Champion Homes Sales Pty Limited v Coghlan

Judgment ex tempore 1Champion Homes Sales Pty Limited (the Builder) appeals against a decision of the Consumer, Trader and Tenancy Tribunal (the Tribunal). That decision was largely in favour of the defendants to this application, David and Michelle Armstrong and their daughter and her husband, Yasmin and David Coghlan, whom I will term collectively as the Owners. 2The Builder entered into a contract with the Owners to build two dwellings on a property. During the course of that contract disputes arose and proceedings were taken in the Tribunal by the Owners. 3Only one of the disputes remains in issue in this appeal. It concerns spoil removal costs. The Builder sought an amount of $12,100 for spoil removal costs pursuant to an invoice for this amount dated 21 September 2011. This amount was loosely based upon an invoice of $10,326.38 from a contractor of the Builder, plus the Builder's margin. I say loosely because the Builder's margin pursuant to Item 8 to the schedule to the contract was twenty-five per cent. 4The Builder referred to cl 47.13 of the contract which provided: "The Builder will remove any spoil, rubbish, fill or debris from the site. The cost of such removal will be charged to the Owner at Builder's costs plus the Builder's margin." 5However, the Builder accepted that there was an agreement that amended this term, at least to the extent that no fill would be removed so long as it did not interfere with construction. 6The findings of the Tribunal in relation to this issue were as follows: "36. The applicants gave sworn evidence that they were not approached about the variation for spoil/rubbish removal until after it had been removed. The applicants gave sworn evidence that they had discussions with the respondents in which it was agreed that they could remove the spoil/rubbish themselves. The applicants have provided a copy of an email in which one of the respondent's employees states "I have spoken with Morgan and he said that he had a brief conversation with you about spoil removal and advised you that if the spoil was not in the way of construction, then you could organise removal yourself". 37. The slabs were poured in the first week of September prior to the spoil/rubbish removal. The applicants rely on this evidence as showing that the spoil/rubbish was not in the way of construction and hence could be removed by them at a later date, as agreed with an employee of the respondent. 38. The applicants referred to a document entitled "Variation Number 6" sent by the respondent and dated 21 September 2011 regarding the spoil/rubbish removal. The document states to 'accept this variation, please sign below and return to us within five working days'. This document has not been signed by the applicants and they do not accept the variation. 39. The tax invoice for the contractor engaged by the respondents to remove the spoil was dated 7 September 2011. 40. This evidence supports the oral evidence given by Mrs Coghlan and Mrs Armstrong in relation to the matter. 41. The respondent agrees that the spoil/rubbish removal was not included in the contract and is therefore a variation. The respondent appears to be arguing that it was the price of the variation which was not agreed to, rather than the variation itself. That evidence is rejected. Indeed, the variation agreement included in the respondent's materials is dated 21 September 2011 and is not signed by the applicants. 42. There has been no evidence provided that the applicants approved the variation in compliance with the contract. As stated above, the respondent's argument that the applicants are liable, as they have had the benefit of the variation without compliance with the provisions of the contract, is rejected. The applicants have satisfied the Tribunal to the appropriate standard and accordingly, the applicants are not liable for the variation cost. 43. The applicants also question the quantum charged. Although this may well be the case, these reasons [sic] has not addressed this issue, due to the determination made that the applicants are not liable for the cost of spoil/rubbish removal. 44. The evidence provided by the applicants regarding the site preparation and removal of all tree stumps from the site is noted as being relevant to the assessment of the applicants' credibility in a positive sense, and to the detriment of the respondent's credibility in relation to the quantum stated for spoil/rubbish removal." 7It is apparent that the Tribunal's decision is based on three matters. First, that no spoil was removed prior to the slab being poured and therefore no spoil was in the way of construction. Secondly, there was no variation signed by the Owners and no evidence that the Owners approved of the variation. Thirdly, generally the Tribunal preferred the evidence of the Owners. 8No issue is taken by the Builder with the second and third matters. The Builder does not challenge the credit findings of the Tribunal and accepts that there was no oral or written acceptance of the spoil removal by the Builder. Indeed, the Builder concedes that the evidence did not even suggest that the Owners acquiesced in the removal of the spoil. However, the timing of the removal of the spoil was challenged by the Builder. There was evidence before the Tribunal of dockets by the contractor of the Builder that indicated that 10 of the 22 loads of spoil removed were removed on or after the 5 September 2011 but other dockets indicated that the first 12 loads were removed in the period up to 23 August 2011. It was common ground that the slabs were poured on 30 August and 1 September 2011. There was also evidence that on 8 August 2011 the contractor wrote to the Builder in the following terms: "Hi, please provide approval for the following ... Champion Lot 1/55 Martin Street, Roselands From Excavation Only Eight to ten loads of fill One to two loads of grass One load of concrete One load of tree stumps (very large). Note: We can pier the jobs but are unable to form up due to amount of Fill." 9This evidence indicates that some of the fill, perhaps as much as 12 loads, needed to be removed so that the "form up" for the slab could be undertaken. 10There was also evidence that the Owners had contemplated the removal of some of the fill. Before the Tribunal one of the Owners stated: "Witness Armstrong: Piering took place on 10 August. Member: Sorry, 10 August? Yes? Witness Armstrong: The slabs were poured on 30 August and 1 September 2011 with the spoil in place. The spoil was removed from what we can work out between two and fourteen therefore this gives Champion at least four weeks to notify us about needing to remove the spoil. We never expected spoil to be removed off charge (sic) however it was done behind our back even though Champion knew, had stated in emails that Morgan Notley had informed us that if the spoil was not in the way we could move it ourselves. We believe Champion should have given us the opportunity to discuss what the spoil was in the way of and if all of it had to be removed. Instead they removed every last bit of soil on the property. We find it very difficult to believe that all the soil had to be removed when the plans clearly show that the Builders are able to work within an area less than one metre wide. Yet where the soil was, it is three metres wide so how could every bit of soil be in the way in such a large area. Champion Homes have removed so much soil that we will now have the extra cost of purchasing fill to level out the land. On the invoice Champion have sent us states that there were two loads of grass, one load for a tree stump and one load of rubbish. Keep in mind that each load holds twelve tonne. However we have photos of the land left clear and a witness statement from our demolisher stating that there were no tree stumps or rubbish left on the land. Janette Pro, the Administration Manager, states in an email to us on 21 September 2011. The only evidence they had regarding what was removed is the sub contractor's invoice. This invoice was one page of writing and does not include any tipping receipts or valid roof (sic) of tree stumps, rubbish, grass or amount of soil. Member: If you're going to remove it yourself how much would that have cost you? Witness D Coghlan: We wouldn't have removed a lot of it because we need so much for fill now. Member: Okay. Witness D Coghlan: And we had a quote from Adam if we had to move it. Member: Okay you know how I said to you before that one gives his evidence at a time and no chatting. I know it is really difficult for people who are not legally trained to understand this. You had a quote from someone? Witness D Coghlan: Yeah in case it all had to be moved. Member: And how much? Witness D Coghlan: $4,000 or $3,000. Member: Do you remember the price? Witness J Coghlan: Because we'd used him for demolishing we were going to get a good price of between four and $5,000 for the lot. Member: Okay, alright." 11In the application form to the Tribunal the Owners stated words to similar effect to this quoted evidence. They also stated: "All we ask is that Champion Homes show some evidence e.g. truck log books or tipping receipts to prove to us that they really did take the amount of soil they are claiming." 12In addition, in their submissions before me the Owners stated: "Champion Homes claimed that they were entitled to payment for the spoil removal as we enjoyed the benefit of this work. This did not benefit us in any way as we had already arranged with our own contractor to have the spoil removed at the completion of the building work. In addition we would have never needed to have all the spoil removed as we needed this to level out the land." 13Section 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 enables a party to appeal to this court from the Tribunal. It provides: "67 Appeal against decision of Tribunal with respect to matter of law (1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the District Court against the decision. (2) An appeal is to be made in accordance with the rules of the District Court. The rules of the District Court may provide that an appeal (or such classes of appeal as may be specified in the rules) may be made only with the leave of the Court. (3) After deciding the question the subject of such an appeal, the District Court may, unless it affirms the decision of the Tribunal on the question: (a) make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or (b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal. (4) If such a rehearing is held, the Tribunal is not to proceed in a manner, or make an order or a decision, that is inconsistent with the decision of the District Court remitted to the Tribunal." 14The phrase in subsection (1): "a question with respect to a matter of law" has been the subject of high judicial authority. In Kostas & Anor v HIA Insurance Services Limited t/as Home Owners Warranty & Anor [2010] HCA 32 French CJ at paragraph 25 held that: "The words 'question with respect to a matter of law' are wide enough to encompass a question of mixed law and facts. Questions of fact and law are often closely intertwined." 15The plurality in Kostas (Hayne, Heydon, Crennan, Keifel JJ) determined at paragraphs 90 and 91: "It is sufficient for present purposes to determine that the ground usually described as a 'no evidence ground' raises a question of law ... whether there was no evidence to support a factual finding is a question of law, not a question of fact ... what amounts to material that could support a factual finding is ultimately a question for judicial decision. It is a question of law." (See also Edyp & Ors v Brazbuild Pty Ltd [2011] NSWCA 218 at paragraphs 109 and 110). 16It seems to me that when the evidence to which I have referred is considered there is no evidence to support the finding of the Tribunal that the spoil removal occurred or took place after the slab was poured. At least some portion of the spoil removal, in the order of about half of the spoil removed, took place before the slab was poured. 17This is an error with respect to a question of law: the question of whether there was any evidence to support the finding that the slab was poured (and thus the formwork was constructed) prior to the removal of the fill. That was a significant question. It is the basis of the finding that the spoil was not in the way of construction and therefore should not have been removed. 18However, it remains unclear how much of the spoil needed to be removed so that it was no longer "in the way of construction". 19A second matter raised by the Builder was a question of quantum meruit. The Tribunal gave no consideration to whether the Builder was entitled to remuneration for the work of removing the spoil, even if the contractual variation procedure was not followed. 20An action in indebitatus assumpsit for the value of the work done and materials supplied, otherwise known as an action on a quantum meruit, depends upon proof by the Builder that he did the work and that the Owners accepted the work without paying the agreed remuneration: see Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 at 228. 21There is a contest about the value of the work, largely because of the uncertainty about the amount of fill that needed to be removed. There is also a dispute about whether the Owners accepted the work, given the suggestion in the evidence that an uncertain amount of fill may still be needed at the site. 22The resolution of these questions depend in part upon the credit of witnesses and would not ordinarily be able to be determined by this court without hearing the evidence that was before the Tribunal. 23The Builder has, in its closing submissions, restricted its claim to an amount of $5,500, being a calculation based upon 10 loads at $400 plus GST plus a builder's margin of twenty-five per cent. I do not think it appropriate for this court to determine the proper amount, presumably between 0 and $5,500, without having heard the evidence, at least in the absence of any consent by the parties. 24Accordingly, I propose to set aside order 1 of the Tribunal's orders insofar as it refers in the second bullet point to the spoil removal costs and to remit consideration of the matter to the Tribunal for further hearing in accordance with these reasons. I note that neither party was legally represented and as no costs have been sought I propose to make no order in respect of the costs of the appeal. 25The parties requested a short adjournment, which I granted. Upon the expiration of that adjournment I was informed that the parties consented to the Court making a determination in accordance with section 67(3)(a) of the Act, thus seeking that the court determine the appropriate amount, if there be any amount, that should be payable by the Owners to the Builder in respect of the removal of the spoil. I note that the Builder seeks, as I have already referenced, $5,500, being in its submission, the value of the spoil removal prior to the formwork for the construction of the slab. While this amount of spoil on the evidence that I have seen may have been removed prior to the formwork, there is no evidence before me that the contractor was guided by the principle that it should only remove that which was necessary to enable the work to be done. 26Therefore, it is difficult to determine how much of that spoil should be paid for by the Owners. They should only be responsible for that which needed to be removed for the construction to continue, because that spoil would have been removed by them at their cost in any event. 27There is also some limited evidence that the Owners may have been disadvantaged by the amount of fill removed because there may be some costs that they have met or will have to meet to return fill or soil to the site. 28Bearing all those matters in mind and doing the best I can, I decide that the amount of $2,000 should be payable by the Owners to the Builder in respect of the spoil removed. I note that this amount is substantially below the amount evidenced in respect of the spoil removal costs but it is higher than the cost of about $1,000 suggested by evidence tendered on behalf of the Owners before the Tribunal. 29Accordingly, I propose to make an order varying the orders of the Tribunal to delete the second bullet point of order one relating to spoil removal costs, noting that the amount of $2,000 remains owing by the defendants to the plaintiff in respect of the spoil removal costs. 30The Builder then sought an order for the costs of the proceedings, for the sums of $476 for the summons, $1,264 for the hearing fee and approximately $1,200 for the transcript. 31Rule 42.35 of the Uniform Civil Procedure Rules 2005 provides in respect of judgments for an amount of less than $40,000 an order for costs may be made but will not ordinarily be made unless the court is satisfied the commencement and continuation of proceedings in the District Court rather than in the Local Court was warranted. It may be argued that the proceedings in this Court are warranted because they could not have been commenced in the Local Court. On the other hand, ultimately it is a very small issue in dispute and the proceedings dealt with other issues which were abandoned. In the circumstances I think that the parties should share the disbursements that were incurred. The quantum of those costs is not certain. I propose to make an additional order that the Owners pay a further amount of $1,200 in respect of the Builder's costs of the proceedings, given the Builder's limited success in these proceedings in terms of the amount ultimately awarded. 32The orders of the Court are: