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[2007] WASAT 45
General information, not legal advice.
State Administrative Tribunal (WA)
2007-02-19
Original judgment source is linked above.
ACT : BUILDERS' REGISTRATION ACT 1939 (WA)
CITATION : COMMODORE HOMES (WA) PTY LTD and DEEGAN & ANOR [2007] WASAT 45
Builders' Registration Act 1939 (WA) - Application for leave and review of decision of Disputes Tribunal heard together - Effect of Disputes Tribunal not following previous decision of State Administrative Tribunal
1 The applicant applied pursuant to s 41 of the Builders' Registration Act 1939 (WA) to review a decision of the Building Disputes Tribunal made on 22 December 2006.
2 The applicant had been ordered to pay a sum of money to the respondents by way of liquidated damages, which had been calculated at a rate applying to each calendar day of delay, from the contractual date of completion to the actual date of completion. In arriving at its decision, the Building Disputes Tribunal was referred to a previous decision of this Tribunal which was directly in point. Although the Disputes Tribunal's reasons for decision reflected the basis upon which it reached the conclusion which it did, there was no analysis of this Tribunal's decision. The Disputes Tribunal referred to, but stated that it was not persuaded by, the decision of this Tribunal.
3 After considering the Disputes Tribunal's reasons for decision the Tribunal was not satisfied that its earlier decision, and a later decision which approved it, were clearly wrong and indicated that it would therefore follow those decisions. Indeed, the Tribunal expressed the view that it considered its earlier decisions were correct and that it did not share the difficulties expressed by the Disputes Tribunal in applying the contractual definitions set out in the contract.
4 The Tribunal also pointed out that the Disputes Tribunal had omitted to deal with a clause of the contract in which specific reference had been made to calendar days which supported the application of the definition of "days" and "day" as meaning a day including Monday to Friday but excluding public holidays. The Tribunal also expressed the view that there was no difficulty in including within a rate for liquidated damages, applying to each weekday that the contract was delayed, a sufficient amount to cover a weekly rental.
5 The Tribunal commented upon the need for the Disputes Tribunal to follow the decisions of the Tribunal to avoid inconsistency and to avoid bringing the process of determining disputes under the Builders' Registration Act 1939 (WA) and the Home Building Contracts Act 1991 (WA) into disrepute. Because of the importance of that consideration, the Tribunal directed that the Executive Officer of the Tribunal provide a copy of the reasons for decision to the Registrar of the Disputes Tribunal, so that this decision is brought to the attention of the chairperson and various deputy chairpersons of the Disputes Tribunal.
6 The Tribunal granted leave to review the decision, granted the review, set aside the decision under review and substituted its own decision ordering payment of a reduced amount for liquidated damages, calculated on each week day that the completion of the works was delayed.
7 The applicant (builder) by application lodged with the Tribunal on 12 January 2007 applies pursuant to s 41 of the Builders' Registration Act 1939 (WA) (BR Act) for leave to appeal [sic] a decision of the Building Disputes Tribunal (BDT), made on 22 December 2006, awarding the first and second respondents (the owners) liquidated damages in an amount of $4590. The builder seeks an order setting aside the order for payment in the above amount and that there be substituted an order that the builder pay to the owners the sum of $3210. The difference in the two amounts depends upon whether liquidated damages payable under the building contract entered into between the parties is to be calculated based on calendar days or working days. An order was also sought that the owners pay the builder's costs of the appeal [sic] but that was withdrawn at the directions hearing.
8 Section 41 of the BR Act does not provide for an appeal from the decision of the BDT, but for a review, being a review which is to be conducted under s 27 of the State Administrative Tribunal Act 2004 (WA) (the SAT Act).
9 A single ground of review is relied upon as follows:
"1. The Building Disputes Tribunal ('the BDT') erred in law in calculating the quantum of liquidated damages payable by the Applicant to the Respondent in that it took account of each calendar day and not each day as defined in clause 27 the building contract, being 'Monday to Friday but excluding any day that is a public holiday in the area of the Site or throughout Western Australia', and in doing so, ignored the decision of this Tribunal in BGC Residential Pty Ltd v Parker (2006) WA SAT 281."
10 At the initial directions hearing, heard on 8 February 2007, the owners informed the Tribunal that they were aware that the decision in BGC Residential Pty Ltd and Parker [2006] WASAT 281 was against them, that they were unable to advance any argument as to why that decision was wrong and that they did not intend to engage a lawyer to attempt to support the decision of the BDT. In the premises the Tribunal made directions that subject to further order, the builder file and serve the documents on which it wished to rely; and that the application for leave and the review be determined on the documents. The builder has filed a copy of the contract in question together with a copy of the reasons of decision of the BDT constituted by a deputy chairperson of the BDT, sitting alone.
11 The BDT decision reflects that the learned deputy chairperson was referred to BGC Residential and Parker. The only consideration given to the case was expressed in these terms:
"19. ... In that case the Tribunal construed an identical clause to the Clause in the current Contract and held that the parties' own dictionary definition had to be applied to the calculation of 'liquidated damages'.
12 While there is no analysis of the BGC Residential and Parker decision, the reasons for decision do reflect the BDT's rationale for coming to the conclusion which it did. In essence that rationale is as follows:
13 The contract between the parties consists not only of an identical liquidated damages clause, it is an identical form of contract to the contract that was considered in BGC Residential and Parker. In that decision, which was made by a panel comprising of myself as the senior member presiding, and two fulltime ordinary members, reference was made to authorities relating to the effect of the use of definitions. In Re Sassoon (1933) 1 Chancery 858 the Court expressed the view that excepting actions for rectification, a court has no power to add to or subtract from the words of a written instrument; that where the instrument indicates sufficiently plainly that words or phrases are being used, other than in their literal and ordinary meaning, that meaning must be applied. A similar view was expressed in Electric & Musical Industries Ltd v Lissen [1938] 4 AER 221. Accordingly, the Tribunal held that the term "day" is to have a corresponding meaning to "days" as defined in the interpretation clause (cl 27), namely Monday to Friday but excluding a day that is a public holiday in the area of the site or throughout the State of Western Australia. The Tribunal also pointed out that cl 12(a) of the contract, which relates to the defects liability period, defines that period by express reference to calendar days. There was no such reference in the liquidated damages clause. That in itself could be an indication that the parties intended a different meaning to the ordinary meaning elsewhere in the contract to references to the term "day" or "days" and that was supported by the definition clause. The BDT, both in its decision in BGC Residential and Parker, in which the same deputy chairperson was presiding, and in the decision under review, made no reference to this different use of terminology.
14 The decision in BGC Residential and Parker was approved and followed in a subsequent decision of the Tribunal in BGC Construction and Vagg & Anor [2006] WASAT 367.
15 In the interests of consistency, which is discussed further below, I consider that I should follow the previous decisions of this Tribunal unless I am satisfied that the earlier decisions are wrong.
16 The reasoning of the decision under review does not persuade me that the decisions in BGC Residential and Parker and BGC and Vagg & Anor are wrong. To the contrary, I am of the view that they are correctly decided.
17 Firstly, I do not share the difficulty which the learned deputy chairperson had in applying the plural definition of "days" to the singular "day". As expressed, in BGC Residential and Parker, a corresponding meaning, that a "day" means a day being Monday to Friday and excluding public holidays, as stated in the definition, results from a logical application of the definition. The purpose of using the formula that words importing the singular include the plural and vice versa is to avoid unnecessary repetition of the same concepts. The application of the definition does not require that a sentence expressed in the singular must be capable of being read without any change when consideration is given to the same concept in the plural.
18 Secondly, the fact that rental covers a complete week, is no reason why a formula for liquidated damages cannot be expressed as applying to each working day which is delayed. The decision as to the reasonable amount to be included as the rate at which liquidated damages will accrue should take that into account. To illustrate this, if the rental is $150 per week, one would expect that the liquidated damages clause would, on the Tribunal's construction of it, provide for liquidated damages to be paid at a rate of $30 for each day the contract is delayed. There is nothing to prevent the parties factoring in an allowance for public holidays or any other issue likely to affect damages.
19 Thirdly, the interpretation advanced by the BDT not only requires that the interpretation clause be ignored, but ignores that where the parties have intended to express a time period in calendar days, the contract has expressly referred to calendar days.
20 Reviews of the decisions of the Disputes Tribunal are, to this Tribunal, the decisions of which are subject to an appeal to the Supreme Court. Section 42 of the BR Act enables the BDT to state a case on a question of law to this Tribunal.
21 The administration of the law before the BDT in the exercise of its jurisdiction under the Home Building Contracts Act 1991 (WA) (HBC Act) and the BR Act will become unpredictable, to the detriment of the public interest, if the BDT does not follow the decisions of this Tribunal.
22 In Re Drake and Minister for Immigration and Ethnic Affairs (No 2) [1979] AATA 179; (1979) 2 ALD 634 at 639, President Brennan J of the Administrative Appeals Tribunal, as he then was, stated:
"Inconsistency is not merely inelegant: it brings the process of deciding into disrepute, suggesting an arbitrariness which is incompatible with commonly accepted notions of justice."
23 Although the statement was made in a different context, in which intra tribunal decision-making consistency was discussed, it is apt in relation to what has occurred in this matter. By deciding the matter as it has, the BDT has put the parties to unnecessary trouble and expense and the owners were placed at risk of an adverse order as to costs. Even if the BDT considers that a decision of this Tribunal is wrong, it should follow the decision. However, when doing so the Disputes Tribunal may express its doubt, or even a more strongly held dissenting view, together with the reasons for that view. In that circumstance, it lies with the losing party to decide whether to proceed to a review before this Tribunal to persuade the Tribunal to change its view, or if need be, ultimately to appeal to the Supreme Court. In that way, the integrity of the decision-making process can be maintained.
24 Because the approach taken by the BDT in this matter has the potential to bring the process for determination of disputes under both the BR Act and the HBC Act into disrepute, and create uncertainty within the building industry and consumers seeking advice in relation to that legislation, the Tribunal will direct that the Executive Officer of the Tribunal provide a copy of this decision to the Registrar of the BDT, so that it can be brought to the attention of the chairperson and deputy chairpersons who preside on the hearings of the BDT from time to time.
25 For the above reasons the Tribunal orders as follows:
I certify that this and the preceding [25] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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