a finding that the windows installed by the appellant were defective by reason of the appellant's failure to utilise small joint sealer in the remanufacture of the windows, the Tribunal had relied upon evidence from Mr Brennan's first report that he could not detect any gaskets or small joint sealer.
The appellant submitted that the Tribunal had failed to take into account concessions later made by Mr Brennan in his report in reply and in his oral evidence, that he had been wrong in his first report.
The appellant submitted that Mr Sim had identified small joint sealant in the junction of the joinery pieces in the windows which had been removed and left disassembled on site. The appellant submitted that in his report in reply, Mr Brennan, at 4.4, had conceded there was evidence of sealant "in some joints" but that "some joints were not sealed well enough".
The appellant submitted that, in cross-examination, Mr Brennan had agreed that he had assumed in his first report that no small joint sealant had been used and that there was evidence of small joint sealant in some photos included in Mr Sim's report. The appellant further submitted that Mr Brennan had "conceded that he did not know whether or not the small joint sealant had been applied correctly by BW in the process of manufacture".
The respondents submitted that Mr Brennan had not conceded that the small joint sealant had been applied appropriately. The respondents referred to evidence given by Mr Brennan during the hearing that: At some point there may have been small joint sealant in there and that was obvious later on when I had seen the other experts' reports. However, it doesn't mean it was applied correctly and evenly to every joint.
The respondents submitted that the appellant's submissions overlooked the proposition that the windows leaked through the window frames. The respondents submitted that "the absence or presence of gaskets or small joint sealer contributed to the leaks in the windows but were not the substantial cause of the problem".
In reply, the appellant noted that the respondents had conceded that the absence or presence of small joint sealer was not the substantial cause of the problem and submitted that "the absence of flashing was the substantial cause of the problem". The appellant submitted that Mr Brennan had conceded in cross-examination that he did not know whether or not there were any shortcomings in the use of small joint sealant in the manufacturing process.

[14]

Consideration - Ground 6

It is clear in our view that the appellant's challenge to the Tribunal's finding that the windows leaked by reason of the absence of small joint sealant does not raise any question of law. The appellant's challenge is rather on the basis that the finding was against the weight of evidence or was not fair and equitable.
The finding of the Tribunal that the windows leaked by reason of the absence of small joint sealant was a finding of fact supported by the evidence of Mr Brennan. Contrary to appellant's submissions, Mr Brennan did not at any time concede that the small joint sealant had been correctly applied within the windows. His only concession was that there was apparently some sealant within the windows but he could not say whether it had been correctly applied.
We are not persuaded that the finding of the Tribunal was against the weight of evidence or not fair and equitable. There was evidence that the windows were leaking and Mr Brennan gave evidence in his initial report that one reason for the leaking windows was the absence of gaskets or small joint sealant. Although he acknowledged in his reply report and in oral evidence that there was some sealant apparent within the windows, he did not resile from his evidence that one reason for the windows leaking was the absence of small joint sealant.
Moreover, in circumstances where Mr Brennan's evidence had clearly raised the issue whether gaskets or small joint sealant had been applied in the manufacture of the windows, the Tribunal was entitled to draw a Jones v Dunkel inference from the unexplained absence of evidence from any person who had been involved in the manufacture of the windows, that the evidence of any such person would not be of assistance to the appellant. By reason of that inference, the Tribunal could more readily accept the evidence of Mr Brennan that small joint sealant had not been properly installed.
Accordingly, ground 6 must be rejected and leave to appeal on that ground must be refused.

[15]

Ground 7 - the cost of scaffolding

The appellant submitted that, in awarding $9,240 in respect of scaffolding, the Tribunal had failed to recognise that the respondents' claim in respect of scaffolding had been reduced to $3,960 at the outset of the hearing.
The appellant submitted that Mr Sibilia in his evidence had initially relied upon a different document, which was an invoice dated 20 September 2019 in the amount of $9,240 for "scaffolding services rendered at the above site address". The applicant submitted that that invoice clearly included charges for the hire of scaffolding for a period prior to the execution of the Deed.
The appellant submitted that the Deed released the appellant from liability in respect of the hire of scaffolding up to the date of the Deed.
The respondents submitted that the invoice for scaffolding in the sum of $9,240 was the cost incurred by the respondents in relation to the provision of scaffolding in the period after the execution of the Deed. The respondents also submitted: "In an effort to try and resolve the matter prior to the initial hearing, the respondents requested from the scaffolding company a quote for the two weeks that the scaffolding was in place to enable the appellant's replacement defective windows to be removed and new Wideline windows installed with make good, noting that the removal of scaffolding and reinstallation of the Wideline windows would have been a far more expensive exercise than having the scaffolding there the whole time. This was confirmed by Mr Sibilia in evidence in his cross examination [T1556-1558]. This quote came in at $3,960 (inc GST)."
The respondents submitted that the Tribunal had awarded the sum of $9,240 "as per the invoice for scaffolding as the appellant had provided no independent evidence or market quote to the contrary".
In the lines of the transcript of Mr Sibilia's evidence referred to by the respondents, Mr Sibilia stated in relation to the original claim of $9,240: "That's what I paid because the scaffolding was there for the period of time that - we've adjusted that to be - for the minimum period to cover the time between completion of windows by the [inaudible] and that's been sent through. So we've adjusted that down."
In its reply submissions the appellant explained the issue more clearly as follows: The respondents initially claimed $9,240 on the basis of invoice No 1742 dated 20 September 2019. Shortly before the hearing, BW served its Tender Bundle which included another invoice No 1742 from the same scaffolding firm, this time dated 17 December 2018 in the sum of $4,420. BW could not have been liable for this amount, as it was before the Deed of Release. Further, the existence of two invoices with the same number made the later invoice unreliable as evidence. Faced with this, the respondents reduced their claim for scaffolding to $3,960 incl GST at the outset of the hearing. This was on the basis of a different document, a "Quotation" (rather than an invoice) dated 3 March 2020. After the hearing, the respondents in their final written submissions maintained the reduced claim for $3,960.
In relation to the quote for $3,960 the appellant submitted: "There is no evidence to support the scaffolding hire claim for $3,960, as the quote dated 3 March 2020 produced by the respondents in support of this claim was not explained in evidence. The document certainly does not speak for itself in terms of damages caused by breach of contract.

[16]

Consideration - Ground 7

The Tribunal's reasoning in relation to the award of the cost of the scaffolding was as follows, at [59]: "I accept the uncontested evidence of Mr Sibilia … that due to the location of the three replacement windows, scaffolding had to be hired between 31 January 2019, when the windows were found to be leaking, until 15 September 2019 when the rectification work had finished. I award $9,240 for the scaffolding cost as per the invoice at Y4. I note that the respondent has provided no independent evidence or market quote to the contrary."
Although Mr Sibilia had stated in his affidavit that "due to the location of the three replacement windows, scaffolding had to be hired between 31 January 2019, when the windows were found to be leaking, until 15 September 2019 when the rectification work had finished", no explanation was provided why it was necessary to have scaffolding in place for seven and a half months when the windows installed by the appellant were removed and the replacement Wideline windows were installed in June. In his cross-examination Mr Sibilia acknowledged (in the passage set out above) that the amount of $9,240 which the respondents had paid was for a longer period than was necessary for the removal of the defective windows and installation of the Wideline windows. The respondents had limited their claim at the hearing to the $3,960 set out in the quote and it is apparent from the transcript that he was cross-examined on the basis that the respondents' claim had been so limited.
Shortly after the answer set out above Mr Sibilia gave the following evidence: "We said that we would look at these from the point of view that look at your claims and work out - I mean we also have rent [inaudible] but we struck that out and we've also looked at scaffolding and reduced it to a period of time that covers when the replacement windows were put in."
The cross-examination then moved to other topics.
The respondents sought to suggest that it would have been much more expensive to erect fresh scaffolding and take it down again. However, the quote obtained by the respondents dated 3 March 2020 - which was provided by the scaffolding contractor who had rendered the invoice dated 20 September 2019, and must therefore be taken to have been familiar with the requirements for the installation of the scaffolding - indicates that the cost would have been substantially less.
The narration to the quote is: "To supply, deliver, erect, dismantle and remove aluminium scaffolding 450kg (SWL) from the above site address

To scaffold rear of house adjacent to windows"

In our view there was no evidence before the Tribunal to support the conclusion that the invoice for $9,240 was in its entirety a cost incurred in relation to the replacement of the windows. Mr Sibilia's statement in his affidavit did not go that far and his evidence in cross-examination was to the contrary. Moreover, the quotation of March 2020 clearly indicates that the amount of $9,240 was well in excess of the cost of providing scaffolding for the purpose of replacing the windows.
As we have noted above, the onus lay upon the respondents to prove their damages including providing evidence to establish the cost of the scaffolding necessary for the replacement of the windows.
In our view the award of $9,240 was either made without evidence or was against the weight of evidence and not fair and equitable. To award the respondents an amount they had explicitly not sought at the hearing would involve a substantial miscarriage of justice to the appellant in circumstances where it is apparent that the cross-examination of Mr Sibilia was predicated on the fact that the respondents only sought the amount of the quote and not the whole amount paid. It follows that the award of $9,240 in respect of the cost of scaffolding must be set aside. To the extent necessary we would grant leave to appeal against the award of $9,240 in respect of the cost of scaffolding.
Nevertheless, we do not consider that the respondents should receive nothing for the cost of scaffolding. Mr Dalgleish suggested at the hearing of the appeal that an allowance of $1,000 would be appropriate. However, we consider that there is evidence of the cost of providing scaffolding for the removal and replacement of the windows. We do not accept the appellant's submission that the quotation of 3 March 2020 is not evidence of the cost of scaffolding for the replacement of the windows. That document was provided by the contractor who had provided scaffolding for the construction project and correctly identified the relevant site and the location of the windows which required replacement.
Whether or not the document would meet the requirements for admissibility under the Evidence Act, the laws of evidence do not apply in the Tribunal. We consider that the quotation is sufficient evidence to establish that the appropriate compensation in respect of the cost of scaffolding for the replacement of the windows was $3,960 inclusive of GST.
We note in this context that the quote included the cost of erection and dismantling of the scaffolding, which were costs in respect of which the builder had invoiced the respondents in the third of the builder's invoices. As we have not allowed the respondents any compensation in respect of the builder's invoices, there is no risk of double counting in awarding the respondents the full value of the quotation.
Accordingly, we will reduce the judgment sum by a further $5,280 (the difference between $9,240 and $3,960).
We note that the amount awarded by the Tribunal, $50,771.69, is $2,090 less than the sum of the three amounts which the respondents claimed. This discrepancy was not explained in the decision. It is not necessary to explore that matter further. The amount to which we consider the respondents were entitled was $14,020 in respect of the supply of the windows and $3,960 for scaffolding. The sum of those figures is $17,980, which is the amount to which we will vary the amount of the judgment.

[17]

Costs

The Tribunal ordered that the appellant pay the respondents' costs of and incidental to the application on the ordinary basis as agreed or assessed. The appellant appealed against that order.
In its reply submissions the appellant submitted that: "No order for costs should be made either in respect of the appeal or the proceedings at first instance until both sides have had the opportunity to make further written submissions in light of the outcome of the appeal.
As we have reduced the amount awarded by the Tribunal by approximately two thirds, it is possible that there may have been offers made between the parties which might be relevant to the question of costs. The order made by the Tribunal in relation to the costs of the application should be set aside.
It is appropriate that the parties have the opportunity to file submissions concerning the question of costs both at first instance and in respect of the appeal.
At the hearing both parties agreed that the question of costs could be determined on the papers without a further hearing and accordingly we will allow the parties to file submissions concerning the question of costs both at first instance and on appeal. We will then determine costs of both the first instance hearing and the appeal on the basis of the submissions provided.
Our orders are: 1. Appeal allowed in part. 2. Grant leave to appeal to the extent necessary in relation to the award of $9,240 in respect of the costs of scaffolding. 3. Vary Order (1) made on 2 October 2020 by changing the sum of $50,771.69 to the sum of $17,980. 4. Set aside Order (2) made on 2 October 2020. 5. The stay of the orders made by the Tribunal on 2 October 2020, granted by the Appeal Panel on 4 November 2020, is lifted. 6. Any application by either party for an order in relation to the costs either of the proceedings at first instance or of the appeal, with evidence and submissions in support of the application, is to be filed and served within 14 days of the date of these orders. 7. Any evidence and submissions in response to any application filed in accordance with Order (6) are to be filed and served within a further 14 days.

At a glance

Court

Decision date

Source

Judgment (18 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (5)

Cited By (1)