Collings Homes & Anor v Greg Smith & Ors [2003] NSWSC 567 | Case summary

JUDGMENT 1 MASTER: Collings Homes Pty Ltd (the company) is a designer of homes. It does not build homes. It contracts to provide certain services (including what may be described as design services) and to introduce to the customer an independent Gold Licensed Builder who will execute a building contract for its estimate of the total cost of the project. This cost is the subject of certain express conditions. 2 Mr and Mrs Smith (the Smiths) are the owners of a property known as 9 Chateau Close Kellyville (the land). They were desirous of building a home on the land. The Smiths entered into a contract with the company on 26 December 2000. Certain of the documentation was in the standard form used by the company. 3 Mr Collings is now retired. He represented the company (the capacity in which he did so remains unclear) and engaged in certain pre-contractual conversations with the Smiths. 4 The company performed certain services under the contract (including preparing plans and submitting the same to council for approval). Neighbours objected to the plans and in July 2001 the application was put on hold by the Smiths. Subsequently, they decided not to proceed with the contract (September 2001). 5 The contract required payment of a non-refundable progress payment in the sum of $10,000. This sum was ultimately paid but not in accordance with the contract (full payment was not made until 28 May 2001). 6 The Smiths sought a refund of this sum. The company disputed that entitlement. An application was made to the Fair Trading Tribunal (the Tribunal). 7 Before the Tribunal, the Smiths sought the refund of the sum of $10,000 and an amount for rental (for the period from 1 November 2001 to 30 April 2002). The named respondents were the company and Mr Collings. The company brought a Cross-Claim. It sought the balance that was payable under the contract. 8 The dispute came before the Tribunal on a number of days. The ultimate hearing took place on 27 June 2002. The decision reached by the Tribunal is recorded in a written document dated 15 August 2002. 9 The decision of the Tribunal saw the company being ordered to pay the sum of $10,000 together with a further sum of $2,850 (being rental for 17 weeks delay at the rate of $167.69 per week). I shall come to what happened to the Cross-Claim in due course. 10 The proceedings presently before this Court are an appeal from that decision. There are numerous grounds of appeal. The first and second defendants have put on a Notice of Contention. Ultimately, most of the matters raised in that notice were not pressed. It is unnecessary to expressly address all of the matters that were agitated. 11 In addition to the written document, the court also has part of the transcript of the proceedings. Some of the transcript is not available (including for the day of 23 May 2002). The court also has an affidavit from Mr Collings which sets out his version of exchanges between himself and the Tribunal Member which he says do not appear in the transcript available to the court. The court also has an affidavit from Mr Smith which sets out his response to the Collings version. The language used in Mr Smith's affidavit puts in issue that version (inter alia "did not take place as alleged" ). Largely, he did not put forward his version of any exchange that took place. Because of the conflict, both deponents were cross-examined at some length. 12 For present purposes, it is unnecessary to make rulings on questions of credibility. Despite inadequacy as to recollection (inter alia on matters such as hearing dates), the evidence clearly discloses that there is some substance in what was said by Mr Collings (the thrust of which was that he did not get a fair hearing). This became clear during the cross-examination of Mr Smith. Certain exchanges of the like did take place and they exhibit a tendency on the part of the Tribunal to inhibit the presentation of the case sought to be advanced by the company and Mr Collings. 13 It is unnecessary to take this matter any further, as the appeal can be disposed of for other reasons. However, I shall return to the submission that was made on behalf of the plaintiffs in due course. 14 Broadly speaking, the application by the Smiths could be said to be founded on both representations and breach of contract. Written submissions made to the Tribunal by the Smiths present a case founded on s 52 of the Trade Practices Act 1975 (Cth) and breach of contract. 15 It appears that although applications for legal representation were refused there was some involvement of legal representation during the conduct of the proceedings. 16 Apart from documentation, evidence was given by both Mr and Mrs Smith and Mr Collings. Reference to that evidence can be found in paragraphs 4 - 17 of the written document. There was substantial conflict between Messrs Smith and Collings and where there was conflict the Tribunal Member preferred the evidence given by Mr and Mrs Smith. 17 Paragraph 4 sets out the contract and the findings made in respect thereof. It is not in dispute. 18 Paragraph 18 of the document sets out what are said to be findings. 19 Paragraphs 19 - 21 set out provisions of the Fair Trading Act 1987 (ss 41, 42 and 44). 20 Paragraph 22 states that it flows from the findings of the Tribunal Member that the company had contravened ss 42 and 44. Also, it lists certain contraventions. Further, there is a statement that the compensation for the loss and damage suffered should provide for restitution (involving a component of delay costs). 21 Paragraph 24 is as follows:- " BREACH OF WARRANTY 24 In addition to the Respondents' breaches of the Fair Trading Act 1987 , I find that the contract between the parties included a warranty that the Smiths' home could be constructed for a 'Fixed Price' and within the time promised by the Respondents. It follows from my findings above that the warranty and price were illusory and the home could not have been and in fact was not constructed in the timeframe promised by the Respondents." 22 Paragraphs 25 - 30 are headed DAMAGES. It refers to s 68 of the Fair Trading Act 1987 and deals with the claim for rent. 23 Paragraph 31 is in the following terms:- " CROSS CLAIM 31. The First Respondent claimed its unpaid contract price by way of cross claim. However as the Respondents successfully argued that the Tribunal did not have jurisdiction to hear the matter under the Home Building Act 1989 but rather was a consumer claim, I was not able to entertain the cross claim under the Consumer Claims Act 1998 . However, given my findings above, the fact that the First Respondent did not press the claim or lead any substantive evidence in that regard at the hearings, even if I had found the jurisdiction under the Home Building Act 1989 , I would have dismissed the cross claim on those bases alone." 24 Paragraph 32 - 34 set out the decision that was reached by the Tribunal. This material suggests that the orders of the Tribunal were made after giving consideration to "the Respondents' breaches of contract and of the Fair Trading Act 1987". 25 It is common ground that this appeal is governed by the provisions of the Consumer, Trader and Tenancy Tribunal Act 2001 (the Act). The appeal is brought pursuant to ss 65 and 67 of the Act. Section 65 enables challenge where there has been a denial of procedural fairness. The relevant provision in s 67 is as follows:- " (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 Supreme Court against the decision." 26 There was issue between the parties as to the meaning to be given to s 67 (1) (see Eather & Anor v Rawson Homes & Anor [2003] NSWSC 439). However, for present purposes, such issue does not need to be decided. 27 It can be seen from the application itself and the submissions made on behalf of the Smiths that the Tribunal determined the application on bases different from what had been argued by the parties. It purported to determine the application on the grounds of contraventions of the Fair Trading Act and breach of warranty. I mention these matters for the purposes of completeness. The challenge made by the plaintiffs does not raise these matters. 28 At the outset, it can be observed that the nexus between the findings, the contraventions, breach of warranty and the damages is in various respects difficult to discern. There seems to be a lack of logical sequence between the findings and the end result. 29 Complaint is made as to there being no evidence as to many of these matters (inter alia matters of causation). In my view, findings which were relied on to reach the end result were made in the absence of evidence. There is authority in this Court for the proposition that a finding made in the absence of evidence is a denial of procedural fairness (Carpet Fashion Pty Ltd v The Consumer Claims Tribunal (Unreported NSWSC Ireland J 29 October 1992) ). It was a case that involved an appeal from the Consumer Claims Tribunal. I am bound by the decision. It followed what had been said by Deane J (as he then was) in (Minister for Immigration and Ethnic Affairs v Pochi 31 ALR 666 at 689 - 690. 30 Deane J was considering the question of the application of the rules of natural justice to a statutory tribunal. He was dealing with an appeal which had initiated from a statutory tribunal. The view was taken that the rules of natural justice in such a case were not to be restricted to the procedural steps leading to the making of a decision. He regarded such rules as being of general validity in the case of a statutory tribunal which is bound to act judicially. 31 The plaintiffs contend that it was erroneously found by the Tribunal that Mr Collings was a director of the company. It was said that there was no evidence to support this finding. I am not too sure that is the case. It may well be that Mr Collings was not a director of the company. However, it seems to me that the end result will remain the same. On the evidence, it was open to find that he was a servant or agent of the company. 32 The finding that the contract included a warranty is said to be an error of law. It seems to be the only breach of contract found against the respondents. It cannot stand with the contract provisions that were earlier found between the parties (see pp 6 - 7 of the written document) and appears to have been made in the absence of evidence. 33 What is said to be the breach of that warranty appears to rest on what are said to be findings "that the warranty and the price were illusory" and that the home could not have been constructed within "the time frame promised". 34 Leaving aside the puzzling reference to the warranty being illusory, the other findings were made in the absence of evidence. 35 There was no evidence, as at the time of the making of the contract, to suggest that the construction of the home could not have been completed by November 2001. Indeed, it seemed to be common ground that it could have been built within that time. 36 What is meant by the finding that the price was illusory is somewhat unclear. Presumably, it was meant to convey in effect that the estimate of cost was blatantly unrealistic or the like. If that be the case, the Tribunal had before it evidence that there was a builder who was prepared to build the home for the estimate of the total cost. There was evidence of another quotation at a higher price. There was also evidence that there existed a tremendous scope for variation in the cost of a project. In my view, this material cannot be said to be evidence that the price was illusory. 37 Paragraph 22 of the written document suggests that the orders made by the Tribunal were made so as to provide for restitution (including a component for delay costs). 38 The Tribunal misconceived the first and second defendants' rental claim as being for a period from February 2001 to 1 November 2001 (see paragraph 28 of the written document). The claim had in fact been made for the period from 1 November 2001 to 30 April 2002. 39 Clearly, a claim for that period could not have been allowed. The case advanced by the Smiths was that it was represented to them that they would have occupation by November 2001. It is not in dispute that any rental paid prior to that time would have been incurred in any event. Further, well prior to November 2001, the Smiths had placed the application to council on hold and had decided not to proceed with the contract. 40 What the Tribunal did in fact do was to allow a sum of $2,850 calculated in relation to a period of 17 weeks. This was said to be a period of delay caused by the company in the preparation of plans and failure to adequately liaise with the council. What was allowed was not a claim for rent. It was what was regarded as an appropriate measure of damages taking into account either the costs of a mortgage or the opportunity costs of interest (see paragraph 29 of the written document). 41 In so doing, the Tribunal did not determine an issue agitated by the parties. In embarked on an exercise of its own. An exercise on which neither party had any opportunity to be heard. In my view, what was done was a clear denial of procedural fairness. 42 The plaintiffs say that there was other lack of procedural fairness during the conduct of the proceedings. Mr Collings, who had the conduct of the case before the Tribunal on behalf of the company and himself, was inhibited in the presentation of the case for the respondent. I have earlier made mention of this matter and I am of the view that there seems to be considerable force in that contention. I should add that s 35 of the Act requires the Tribunal to ensure that each party is given a reasonable opportunity to adduce evidence and make submissions. 43 The company is entitled to be in doubt as to the fate that befell its Cross-Claim and the relief sought by the company. Paragraph 31 of the written document contains a number of observations on these matters. However, the reasoning process and the fate of the Cross-Claim is somewhat unclear. 44 The Tribunal had earlier ruled that the claim brought by the first and second defendants was a consumer claim and not a building claim. From what was said from the Bar Table, counsel were unable to assist on the question of whether or not a Cross-Claim can be maintained in answer to a consumer claim. It seems that one can be relied on where there is a building claim. Indeed, the claim advanced by the company was erroneously presented in the prescribed form used by the Fair Trading Tribunal in its Building Division. 45 The court has been taken to many passages in the transcript. The theme that emerges from this material is that it was never suggested by the Tribunal that the company was not able to litigate its Cross-Claim (or the relief sought by the company) in answer to the consumer claim. On the contrary, there is material which could be taken as leading the company to believe that it was in fact being entertained. 46 If the Cross-Claim was dealt with on the basis that the Tribunal was not able to entertain it under the Consumer Claims Act 1998, then this was a matter upon which it was not given an opportunity to be heard and accordingly there was a denial of procedural fairness. 47 The Tribunal has also said that the company did not press the Cross-Claim. This is clearly erroneous and if that be the gravamen of the decision, then the Tribunal has not dealt with it because of that error. 48 The Tribunal has also said that the company did not lead any substantive evidence in respect of the Cross-Claim. This contradicts what appears at page 28 of the Transcript. On that page, the Tribunal is recorded as observing "There is no more evidence that you need to put on." 49 What was formulated in the Cross-Claim, was a claim for the balance due under the contract. At least on one view of the matter, in such a case, there may have been no need to lead any further evidence. The company had before the Tribunal the evidence that it wished to rely on by way of breach of contract. 50 During the proceedings before the Tribunal and in the course of this appeal, mention was made of an alternative claim in respect to the work actually performed by the company pursuant to the contract. There is dispute between the parties as to whether evidence was led in respect of such a claim. 51 Leaving aside any question of whether or not a Cross-Claim was maintainable, the Tribunal had power under s 8 (2) to grant relief of the nature sought by the company. It did not purport to exercise the jurisdiction had under those provisions. 52 The plaintiffs bear the onus of satisfying the court that the decision of the Tribunal should be disturbed. I am satisfied that such onus has been discharged and that there needs to be a rehearing before another Member of the Tribunal. 53 The appeal is allowed. This decision is remitted to the Tribunal and I order a rehearing of the proceedings by it. The first and second defendants are to pay the costs of the Summons. If so entitled they are to have a certificate under the Suitors' Fund Act 1951.

Collings Homes & Anor v Greg Smith & Ors

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (1)