Bradshaw v Complete Coating Commercial Pty Ltd t/as CCC Civil

NCAT Appeal Panel|2017-04-07

Introduction

This is an internal appeal under section 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
The appellants, Mr and Mrs Bradshaw, challenge an order of the Tribunal sitting in its Consumer and Commercial Division, and made on 8 December 2016. The proceedings below arose out of an agreement between Mr and Mrs Bradshaw and the respondent (CCC Civil), by which CCC Civil agreed to construct a bitumen sealed pavement over the existing driveway of Mr and Mrs Bradshaw's property in northern New South Wales.
The Tribunal's order determined two applications. One was an application by Mr and Mrs Bradshaw (HB 16/35464) and the other an application by CCC Civil (HB 16/43828).
Mr and Mrs Bradshaw had paid CCC Civil $30,000.00 for the pavement works. By their application, they claimed damages because CCC Civil's work was substantially defective. They quantified that claim in the amount of $25,000.00, calculated as the money paid for the work, less an allowance of $5,000 for grading works they claimed as not being defective. CCC Civil's application claimed an allegedly outstanding payment of what CCC Civil assessed as due for the work carried out on a quantum meruit basis.
The Tribunal gave oral reasons for decision and made the following findings that are not challenged on appeal: 1. that the work was 'residential building work' within the definition in section 3 of the Home Building Act 1989 (NSW) (the HBA); 2. that the contract did not comply with section 7 of the HBA, being neither in writing, nor dated, nor signed by both parties; 3. section 10 of the HBA precluded CCC Civil from enforcing the contract against Mr and Mrs Bradshaw, but did not prevent CCC Civil from making a quantum meruit claim for payment for the work done; 4. the terms of the contract required CCC Civil to have a two-coat seal spray surface layer applied by a 'major contractor', such as Boral, and that CCC Civil repudiated the contract by denying it had that obligation; and 5. Mr and Mrs Bradshaw were lawfully entitled to terminate the contract by accepting CCC Civil's repudiation, and were entitled to an award to compensate them for CCC Civil's breach of the contract.

Scope and Nature of Internal Appeals

Internal appeals may be made as of right on a question of law, and otherwise with leave (meaning the permission) of the Appeal Panel: section 80(2) Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).

Question of law

In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast) the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. a failure to provide proper reasons; 2. the identification of a wrong issue or asking the wrong question; 3. the application of an incorrect legal principle; 4. a failure to afford procedural fairness; 5. a failure to have regard to any relevant (i.e., mandatory) matter; 6. considering an irrelevant matter; 7. making a factual finding without any evidence; and 8. making a decision which is so unreasonable that no reasonable decision-maker would ever have made it.

Leave to appeal

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 clause 12(1) of Schedule 4 of the NCAT Act. Those cases require the Appeal Panel to be satisfied the appellant has suffered a substantial miscarriage of justice on the basis that: 1. the Tribunal's decision was not fair and equitable; or 2. the Tribunal's decision was against the weight of the evidence; or 3. significant new evidence has emerged, being evidence that was not reasonably available at the time the original proceedings were heard.
The Appeal Panel dealt with the concept of 'substantial miscarriage of justice' in this context in Collins v Urban [2014] NSWCATAP 17 (Collins v Urban) at [76] in these terms: … 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.
The Appeal Panel still has a discretion as to whether it should grant leave to appeal under section 80(2)(b) of the NCAT Act, even if an appellant satisfies the Appeal Panel of the requirements of clause 12(1) of Schedule 4. As to that discretion, the Appeal Panel in Collins v Urban at [84] said that ordinarily it was 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.

Documents considered in determining the appeal

We have considered the following documents in determining the appeal: 1. the folder of documents (Folder 1) referred to in the Mr and Mrs Bradshaw's 'Grounds of Appeal Index', as further explained in Mr and Mrs Bradshaw's letter to the Tribunal dated 27 February 2017 (the 27 February Letter), and comprising: 1. the Notice of Appeal received by the Tribunal on 30 December 2016 (document 2 in Folder 1); 2. the grounds on which Mr and Mrs Bradshaw relied to demonstrate both error by the Tribunal member, and as demonstrating that the Tribunal's orders were not fair and equitable - Annexure as to question 5B in the Notice of Appeal (document 2 in Folder 1); 3. the orders which Mr and Mrs Bradshaw submitted the appeal panel should make - Annexure as to question 5C in the Notice of Appeal (document 19 in Folder 1); 4. the grounds on which Mr and Mrs Bradshaw relied to demonstrate why the Tribunal's orders were against the weight of evidence - Annexure as to question 6B(ii) in the Notice of Appeal (document 21 in Folder 1); 5. the grounds on which Mr and Mrs Bradshaw relied to demonstrate they should be granted leave to rely on new evidence because it was not reasonably available at the hearing - Annexure as to question 6B(iii) in the Notice of Appeal (document 22 in Folder 1); 6. documents on which Mr and Mrs Bradshaw had previously relied at the hearing, being documents 3 to 13, 15, 16, 20 and 25 in Folder 1; 7. 'additional evidence', which Mr and Mrs Bradshaw must establish as being significant new evidence which has emerged, being evidence that was not reasonably available at the time the original proceedings were heard' being documents 14 and 18 of Folder 1; 1. the folder of documents referred to in Mr and Mrs Bradshaw's 'Index of Additional Documents', as further explained in the 27 February 2017 Letter (Folder 2), and comprising: 1. written submissions as to why the Appeal Panel should permit Mr and Mrs Bradshaw to rely on new evidence on appeal (document 1 in Folder 2); and 2. 'additional documents' 2 to 8 in Folder 2, which Mr and Mrs Bradshaw must demonstrate as being significant new evidence that not reasonably available at the time the original proceedings were heard; and 3. documents 2 and 9 in Folder 2, on which Mr and Mrs Bradshaw had previously relied at the hearing, but which Mr and Mrs Bradshaw incorrectly described in the Index of Additional Documents as being additional or new evidence; 1. Annexure 'Z 12', comprising several photographs taken of CCC Civil's works on 26 February 2017, referred to in the 27 February Letter (Z 12); 2. the folder of documents referred to in the Summation index (Folder 3) comprising: 1. written submissions, as corrected by the 27 February Letter (document 1 in Folder 3); and 2. documents 3 and 4 in Folder 3, said to be additional evidence, and which Mr and Mrs Bradshaw must prove was evidence not reasonably available at the hearing; and 3. document 2 and 5 in Folder 3, on which Mr and Mrs Bradshaw had previously relied at the hearing; 1. the document described as 'Annexure of Additional Evidence', comprising further submissions as to why the Appeal Panel should permit Mr and Mrs Bradshaw to rely on the additional evidence on which they wish to rely on appeal; 2. the documents referred to in an index of documents referred to by Mr and Mrs Bradshaw at the hearing (Folder 4), comprising: 1. submissions as to the evidence timeline (document 1 in Folder 4); and 2. documents 11 to 14, 16 to 19, 20 and 22 to 24 which are identical documents to those referred to the Folder 1 index; 1. CCC Civil's folder of reply documents (the Reply Folder) comprising; 1. Civil's Reply to Appeal dated 12 January 2017; 2. brief written appeal submissions on appeal; 3. the written report of Mr Peter Atkinson dated 8 November 2016, on which CCC Civil relied at the original Tribunal hearing; 4. an additional written report by Mr Atkinson dated 26 March 2017, which CCC Civil must demonstrate as being significant new evidence that not reasonably available at the time the original hearing; and 5. a one page document relating to the conversion of a truck load of material to cubic metres by Mr Mick Sivewright dated 12 January 2017, again being additional evidence which CCC Civil must establish was not reasonably available at the time of the hearing; 1. the transcript of the Tribunal hearing on 8 December 2016 provided by Mr and Mrs Bradshaw, which includes the reasons for decision given orally (the Transcript); 2. Mr and Mrs Bradshaw's submissions as to the Transcript dated 21 April 2017; 3. Mr and Mrs Bradshaw's response submissions replying to CCC Civil's Reply to Appeal dated 3 April 2017; 4. a transcript of phone text messages passing between Mr and Mrs Bradshaw and Mr Sherman; 5. the statutory declaration of Mr Sherman dated 15 November 2016, and Mr and Mrs Bradshaw's submissions dated 4 October 2016 relating to the payment of $10,000 in cash which was in dispute at the hearing by; and 6. the oral submissions made at the appeal hearing by Mr and Mrs Bradshaw and Mr Sherman.

Notice and Grounds of Appeal

The Notice of Appeal was lodged within the 28-day period specified in clause 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (the Rules), and CCC Civil did not submit otherwise.
Section 5B of the Notice of Appeal refers to a nine-page Annexure in which Mr and Mrs Bradshaw set out the grounds for their challenge of the Tribunal's orders (the 5B Annexure).
The 5B Annexure contains various contentions, which are submissions, rather than a brief statement of the grounds of appeal. In cases involving self-represented litigants, as the parties in the present appeal, who cannot clearly articulate grounds of appeal, nor distinguish between errors of law and errors of fact in relation to which leave to appeal is required, it is appropriate for the Appeal Panel to consider the material provided on the appeal to properly identify and characterise the grounds of appeal being advanced: Prendergast at [12].
Section 6B(i) of the Notice of Appeal, which indicates why Mr and Mrs Bradshaw consider the Tribunal's decision was not fair and equitable, also refers to the contentions in the 5B Annexure.
The 5B Annexure contains the following relevant statements, extracted by the Appeal Panel by reference to the common subject matter and the errors addressed.
The first of the contentions in the 5B Annexure (Ground 1) are: The figures for [the Tribunal's] determination…were never broken down or explained to us. At the hearing there was no discussion, no looking at Mr Sherman's evidence, no receipts shown, no cross examination in this regard, just a conversation between the Member and Mr Sherman where the Member said word to the effect, 'I see where you get your figures'. … Even when it was drawn to the Member's attention that we did not get 300 millimetres (sic) of good road base, Mr Sherman was not asked for and did not produce any receipts showing the type and quantities of material used.
The second group of contentions in the 5B Annexure (Ground 2) are: The Member did not accept Clark Asphalt as an expert witness. … The Member did not accept Clarke (sic) Asphalt as part of our evidence as they use Asphalt and not two-coat bitumen spray as Boral Asphalt quoted for. … …[the] Clarke (sic) Asphalt letter…and Boral…together prove that the sub-grade of section 'D' is not suitable for any kind of surfacing, either asphalt or two coat spray. It is unfair that this documentation was not looked at or taken into consideration when the Member ruled out Clark Asphalt as an expert witness. … Photographs as evidence were supplied… The inferior preparation done by [CCC Civil] is also shown by a quote submitted at our hearing…from Price Civil Pty Ltd. … All of this evidence if considered, we believe would have changed the Member's quantum merit (sic) outcome of Mr Sherman's payment. … c) As well as Clarke (sic) Asphalt and Boral's evidence, we had two licensed road builders quote on repairing [CCC Civil's] work and preparing the sub-grade on our driveway to a standard for surfacing. … …The Member's order has not taken into account [the RF Byrne evidence]… …Nor did the Member take into account the Quote from Price Civil Pty Ltd… and … b) The Member's quantum merits (sic) awarded to Mr Sherman was not based on factual evidence. We had supplied photographs, which clearly show that there is not 300 millimeters (sic), compressed to 100 millimeters (sic) of good road base on our driveway in any of the sections. The Member in our hearing had said 'so many photo's! (sic)' and did not seem interested to examine the photographic evidence showing the above. … As Mr Sherman's counter claim and our claim were heard at the same time, it was unfair that Mr Sherman did not have to prove that his sub-grade and preparation is to standard, or that he supplied all that blue metal in his counter claim.
The third group of contentions in the 5B Annexure (Ground 3) are that: At the outset of our hearing, the Member said he had read all our material, however the Member never addressed [the submission as to the lack of documentary material to prove the quantum meruit claim] in his calculations, nor cross examined Mr Sherman on our response to Mr Sherman's cross claim. We were never asked our opinion of the calculations that both the Member and Mr Sherman discussed. We had been told not to interrupt very early on in our hearing and we both felt quite shut down.
The fourth group of contentions in the 5B Annexure (Ground 4) are: … e) It is not fair that the Member has not taken into account that we will need to pay to have [CCC Civil's] failing, un-authorised sample of two-coat spray removed, when he made the costs order in favour of [CCC Civil]. … h) We believe it to be unfair that Mr Sherman has been paid for a job that he did not do and he has not proven his work is up to standard. His work needs to be re-done, with 29 truck loads, 360 tonne of good road base, all at extra cost to us.
The fifth group of contentions in the 5B Annexure (Ground 5) are: f) It is not fair that Mr Sherman's word is taken as fact, that he applied 300 millimeters (sic) of road base over 800 square meters (sic) without any evidence. … g) It is not fair that Mr Sherman's word was taken as Mr Sherman lied on a number of occasions…
The sixth group of contentions in the 5B Annexure (Ground 6) are: 3) We also appeal on questions of public importance. Since lodging our Application…we have found that another neighbour…has also had work done by [CCC Civil]… … We feel it is unfair that an un-licensed contractor, continues to cause havoc, stress and financial loss to individuals in the community.

The quantification of the quantum meruit entitlement

If CCC Civil was to recover any payment for work carried out for Mr and Mrs Bradshaw, it could not rely on the contract, as the contract was unenforceable. It had to rely on the law of restitution; the principle of unjust enrichment: Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 and Lumbers v W Cook Builders Pty Ltd 232 CLR 635 at [83] - [84].
Each of the Grounds raise the issue of whether there was error by the Tribunal in its approach to the assessment of CCC Civil's quantum meruit claim, and in that context whether the Tribunal was correct to reject Mr and Mrs Bradshaw's expert evidence, and photographic evidence, on the basis that it was unreliable because it assumed that an asphalt surface layer would be laid on the base course and aggregate subgrade. Referring to the terminology in Prendergast these grounds of appeal involve questions of law on the basis that the Tribunal either: 1. identified a wrong issue or asked the wrong question; 2. applied an incorrect legal principle; 3. failed to afford procedural fairness; or 4. made a decision which is so unreasonable that no reasonable decision-maker would ever have made it.

Principles as to the quantification of the quantum meruit claim

For CCC Civil to succeed, it had to establish three things to the Tribunal's satisfaction: 1. the CCC Civil pavement work had 'enriched' Mr and Mrs Bradshaw by them receiving the benefit of that work; 2. the benefit that Mr and Mrs Bradshaw had received was at CCC Civil's expense; and 3. that it was be 'unjust' in the circumstances to allow Mr and Mrs Bradshaw to retain the benefit without paying for it;
Sopov v Kane Constructions [2009] VSCA 216 is authority for the proposition that the valuation of a quantum meruit claim can be by reference to the builders' cost of materials, goods and profit. In that case, the owner raised the following arguments to oppose the builder's quantum meruit claim: 1. that the builder's only remedy was for damages consequent on the owner's breach of the contract, and not quantum meruit; and 2. if the builder had an entitlement to elect to claim on a quantum meruit, the amount recoverable by the builder was limited to the contract price; and 3. if the amount which the builder could recover was not limited by the contract price, the contract price was, nevertheless, the best evidence before the court of the value of the benefit received by the owner.
The Victorian Court of Appeal's discussion on quantum meruit cannot be divorced from the facts, but it is correct to observe that the Court in Sopov v Kane considered that the value of the work done could be established by evidence of the actual costs incurred by the builder. At the same time the Court made it clear that it was appropriate to ascertain what it would have cost to have the works carried out by another builder in comparable circumstances, in dealing with the builder's entitlement to a profit margin.
The present case does not involve a discharged contract, where a builder is claiming for payment after terminating the contract because of repudiatory conduct. Here, the party seeking to make a quantum meruit claim was not in a position to enforce the contract because of its own breach of the HBA requirements. These were requirements which have the essential purpose of fulfilling the consumer protection objectives of the HBA.
In Council of the City of Sydney v Woodward [2000] NSWCA 201, where Heydon JA at [12] by (Priestley and Meagher JJA both agreeing) referred to the following proposition as a matter of principle: The position which obtains when a Court is asked to determine a reasonable remuneration payable to a plaintiff, on a quantum meruit basis, is as Renard makes quite plain, that it is the task of the Court to stand back from the evidence and to weigh up, in general terms from all of the evidence before it, what is a fair and reasonable amount to be paid to a plaintiff.
In Pavey & Matthews Pty Ltd v Paul, Deane J said at 263 of the judgment: What the concept of monetary restitution involves is the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or "enrichment" actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided (eg remuneration calculated at a reasonable rate for work actually done or the fair market value of materials supplied).
However, his Honour went on to make the following observation: In some categories of case, however, it would be to affront rather than satisfy the requirements of good conscience and justice which inspire the concept or principle of restitution or unjust enrichment to determine what constitutes fair and just compensation for a benefit accepted by reference only to what would represent a fair remuneration for the work involved or a fair market value of materials supplied.
The way in which a Court or Tribunal approaches the valuation of a quantum meruit claim will depend on the circumstances and context in which the claim arises. Mason K and Carter JW, Mason & Carters Restitution Law in Australia, Third Edition, LexisNexis Butterworths, Sydney, 2016 relevantly states at [1416] (the footnoted references are not included): Generally, the starting point, or prima facie position, for accepted services is that the plaintiff is entitled to recover the market value or price of the services. The amount will include a profit element. It follows that the amount by which the defendant's assets have in fact been increased is not usually the basis for assessment. Superficially at least, this suggests that valuation is more concerned with the cost of rendering performance than the actual benefit to the defendant. But it can equally be said that the benefit obtained at a plaintiff's expense is the amount which the defendant would have had to pay a third party to provide the benefit. However, the actual costs of the plaintiff in conferring the benefit may be taken into account. And where a claim for reasonable remuneration succeeds on the grounds of acceptance of a requested benefit, the defendant may be held liable to pay for work, such as preparatory work, which would not have been a distinct component of the price of the completed work, as where an anticipated contract fails to materialise. If the services to be valued were rendered by a professional, the above approach leads to a valuation at the commercial rate applicable to work of the same kind done a person of the plaintiff's standing. Account may be taken of custom and prevailing rates and practices in the relevant market. This may justify an award on a commission basis. Of course, account must also be taken of the extent to which the plaintiff was in fact remunerated. … Awarding market value assessed by reference to the cost of rendering services or doing work is not the starting point if the obligation is to make restitution for an incontrovertible benefit. In such cases, the claim is based on receipt of a realised benefit, or one which is realisable as a money sum. Thus, BP Exploration Co (Lybia) Limited v Hunt (No. 2) Robert Goff J said that if the 'sole basis of recovery' is that the defendant was incontrovertibly benefited, it may be legitimate to limit recovery to the actual increase in the defendant's wealth. Accordingly, the claim is limited to the money sum which has been realized (or which is realisable, unless that amount is in fact greater than the market value of the work done or other services rendered).
Having regard to the authorities already referred to, we consider that the Tribunal below was obliged to consider the value of CCC Civil's work to Mr and Mrs Bradshaw. This could have been done by considering what Mr and Mrs Bradshaw would have had to pay a comparable builder for the work requested, not merely by reference to the agreed contract price for the work. The agreed contract price of the works was no more than a piece of evidence that might have been relevant to that finding, but should not have been the starting point and the conclusion of the Tribunal's consideration of the value of CCC Civil's work to Mr and Mrs Bradshaw.
Another manner in which quantum meruit can be quantified was considered in Brenner v First Artists' Management Pty Ltd, in which Byrne J applied a presumption of the quantification of quantum meruit claim, based on what the defendant would have had to pay for the work carried out under a 'normal commercial arrangement' for the services rendered. In that case, there was a lack of reliable evidence on what a comparable person providing the services may have charged. Byrne J, in the absence of that evidence, took the cost of rendering the services into account, to arrive at an appropriate remuneration.
In this case, we have concluded from the transcript that the Tribunal did not enquire as to the cost of the work performed by CCC Civil and assumed that the agreed contract price reflected the fair market value, without apparently directing any enquiry as to whether this was an appropriate assumption to make.
The Appeal Panel considers that in assuming that the contract price satisfied CCC Civil's onus of demonstrating the fair market value of the work, the Tribunal made a legal error by either: 1. identifying the wrong issue or asking the wrong question; or 2. applying an incorrect legal principle;
We are satisfied that the manner in which the Tribunal dealt with this issue warrants setting aside the Tribunal's determination of CCC Civil's quantum meruit entitlement.
Mr and Mrs Bradshaw's case before the Tribunal below was that although CCC Civil had agreed to provide a good quality granite aggregate as the pavement's base course for the surface layer, CCC Civil had imported a fine dust into the aggregate base course in the quantities that it had agreed to use, and that the base course was mostly "cracker dust", or decomposed granite. Mr and Mrs Bradshaw relied on several photographs, which on our assessment provided reasonable grounds to at least question what CCC Civil actually used for the base course of the pavement.
It appears to us that the Tribunal below failed to come to grips with Mr and Mrs Bradshaw's complaint about the lack of invoices and receipts which they submitted were necessary for CCC Civil to satisfy the onus of proof in demonstrating that it did use good aggregate road base, as had been agreed. In this respect, the Appeal Panel also considers that the Tribunal below: 1. identified the wrong issue or asked the wrong question; or 2. applied an incorrect legal principle. This also justifies setting aside the Tribunal's determination of CCC Civil's quantum meruit entitlement.
We consider that CCC Civil's failure to comply with the procedural requirements of the HBA was a relevant circumstance in the valuation of the claim and warranted the Tribunal below taking the view that CCC Civil had to establish more than the contract price for the works. To do no more than that was to permit CCC Civil to enforce the terms of the very contract by way of quantum meruit what the HBA would otherwise have prevented CCC Civil from enforcing.

Conclusion

Accordingly, we allow the appeal and remit the proceedings to the Tribunal. Having allowed the appeal on a question lf law, it is unnecessary to consider whether leave to appeal should be granted.
As noted above, the remitted proceedings are to be determined on the basis that liability has been found for Mr and Mrs Bradshaw in connection with CCC Civil's repudiation and breach of contract (as determined by the Tribunal below on 8 December 2016) and on the basis that CCC Civil is entitled to claim a quantum meruit payment for the work it has carried out. Fresh evidence may be required in the remitted proceedings to quantify the quantum meruit claim.

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: 03 November 2017

Home Building Act 1985(NSW)

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Judgment (10 paragraphs)

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Cited By (3)