Blue Haven Pools South Pty Ltd v Maloney

Tribunal proceedings and decision

1. Ms Maloney brought proceedings in the Tribunal. She initially sought an order that the contract be performed but ultimately sought an order for damages of $182,332.23 alleging Blue Haven had repudiated the contract, that she had accepted the repudiation, and terminated the contract.
2. Blue Haven opposed the application saying it was willing to construct the pool if Ms Maloney accepted that she was liable for the additional costs of construction. It argued she was not entitled to terminate the contract and in doing so she repudiated the contract. Blue Haven said it has accepted Ms Maloney's repudiation and itself terminated the contract so it is released from the contract and Ms Maloney's application should be dismissed
3. The matter was heard by the Tribunal on 31 October 2018 and determined by it on 25 February 2019. The decision was amended pursuant to s.63 of the Civil and Administrative Tribunal Act 2013 on 20 March 2019 to correct an error in the final dollar amount of the order. Nothing turns on that amendment in this appeal.
4. The Tribunal made certain factual findings. The important ones for the purposes of this appeal are as follows: 1. The contract was in writing and provided that Blue Haven would complete the pool and associated works in accordance with the particulars and the terms set out in Part A and Part B of the contract for the contract price of $49,800.00, subject to variation of the price in certain defined circumstances 2. Following inundation of the site during excavation in July 2016, on or about 7 November 2016 Blue Haven advised Ms Maloney by phone that it had a quotation for additional work in the sum of $79,000. Both parties were willing for the pool to be constructed provided the other party paid these additional costs. 3. On 5 August 2018 at about 8.40 pm a representative of Blue Haven forced his way into Ms Maloney's home and placed a cheque in the sum of $15,000.00 on the table in the hallway. Ms Martinez (from Blue Haven) gave evidence that the cheque represented the balance of monies paid by Ms Maloney under the contract, and not previously refunded to her. Ms Maloney did not accept the cheque and it was returned to the Bank following intervention by NSW Police. 4. By letter dated 19 September 2018 Ms Maloney stated that she was terminating the contract. 5. By letter dated 25 September 2018 Blue Haven stated that it was terminating the contract. 6. The Tribunal accepted expert evidence that, in order to mitigate the risk of collapse of the excavation during construction of the pool, installation of sheet piling and dewatering will be required.

Tribunal decision regarding construction of the contract

1. The Tribunal noted that the contract provided that the contract price may change under certain provisions. We quote from the Tribunal [5-(3)] to [5-(9)] as follows: 1. Part A schedule 3 to the contract set out rates to be used in valuing works not otherwise covered by the contract. At schedule S3.7 under the heading "Prime cost and provisional sums - allowance for work where a choice still has to be made" the words "Shoring and extra steel for sand " had been written. No figure appeared in the column "Prime costs or provisional sum allowed". 1. Schedule S3.9 was headed "Items which may not be included in contract work and price". 1. A manual alteration had been made to tick "included" rather than "excluded" next to items 7 and 8: Item 7 Formwork, backfilling and piering carried out below existing ground level, Item 8 Any work necessary to stabilise the site conditions encountered in excavating and/or necessary to allow construction to proceed or recommence. This includes or covers events and consequences such as excavation collapsing due to unstable soil and/or the consequences of weather conditions such as rain and storms, and the use of pumps/spear pumps for dewatering if required. These are important and will referred to as "Items 7 & 8" 1. Clause 8.1 (e) provided: If design and construction methods change in order to provide structural integrity to the pool and to address site conditions uncovered by excavation and the cost of the pool increases by more than 35% of the contract price the Customer may, within 5 days of receipt of advice from the Builder of the cost implications of additional work, cancel the contract by written notice to the Builder. Cancellation of the contract will not affect the Customer's liability for payment of money owing as a result of the Builder's actual costs incurred including but not limited to site investigation, preparation of the plan, costs associated with the building approval application 1. Clause 8.5 provided (inter alia): (a) Where any work to be performed under the contract or any item to be used is of a nature that the cost cannot be determined until during the course of the work a provisional allowance may be included in the contract price. Such an allowance includes an amount for the acquisition of the appropriate item or the carrying out of the work and an amount for the Builder's overheads and profit. Such an allowance is referred to as a provisional sum or prime cost item. (b) All work or items covered by a provisional sum or prime cost are set out in Part A Schedule 3 Item S3.7. 1. Clause 9 dealt with variations and provided inter alia: (a) The Customer may order variations to the contract work or may be required due to a latent condition. The procedure to do this is set out in this clause. A variation is to be carried out by the Builder provided the work is required and its cost is agreed in writing. … (f) Additional costs will be payable by the Customer if the Builder is required to pump water from the excavation, pool shell or pool where the presence of such water would otherwise cause delay or damage to the work. The extra cost payable by the Customer will be the costs incurred by the Builder. Water from rain, seepage or run off which affects the work being done or to be done is covered by this clause. 1. The contract defined latent condition as meaning "a matter or thing, including ground conditions, drainage or other matter not reasonably discoverable prior to the commencement of works"
2. The Tribunal then analysed and interpreted the contract terms. The contract was a printed type contract but had various handwritten amendments. The Tribunal said it applied the principles in Australian Broadcasting Commission v Australasian Performing Rights Association Ltd (1973) 129 CLR 99.
3. The Tribunal relied upon the wording of Part A, S3.9, Items 7 & 8 which it found were in "broad terms". It was "..satisfied that the work required to install the sheet piling and to supply and install the dewatering system is work which comes within the ambit of Item 8 and is accordingly included in the contract..".
4. The Tribunal found that because no estimate of costs was included with the words "Shoring and extra steel for sand" in Part A, S3.7 that the items do not fall within the definition of a provisional sum. In doing so it rejected Blue Haven's submission that the amounts are included as provisional allowances and found they are included in the fixed price.
5. As a result of those findings, the Tribunal found the price of the pool had not been increased and so Clause 8.1 does not apply.
6. The Tribunal also found that the conditions which resulted in the need for sheet piling were "latent conditions" but Clause 9 (which allows additional payments for latent conditions) did not apply. That was because Part A, S3.9, Item 8 did not exclude work required because of a latent condition. Thus, by altering the standard contract to include the matters described in Item 8 in the fixed price contract, meant additional payment pursuant to Clause 9 could not be obtained even if those matters fit the description of a latent condition.

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with permission (that is, the "leave") 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 discussed below in the section dealing with leave to appeal.

Grounds of appeal

1. Blue Haven had eight grounds of appeal. A ninth ground was not pressed - this related to quantum.
2. The appeal was heard on 7 June and 9 August 2019 for a half day on each day. Lengthy submissions were made by both parties. Blue Haven's grounds can be divided into two broad issues. The first relates to matters of construction of the contract (Grounds 1 to 7). The second relates to termination of the contract (Ground 8). We will return to these shortly.

Submissions and evidence

1. In deciding the appeal, we have had regard to the following:

• The Notice of Appeal lodged on 25 March 2019 including the Grounds of Appeal.
• The Reply to Appeal lodged on 3 April 2019
• The Agreed Bundle comprising two folders and 643 pages of the documentary evidence before the Tribunal. It did not include a transcript of the hearing. It was amended and a fresh Bundle filed 20 May 2019. This was the Bundle the appeal panel relied upon.
• Blue Haven provided
• written submissions
• written submissions in reply; and
• written submissions filed after the second day of the appeal hearing dealing with a limited issue.
• Ms Maloney provided
• Submissions; and
• a note on case law after the first day of the appeal hearing pursuant to a request of the appeal panel

Notice of Appeal

1. The Notice of Appeal was lodged on 25 March 2019, which is within 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules).

Grounds of Appeal

1. The grounds of appeal specified in the Notice of Appeal can be grouped together being variations on a central argument.

Grounds 1, 2, 6 and 7

1. Blue Haven argued that the Tribunal's interpretation of Part A, S3.9 Items 7 and 8 was an error of law because it was capricious and unreasonable. In this regard it relied upon Australian Broadcasting Commission v. Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 110 per Gibbs J "..if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust.."
2. Blue Haven argued that an alternative construction, more favourable to it, would avoid what it called the unreasonable and unjust result from the Tribunal's decision.
3. It pointed to other parts of the contract which it said were inconsistent with the Tribunal's interpretation including 1. Part B, Clauses 2(d), 2(e), 2(f) and 3(e) which relate to site investigation. Clause 2(d) provides that "..the contract price is based on there being no ..latent conditions….latent water requiring dewatering..". However, Clause 2(d) provides that it applies only "Unless otherwise stated in the contract..". Part A, S3.9 Items 7 and 8 are just such another statement in the contract. Clauses 2(e),2(f) and 3(e) are consequential to the operation of Clause 2(d). Hence, there is no inconsistency. 2. Part B, Clause 8.1(e) which provides that if construction methods change to address actual site conditions uncovered by excavation and the cost of the pool increases by more than 35% then Ms Maloney may cancel the contract if given appropriate notice. But the contract price did not increase because of the site conditions and Ms Maloney never sought to cancel the contract on this basis anyway. There is no inconsistency here. 3. Part B, Clause 9, in addition to 9(a) and 9(f) quoted above, Blue Haven relied upon 9(d) which essentially provides that the customer (Ms Maloney) is liable for the cost of or is deemed to have ordered a variation if changes occur in the work to address actual site conditions uncovered by excavation or any other latent condition. This does appear to be inconsistent with Part A, S3.9 Items 7 & 8. 4. Similarly, Part a, S3.6(7) provides that if additional structural work is required to meet site conditions discovered during excavation then certain costs apply to the additional work. This also does appear to be inconsistent with Part A, S3.9 Items 7 & 8.
4. Blue Haven says that these inconsistencies should result in Items 7 & 8 being given a narrow construction to avoid inconsistency or an alternative construction to avoid injustice.
5. Blue Haven also says it should be obvious that latent conditions should not be part of the fixed price contract. It says no sensible builder would agree to this and to interpret the contract as doing so leads to unfairness. It points to the quote obtained by Ms Maloney from an alternative builder (page 424 Agreed Bundle) to build the pool for the sum of $139,638 (incl. gst but excluding sheet piling and underpinning). Blue Haven says that the meaning of contractual terms should be determined by "..what a reasonable person would have understood them to mean.." Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52 at [40].
6. Regarding inconsistency, in our opinion the Tribunal did not fall into error in its interpretation of Items 7 & 8. 1. Firstly, the wording is very broad and sustains the meaning found. 2. Secondly, the broad meaning found is supported by an interpretation provision in the contract. Part B Clause 19.1(f) provides that the word "includes" should be read as if was followed by the words "(without limitation)". This tends to strengthen the interpretation found. 3. Thirdly, there is authority for the proposition that where contractual terms conflict, terms that have been specifically negotiated should be given primacy over the standard printed or "boilerplate" terms; see Hume Steel Ltd v A-G (Vic) (1927) 39 CLR 455 at 465 where the High Court said (per Higgins J.) that "..where part of the instrument is printed, and part written, greater effect is to be given to the written words"; see also Godecke v Kirwan (1973) 129 CLR 629 at 637; Walker v Citygroup Global Markets Australia Pty Ltd [2006] FCAFC 101 at [77]; Wentworth Partners estate Agents Pty Ltd t/as RE MAX Gold v Gordony [2007] NSWSC 1135 at [52]-[54]; and W & K Holdings (NSW) Pty Ltd v Laureen Margaret Mayo [2013] NSWSC 1063 at [57]-[58]. 4. There is no dispute that Items 7 & 8 can be characterised as handwritten amendment while the inconsistencies are found in the printed contract. The interpretation found by the Tribunal is supported by authority and we can see no error.
7. As to the unfairness argument, a more complete reading of Australian Broadcasting Commission v. Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109 to 110 gives better guidance: It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, "even though the construction adopted is not the most obvious, or the most grammatically accurate", to use the words from earlier authority cited in Locke v. Dunlop (1888) 39 Ch D 387, at p 393 , which, although spoken in relation to a will, are applicable to the construction of written instruments generally; see also Bottomley's Case (1880) 16 Ch D 681, at p 686 . Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument. Finally, the statement of Lord Wright in Hillas &Co. Ltd. v. Arcos Ltd. (1932) 147 LT 503, at p 514 , that the court should construe commercial contracts "fairly and broadly, without being too astute or subtle in finding defects", should not, in my opinion, be understood as limited to documents drawn by businessmen for themselves and without legal assistance (cf. Upper Hunter County District Council v. Australian Chilling and Freezing Co. Ltd. (1968) 118 CLR 429, at p 437 ). (at p110)
8. In our opinion the words used in Items 7 & 8 are unambiguous and the language is not open to two constructions. The Tribunal did not fall into error in giving effect to them.
9. Secondly, it is not for the Court to interfere with the bargain reached by the parties, or put more correctly that commerciality is no basis for re-writing the agreement which the parties actually made; see Kooee Communications Pty Ltd v Primus Telecommunications Pty Ltd [2008] NSWCA 5 at [27] (Basten JA, Giles and Tobias JJA relevantly agreeing). As Blue Haven said in its written submissions at [40] "this was a pool that was never going to be built for $49,800" but there may be good commercial reasons, unrelated to its profit level, why Blue Haven agreed to what appears to be a very low price for this contract.
10. We can find no reason to interfere with the decision of the Tribunal on the grounds that its interpretation of the contract produced a result which was capricious or unreasonable, inconvenient or unjust.
11. Ground 3 relates to the Tribunal's finding at [14] that because no estimate of costs is included in the contract (at S3.7) the items do not fall within the definition of provisional sum. It is argued this is an interpretation that produces a result which is capricious, unreasonable, inconvenient or unjust. Our observations and opinion set out above apply equally to this ground. There is no error.
12. Grounds 4 and 5 relate to Clause 8.1(e) whereby the Ms Maloney is entitled to cancel the contract if the price should increase by 35%. Blue Haven's arguments are unclear on these grounds because Ms Maloney never sought to invoke Clause 8.1(e) so its meaning is academic in the circumstances, but if it be argued the Tribunal decision produces an unjust result, then the comments above apply.

Leave to appeal on construction of the contract

1. Blue Haven seeks leave to appeal on a ground other than a question of law - see [92] of its submissions. This is because Ground 5 may involve mixed question of fact and law. 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 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).
2. 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) 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.
3. 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).
4. 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.
5. We are satisfied that Blue Haven has not suffered a substantial miscarriage of justice in the relevant sense and in any event, for the reasons which follow, we are of the opinion that leave to appeal should not be granted.
6. Essentially, this is because it is our view that Blue Haven has not demonstrated that there is a significant possibility that it has been deprived of a chance that was fairly open of achieving a better outcome than occurred. Nor would we exercise the discretion to grant leave to appeal under s 80(2)(b).
7. To elaborate upon the above conclusions, Blue Haven argued that the case involved an issue of principle and it is reasonably clear that an injustice has occurred. It said there were substantial reasons to allow appellate review where it will suffer a substantial loss on the contract. We disagree and are satisfied for the reasons already set out above that the Builder did not suffer a substantial miscarriage of justice.
8. We are not satisfied that, even if there has been a miscarriage of justice on one of the grounds identified in cl 12(1) that we should grant leave. This is because we are of the opinion that there are no issues of principle, no questions of public importance or matters of administration or policy which concern this appeal. Nor are we satisfied that Blue Haven has suffered an injustice which is reasonably clear.

Ground 8 - Repudiation

1. Blue Haven argues the Tribunal was in error when it found that Ms Maloney had validly terminated the contract. Blue Haven says that she had the right to terminate on 5 August 2018 (when the cheque was forcibly delivered to her) but she subsequently lost the right to terminate because either; 1. she did not accept the cheque and so affirmed the contract. 2. Blue Haven wrote an email on 7 August which it said evidenced an intention to retract the repudiation and to be bound by the contract 3. Ms Maloney's solicitors wrote to Blue Haven on 22 August, re-listed the matter before the Tribunal and did not seek to terminate the contract.
2. Put shortly, Blue Haven argued that the right to terminate was "spent" by the time Ms Maloney actually did terminate the contract on 19 September 2018 so her purported termination was not valid.
3. Putting aside for the moment Ms Maloney's arguments as to why the Tribunal was not in error, she says there is a more fundamental issue when considering this ground of appeal. She argues that this issue was not argued in the Tribunal and Blue Haven should not be permitted to raise this issue for the first time now.
4. Ms Maloney took the appeal panel to extracts of the correspondence and the submissions to the Tribunal which she says shows that Blue Haven did not raise the issue of the right to termination being "spent" but instead Blue Haven had argued the facts did not support a finding that Ms Maloney had validly terminated the contract. The reasons of the Tribunal do not deal with the issue of the right to termination being "spent", she says, because it was not raised at the trial.
5. Blue Haven does not dispute this, saying that in the Tribunal it argued it's actions on 5 August 2018 did not constitute a repudiation of the contract. It was unsuccessful on that issue and now accepts its conduct did constitute a repudiation. It argued in the Tribunal that the email of 7 August 2018 evidenced an intention to perform the contract. On appeal it seeks to argue that the email of 7 August operates as a retraction of the repudiation.
6. Ms Maloney says that if this issue, namely the alleged retraction of the repudiation, had been agitated at the trial she would have conducted her case differently and/or led evidence to meet it. In oral submissions Counsel for Ms Maloney (who conducted the case for her at trial), said that the Manager for Blue Haven, Ms Martinez, gave evidence and was cross examined. She was not cross examined regarding the bona fides of the 7 August email but would have been so cross examined if the "retraction" issue was raised, to suggest the alleged retraction was not genuine. We did not have a transcript of the evidence in the Tribunal and so were not able to independently verify this aspect.
7. In Suttor v Gundowda Pty Ltd [1950] HCA 35 at [9] the High Court said The circumstances in which an appellate court will entertain a point not raised in the court below are well established. Where a point is not taken in the court below and evidence could have been given there which by any possibility could have prevented the point from succeeding, it cannot be taken afterwards.
8. See also Coulton v Holcombe (1986) 162 CLR 1 at 7
9. Despite the lack of a transcript, we accept there is a possibility that evidence could have been given in the Tribunal if this issue had been raised during the trial. That is because there is logic to it and Blue Haven did not dispute the reasoning. Thus, Ms Maloney would be prejudiced if this new issue were raised on appeal; NAJT v Minister for Immigration & Indigenous Affairs [2005] FCAFC 134 at [77]-[78] per Hill J.
10. Blue Haven is not permitted to raise the issue of the right to termination being "retracted" in this appeal. This infects the other arguments by Blue Haven - namely, that Ms Maloney elected, by her conduct, to continue the contract or the repudiation was extinguished by electing to return the cheque.
11. Even if we were wrong on that issue, we would have found that the nature of Blue Haven's repudiation on 5 August was such that it could not easily be retracted or extinguished by her election, at least without much clearer evidence. Merely returning the cheque or re-listing the matter in the Tribunal is not sufficiently clear evidence in the circumstances.
12. Ms Maloney gave evidence about the events of 5 August and we were taken to her affidavit of 20 September 2018 regarding what happened which were not challenged by Blue Haven in cross examination. The events as described are disturbing and most unusual in the context of a commercial dispute.
13. The forcible entry into Ms Maloney's home in order to have her accept a cheque in the sum of $15,000.00 goes beyond being merely repudiatory conduct. It evidences egregious conduct such that Ms Maloney was entitled to doubt the bona fides of the statements of intention in the email of 7 August 2018. In our view, Ms Maloney had not lost the right to terminate the contract on 19 September 2018.
14. These finding are sufficient to dispose of the appeal.

Conclusion

1. In light of the above, the appropriate orders are 1. Leave to appeal is refused; 2. The appeal is dismissed; Blue Haven has been unsuccessful. The Appeal Panel makes the following directions on the determination of any application for costs: 1. If the Respondent wishes to seek an order for costs of this appeal in her favour, she is to file and serve within 14 days of this decision a short outline of submissions as to why the Appeal Panel should make such an order and as to whether the question of costs should be determined on the papers; 2. If the Appellant opposes any costs order being made, the appellant is to file and serve a short outline of submissions as to why such an order should not be made and dealing with whether the issue of costs should be determined by the Appeal Panel on the papers, 14 days after receipt of the Respondent's submissions on costs; and 3. The Respondent is to file and serve any reply submissions on costs within 14 days after service of the Appellant's submissions.

---

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: 17 October 2019