Benjamin v Geneville Constructions Pty Ltd; Geneville Constructions Pty Ltd v Benjamin

Background to appeal

1. The owners own land in Carlingford NSW. The owners and the builder had previously engaged in a similar residential building project to the subject matter of these proceedings, namely, demolishing the existing dwelling and constructing a dual occupancy dwelling. From about August 2013 the parties discussed the present project. From late 2013 the builder began to contact service providers for the project including design and drafting services and to develop a tender. Development consent was obtained about 31 March 2015. The owners contacted other builders as well.
2. A written contract to carry out works was entered into on 11 September 2016 with a contract price of $1,280,060.25 (the building contract). The owners paid a deposit of $128,006 on about 31 July 2017, a construction certificate was issued in late August 2017, and work began in September/October 2017 on Stage 1 of the contract works. This followed delays while the owners obtained finance. Stage 1 works were described as "Existing house removed; Site levelled; Piers & Footings Excavated; Spoil removed or spread if required".
3. There was no issue that the builder was licensed and the building works insured.
4. The builder carried out significant demolition and footings work. On 19 December 2017 the builder hit rock that required excavation and triggered investigation under cl 14.1(b) of the building contract. In accord with cl 14.2, the builder provided details of additional earthworks and a preliminary estimate of $90,000. The owners terminated the building contract on 22 December 2017 under cl 14.6. There was no issue that the owners were entitled so to do since the estimated price exceeded 5% of the contract price.
5. Clause 14.7 of the building contract provided that, when the owners ended the contract under cl 14.6: "the owner must pay to the builder the price of the works carried out to the date that this contract is ended. The price includes the builder's margin applied to the costs incurred by the builder which costs include the cost of materials on site or already ordered from suppliers that are not refundable."
6. None of "costs", "price" or "works" is defined in cl 1 or elsewhere in the building contract. There is a definition in cl 1 of "building works" which means the building works to be carried out, completed and handed over to the owner in accordance with the contract as shown in the contract documents and including variations. "Contract documents" is defined to mean the general conditions, any special conditions, the plans and specifications and other documents specified in Sch 5 to the contract (none was included in Sch 5). "Contract price" is defined but not relevantly to the issue in these proceedings.
7. In June 2018 the builder emailed the owners that the builder would charge the owners $110 per hour for the builder's role in obtaining "other services".
8. In HB 19/18891, filed in the District Court on 4 October 2018 and transferred to the Tribunal on the owners' application, the builder claimed payment from the owners of alleged unpaid monies said to be owing under the contract. The owners defended these proceedings on the basis that the builder had only done work that did not exceed the deposit paid and had no right to additional payment for the "additional services". These services were said to fall outside the scope of contract work or were said not to be "residential building work" as defined in HBA s 3 and Sch 1 para 2. The Tribunal at first instance noted an alternative submission that these services were covered by the contract. The builder made no claim in quantum meruit.
9. In HB 20/04576 filed 30 January 2020 (after the first day of hearing) the owners claimed a refund payment from the builder of $39,838.16 on the basis that the builder had completed works amounting to $88,167.84 and had been paid $128,006. The grounds were substantively those identified in the owners' defence to the builder's claim.
10. In orders and reasons delivered 27 April 2020 following a hearing on 11 December 2019 and 7 February 2020, the Tribunal dismissed the owners' claim and in the builder's claim ordered the owners to pay the builder $237,701.34 by 24 May 2020.

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NCAT Act).
2. 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.
3. 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 to the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 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).
4. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) in 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.
5. 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).
6. 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: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) 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; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) 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.

Owners' and builder's appeals in outline

1. An appeal AP 20/22780 was filed by the owners on 25 May 2020, with a stay application filed the same day. The appeal was said to have been filed within 28 days after the date that the owners said they received the Tribunal's decision being 1 May 2020. No issue was taken with time of filing although the builder referred in its own appeal, in support of extension of time to its having been filed on the last day of the appeal period. For avoidance of doubt, we extend time for filing the appeal, if such extension be required, to and including 25 May 2020. On 4 June 2020 a stay was granted until determination of the appeal.
2. On 4 June 2020 leave for legal representation was granted to both parties. To the extent necessary we extend such grant to the builder's appeal and make an order that the appeals be heard together.
3. We shall deal in detail below with the owners' appeal which was the focus of the appeal hearing.
4. The builder's appeal AP 20/24046 was filed on 2 June 2020. It sought a revision downwards to $141,959.44 (corrected in the builder's written submissions dated 2 July 2020 to $137,114.65) of the amount ordered to be paid by the owners and a variation of the payment date to 28 days after that revision. This was to correct what were said to be errors of calculation in the Tribunal's findings which did not give credit for monies paid to the builder and did not properly include margin, GST and stamp duty in respect of various items.
5. The owners accepted the basis for the builder's appeal to the extent the owners' appeal was not successful and to the extent that the re-calculation fitted with findings in the owners' appeal. The owners agreed with the re-calculation in the builder's appeal and the re-calculated figure as correctly representing the outcome before the Tribunal at first instance and if the owners' appeal was dismissed entirely.
6. The owners went on to say that the need for such correction itself was an additional ground for setting aside the Tribunal decision and ordering a new hearing. We do not accept that contention. The calculation errors stood alone, could be corrected in themselves and did not add a dimension to the substantive grounds of appeal of the owners.
7. There was no opposition to extension of time to file the appeal. It was pointed out by the builder that the corrections could have been made under s 63 of the NCAT Act by the Tribunal at first instance if the appeal had not been lodged, on the final day of the appeal period, but that it was now appropriate to consider the re-calculation in the context of the owners' appeal. We agree, and extend time for filing the builder's appeal to and including 2 June 2020.
8. Consistent with the parties' approach we accept that there is a basis for the relief sought in the builder's appeal but now focus on the owners' appeal to determine the extent to which the outcome in the builder's appeal affects and is affected by the final position in the owners' appeal. The parties filed agreed alternative orders on the outcome if the owners enjoyed success on appeal on different combinations of grounds.

Owners' amended grounds of appeal and builder's reply

1. The owners' amended grounds of appeal filed 20 July 2020 did not identify what was said to be errors of law and errors of fact (with the latter requiring leave), or whether they were put on both grounds.
2. The first three grounds (numbered 4 to 6) in the amended grounds focused on a set of invoices from one supplier (the Adapt invoices, called "Adept" in some places in the material). The Tribunal was said to have erred in not finding a reason to "go behind" the Adapt invoices as the owners had submitted at first instance. The Tribunal was said to have failed to consider these first instance submissions which attacked the credibility and reliability of the supporting "purported" business records and the performance of some of the work invoiced (being delivery of windows and frames and duration of fencing onsite). Evidence relating to the adequacy of the attempted mitigation concerning windows and frames was also raised.
3. The final ground (numbered 8) in the amended grounds said that the Tribunal erred in finding the builder was entitled to $26,581.33 including margin and GST for "pre-contract work". It was particularised as follows: 1. failure to consider owners' submissions regarding HBA s 7; 2. failure to consider the builder's email 30 March 2016 "confirming that [the builder] was not expecting payment for certain pre-contract assistance"; 3. rejecting at [99] of the reasons at first instance the owners' submission that the builder's business documents were "unreliable" and "obscure".
4. The builder had filed on 5 June 2020 a reply to the original grounds of appeal. That reply stood in relation to the amended grounds, which simply removed original grounds 1, 2, 3 and 7 and added further particulars to grounds 4-6 and 8 to which the builder did not object: 1. Ground 4 was said to require particularisation in submissions before there could be a meaningful response; presumably what was sought was an identification of which of the builder's invoices and records were impugned beyond the Adapt invoices in grounds 5 and 6. The same point was made in relation to the final original particular for ground 8. (As it turned out, no submissions distinct from those made on grounds 5 and 6 were made on ground 4.) 2. Ground 5 was wrong because the Tribunal at [80]-[81] of the reasons had regard to the owners' challenges to the veracity of the Adapt invoices, found those challenges had not been made good and, accordingly, that no reason had been demonstrated to go behind the invoices or not to accept them on their face. 3. Ground 6 challenged the same finding as ground 5 and proceeded on the misconception that a charge for timber frames was being passed through to the owners, which the Tribunal dealt with at [78] of the reasons, referring to [46]-[49] of the builder's submissions. In relation to alleged non-delivery (also raised in ground 4(c)), the Tribunal at [80] of the reasons referred to objective evidence of supply (supporting the Adapt invoices). 4. As to ground 8, the builder relied upon its own appeal correcting the quantification but resisted the bases for further reducing that quantification. HBA s 7 was said to be irrelevant because the builder claimed under cl 14.7 of the building contract, which was the basis of the Tribunal's finding at [108]-[109] of the reasons and was not subject to any defect under HBA s 7 raised by the owners. Further, the Tribunal at [104] of the reasons took into account the matters raised concerning the builder's email of 30 March 2016. 5. Grounds 5 and 6 and parts of ground 8 required leave which was opposed at least until the grounds were developed. (By parity of reasoning one could include ground 4 in that approach.)

Tribunal findings in summary

1. The Tribunal was satisfied that there was jurisdiction under HBA s 48K as to amount and timing of the claims. This finding was not challenged on appeal and appears to be correct, as to time under s 48K(8)(a) for the builder's claim and s 48K(3) for the owners' claim and as to amount under s 48K(1) for both claims.
2. The Tribunal has jurisdiction under HBA s 48I, read with the definitions in s 48A of "building claim" and "building goods or services", to determine a claim that arises from (relevantly) a supply of building goods or services, being goods or services supplied "for or in connection with the carrying out of residential building work".
3. The Tribunal found that the Stage 1 works were "residential building works" as defined in HBA s 3 and Sch 1 para 2(1)(a) which relevantly means "any work involved in, or involved in co-ordinating or supervising any work involved in: (a) the construction of a dwelling".
4. At [45] of the reasons, the Tribunal specifically dealt with an exemption for "excavation" where it was stand-alone and said it was not within that exemption in the present project. The Tribunal noted that the parties did not seek to raise this matter.
5. We think that the Tribunal may have been referring to the exemption, in HBA Sch 1 para 3(j), of "demolition work" as there is no express reference to an exemption for excavation. There is no qualification on the exemption for demolition work, which means that it is not in itself "residential building work". However, here the demolition, by the same contractor, was an integral part of the construction of a residential dwelling and, while not "residential building work" in itself, was the supply of a service "for or in connection with" the carrying out of residential building work.
6. At [46]-[55] of the reasons, the Tribunal dealt with whether the "other services" for which payment was claimed by the builder constituted "residential building work". The Tribunal reviewed the approach distilled in Grygiel v Baine [2005] NSWCA 218 and Syed Ahmad Shoaib Ali PL v Jandson PL [2018] NSWCATAP 228 which brought preparatory work potentially within the definition. The Tribunal came to the view that each category of preparatory services claimed needed to be reviewed for the closeness of its connection with the physical construction work and the nature of the builder's involvement in providing the service (eg, providing it directly or supervising others).
7. The parties had not raised the questions considered by the Tribunal in relation to the nature of the services the subject of claim, either before the Tribunal or on appeal as a ground of appeal. Being a jurisdictional issue, we are satisfied that, even if a particular service was not "residential building work" in itself, it was the supply of a service "for or in connection with" the carrying out of residential building work and so within the Tribunal's jurisdiction over building claims, which was a matter not addressed specifically by the Tribunal. We add that we are also satisfied, as was the Tribunal, that the nature of the services the subject of claim met the test to qualify as "residential building work" in themselves except for one category which the Tribunal dismissed and which was not the subject of appeal (being category D as described below).
8. At [56]-[57] of the reasons the Tribunal described the process by which the builder's claims were set out and correlated to the evidence. The owners' written submissions on appeal were structured on what was challenged on appeal according to this schema, which we now set out.
9. Category A "Additional services" comprised money the builder paid to a third party for preliminary matters relating to the preparation and submission of Council documents and other documents submitted for approval by and compliance for utility services, plus the builder's time for oversight of this process in June to August 2017. It was claimed under cl 14.7 of the building contract. At [58]-[73] of the reasons it was found to have sufficient causal connection to be "residential building work" and to be a distinct contract, probably collateral, formed by emails between the owners and the builder. Although that collateral contract in itself arguably was not compliant with HBA s 7, the services and their benefit, and the builder's hourly rate, were accepted by the owners without timely complaint. It came within cl 14.7 because "the works" (emphasised by the Tribunal), being the subject matter of cl 14.7, were not restricted to the contract works, defined in the building contract as the "building works" but, rather, extended to works that the builder had undertaken connected with the contract works. These findings were not challenged on appeal by the owners.
10. Category D "Post contract debt collection" was disallowed by the Tribunal at [118]-[124] of the reasons for jurisdictional doubts and forensic inadequacy. It was not raised by the builder's appeal and therefore was not the subject of challenge by either party on appeal.
11. Category B "The building works" was for works the builder claimed to have completed under Stage 1 of the contract with the greater part to pay the builder's sub-contractor Adapt the amount on its final invoice which incorporated two earlier invoices and for which there had been part-payment by the builder (the Adapt invoices). At [74]-[90] of the reasons the Tribunal found for this claim in the builder's favour.
12. At [76] of the reasons the Tribunal confirmed jurisdiction as to time and as to the claim being for "residential building work".
13. The Tribunal allowed the Adapt invoices as the work the subject of the invoices was found to be "in keeping with what was required to allow the builder to carry out the written contract work" (at [79] of the reasons). The work was site set up and maintenance, supply of window and timber frames (the largest part of the claim), supply and installation of site services such as temporary power, toilets, water and fencing, demolition of the existing dwelling, removal of trees, asbestos and the existing dwelling when demolished, and excavation and landfill.
14. The Tribunal found at [80] of the reasons that in cross-examination the builder's principal "remained steadfast … that the matters claimed were matters for which he had incurred the cost sought" and was able further to support the invoices by other evidence.
15. At [81]-[82] of the reasons the Tribunal found that the owners failed to substantiate their claim that no more than half the Stage 1 work was completed or their other challenges. Accordingly there was no reason to go behind the Adapt invoices and they were accepted on their face.
16. The findings concerning the Adapt invoices were challenged by the owners on appeal.
17. At [83]-[84] of the reasons the Tribunal accepted that the builder had demonstrated a contract entitlement to be paid insurance premiums and that the documentation supported that the insurance had been obtained and paid for. This was not challenged by the owners on appeal.
18. At [85]-[90] of the reasons the Tribunal rejected the builder's claim, based on the builder's principal's time sheets alone, for the period prior to works commencing between September 2016 and June 2017 and for September to December 2017 when the Adapt invoices contained a labour charge and Adapt appeared to be doing the main work. The claim was said to be excessive without further substantiation. This was not challenged by either party on appeal.
19. "Category C" Pre-contract at [91]-[117] of the reasons comprised claims for costs that the builder agreed were incurred before entry into the contract but which were claimed under cl 14.7 of the building contract.
20. The first and second items were for work by third parties invoiced to the builder to price the project including obtaining tenders from sub-contractors. The final item was to reimburse payment by the builder for a traffic management report from a third party that was obtained at the request of the owners in December 2015.
21. At [95]-[98] of the reasons the Tribunal reviewed the invoices, time sheets, work records and bank statements provided by the builder. The Tribunal described instances where the builder's claim was less than the invoice and where there were other anomalies.
22. At [95] and [99] of the reasons the Tribunal nevertheless found, "on balance" and "when looked at on the whole", that it was satisfied that documents established that the builder was liable to pay for the items claimed and, "although not perfect", did not support the owners' claim that the documents were "unreliable" and "obscure". The Tribunal concluded "Nor is there any evidence to directly refute them".
23. At [100] of the reasons the Tribunal found that there was a sufficient causal nexus with physical construction work to be under "residential building work".
24. At [101]-[117] of the reasons the Tribunal characterised the relevant contract. Having reviewed the builder's admission in cross-examination that at the time some of the claimed costs were incurred there was no obligation on the parties to enter into any building contract, the owner's contention that the builder never expected payment and the fact that the builder never claimed payment while the contract remained on foot, the Tribunal stated that both parties at various stages in their oral evidence "seemed to be in agreement that the cost of these matters would be absorbed by the contract price the owners were to pay under the written contract" (at [105] and [107] of the reasons). The Tribunal at [103] of the reasons had drawn attention to the fact that, by the time the written contract was executed in September 2016, "the builder had facilitated, organised and obtained the items in question and as such he carried them with him into the written contractual agreement".
25. At [106] of the reasons the Tribunal then accepted that the position in both parties' evidence "can be the only plausible explanation. It is implausible to accept that the builder would not seek to be reimbursed for matters for which he is liable and which facilitated the owners' project. It is implausible that the owners expected that they could benefit from these matters at no cost".
26. The Tribunal then went on at [108]-[109] of the reasons to find that the absorption of the costs into the contract price, which was not paid because the building contract was not completed for reasons under cl 14, effectively invoked the compensation provision in cl 14.7 in relation to these items.
27. At [110]-[113] of the reasons the Tribunal accepted the invoiced amounts but rejected the builder's time claim, based on the builder's principal's time sheets, as insufficient to substantiate the builder's own time. No party has appealed the finding on the time aspect of the claim.
28. Finally, at [114]-[117] of the reasons the Tribunal rejected the implication of the owners' argument that no quantum meruit had been pleaded and such was required to establish the claimed amounts. The Tribunal said that the owners gained the benefit of the work the subject of the claimed amounts and had acquiesced in the builder's incurring the liability for such work. Clause 14.7 of the building contract was "sufficiently broad" to allow payment in those circumstances without strict pleading of a quantum meruit.

Owners' submissions on remaining appeal grounds

1. The owners' counsel summarised the owners' remaining challenges in [1] of his written appeal submissions, to which he spoke at the appeal hearing: 1. Item B (grounds 5 and 6): the Tribunal allowed a claim for windows that were never delivered and that the evidence established were "turfed". 2. Item B (grounds 5 and 6): the Tribunal allowed a claim for temporary fence hire where the evidence established that the fences were erected on site for a far shorter time than the builder claimed. 3. Item C (ground 8): the Tribunal allowed a claim for the pre-contract work where there was no contract in existence that provided for payment of any pre-contractual work done. (As previously noted, ground 4 was not separately discussed.)
2. In relation to Item B, the owners said (appeal submissions [41]) that the construction and purpose of cl 14.7 of the contract was "clear enough. The owners concede that the builder is entitled to claim the costs that it has incurred, plus its builder's margin carried out to the date of the contract's termination".
3. To establish the "no evidence" point to support delivery of the windows and frames, the owners referred to the builder's principal's answers in cross-examination to the following effect: the frames and windows were never delivered to site, to the builder or to Adapt; the builder had seen "what was left of them" and that the manufacturer had "turfed them"; that the builder had tried to obtain a refund for the windows but had not described those attempts in his affidavit; he offered the windows to the owners but this was not in his affidavit; he had not invoiced for the timber.
4. The owners accepted that the builder had paid in full the second Adapt invoice for $125,645.50 which claimed for "preorder windows as per approved plans" and "preorder of timber frame as per approved plans". The builder's bank statements supported that payment. But the owners said that the builder's evidence that he had not invoiced for the timber (presumably meaning not invoiced the owners) was in "stark contrast" (appeal submissions [44]) to the Adapt invoices that narrated charging the timber to the builder. This was said to be "an example of the unreliability of the business records relied upon by the builder" (ibid).
5. However, the essence of the complaint was that the Tribunal erred in allowing the builder to claim for windows that were manufactured but not delivered to the owners. The builder was said not to be absolved from the obligation of delivery under cl 14.7 and "Put another way, cl 14.7 does not allow the builder to claim for goods that were not delivered and were 'turfed'" (appeal submissions [45]). The Tribunal was said to have "failed to address and deal with" that submission at [49(b)], [52(a)-(b)(i)] of hearing submissions 11 November 2019: appeal submissions [46]
6. In relation to the temporary fencing, the essence of the complaint was that the Tribunal "failed to deal" with [49(d)], [52(b)(iv)] and [54] of the hearing submissions. These pointed to evidence that the fences were not in place for the 60 weeks from the start date that were said to be charged in the Adapt invoice. It was said that the photographic and other evidence did not support the builder's contention that the temporary fencing was in place from October 2016 and that at most about 14 weeks to date of termination from start of work (being 14 September 2017 mentioned in the Adapt invoices) at $324 per week for 18 panels at $18 per panel, totalling $4,536 plus margin and GST, should have been allowed, not the $12,960 charged by Adapt (appeal submissions [ 48]-[55]).
7. In relation to item C, the owners said that the Tribunal erred in law with respect to "construction of the contract. In short, the Tribunal erred in finding that there was [a] contract in relation to the pre-contractual work" (appeal submissions [15(c)]). The Tribunal was also said to have erred in law by impermissibly having regard to what the Tribunal considered to be the parties' subjective intention and by failing to have regard to the submissions by the owners that there was no agreement for payment to the builder for pre-contractual work.
8. The owners pointed to the absence of a request for payment for this work prior to the builder's email of 23 June 2017 when the work in question had been done years before. The owners pointed to an email dated 30 March 2016 when the builder offered to look over alternative quotes to assist the owners. The absence of dealing with this email and the owners' submissions was said to constitute a denial of natural justice and failure to consider an aspect of the owners' claim, both said to be errors of law.
9. All this was said to lead to the conclusion that the builder never expected payment for work of any type before the building contract was entered into in September 2016. The claim for payment was said to be an "afterthought" once the building contract was terminated.
10. The Tribunal's reasoning at [105]-[107] of the reasons that the parties seemed to agree in their oral evidence that such costs would be absorbed within the contract price was said to be reliance upon impermissible subjective intention.
11. The owners concluded their submissions on appeal on this point by saying that, understood objectively as contract interpretation required, there was no agreement for the payment of the pre-contract sums and it was not correct that the building contract in September 2016 "could capture amounts incurred by the builder from 2013-2015" or apply the builder's margin referred to in cl 14.7 to them: appeal submissions [33]-[34].
12. In their oral submissions at hearing of the appeal, the owners submitted in addition that cl 14.7 did not have retroactive effect.

Builder's submissions on remaining appeal grounds

1. In relation to item B, the builder repeated the submission made at the Tribunal hearing that the relevant Adapt invoice was the third and final invoice which, after the end of the contract, adjusted and to the relevant extent incorporated the earlier invoices and payments to achieve an outstanding balance. This invoice did not charge for the timber frames and the owners' submission based on the narrative in earlier invoices was misconceived.
2. The builder submitted that the owners bore the evidential onus of mounting a sufficient challenge to go behind the third party invoices. Such an exercise in effect was an allegation that the builder failed to mitigate by querying the third party.
3. The builder also pointed to the objective evidence of manufacture of the windows and their customised colour which precluded a refund. The builder was not responsible for the "turfing" by the manufacturer.
4. The builder said that the delivery obligation sought to be read into cl 14.7 of the building contract as a condition of payment was novel, was not raised before the Tribunal and in any event was wrong on correct interpretation of cl 14.7.
5. The builder pointed out that the charge for temporary fence hire in the third Adapt invoice was for 40 rather than 60 weeks. The builder pointed to the builder's evidence, accepted by the Tribunal in its comments concerning the failure to shake the builder's evidence, that the fencing had been hired and located at the property while the owners were obtaining finance (which was an obligation of the owners under cl 4.1), even if it was not installed for the entirety of the period.
6. The builder submitted, overall, that the matters raised errors of fact and there was no basis for grant of leave to do so because "this aspect of the appeal rises no higher than a complaint that the Tribunal should have accepted the owners' version of the facts" (builder's appeal submissions [40]). Although made in the context of the temporary fencing, the tenor of that submission pervaded the builder's appeal submissions concerning item B.
7. With respect to item C, at [50] of its written submissions the builder said that many of the owners' submissions were "beside the point" because they addressed a case the builder had not made. The builder's case was under the building contract cl 14.7, not under a prior agreement.
8. The builder pointed to the owners' obligation, under cll 4.1 and 5.1, to comply with development consent conditions and that some of the pre-contract expenditure was on such matters so was clearly connected with the contract works.
9. The builder submitted at [58]-[59] of its written submissions that, if the contract ran its course, the builder could be expected to recoup the total costs that the builder incurred in negotiating, facilitating and performing the contract (which included the pre-contract expenses in respect of pricing) because "as a matter of commercial reality such costs would be priced into the works by a builder seeking to earn some profit on a contract". Clause 14.7 provided an alternative recoupment mechanism when the commercial expectation informing the contract price was disrupted and therefore should extend to recoupment of costs before the building contract was entered into "provided they bear some relationship to the work the subject of the contract". The Tribunal found at [100] of the reasons that there was such a sufficient causal connection between the cost items and the physical construction work.
10. The builder submitted that the findings at [105]-[107] of the reasons permissibly assisted in the analysis of the commercial purpose of cl 14.7 which also happened to accord with what the parties said in their oral evidence.

Conclusions on owners' submissions

1. We discern no error of law, nor any error of fact justifying the grant of leave, in the Tribunal's reasons and conclusions.
2. We regard the remaining appeal challenges as mixed questions of fact and law requiring leave, on the tests set out above, except where indicated.
3. Turning first to the frames and windows, the Tribunal dealt with the adequacy of the builder's records expressly as we have already recorded. There is nothing in the Tribunal's reasoning that would justify a grant of leave. The findings were not against the weight of evidence and were fair and equitable on the material before the Tribunal. The Tribunal simply concluded that there was insufficient material in what was pointed to by the owners to cast sufficient doubt on the builder's evidence and go behind the third party invoices. That was a reasonable conclusion on the evidence, which meant that the owners had failed to discharge their onus. Further, there was no clear injustice from plain or readily apparent error to enliven an exercise of discretion.
4. We make the general observation, in response to the owners' criticisms concerning records, that the Tribunal's findings were made on evidence that did not include any expert evidence led by the owners to substantiate any challenge to quantities or pricing.
5. We also agree with the builder's submission that the final, operative Adapt invoice did not include a charge for timber frames.
6. It is correct, as the owners submitted, that the Tribunal did not expressly mention the owners' submission that "they should not be charged for windows that they didn't receive". As said earlier, failure to consider relevant considerations can constitute an error of law, and if not may result in a finding that justifies a grant of leave.
7. The difficulty faced by the owners was that cl 14.7 of the building contract expressly included, within the price of the works carried out to date of termination, the costs of materials already ordered from suppliers that were non-refundable. The builder was claiming what it had been charged by Adapt. There was no evidence that the builder could have obtained a refund; indeed, the evidence is to the contrary because the windows were customised in colour. Logically, a refund would be unlikely if the windows had been manufactured and were in any way customised and non-standard. There is no requirement or condition on reimbursement in cl 14.7 that materials the builder is charged for are delivered. Indeed, the inclusion within the wording of "on site or already ordered" renders delivery irrelevant.
8. The wording of cl 14.7 also does not embrace concepts of mitigation of loss such as one finds in assessment of contract damages. Rather, it is on its face an exception to the payment mechanism and entire obligations on the parties if the project runs its course. We were pointed to no authority that suggested otherwise in its interpretation.
9. In those circumstances, whether or not the materials invoiced were delivered is irrelevant to the builder's rights under cl 14.7.
10. It was, properly, not suggested that the builder needed to go beyond establishing a liability incurred to the third party to come within cl 14.7. That is the meaning of "costs incurred".
11. The same difficulty faced the owners' submission that the charge for the temporary fencing was for too long a period. That period of charge was the cost that the builder incurred in the Adapt invoice to the builder. The Tribunal expressly found that there was no reason in the evidence to go behind the Adapt invoices on the bases discussed in relation to the windows and frames. For similar reasons to what is there given there is no basis for a grant of leave to challenge those findings.
12. Turning to the pre-contract work, as we have referred to above, the Tribunal expressly referred to most of the factual matters pointed out by the owners about the absence of prior request for payment, the absence of obligation to enter into a building contract, the negotiations with a third party without request for payment, the fact that the work in question occurred years before entry into the contract, the absence of any earlier express contractual right and the owners' concession that they benefited from the work.
13. From these matters the owners concluded (appeal submissions [26]) that the Tribunal should have found that the builder was not expecting payment and the Tribunal did not properly consider their submission to this effect, including their submission on the email of 30 March 2016 that was not expressly mentioned by the Tribunal.
14. The owners also focused on the Tribunal's reference to the parties' oral evidence as inferring agreement that the cost of these items would be absorbed into the written contract (if it emerged, as it did)as impermissible use of subjective intention. This would be the case if the Tribunal had relied upon it for that purpose.
15. However, it seems to us that the Tribunal set out the preceding matters to describe what had been raised by the parties before focusing on the real question that was before it.
16. The builder's case for the pre-contract work in item C, as said earlier, was based on being within cl 14.7 of the building contract. No party, as we understand it, sought to make a case for any alternative or any variation, by estoppel or otherwise, to the wording of that provision and its interpretation.
17. Accordingly, evidence showing that there was no earlier agreement or request for payment was irrelevant to the real question before the Tribunal on the way the builder framed its case. That evidence may have been relevant as surrounding circumstances aiding interpretation, but no party seems to have used it in that manner to interpret clause 14.7 itself.
18. The Tribunal recognised this at [105]-[107] of the reasons when it used the material to infer (in a way supportive of the owners' point if the contract had been completed) that there was no basis for a separate charge for the pre-contract works if the contract had been completed. In so doing it was not relying upon a subjective intent of the parties but, rather and permissibly on the authority relied upon by the owners, analysing what emerged objectively as the commercial purpose.
19. However the Tribunal from [108] of the reasons went on to contrast that position with what it had to determine, which was the contractual consequence of the building contract being ended for hidden site conditions, in this case rock (as defined in the contract). That meant the focus was on the operation of the contract in that circumstance, which was governed by cl 14.7 and the interpretation of that clause: "As such the builder must be compensated under that clause".
20. Accordingly, within the context of what the Tribunal had to determine on the builder's case, it seems to us that the three identified "errors of law" boil down to the one point, namely, whether the Tribunal erred in interpreting cl 14.7 as extending to pre-contract work that was not within the express scope of the "building works" as defined in the building contract and for which payment was not requested until the builder's email of 23 June 2017 at the hourly rate there set out with no builder's margin in addition.
21. The Tribunal expressed its conclusion that the pre-contract expenses were within the scope of the works in cl 14.7 in short form at [109] of the reasons. That conclusion was supported by the reasoning in earlier paragraphs: (where the same reasoning supported the same conclusion, namely, that "the works (emphasised in the Tribunal's reference) carried out to the date that the contract is ended" was broad enough to encompass such pre-contractual matters: see in particular [64]-[67] and [90] of the reasons) Indeed, that reasoning in relation to other pre-contractual matters said to be the subject of a distinct contract outside the building contract scope of works were in item A and the Tribunal's reasoning at [64]-[68] of the reasons on the application of cl 14.7 to them was ultimately not challenged on appeal.
22. The Tribunal's language may not have been entirely apposite in the references to quantum meruit and its ingredients at [67] and [114]-[117] of the reasons. However, in substance that language was describing the incorporation of similar concepts within the contractual machinery for compensation in cl 14.7 under which the builder claimed and in substance the Tribunal came to the correct interpretation of cl 14.7 for the correct reasons.
23. As we have pointed out and as the Tribunal emphasised, cl 14.7 compensates for the "price" of "the works" carried out to contract end. It expressly includes certain items, being margin and materials on site or on order. The ingredients in the wording of cl 14.7 have elements of the components assessed in a quantum meruit but not the requirements for request or acceptance and benefit: Pavey & Matthews PL v Paul (1987) 162 CLR 221, [1987] HCA 5 esp at 224, 236, 250-252, 257, 262-264.
24. However, the contract is interpreted on its own wording. The lack of restriction of "the works" to those specified as the defined "building works" leads to the inclusion of work done in connection with the project outside of the specified contractual scope of works. In this respect, it is akin to the causal connection found by the Tribunal at [100] of the reasons for the jurisdictional purpose that we explored earlier in these reasons.
25. The provision operates only when the usual mechanism for payment and adjustment of payment has been disrupted and ended by the owner in specified circumstances. In those circumstances, matters which might otherwise be absorbed within the contract price but not expressly named within the scope of contract building works, perhaps because they have already been done, nevertheless have been connected with the project and have been a cost to the builder where the builder's overall return bargained for will not be achieved through no fault of either party but on the initiative of the owner.
26. The clause is focused on the cost to the builder, not any enduring benefit to the owners, as has already been discussed.
27. The clause has no temporal restriction and it would be inconsistent with the plain words to read one into the provision.
28. A similar provision is found in cl 4.3 of the building contract where the payment regime is disrupted by activity (or absence of it) for which the owner is responsible.
29. Here, as the Tribunal correctly found, the item C pre-contractual works were within the category of "the works" covered by cl 14.7 even though not within the scope of the defined "building works" under the building contract.
30. The owners' appeal is therefore unsuccessful.

Outcome on appeals

1. The appeal in AP 20/22780 is dismissed because the owners have not succeeded in establishing any of their grounds of appeal.
2. The appeal in AP 20/24046 is allowed and the relevant order of the Tribunal is varied in the amount and payment period sought by the builder. This is because the owners have not succeeded in varying the Tribunal's findings on the owners' liability for relevant amounts. Accordingly, the only adjustments are those put forward by the builder and not disputed as to calculation by the owners.

Costs of appeal

1. Rule 38A of the Rules applies the same costs rules as applied in the Division when there is a departure under the Division rules (such as under Rule 38) from CATA s 60. Here both claims always exceeded $30,000 so the ordinary costs rules apply.
2. The starting point for exercise of costs discretion on the usual principles is that costs follow the event. "The event" is usually the overall outcome of the proceedings; that is, did the successful party have to go to the Tribunal (in this case) to get what it achieved, rather than being offered at least that relief. If there are distinct issues on which the party seeking relief did not succeed, that may be taken into account in the exercise of costs discretion.
3. Here there appears to be no reason not to apply the usual principle that costs follow the event. The builder accordingly is entitled to its costs of the appeal. No party has made any submission that costs should be other than on the ordinary basis or that the question of costs should be deferred. However, we have made the costs order subject to any application for an alternative costs order.

Orders

1. The orders we accordingly make are as follows: 1. Time for filing the appeal in AP 20/22780, if such extension is required, is extended to and including 25 May 2020. 2. Time for filing the appeal in AP 20/24046 is extended to and including 2 June 2020. 3. To the extent necessary, the grant of leave to both parties to be legally represented is extended to AP 20/24046. 4. The appeal in HB 20/22780 is dismissed. 5. The appeal in HB 20/24046 is allowed. 6. Pursuant to order 5, vary the first order made 27 April 2020 so that it reads "In application HB 19/18891 Edmund Benjamin and Sarah Benjamin are to pay Geneville Constructions PL $137,114.65 within 28 days after date of orders in AP 20/22780". 7. Edmund Benjamin and Sarah Benjamin are to pay Geneville Construction PL's costs of appeal proceedings AP 20/22780 and AP 20/24046 on the ordinary basis as agreed or assessed, subject to any application for an alternative costs order. 8. Any application for an alternative costs order, together with evidence and submissions in support of the application, is to be filed and served within 14 days of the date of these orders. 9. Any evidence and submissions in response to an application for an alternative costs order is to be filed and served within 14 days thereafter.

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: 18 May 2021