For the reasons given below I have ordered the second respondent (the sole director, secretary and shareholder of the first respondent) to repay to the applicant owner the entire amount paid by the owner and to compensate the owner for repairing damage. I have called the second respondent in these reasons "the director".
At no point did either party request leave for legal representation. In my view there were no special circumstances justifying an award for costs under s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). The amount claimed of $32,800 was slightly over the threshold of $30,000 in r 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) to attract normal costs rules. In the absence of a request for or grant of leave for legal representation and the parties representing themselves at hearing, I see no basis for an award of costs under the ordinary rules. I note that a parties' time in preparation and appearance is not compensable in costs in the usual course and there seems nothing unusual in that respect in the present circumstances. I shall however give the opportunity to apply for a different outcome on costs of the proceedings if a party wishes so to apply.
[2]
Background, evidence and issues, procedure
In these proceedings filed 9 August 2022 the applicant owner alleged that the respondents had failed to install a kitchen in the owner's home in Glenhaven, in northwest Sydney, NSW. All the respondents had done was to remove the existing kitchen and install an unfinished carcass. The respondents had prevaricated on completion timeframe. The owner claimed a complete refund of the $32,800 that he had paid in tranches on 7 and 10 June and 5 August 2022. He also wanted compensation for his out-of-pockets. He estimated that the cost to bring the kitchen to a functioning state as a new kitchen was $41,000 which was the contract price.
Brown v Max Pattison Pty Ltd and Travis-Almond [2023] NSWCATCD 86 | Case summary | Zoe
Searches showed that the second respondent was the sole director, secretary and shareholder of the first respondent. A response from Fair Trading dated 10 August 2022 to the owner's earlier complaint noted that the first respondent was unlicensed. There was no evidence that the second respondent (the director) was licensed.
The respondents did not appear at the directions hearing on 8 September 2022 when it was noted that the owner needed to establish when and how the contract had ended in points of claim and directions to prepare the matter for hearing were made.
The respondents again did not appear at a directions hearing on 6 February 2023 but the director answered a telephone call from the Tribunal, gave an email address for service and said he hadn't received the notice for that hearing or the directions made on 8 September 2022. The directions hearing was adjourned for two weeks and it was noted that there should be a further adjournment only in exceptional circumstances.
On 20 February 2023 preparation for hearing directions were made again and the presiding member noted that the owner said he could establish that the contract was with both respondents. The first respondent was noted as currently registered as a company. The non-appearance again of the respondents was noted and the matter was said not to be adjourned again. It was noted that the owner had served all documents on which he sought to rely at final hearing on the first respondent's registered office on 14 October 2022, the director's home address on 31 October 2022 and by email.
Shortly prior to the notified final hearing date the respondents by the director requested an adjournment, citing illness. The owner objected, pointing to the history of non-participation and other matters. The respondents had filed and served no documents for the final hearing.
Late morning before the 1.15pm final hearing, at my request the Registry sent the following order by email to the parties:
"The respondents have requested an adjournment through recent illness (infuenza B). The respondents have filed no evidence or submissions. The applicant when notified of the request has objected because of delays and non-appearance by the respondents. Balancing the interests, the matter is adjourned today for a decision on the existing filed material on the papers. The parties have the opportunity to file and serve by email on or before 24 May 2023 brief submissions setting out what they would have said today at hearing about the existing evidence without repeating existing material. The applicant will then have a further opportunity before 31 May 2023 to file and serve by email any brief response to what the respondents file and serve."
No material was received in response from the respondents of which I was made aware.
There was no dispute that the subject of any contract was residential building work as defined in HBA Sch 1 para 2(1)(a) and/or (b) and (c), 2(3)(a), 3(1); Home Building Regulation 2014 (NSW) reg 12. Any building contract required homeowners' warranty HBCF insurance since it exceeded $20,000 in the reasonable market cost of labour and materials involved: HBA ss 7(2)(f1), 92, 94; Home Building Regulation 2014 (NSW) reg 53.
Homeowner warranty HBCF insurance was required since the reasonable market cost of labour and materials involved in the contract exceeded $20,000: Home Building Act 1989 (NSW) (HBA) ss 7(2)(f1), 92, 94; Home Building Regulation 2014 (NSW) reg 53. There was no evidence of such insurance.
The claims were clearly within required time and money limits under HBA s 48K.
[3]
Termination of contract
The owner had sent to the director's home address a letter of termination for breach dated 12 October 2022. The letter claimed a full refund and damages of $17,200 and sought collection of all the respondents' material onsite otherwise they would be disposed of and disposal costs claimed. The letter said that the respondents had "substantially deprived [the owner] of the whole benefit he was to obtain from the contract (a new kitchen) as you have failed to complete the works agreed in the contract, which has resulted in a breach of the contract". In my view the letter confirmed the position that the owner had terminated the contract for breach by filing the proceedings on 9 August 2022 seeking the relief identified earlier.
In his points of claim the owner particularised the damages claimed as his time of work at $1,513pd for 14 days to attend and prepare for hearing and $1,058 on expenditure to repair walls, cornices and skirtings in the removal of the existing kitchen.
The owner submitted that no useful work was done, the previous kitchen was removed and nothing was done to complete installation of the new kitchen including make good on removal damage, leaving the house without a kitchen.
Although the contract described below contained no terms as to performance period or termination, performance would be required to occur within a reasonable time under the statutory warranty to that effect in HBA s 18B(1)(d). The owner's witness statement said, uncontradicted, that the director told the builder before contract that installation would take about five weeks (that is, by about mid-July 2022). The time between contract date and filing of these proceedings in early August 2022 was more than reasonable for completion on the evidence. The owner was justified in terminating for breach.
[4]
Parties to contract
The contract was formed by acceptance by the owner, in form of a requested first payment to the builder on 7 June 2022 of $8,200, of a written "Joinery Agreement" communicated by the builders. The Joinery Agreement had no name on it other than "Sydneys Kitchen Hub" and was not signed by either party. The preceding "Project Scope" was the same.
There was no registered business names search in evidence for the precise business name on the director's shirt and an advertisement to which the owner responded that led to the initial contact with the director. That business name was "Sydney Kitchen Hub" as described in the owner's witness statement. The search in evidence was for "Sydneys Kitchen Hub" which was the name on the Joinery Agreement. The search showed a name of owner and address which was not demonstrated by the evidence to be related to these proceedings.
The three invoices issued by the builder to the owner had no reference to the first respondent. The only corporate reference was to "Sydney's Kitchen Hub Pty Ltd" which was the same as the spelling of the business name on the letterhead immediately above "Attention: Mick Travis" and to a message, in the body of the invoices, "Thank you for choosing Sydney's Kitchen Hub for your project". The first respondent did not have an earlier corporate name on the search. The corporate reference was in the account details for payment - there was no evidence about the customer details of that account. The "Payment advice" slip gave the name "Sydney's Kitchen Hub" above "Attention: Mick Travis". Extrinsic evidence may be used to assist in identifying parties, even if post-contractual and particularly in the case of a partly-written contract or oral contract: Heydon on contract (2019), paras [9.580], [9.1560] et seq.
On the evidence there was no connection of this contract with the first respondent. The only references were to the second respondent (the director). The director's name appeared on the invoice immediately under the business name which was identical to the business name on the contract except for the addition of an apostrophe.
In my view the owner's contract was with the second respondent personally.
For completeness, HBA s 10 renders unenforceable by the builder contract rights for certain non-compliances with the HBA, including the requirements in s 7 and the insurance requirements previously mentioned. Further, under HBA s 8 the maximum deposit was 10% but the director sought and was paid 20% as the first instalment. Section 8 prescribes a penalty but no express civil consequence.
In Nyunt v North Shore Homes PL [2020] NSWCATAP 143 at [88]-[159], esp at [109], [118], [130], [165], the Appeal Panel held that: on a proper construction of the HBA, the statement of some penalty or civil consequences for non-compliance with a provision of the HBA does not prevent implication by law of other consequences such as a right of the owner to terminate the contract; whether the right or the opportunity to exercise it arises depends upon the objective seriousness of the consequences of the non-compliance in the circumstances of the particular case; seriousness is assessed against the test - does the non-compliance deprive the other party of a substantial part of the benefit for which the other party contracted or cause a substantial loss of benefit, including unreasonable delay in performance which shows objectively an intention not to perform the contract.
I do not need to determine that matter because of the other ground for termination.
[5]
Appropriate relief to the owner
In my view the contract was an entire contract, in which the right to payment of the contract price depended on complete contract performance. Progress payments were on account only and subject to final accounting for overall payments and works at time of the final payment invoice being rendered at completion of the entire works. Non-payment would arguably give a right to terminate the contract and potentially to sue at general law for damages, but not to sue in accrued right for non-payment of that invoiced progress payment without being subject to account if termination rights were exercised or the contract otherwise ended: McDonald v Dennis Lascelles Ltd (1933) 48 CLR 457 at 476-477; Southern Han Breakfast Point PL (in liq) v Lewence Construction PL (2016) 260 CLR 365, [2016] HCA 52 at [79].
The absence of any terms for progress payments and the fixed price nature of the contract reinforces my conclusion.
The owners' uncontradicted photographic and documentary evidence clearly established that the second respondent had removed an operating kitchen and left an unfinished and non-operative mess, with damage from removal of an existing kitchen. This was reinforced by the conclusions in an expert report based on an inspection on 23 August 2022. There was a clear absence of completion of the contract works to a substantial extent.
On the ending of an entire contract, and in the absence of a valid claim in quantum meruit for the reasonable cost of work done to point of ending or a contractual entitlement to accrued payments, there is a substantial failure of consideration for what has been paid because that is part payment of an entire sum which constitutes the contract price and is the quid pro quo for the entire works. The parties are entitled to return of what has been paid and what has been supplied to the extent that it can be returned, but to no further payment for work partially done.
In Summers v The Commonwealth (1918) CLR 144 at 153, the High Court ordered a return of a deposit as an incident of the contract if there was a substantial failure of consideration; see also DTR Nominees PL v Mona Homes PL (1978) 138 CLR 423 at 434.
Accordingly, the owner is entitled to an entire refund from the second respondent of what the owner paid, totalling $32,800. The owner is also entitled to restoration of his property to the state that it was in before the works were commenced, which the owner has costed, uncontradicted, at $1,058.
The owner also relied upon a Scott schedule assessing damages for remedial and completion works at $32,804 for the contract works. The basis for that costing was not apparent as the result of an expert opinion and is in any event not required for the relief that I have considered appropriate.
[6]
Orders
I make the following orders:
1. Order that Michael Patrick Travis-Almond pay Craig Brown $33,858 immediately.
2. Subject to orders 3 and 4, make no order as to the costs of the proceedings.
3. Any application for an alternative costs order (including any application for a further hearing on costs) is to be filed and served electronically on or before 28 August 2023 with any supporting submissions (maximum 3 pages with typeface Arial 12 or larger, standard margins and 1.5 or greater spacing) and any further evidence in respect of costs.
4. Any submissions in response (maximum 3 pages with typeface Arial 12 or larger, standard margins and 1.5 or greater spacing) and any further evidence in respect of costs is to be filed and served electronically on or before 28 August 2023.
[7]
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: 22 September 2023