Chapman v Nicolosi

NCAT Appeal Panel|2022-12-05

Solicitors: Bilbie Faraday Harrison Solicitors (Appellant) Respondent (Self Represented) File Number(s): 2022/00274511 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 9 September 2021 Before: G K Burton SC, Senior Member File Number(s): HB 20/27309; HB 20/40880

REASONS FOR DECISION

This is an appeal by a builder from orders of the Tribunal ordering him to pay $80,475.74 to a homeowner (the "owner") for breaches of a fixed priced building contract (the "contract") entered into by the parties on 4 April 2018.
The central point in the appeal was the proper construction of the contract, and specifically whether work required by the development consent to be done by the owner on an adjacent laneway was part of the work to be performed by the builder under the contract.

Plain English Summary for the Parties

The Tribunal was mistaken in deciding that the contract included the laneway work. The words of the contract, when properly interpreted, did not include the laneway work.
On the overpayment / underpayment issue, the Tribunal made a mistake in finding against Mr Plant's credibility because the Tribunal was mistaken when it said Mr Plant (and the builder) denied cash payments had been made at all. Mr Plant only denied that cash payments were paid to him. As that was a fundamental fact relied on by the Tribunal, and as it was mistaken, the decision on that issue should not stand and the overpayment / underpayment issue should return to the Tribunal to be decided again.
The Tribunal was correct in deciding that the builder should compensate the owner for the remaining defects in the verandah. However, the Tribunal made a mistake in awarding the owner $10,016.20 for repair of those defects when there was no evidence given to the Tribunal identifying the remaining defect and no evidence of the reasonable cost of rectifying that defect. These issues will go back to the Tribunal to be decided again, and the parties may lead new evidence on those issues.
The Tribunal made a mistake in deciding when the end date was for the calculation of delay damages. This was principally because the Tribunal erred in treating the uncompleted laneway work as work required to be done under the contract. The Tribunal otherwise did not determine when and if the work under the contract was completed in accordance with cl 21 of the contract and failed to consider an argument by the builder that the owner's early occupation of the property triggered practical completion under cl 21(f). It also failed to determine the owner's argument that she had the builder's permission for early occupation. Those issues will go back to the Tribunal to be decided again.

The Owner's Fresh Evidence

On the appeal the owner sought to tender evidence which was not before the Tribunal. That course is not permitted. An appeal is not a second hearing. Occasionally fresh evidence is permitted if a party proves that the fresh evidence was not reasonably available to that party i.e. all but impossible to obtain, at the time of the Tribunal hearing. We are not persuaded that that is the position here and do not accept that evidence on this appeal.

Background Relevant to Deciding This Appeal

The owner purchased Lot 2 in a two-lot subdivision in Nelson Bay, NSW. An existing dwelling existed on Lot 1, and it was proposed that a new dwelling be constructed on Lot 2. Lot 2 was subject to an existing development consent granted by Port Stephens Council allowing construction of a three-bedroom house subject to various conditions.
Lot 2 was generally to the north of Lot 1. To the east of the two lots was an unsealed laneway. It was proposed that vehicular access to Lot 2 was to be via that laneway. The development consent was approved on the condition that the owner of Lot 2 be responsible for work to be done on that laneway which would result in the laneway being upgraded and constructed in accordance with the details shown on Sheet 1 of 5 of plans prepared by North Point Surveys dated 28 April 2016 Ref No 34979ES2. In short, the laneway was to be sealed with concrete and was to be constructed with appropriate provision for drainage and the like. The basal reason for this was to allow for sealed access from the laneway to the new driveway proposed to be built on Lot 2.
In late 2017, the owner met Mark Plant who was working nearby and had a concreting business, Plant Concrete & Civil Pty Ltd ("Plant Concrete"). The owner and Mr Plant struck up a friendship and the owner discussed with Mr Plant her future building plans and the difficulty she was having finding a builder.
On the owner's evidence, they discussed the work required to be done to the laneway including the fact that concrete was the required building material.
It was not in dispute that Mr Plant suggested that the owner approach the builder and see whether she and he might enter into a building contract. The owner said that Mr Plant told her that if she proceeded to enter into a building contract with the builder, he (Mr Plant), would do all the work, he knew the local contractors and he would ensure she was not "ripped off".
At about the same time the owner had been working on a modified house plan different to that shown in the development consent. New plans setting out what she wanted to construct were prepared at her request by Tim Lowe Building Design Pty Ltd ("TLBD") dated 24 November 2017 with Job No 67717-V1. Those plans consisted of eight sheets and did not contain any plans regarding the laneway, albeit the laneway appeared as a geographical feature on Sheet 1 in the landscape and site plans.
At an unknown time, but some months before April 2018, those TLBD plans were submitted by the owner to Port Stephens Council as part of an application by her to modify the original development consent to, in simple terms, construct the house designed by TLBD in lieu of the one the subject of the original development consent.
According to the builder, Mr Plant contacted him in March 2018 and asked whether he wished to quote on the owner's proposed construction. He said Mr Plant sent him the plans prepared by TLBD dated 24 November 2017 together with some schematic drawings Mr Plant had prepared. The schematic drawings were not in evidence.
The builder prepared a quote and said he emailed it to the owner on 31 March 2018. The owner said she did not receive that quote. She said that the email address entered for her on that email was incorrect. The dispute about whether the owner received that email revolved around whether a particular letter in the owner's given name in the email address was an "i" (correct) or an "l" (incorrect). One copy of the email in the appeal books shows an "i" and another copy shows an "l", although the difference may be a function of the quality of photocopying. In any event the owner said that even if the email address was correct, she "may not" have received the quote because where she was living at the time had poor internet coverage. The Tribunal did not make a finding whether the owner received this email with the quote attached.
The quote contained the following relevant contents (emphasis is ours): "Plans drawn by Tim Lowe Building Design Dated: 24-11-2017 Ref: 67717-Vl Scope of work: Construction of dwelling from Excavation stage to Completion. Includes the following: • Consruction (sic) and Home Warranty Insurances • Set-out Survey • Excavation to maximum depth of 500mm. • Concrete to Engineers details as approved by council. • Wall and roof framing as per plans • Exterior linnings (sic) ('hardiplank'or 'weathertex' or equivalent) • Color-bond roofing and guttering (color to be determined) • Interior linning (sic) Gyprock • Timber fixout (sic) including doors and architraves and skirting • Kitchen supply and installation (polyurethane doors; rolled edge laminate top) • Supply and install PC items and kitchen appliances (see schedule of allowances) • Wall and floor tiling to bathrooms and laundry areas • Water-proofing of wet areas (provide certification according to Australian Standards) • Tiles or carpet to all living areas to be determined (see schedule of allowances) • Electrical and plumbing (refer to plan drawings) • Painting: Undercoat and 2 top coats acrylic (interior and exterior) 4 colors allowed: Walls; Ceilings; Trims; Exterior walls and posts etc. • Physical connection of services (Fees to be paid by owner) Quote applies to dwelling only and includes retainer walls as they are necessary to facilitate construction. Does not include fencing or anything beyond the perimeter of the dwelling. Schedule of Allowances: • Wall and floor tiles purchase price: $50.00 per square metre • Carpet including installation: $60.00 per square metre • Vanity units: $360 per unit • Tapware: $80 per mixer set, shower head allow $120 • Toilet suit: $340 per suit • Shower screens: $800 per unit • Bath: $300 (acrylic) All work to comply with the relevant 'Australian Standard Building Codes'. Comply with local Council building requirements and Principal Certifier Inspections. Structure to satisfy the requirements of the Home Building Act of Australia and the subsequent issue of Home Warranty Cover. Total this quote: $259,800 (including GST amount of $23,618)"
It is tolerably clear that that quote did not include any express reference to work on the laneway.
On 4 April 2018 the owner, builder and Mr Plant met. The owner and the builder executed the contract being a fixed price building contract in the standard Master Builders Association form for use in residential construction where there was no architect administering the contract. The fixed price set out in the contract was the same sum set out in the builder's earlier quote.
According to the owner, the requirement of Port Stephens Council for the concrete sealing of the laneway was "acknowledged and discussed" at this meeting, although her recollection of what was said on the topic was not given in her written evidence. The owner sought leave to adduce oral evidence of this part of the conversation but after receiving the oral evidence on the voir dire i.e. conditionally, the evidence was rejected [Appeal Book ("AB") 454].
The builder denied there was any discussion of the concrete sealing being part of the contract works at this meeting. The factual dispute about what was said in this conversation was not resolved by the Tribunal. However, the evidence that the laneway was "acknowledged and discussed" was equivocal. Obviously, the laneway work needed to be done. Whether the conversation was about the builder doing that work or, for example, whether it was simply about the need to co-ordinate the work on the house with the work being done on an adjacent laneway (by someone else) is unknown. Both scenarios could fall within the description "acknowledged and discussed" with the former being consistent with the owner's case and the latter being consistent with the builder's case.
The contract contained the following terms which are relevant to our decision on this appeal.
On page 6 of the contract (AB 108) it said: "IT IS AGREED: (1) The Builder shall subject to the Conditions of Contract, for the consideration mentioned, complete the work shown upon the Drawings and described in the Specification."
The "work", "Drawings" and "Specification" were particularised on page 4 of the contract (AB 106) as follows (the italicised words below indicate the words were in handwriting on the document): "WORKS: 3 bedroom 'Homestyle' dwelling DRAWINGS prepared by Tim Lowe Building Design P/L Number(s) _______________ Date ____________ Job Number 67717-Vl 8 pages SPECIFICATION prepared by SAME DRAWINGS and SPECIFICATION approved by the Council of the Shire/Municipality of Port Stephens Approval Number(s) 16-2016-42-2 Date 12th APRIL 2018 Source of information www.portstephens.nsw.gov.au"
On page 10 of the contract (AB 112), in Item 13 of Schedule 1, it said (italicised words in handwriting): "13 FITNESS FOR PURPOSE Clause 1(c) (specify purpose or result required - if not for a completed dwelling specify the stage of construction to be achieved) Completion Occupation certificate"

The clause referred to, clause 1(c) of the contract, said: "(c) The builder warrants that: (i) the work under the contract will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation; and (ii) that where Item 13 in Schedule 1 is completed, the work under the contract will be reasonably fit for the purpose stated in that Item."
On 12 April 2018, Port Stephens Council issued formal approval of the owner's application to modify the development consent. That modified approval had a reference number and date which appeared in the contract (apparently signed eight days earlier), referred to the same North Point Survey plans for the laneway and referred to the "Development Plans" as being by TLBD, dated 24 November 2017, Ref No 67717-VI and being Sheets "1, 2 and 4 of 8".
The parties could not explain how a modified approval dated eight days after the signing of the contract came to be specified (in handwriting) in the contract. However, it does not appear that anything turns on that unexplained fact.
The contract specified that the works were required to be completed within 14 weeks after the "date of commencement". There was space for the nomination of the date of commencement on page 8 of the contract (AB 110), but that space was left blank.
Clause 10 of the contract (AB 116) said that the date of commencement was the date specified (on page 8), or within 15 days of the owner's compliance with cl 4 (not presently relevant) or within 15 days after receipt of the "Building Approval, whichever shall be the later".
With the owner's consent the builder appointed Mr Plant as the project manager under the contract.
Various delays then occurred for reasons which need not be described.
In May 2018, the owner said that Mr Plant asked her to pay $30,000 as a pre-payment for the construction of the laneway which (he allegedly said) had to be constructed before the dwelling was built. The owner said Mr Plant asked her to pay that amount in three payments. The owner then paid three payments as directed by Mr Plant on different days totalling $29,949.64 (the parties and the Tribunal rounded this off to $30,000). One payment was made to Plant Concrete and the other two were made to a supplier of materials to Plant Concrete in apparent reduction of Plant Concrete's debt to those suppliers.
The contract specified that all payments under the contract were to be paid to the builder (not Mr Plant or his company). However, the owner paid most, if not all, of the payments Mr Plant requested of her (on behalf of the builder) directly to him (Mr Plant) or to others at Mr Plant's direction (such as various tradesmen and suppliers of materials).
Item 5 of Schedule 1 of the contract set out the six instalments to be paid under the contract (after the payment of the $20,000 deposit) and the stage the works had to have achieved for each payment. No stage referred to the concrete sealing of the laneway and all were referrable to the dwelling only. The parties did not follow that payment schedule, with the owner making many more payments over time as directed by Mr Plant.
Mr Plant denied the owner's version of the conversation as to the $30,000. His evidence was that he and the owner had a conversation in which Mr Plant disclosed some financial hardship after which he and the owner agreed that she would lend him $30,000.
The factual dispute about what was said in this conversation was not resolved by the Tribunal and it appears, despite his sworn evidence (AB 546), Mr Plant has not repaid the $30,000 he said he borrowed from the owner.
In her written submissions to the Tribunal the owner said that she agreed with the proposition that Plant Concrete was going to construct the laneway. She submitted that, as far as she knew, Plant Concrete was going to be a sub-contractor to the builder just as other trades (plumbers, electricians and the like) would sub-contract to the builder for work indisputably part of the contract works.
On 12 November 2018, Port Stephens Council issued a Further Information Request to the owner regarding the concrete sealing of the laneway. It referred to a Laneway Detail Plan prepared by North Point Surveys dated 30 October 2018 (note: the North Point Survey plans referred to in the modified development consent were dated differently, namely 28 April 2016).
The Further Information Request sought further information from the owner, pointed out perceived deficiencies in the submitted plans and included Condition 8 which was in the following terms (emphasis original, redaction of the name of the laneway is ours): "8. All work required to be carried out within a public road reserve must be separately approved by Council, under Section 138 of the Roads Act 1993. Prior to the issue of a construction certificate, engineering plans for the required work within adjoining ****** Lane must be submitted to Council. These are to be prepared and designed by a suitably qualified professional and constructed in accordance with Council's 'Infrastructure Design and Construction Specification AUS Spec', and Port Stephens Council Development Control Plan 2014. The design shall include the following: a) Minimum thickness 150mm; b) Minimum width 3.5m; c) Passing bays to be provided at 30m intervals by increasing; pavement width to 6.0m (i.e. 6m length plus 45 degree transitions); and d) One way X-fall with Upright Kerb and Gutter."
We infer from this document, and the terms of the construction certificate mentioned in the next paragraph, that the work on the laneway required a separate construction certificate from the construction certificate required for the work on Lot 2 itself.
On 11 December 2018, the owner obtained a construction certificate (for Lot 2) and the work on Lot 2 commenced at the end of January 2019.
Various disputes proceeded to arise and develop between the owner and builder, and particularly between the owner and Mr Plant.
On 7 July 2019, the owner moved into the partially constructed dwelling on Lot 2. Contrary to cl 21(f) of the contract, she did not obtain the prior written consent of the builder to do so, although, as we understand it, she said she obtained it subsequently and directed attention to an email from the builder dated 28 July 2019.
In that email, which was from the builder to Mr Plant (and, it appears, then forwarded by the builder to the owner), the builder referred to the owner residing in the dwelling. The email said that the builder was "not too phased (sic)" with the owner residing there, and that she had "gotten permission to do so". No details were provided as to who allegedly gave that permission, if anybody. In any event, the builder was apparently not troubled by the owner residing in the dwelling, he made no mention of the possible effect that that action may have had on the question whether Practical Completion was achieved at that time by reason of cl 21(f) of the contract and the builder continued with the building work.
On 30 July 2019, the owner refused to allow Mr Plant access to the property, for reasons that were contentious but need not be explored.
On 23 October 2019, after complaint by the owner, Fair Trading NSW issued a rectification order to the builder requiring certain defective work to be completed by 23 November 2019.
The builder attempted to comply with that rectification order, but the owner alleged the builder had not done all the work required.
On 19 June 2020 the owner commenced proceedings in the Tribunal against the builder (HB 20/27309) claiming: 1. a money order for rectification work not done in accord with the Fair Trading rectification order; 2. recovery of $30,000 paid to the builder (via Mr Plant) for work not done which was said to have been part payment for concreting of the laneway; 3. $30 per day for delay damages; and 4. recovery of overpayments paid to the builder in the sum of $91,671.07.
On 12 September 2020 Fair Trading issued another rectification order (AB 172) alleging that the work done pursuant to the first rectification order was defective.
On 24 September 2020 the builder commenced proceedings in the Tribunal against the owner (HB 20/40880) claiming a sum of $70,100.74 said to be due under the contract.
The two proceedings were heard together with evidence in one to be evidence in the other.

The Tribunal's Decision

The Tribunal said that, by the time of the hearing, the owner claimed from the builder: 1. $43,265.40 that she alleged she had overpaid the builder; 2. $8,360 being the cost for the rectification of a defective termite barrier; 3. $10,016.70 being the cost for the rectification of a bull-nosed verandah or a work order against the builder to undertake that rectification; 4. an order against the builder to concrete seal the laneway or payment of $39,050; 5. provision of compliance certificates as requested; and 6. delay damages then amounting to $37,320.
Those issues were resolved by the Tribunal in the order set out below.
The first issue, the alleged overpayment claim, involved resolving many contested allegations between the owner and builder as to what was charged and what amounts were paid. The Tribunal resolved those many disputes and found that the owner had overpaid the builder by $16,259.54.
That sum included crediting the owner with the $30,000 she paid to Mr Plant (on her case, being for the laneway) for reasons to which we will shortly come, and, on an issue of credit, rejecting Mr Plant's denial of receiving cash payments from the owner because that denial was "plainly contradicted by at least two admitted payments identified" earlier in the Tribunal's reasons.
The Tribunal found that the laneway work was part of the work under the contract. The Tribunal said (at [73]) that: "… the interpretation of contractual terms is determined objectively by reference to the contract text and documents referred to in that text, unless there is ambiguity …"
The Tribunal then reasoned to its finding as follows: "74 Here, as the owner submitted, the contract documents included the approved plans with approval date 12 April 2018 which had attached the access laneway plans. These were the plans extant at time of contract. The builder conceded by its principal that it must have known about the form of the approved plans when executing the contract. This was not surprising since the access laneway plan had not changed from that in the original approved plans and was shortly to be approved in the amended DC on which the builder had offered cooperation pre-contract. The contract did not exclude any work noted in the approved plans or DC. The contract required the builder to complete the works in order to obtain an OC. The OC would not issue without the completion of all works in accord with the consent conditions in the DC and other Council requirements in later approvals such as a CC. The quotation was not a contract document. 75 There seems to me to be no ambiguity in those matters that requires surrounding circumstances to be called in aid, particularly to qualify the scope of the contract works in the contract terms themselves. 76 In that respect, the contract description relied upon by the builder cannot create the required ambiguity in the face of the approved plans being contract documents. The description indicates the overall scope of works in which the concreting of the access laneway was a required element to obtain the OC. 77 In any event, a contract pricing based on the house measurements necessarily must include everything within the contract scope of works, including obligations for compliance with regulatory approvals and requirements, so effectively begs the question. 78 Finally, for reasons already examined, I do not accept that the owner's payments to the project manager in some way indicated a matter outside the scope of the contract works and arguably showing a separate contract with the project manager's company. 79 The builder submitted that the owner had not established an amount to compensate her for having paid the entire contract price (assuming that was established) but still having to pay for concreting the access laneway. I accept the owner's submission in reply that relied upon a quotation for $39,050 particularised and not subject to competing evidence…."
The Tribunal found against the owner on her claim in relation to the defective termite barrier, and there was no appeal from the decision on that issue.
In relation to the bullnose veranda roof, which was the subject of the rectification order issued by Fair Trading NSW, the Tribunal found that the builder's rectification work was incomplete, that a defect remained, the existence of that defect was sufficient justification for further remediation, there was no contradiction of the quoted amount (in the owner's case) for that further remediation and therefore there would be a money order for the quoted amount of $10,016.20.
The Tribunal found in favour of the owner in relation to the issue of compliance certificates, and there is no appeal from the decision on that issue.
The Tribunal found in favour of the owner in relation to delay damages. That is, for damages caused by the builder's failure to complete the building work within the time specified in the contract.
There was a dispute about when time commenced to run under the contract for the construction of the work. This was resolved in favour of the builder and no challenge is made to that finding. The Tribunal found that time under the contract commenced to run on 29 January 2019. The Tribunal then said that the contract works period of 14 weeks therefore ended on 7 May 2019.
There was no dispute that the contract provided that any delay damages would be calculated at the sum of $30 per day.
The parties were in dispute as to the date those damages should be calculated to. The owner claimed $37,320 for delay damages for the 1244 days between 18 September 2018 and 13 February 2022, with delay ongoing since no occupation certificate had issued.
The builder said that under cl 21(f) of the contract the effective date of practical completion was 30 July 2019 after the owner had taken possession of the property without the builder's written consent. The Tribunal rejected this contention because the builder continued work on the site after that date.
Rather, the Tribunal found that the contract came to an end on 24 September 2020 which was the date the builder filed its claim for alleged unpaid amounts of the contract price. The Tribunal found that: "107 … the payment claim was unjustified … and the claim made clear that the builder did not seek to (and by this point could not without a licence) continue to perform the contract and did not seek a work order so that it could have a licensed contractor perform remaining contractual obligations. Such conduct was repudiatory as inconsistent with its contractual obligations; it also justified termination for breach. By not contesting the builder's position on a work order and instead seeking money orders, the owner effectively accepted the repudiation with the consequence that contract obligations, including delay damages, were at an end. 109 Accordingly, the delay damages period is 8 May 2019 to 24 September 2020 both dates inclusive, being 505 days. At $30pd that amounts to $15,150."

Grounds of Appeal

The builder's grounds of appeal were: 1. The Tribunal erred as a matter of law, or, alternatively, as a matter of mixed fact and law, in finding that the builder's scope of works under the contract included an obligation to seal the laneway with concrete. 2. The Tribunal erred as a matter of law, or, alternatively, as a matter of mixed fact and law, in finding that the owner was entitled to payment of the sum of $39,050 on account of the cost of concreting the laneway. 3. The Tribunal's finding that the payment of $30,000 to Plant Concrete was a payment on account of the contract was a finding against the weight of evidence. 4. The Tribunal erred as a matter of mixed law and fact in finding that the owner had overpaid the contract price by the sum of $16,259.54 and that the builder was not entitled to be paid the unpaid balance of its contract price being the sum of $59,493.65. 5. The Tribunal erred in finding that the owner was entitled to a money order in the sum of $10,016.20 for the cost of rectifying a defect in the bullnose veranda roof. 6. The Tribunal erred as a matter of law or, alternatively, as a matter of mixed fact and law, in finding that the owner was entitled to payment of $15,150 on account of delay damages. 7. The Tribunal erred in rejecting the evidence of Mr Plant that he had not received cash payments on account of the contract sum from the owner.

Grounds 1 and 3 - Were the laneway works part of the contract

As we have mentioned previously, the Tribunal did not resolve the factual disputes whether the owner received the builder's quote emailed on 31 March 2018 (three days before the parties signed the contract) and whether the concreting of the laneway was "acknowledged and discussed" at the time of the signing of the contract.
The Tribunal said it did not need to resolve the first of those factual questions. The reasons for that conclusion were (at [73]): "I do not find helpful whether or not the owner sighted the quotation and was shown measurements for the house as part of explaining contract pricing. At best these would be surrounding circumstances that may aid in interpreting ambiguity in the terms concerning the scope of contract works. As the builder's closing submissions correctly stated, the interpretation of contractual terms is determined objectively by reference to the contract text and documents referred to in that text, unless there is ambiguity: Mt Bruce Mining PL v Wright Prospecting PL (2015) 256 CLR 104 at [46]-[51], consistent with earlier authority cited in the decision."
The Tribunal did not explain why it did not resolve the second factual question mentioned, but presumably it was for the same reasons as quoted above.
In our view the Tribunal erred in not resolving the first of those factual questions and erred in not considering the resulting findings of fact on the issue as to the proper interpretation of the contract (whether the contract included the sealing of the laneway). In our view, and with respect, the Tribunal's error (of law) was in applying an incorrect legal principle. The Tribunal, strictly speaking, should have resolved the second factual issue but as the owner's evidence on that issue was equivocal it would have made no difference and so need not be further discussed.
The statement from Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 relied on by the Tribunal was accurately reproduced but was incomplete. It is also a statement of principle expressed by a minority (being French CJ, Nettle and Gordon JJ) and possibly at variance from the statements of principle expressed by the majority, albeit in a nuanced way.
It is true, as the Tribunal said, that their Honours said that "ordinarily", absent ambiguity, regard could not be had to surrounding circumstances. Their Honours said at [48] (footnote omitted): "Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning."
But their Honours went on to say that regard could be had to surrounding circumstances (including facts known to both parties) in certain circumstances, one of which was to identify the objects of the contract. Their Honours said (footnotes omitted): "[49] However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals. [50] Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations. [51] Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties … intended to produce a commercial result". Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". [52] These observations are not intended to state any departure from the law as set out in Codelfa Construction and Electricity Generation. …"
The other four Justices (Kiefel, Keane, Bell and Gageler JJ) took the view that facts know to both parties should be taken into account in construing a contract.
Kiefel and Keane JJ said (footnotes omitted): "[108] That regard may be had to the mutual knowledge of the parties to an agreement in the process of construing it is evident from Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (Action Nos 71 and 72 of 1981). Mason J, with whom Stephen and Wilson JJ agreed, accepted that there may be a need to have regard to the circumstances surrounding a commercial contract in order to construe its terms or to imply a further term. In the passages preceding what his Honour described as the "true rule" of construction, his Honour identified "mutually known facts" which may assist in understanding the meaning of a descriptive term or the "genesis" or "aim" of the transaction. His Honour had earlier referred to the judgment of Lord Wilberforce in Prenn v Simmonds where it was said that: "[t]he time has long passed when agreements … were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations." [109] In a passage from DTR Nominees Pty Ltd v Mona Homes Pty Ltd, to which Mason J referred, it was said that the object of the exercise was to show that "the attribution of a strict legal meaning would 'make the transaction futile'". In Electricity Generation Corporation v Woodside Energy Ltd, French CJ, Hayne, Crennan and Kiefel JJ explained that a commercial contract should be construed by reference to the surrounding circumstances known to the parties and the commercial purpose or objects to be secured by the contract in order to avoid a result that could not have been intended."
Bell and Gageler JJ took the same view. Their Honours said at [120] (footnote omitted): "The parties also agree, consistently with numerous recent statements of principle in this Court, that the proper interpretation of each of those terms is to be determined by reference to what reasonable businesspersons having all the background knowledge then reasonably available to the parties would have understood those terms to have meant as at 5 May 1970."
No Justices said that the approach to construction should be different to that set out in Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 wherein the plurality held at [35] (footnotes omitted): "… The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding 'of the genesis of the transaction, the background, the context [and] the market in which the parties are operating'. As Arden LJ observed in Re Golden Key Ltd (in rec), unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption 'that the parties … intended to produce a commercial result'. A commercial contract is to be construed so as to avoid it 'making commercial nonsense or working commercial inconvenience'." (Emphasis added)
In our respectful view, the Tribunal erred in not resolving the first factual issue we have identified because resolving that dispute would have identified surrounding circumstances known to both parties and the commercial objects to be secured by the contract. Any resultant factual findings would have been admissible material on whether one object of the contract was the sealing of the laneway.
Most particularly, the builder's quote would have been a relevant surrounding circumstance had it been received by the owner as it reasonably clearly did not include work on the laneway and the price quoted was the same as the contract price agreed.
However, as we shall shortly explain, even if those factual questions were resolved in favour of the owner, the proper interpretation of the contract is that it did not include any obligation on the builder to do the laneway works alleged.
That is because surrounding circumstances, or facts known to both parties, can only be an aid in interpreting the written terms of a contract. That is, it is the written terms of the contract which have primacy, and the facts referred to are only aids to determining what they mean. In this case, in our view, the words of the contract are clear.
The proper construction of vital agreements / contracts gives rise to a question of law - Re R [2000] NSWSC 886 at [25], cited with approval in C v W [2015] NSWSC 1774 at [48] - and is therefore appealable pursuant to s 80 of the Civil and Administrative Tribunal Act 2013 (NSW).
In this case, with respect, the Tribunal erred in law in its interpretation of the contract.
The basal error made by the Tribunal was not to identify the relevant words in the contract and then interpret what they objectively meant.
At [74], the Tribunal's reasoning proceeded from the proposition that: "… the contract documents included the approved plans with approval date 12 April 2018 which had attached the access laneway plans. These were the plans extant at time of contract. The builder conceded by its principal that it must have known about the form of the approved plans when executing the contract. This was not surprising since the access laneway plan had not changed from that in the original approved plans and was shortly to be approved in the amended DC on which the builder had offered cooperation pre-contract. The contract did not exclude any work noted in the approved plans or DC. The contract required the builder to complete the works in order to obtain an OC. The OC would not issue without the completion of all works in accord with the consent conditions in the DC and other Council requirements in later approvals such as a CC. The quotation was not a contract document."
That passage contains several errors.
First, it seems that by the words "contract documents" the Tribunal meant all documents in existence which touched and concerned the proposed construction, and which included, most particularly, the approved plans. The approved plans (approved in the development consent) contained two sets of plans: one set for the Lot 2 dwelling and associated works (prepared by TLBD) and another set for the laneway (prepared by North Point Surveys and which we shall refer to as the "laneway plans"). However, the approved plans (in their totality) were not part of the contract.
The second error was that the contract did not say that the builder was required to complete the works "in order to obtain" an occupation certificate. Rather, the contract said on page 6 (AB 108) that the builder was required to "complete the work shown upon the Drawings and described in the Specification".
The contract was the document signed by the parties. The laneway plans were not attached to the contract, nor were they referred to in it (as a separate and identifiable set of plans) and nor were they incorporated by reference. Being "extant" at the time the contract was signed or being "known" to the builder did not mean they became part of the contract.
What the contract said on page 6 (AB 108) was that it was agreed that the builder would "complete the work shown upon the Drawings and described in the Specification".
On page 12 of the contract (AB 114), in cl 1, the contract said that: "(a) The Builder shall … complete the Works shown on the Contract Drawings and described in the Specification. (b) … (c) The builder (sic) warrants that: (i) the work under the contract will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation; and (ii) that where Item 13 in Schedule 1 is completed, the work under the contract will be reasonably fit for the purpose stated in that Item."
There is a definition of "work under the contract" on page 25 of the contract (AB 127). It does not assist because it says that the "work under the contract" means the "work" that the builder is or may be required to carry out and complete under the contract, including variations and rectifications.
"Work" is defined on the same page simply as including the provision of materials.
There is no definition of "Contract Drawings" in the contract.
Page 4 of the contract (AB 106) essentially acts as a schedule to the contract with various typewritten words followed by spaces for the parties to insert the appropriate description of the matter identified by the written words.
So it is that in this contract the printed word "Works" was followed by (in handwriting) "3 bedroom 'Homestyles' dwelling".
The printed words "Drawings prepared by" was followed by the handwritten words "Tim Lowe Building Design P/L" with the job number "67717-V1" consisting of 8 pages.
Those TLBD plans did not include any plans for the sealing and other work required on the laneway, TLBD did not prepare any plans for the laneway and in our view the words "3 bedroom 'Homestyles' dwelling" are not sufficiently broad to include laneway work.
The drawings of the proposed laneway work approved by the Council in the approved modified development consent were prepared by North Point Surveys, and there was no entry next to the words "Drawings prepared by" referring to North Point Surveys.
Below that entry on page 4 (AB 106) were the printed words "Specification prepared by" with the handwritten word "Same". This meant that the relevant specification was that prepared by TLBD. The Specification was not in evidence, but we infer that the Specification prepared by TLBD did not include any work on the laneway as no such work was described in TLBD's drawings.
Below that entry were the printed words "Drawings and Specification approved by the Council of the" followed by the handwritten words "Port Stephens", the approval number "16-2016-42-2" and dated "12th April 2018".
It is true that that approval included approval of the North Point Surveys' laneway plans, but the structure of page 4 of the contract is that the relevant plans and specification are first identified by author, job number and date (being those by TLBD) followed by the identification of when and by whom the plans were approved by the relevant authority. That is, it starts from the particular and then proceeds to the general. In that way, the document is conveying nothing more than that the particular plans referred to (by TLBD) were approved by the Port Stephens Council. It did not mean that everything approved by Port Stephens Council became work under the contract.
Conversely, if the laneway works were to be part of the contract, a reasonable businessperson (per Electricity Generation) would have expected to have seen additional handwritten words similar to "and laneway sealing" next to the printed word "Works", handwritten "and North Point Surveys dated 28 April 2016 Ref No 34979ES2" next to the printed words "Drawings prepared by" and handwritten "and "North Point Surveys" next to the printed words "Specification prepared by".
Therefore, so far as the undefined term "Contract Drawings" appeared in cl 1 of the contract, the better view is that that was a reference to the drawings identified next to the printed words "Drawings prepared by", namely those prepared by TLBD.
That interpretation is not affected by the owner's non-receipt of the builder's quote (assuming that was the case) and is not affected by the fact she gave evidence that the concrete sealing of the laneway was "acknowledged and discussed" at the meeting when the contract was signed. The words of the contract are clear enough.
The Tribunal said that the contract did not exclude any work noted in the approved plans or development consent. That was correct. But the relevant question was not whether the laneway work was excluded, but whether the contested work was included in the contract. In our view it was not.
The Tribunal also said that the contract required the builder to complete the works in order to obtain an occupation certificate. By this the Tribunal meant that if the builder had that obligation, then he was (at least by inference) required to undertake all work necessary to obtain that occupation certificate.
But the contract did not impose that obligation on the builder. Cl 1(c) only required the builder to ensure that the work under the contract would result "to the extent of the work conducted, in a dwelling that is reasonably fit for occupation". That is, in terms, the obligation was limited to the work actually conducted. Put another way, the builder was obliged to ensure that the work he did (even though not all the work required for an occupation certificate) was done such that that work was fit for habitation.
For completeness, we have mentioned the fact that after the signing of the contract Port Stephens Council sent a Further Information Request to the owner regarding the concrete sealing of the laneway (see [41]-[42] above). That request rather suggests the laneway was not part of the works because the scope of those works had not been finalised. We note that whilst subsequent conduct is not admissible on the proper interpretation of contracts, it is admissible to identify the things with which the contract deals - Sportsvision Australia Pty Ltd v Tallglen Pty Ltd (1998) 44 NSWLR 103 at 114.E-116.G.
For those reasons it is our opinion that the contract did not include the work required by Council on the laneway and set out in the North Point Survey plans. Ground 1 of the appeal is therefore upheld. In those circumstances there is no need to decide Ground 3.

Ground 2 - Damages for failure to do the laneway work

Having found that the laneway work was included in the contract, and the $30,000 paid to Mr Plant (on the owner's case, for the laneway) was part of the amount owed under the contract, the Tribunal awarded the owner the sum of $39,050 as being the Tribunal's assessment of the cost to the owner of completing that work.
Ground 2 says that the awarding of this sum was erroneous for several reasons. However, the success of Ground 1 means that the awarding of that sum must inevitably be set aside as we have found that the builder was not contractually obligated to do the laneway work.

Grounds 4 and 7 - Overpayment and a credit finding against Mr Plant

The builder contends that the Tribunal erred in finding that the owner had overpaid the contract price by the sum of $16,259.54 and that the builder was not entitled to be paid the unpaid balance of its contract price being the sum of $59,493.65.
The error the builder says the Tribunal made is found in the Tribunal's reasons at [40]. In that passage the Tribunal said: "I do not accept the builder's case, based on the project manager's denial, that there were no cash payments. It is plainly contradicted by at least two admitted payments identified above. There was no suggestion that these were paid other than to the project manager."
The builder's contention is that the Tribunal misunderstood the evidence and, in essence, made a finding in the absence of evidence.
Contrary to the Tribunal's statement above Mr Plant did not deny that no cash payments were made. His evidence was that no cash payments were paid by the owner to him (AB 426 at [16]).
Again, contrary to the Tribunal's statement above, the builder accepted that various payments were made in cash by the owner (the builder's formal position before the Tribunal), but said that they were paid to various tradesmen and suppliers of materials who did work or supplied materials for the work (see [36] above and AB 385 at [21]).
The owner kept some records of payments, and her records for the two cash payments referred to by the Tribunal at [40] had various notations attached.
As to the first of these, the builder's submissions were: "86. On 18 April 2019, the Owner said she made a cash payment of $1,000 to "Darrin/Painter" as a "Labour (Deposit)". 87. On 3 July 2019, a cash payment of $3,850 was made, with the Owner's description being "Labour (Balance)". 88. The bank statement supporting the entry is reproduced at AB 224, with the handwritten notation: "Balance 4 int painter. $5,000 total paid". 89. The only inference which should have been drawn from that evidence is that a further cash payment was made to Darrin on 3 July, rather than Mr Plant."
Those submissions are accurate, and we draw the inference referred to. In other words, the owner's documentary evidence was that those cash payments were made to someone other than Mr Plant.
The other payment was for $6,370. The builder's submissions were: "91. The Senior Member also referred to a second payment to justify his rejection of the Builder's position. This was the payment said to have been made on 18 October 2019 for $6,370. The notation for this payment says it was paid to "Attention to Detail Pty Ltd - Wayne". 92. The bank statement is reproduced at AB 225, with the handwritten description "PAINTER - EXT"."
The admission the Tribunal said was made (at [33]) was to the effect that it was admitted that Mr Plant received these two payments. However, the "admission" was in a table submitted by counsel and said that the builder "agreed contract payment". That is, the builder conceded the payments were made in relation to the contract works, not that they were paid to Mr Plant. The natural inference from the entries in the owner's documents is that the payments were made directly to tradesmen or the like engaged by the builder. Even were that not so, there was no direct evidence from the owner that those payments were made to Mr Plant.
For those reasons it follows that the Tribunal erred. With respect, the Tribunal misunderstood the concession made, and misunderstood the evidence. Insofar as the Tribunal said that there was no suggestion that those payments were paid other than to Mr Plant, the Tribunal was wrong. There was evidence to that effect in Mr Plant's evidence and in the owner's documentary evidence.
The finding of credit against Mr Plant was flawed, and that finding of credit was central to the Tribunal's reasoning on the issue of the overpayment claim (by the owner) and the alleged underpayment claim (by the builder). Those issues will need to be remitted to the Tribunal.
Ordinarily, where issues of credit are live, a remittal would be to a differently constituted Tribunal. However, in this case we consider the better course is for the matter to be remitted to the Tribunal as originally constituted. That is because the amounts in dispute are not large, particularly when compared to the legal costs already expended, and remittal to the original Tribunal should result in a comparatively shorter hearing given the Tribunal's familiarity with the evidence and the issues in dispute. The member who heard the proceedings is a Senior Member of the Tribunal and able to decide issues of credit afresh and probably without having to see and hear the witnesses give further oral evidence. Remittal to a differently constituted Tribunal would probably require the witnesses to give oral evidence again for the Tribunal to assess their demeanour, a process likely to increase costs significantly.
However, as the parties have not had an opportunity to make submissions on that matter, we shall grant them leave to lodge and serve written submissions opposing our proposed course if that is the position they take. We would propose deciding that issue on the papers absent some compelling reason to the contrary. If they do not make any such submissions within seven days of the date of these reasons the order we have foreshadowed shall be made.

Ground 5 - Damages for failure to rectify verandah

The builder submitted that the Tribunal erred in finding that the owner was entitled to a money order in the sum of $10,016.20 for the cost of rectifying a defect in the bullnose veranda roof.
The background facts are that on 8 August 2019 a building consultant identified a defect in the framing of the verandah.
On 23 October 2019 Fair Trading issued a Rectification Order to the builder requiring him to rectify certain work set out in a schedule to that Order. The schedule included work to the verandah.
The builder engaged a roofer to undertake the work required to the verandah by that Rectification Order.
After that work was done, and on 12 September 2020, a further Rectification Order was issued by Fair Trading (AB 172). That Order said that the building inspector involved (Mr Ward) was satisfied that the work done by the builder was defective and ordered the builder to attend to that defective work.
This Order ordered the builder to: "attend to the items set out in the Schedule attached to this Rectification Order …"
It appears that the Schedule to that order was not attached to the Order, at least in the Joint Tender Bundle provided to the Tribunal. It is apparent from AB 170-180 that the two Orders and report by Mr Ward dated 20 January 2020 have been intermingled and it is not possible for us to identify a Schedule to that latter Order.
In her Points of Claim (AB 40) the owner sought the sum of $10,016.20 for the cost to dismantle the verandah, rebuild it and to remove debris from the site.
In her written submissions the only defect in the verandah claimed by the owner was in relation to the roof screws. The owner submitted they'd been installed through the valleys rather than from the top of the ridges with the rubber seal (between the screw heads and roof) in contact with the top of the ridge. The owner said the method of fixing employed allowed water to penetrate, whereas the proper fixing method would provide a weathertight seal and prevent water penetration. This incorrect method of fixing appeared in the Schedule to the first Rectification Order dated 23 October 2019 as items 2c and d. The builder was cross-examined on this issue (AB 541). His evidence was to the effect he did not know whether the defect still existed, only that he "understood" his roofer had "finished off the job correctly". No other remaining defect was cross-examined upon.
In the builder's written submissions, the only submission made was that the builder had a roofer attend the property to do the work on the verandah required in the first Rectification Order, and that the builder confirmed with Mr Ward that that work had been done. It is apparent that in making that representation the builder relied on what he was told by the roofer and did not himself inspect the property to determine whether the work had been done.
The Tribunal said: "90 The owner said that a FT rectification order of 12 September 2020 found the roof screws on the verandah were still not in accord with the manufacturer's written recommendation to make them weathertight. The builder could not say if the roofer he had engaged after the rectification order of 23 October 2019 had done the rectification as he did not observe the completed work, although he informed FT on 8 March 2020 that the order had been complied with. The owner claimed $10,016.20 by way of money order or a work order for the builder or someone engaged by him to undertake the remaining rectification. 91 The builder relied upon the absence of expert evidence to contradict that the builder had engaged an appropriate trade to undertake the rectification work. 92 It seems to me that the defect remaining to be rectified as specified in the FT rectification order is sufficient justification for further remediation. There is no contradiction of the quoted amount in the owner's evidence. There will be a money order for that amount of $10,016.20.
The builder submitted that the Tribunal made those findings without evidence of what the defect was and what the rectification cost would be. Those submissions are correct.
There was no evidence (as distinct from submissions) that the roofing screw defect identified by Mr Ward in his first Rectification Order had not been attended to, albeit there was evidence that Mr Ward was satisfied that the work done by the builder (pursuant to the first Rectification Order but otherwise unidentified in the evidence) was defective and ordered the builder to attend to that defective work.
There was also no evidence of the cost of remedying that defect. The figure claimed is identical to the total sum paid by the owner to the builder for the construction of the verandah under the contract in two payments in 2019 and set out in the builder's counsel's table at AB 609. The likelihood is that the amount claimed was simply the amount the owner paid the builder for the verandah in the first place, rather than being sourced from a quote to rectify the roof screw defect. Of course, the owner also sought a work order and such an order could and should have been made if there was no evidence to support a money order.
The making of findings in the absence of evidence is an error of law and so the Tribunal's decision on this issue must be set aside.
In submissions the builder properly agreed that should this matter be remitted to the Tribunal the owner should be permitted to tender further evidence to the Tribunal to establish the cost to rectify that remaining defect.
As there was evidence of defective work (Mr Ward's second Rectification Order) and as the owner's submissions identified the only remaining item of defective work to be the roofing screw issue, the just course to adopt is to remit this matter to the Tribunal to be re-determined and to grant leave to the parties to tender further evidence as to whether the roof screw issue exists and, if the owner wishes to pursue a money order rather than a work order, evidence of the reasonable cost of attending to that issue.

Ground 6 - Delay Damages

The contract provided that the owner was entitled to delay damages of $30 per day for each day between the date being 14 weeks after commencement of the works until the date of practical completion.
In her application, the owner sought delay damages for 92 days. The basis for the calculation is unclear as the Points of Claim suggest she was asserting a period of 218 days (excluding weekends and public holidays) which is the number of work days between when she asserted the construction period elapsed (28 August 2018) until 7 July 2019. The latter date is referenced by a statement that that is when she took "early occupation".
The response, in the builder's Points of Defence, was a simple denial that any amount was owed.
In his Points of Cross-claim the builder contended that the owner took possession of the property without consent (AB 45 at [7]), refused to allow Mr Plant access to the site in August 2019 (AB 46 at [8]), and said that this was a breach of cl 25(a) of the contract, the breach amounted to a repudiation of the contract and that repudiation was accepted by the builder (AB 46 at [9]).
In her Points of Defence to Cross-claim the owner asserted she took occupation of the property on 7 July 2019, but denied she took possession without the builder's consent (AB 47 at [4]).
Both parties adopted different contentions in their written submissions at the conclusion of the hearing (there were no oral submissions).
In written submissions the owner said she was entitled to delay damages until an occupation certificate issued. As no such certificate had issued, she claimed delay damages up to the date of the hearing and continuing.
In his written submissions the builder submitted that the owner took steps to exclude Mr Plant on 30 July 2019, that she took possession of the property (no date was specified) and "so for the purposes of cl 21(f) of the contract, that became the date of Practical Completion. The builder submitted that otherwise the contract remained on foot (at [61]).
Cl 21(f) of the contract relates solely to the taking of possession [and not to the exclusion of the builder, which was the subject of cl 25(a)]. Accordingly, the submission is a little confusing. Was the builder relying on the exclusion of Mr Plant, or the taking of possession, or both?
In reply, the owner submitted that even though she took steps to exclude Mr Plant, she did not terminate the contract, did not prevent the builder from attending to work on the property and said that the builder remained bound under the contract (AB 633 at [16]). The owner submitted that her occupation of the property did not trigger cl 21(f), and in any event the builder had given his written consent (in an email dated 28 July 2019).
There was a dispute as to the date the works commenced. The Tribunal determined that that date was 29 January 2019, and there is no appeal from that finding.
Fourteen weeks from 29 January 2019 is 7 May 2019. Thus, the owner claimed liquidated delay damages at $30 per day pursuant to cl 10(c) of the contract from 7 May 2019.
Clause 10(c) of the contract (AB 117) provided that delay damages would be payable until Practical Completion as provided for in cl 21.
Cl 21 (AB 123) provided that Practical Completion would be achieved when the works were completed except for minor omissions and defects which did not prevent the works from being reasonably fit for occupation as a dwelling.
The Tribunal proceeded on the basis that the laneway works were part of the contract and that those works had not been completed. Therefore, it seems the Tribunal proceeded on the basis that practical completion had not occurred (per cl 21) because of the non-completion of the laneway works, but subject to the arguments arising from the exclusion of Mr Plant and the early occupation by the owner without the builder's written consent.
As we have found that the laneway works were not part of the contract, which was a fundamental underlying fact relied on by the Tribunal in relation to delay damages, the decision as to delay damages must be set aside because the laneway works were irrelevant to the issue of practical completion under the contract. That is because the Tribunal made no finding of fact when (or if) practical completion had occurred per cl 21 (that is, when the works - excluding the laneway works - were completed except for minor omissions and defects which did not prevent the works from being reasonably fit for occupation as a dwelling). For that reason alone, the Tribunal's decision on this issue should be set aside.
We are unable ourselves to decide that point as it appears the parties themselves did not address it at the hearing nor did they on the appeal. They should be given the opportunity to do so.
The Tribunal's decision must be set aside for an additional reason, namely that it failed to consider a substantial, clearly articulated argument put forward by the builder. We shall explain why.
Cl 21(f) provided for an earlier date for Practical Completion if the owner took possession without the written agreement of the builder. Cl 21(f) said: "Should the Owner or any tenant or their employees or agents take possession of the Works or any part of the Works without the written agreement of the Builder, the date of Practical Completion shall be the date possession taken, Unless Practical Completion has already been reached. Without limiting the generality of this Clause possession shall be evidenced by any or all of such things as placement of furniture, use of any part of the works, denial of access of the builder to the works or action by the owner or their agent which prevents the builder undertaking work. "
The Tribunal said that it rejected the builder's contention that the "contract ended on 30 July 2019" (at [105]).
That was not the builder's written submission. The submission (AB 599) was that cl 21(f) was triggered which meant that practical completion was achieved on 30 July 2019 (thus fixing the end date for the calculation of delay damages) but that "(o)therwise, the contract remained on foot".
As we read the builder's submission, he had abandoned any reliance upon the exclusion of Mr Plant and the operation of cl 25(a) of the contract (as set out in his Points of Cross-claim), and instead relied on the owner's (admitted) occupation of the property and thus the triggering of cl 21(f).
Notwithstanding those submissions, the Tribunal examined the issue through the prism of repudiation. The Tribunal first said: "105 However, in the circumstances including the builder's continuance with contract works after the project manager's exclusion from the site and the owner's starting to live in the site, even if the owner's conduct justified termination by the builder or was repudiatory (on which I need not make a finding), there was no such termination by the builder and no acceptance of repudiation by the builder at that point. Accordingly, I do not accept the builder's submission that the contract ended on 30 July 2019."
The first sentence of that passage contains a finding that the builder did not terminate the contract by reason of the exclusion of Mr Plant. That finding seems sound given that cl 25(a) says that if the owner refuses the builder access to the property the builder "may" terminate the contract. Assuming the builder did press this submission at the hearing, the Tribunal was correct in finding the builder did not exercise that contractual right and thus the argument based on the exclusion of Mr Plant fell away.
However, the Tribunal did not decide whether the owner's early occupation triggered cl 21(f) and did not consider the owner's claim that she had the builder's written consent to early occupation. Findings on those matters may alter the date for practical completion and thus the calculation of delay damages (if any are payable).
Rather than addressing those issues the Tribunal reasoned to an end date for the delay damages calculation by a path not suggested by either party.
The Tribunal found that the contract was repudiated on 24 September 2020 when the builder filed its claim in the Tribunal, that repudiation was accepted by the owner, the contractual obligation to pay liquidated damages until Practical Completion thereby came to an end and the builder was liable to pay $30 per day for the period 19 May 2019 to 24 September 2020 being the sum of $15,150 (at [106]-[109]).
The Tribunal's holding that repudiation meant that the contractual obligation to pay delay damages came to end is not correct, at least as expressed in those absolute terms. The right to delay damages may amount to an accrued right which survives termination - see, generally, Halsbury's Laws of Australia, online edition, at [110-9565] ff. In addition, some terms (on their proper construction) may survive termination - see, generally, Halsbury's Laws of Australia, online edition, at [110-9575]. Neither issue was examined by the Tribunal, not were the parties provided an opportunity to make submissions on such matters.
It does not seem the Tribunal addressed the argument put in writing by the builder that the denial of access by the owner engaged cl 21(f). This was an error of law in that the Tribunal failed to consider a substantial, clearly articulated argument relying upon established facts. In that case the error is either a failure to afford natural justice or as a constructive failure to exercise jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088 at [24]- [25] (Gummow and Callinan JJ; Hayne J agreeing at [95]).
For those reasons Ground 6 is upheld, at least in part.
The Tribunal should determine the date of practical completion (per the terms of cl 21 i.e. when the works were completed except for minor omissions and defects which did not prevent the works from being reasonably fit for occupation as a dwelling) on the basis the contract did not include the laneway works. The Tribunal should then determine whether the date for practical completion was earlier than that date by reason of the owner's taking of possession and cl 21(f), and by determining the owner's response to the builder's reliance on cl 21(f) to the effect she had the builder's consent by reason of the email dated 28 July 2019. The Tribunal should then calculate delay damages (if any) arising from those findings and the Tribunal's unchallenged finding of fact that the works commenced on 29 January 2019.
For the avoidance of doubt, the builder is not permitted to re-litigate the issue of whether the contract was terminated by reason of the exclusion of Mr Plant. The Tribunal determined that issue and no appeal was brought in relation to that factual finding.

The Loan to Mr Plant

Mr Plant's evidence (AB 383) is to the effect that the owner lent him $30,000. No time for repayment was spoken of. In such circumstances there is an immediate debt owed. The common law position was summarised by Murphy JA, with whom Buss JA agreed, in Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5 at [36] as follows (citations omitted): "At common law, a loan made where no time for repayment is specified, or where the loan is stated to be payable "on demand", creates an immediate debt by which the money is repayable immediately without the creditor first making a demand for payment …"
At this time the owner has not commenced proceedings against Mr Plant based on his evidence of a loan, but the owner may now choose to do so given our decision on this appeal. Whether and where she does so, and whether the claim is a good one, are matters entirely for the decision and judgment of the owner.

Orders

We make the following orders: 1. The appeal is upheld. 2. Order 1 of the Tribunal dated 16 August 2022 is set aside. 3. If either party opposes the remitter being made to the Tribunal as originally constituted, that party will lodge and serve on the other party written submissions supporting that contention of no more than three pages within seven days of the date of these reasons. 4. Any reply of no more than three pages to those submissions must be lodged and served on the other party within 14 days of the date of these reasons. 5. Any submissions lodged and served are to indicate whether the party consents to or opposes the remitter issue being decided on the papers, and if opposed, submissions why the issue should not be decided on the papers. 6. If no submissions are received from any party opposing the remitter being made to the Tribunal as originally constituted, then we order that the proceedings be remitted to the Tribunal as originally constituted for determination in accordance with these reasons. 7. The evidence on the remitted proceedings shall be the same as received into evidence in the original proceedings, save that the parties are granted leave to lodge and serve any additional evidence as to the existence, scope and cost of rectifying the roof screw issue in the verandah as described in Mr Ward's Rectification Order dated 23 October 2019 at paragraph 2c and d. 8. The parties are granted leave to make further submissions on the issues remitted subject to the directions of the Tribunal at first instance.

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: 20 February 2023

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