Concourt Pty Ltd v Victoria Mary Kerr

NCAT Appeal Panel|2015-04-17|Before: Dr J

Introduction

Concourt Pty Ltd (the builder) was retained to conduct substantial building works for Victoria Mary Kerr (the owner) in relation to her premises at Tamarama in Sydney. Each brought proceedings below:- the builder claimed for outstanding payments for work done, including interest, the owner sought to be relieved from any obligation to pay those amounts and in turn sought compensation for alleged defective and incomplete works, as well as legal costs and expert fees.
In the result, by decision below dated 13 November 2014, the Tribunal found the owner owed the builder $44,6051.83, and the builder owed the owner $76,158.50, with the net result that the builder was to pay the owner $36,506.67.
Each party seeks to appeal from those adverse orders. Each was represented by counsel at the hearing below and on appeal. The notices of appeal refer only to questions of law and expressly do not seek leave to raise a question other than of law. There was no application to amend either notice. We thus limit our consideration to the grounds so identified, with one exception of patent factual error.
Any appeal by either party was required to be lodged within 28 days of receipt of the decision below, namely 28 days after 14 November 2014. The owner appealed in time, the builder did not. As we have decided not to extend time, it is convenient first to deal with the builder's application to have time extended.

The owner's appeal

We then turn to the owner's appeal.
It is now necessary to say a little more about the decision below. There was then an expert conclave preceding the hearing, which, as the decision below observed, resulted in receipt of an amended joint Scott Schedule signed by each party's expert which embodied "the agreements and the outstanding disputed issues" at paragraph 3. This is of some significance.
That left six outstanding issues for determination, as set out in paragraph 4 below, namely defective internal stairs, failure to install yellow tongue particle board, failure to top hang sliding doors, rebate for agreed removal of skylight, retention monies held by the owner and the amount of liquidated damages. The owner at the hearing of the appeal did not press its challenge to the sliding doors or liquidated damages issues.

Practical completion

The owner complains that the Tribunal erred in finding the date of practical completion was 18 February 2009 on the basis that on that date, an interim occupation certificate was issued. It points to paragraph 57 of the decision below, which states: "I find that practical completion was reached by the date the occupation certificate was provided. The fact that there were minor incomplete items and perhaps major items of defective works, does not mean that practical completion was not reached. I find that the premises were able to be used for their purpose despite the remaining defective items. The ongoing negotiations between the parties up to June 2012 were in relation to either attempts to have defective works rectified, or minor works completed."
The owner complains that this finding contained in paragraph 57 necessarily was "plainly wrong", having regard to the definition of "practical completion" in the contract, which was tendered on the appeal. "Practical completion" was defined to be "that stage in the carrying out and completion of WUC (works under contract) when the works are complete except for minor defects." We consider this issue further below.

Rectification of tiles

The Tribunal also erred, it is said, by not making a finding as set out in the agreed conclave of the cost of rectifying tiles being $2,376. Rather, as set out in paragraph 7 of its decision, the Tribunal said this: "there is one further issue, being rectification of tiles in the en suite bathroom. The joint Scott Schedule suggests that liability, rectification and cost have been agreed although the builder's counterpart to the Scott Schedule suggests that liability is still to be determined. In any case, the owner now alleges she has spent the sum of $1,155 for this rectification work, although the sum agreed at the conclave was $2,376." It does appear that the Tribunal erred in not applying the amount set out in the Scott Schedule. The question is whether this was a question of fact or law, and what follows, as we discuss below.

Retention Monies

Finally, there is a complaint in relation to the retention monies and interest. This comes under the heading 'the builder's claim' which was for $34,483 in "alleged outstanding payment" and $10,000 estimated interest on that amount over four years. The Tribunal wrote: "67 In oral submissions at the end of the hearing, the builder submitted that his claim for outstanding payment was $24,483 plus interest. The owner submitted the amount was $23,483. 68 The most compelling evidence proving the amount outstanding in my opinion is the variation letter. Although I have found that document not to be in fact a variation of the contract, nevertheless it was signed by the builder, which satisfies me that as at 19 June 2012, the builder did agree that the outstanding amount of $27,483. It is undisputed that the owner paid an amount of $4,000 to the builder pursuant to clause 6 of the variation letter, leaving the amount of $23,483 as contended by the owner. I find that is the outstanding amount owed to the builder. 69 In relation to interest, the owner concedes in the defence to the builder's claim that in the event it is found that the retention monies were unreasonably withheld, interest would be payable. The initial position of the owner is that no interest is payable on any outstanding payment because the works remain defective and incomplete. As I have found above, the works reached practical completion on 18 February 2009. However, the owner asserts in the defence that interest would only accrue from 30 August 2012, as that is the date the builder asserts the works were completed. The evidence is said to be contained in the builder's letter dated 16 October 2012. 70 I do not agree with the owner's submissions. In the letter of 16 October 2012, the builder refers to "maintenance works" being completed, not to the date of practical completion. I find that the claim for interest properly accrues from 18 February 2009."

Ground one - practical completion

The owner argued before the Tribunal that practical completion should be determined based on a 2012 "Variation" to the contract as agreed between the parties. The "variation letter" set out a series of defects that the builder allegedly refused to repair. The owner sought an order from the Tribunal that she was entitled to retain a percentage of the contract price until the builder had performed all works as set out in the variation letter: only after the builder had corrected the defects in the variation letter should the premises be deemed complete.
The argument raised on appeal was not raised below. Now, the homeowner claims that the variation letter was of no consequence and that the Tribunal made an error of law when it failed to determine practical completion by reference to the contract.
We consider that there was no relevant difference between "practical completion" and "practical completion under the contract". Practical completion is a finding of fact and degree and a matter for evidence. The contract at cl 1 deems the work "practically complete" when the "works are complete except for minor defects". The Tribunal was therefore obliged, under the contract, to determine whether minor defects existed. This is a question of fact not law. It does not involve ascertaining the meaning of the terms of the contract, which would be a question of law: see Fitzallen v Roseberry-Toorak Football Club [2003] TASSC 112.
In Owners Corporation Strata Plan 64757 v MJA Group Pty Ltd [2011] NSWCA 236, the Court of Appeal accepted that determining the completion of work involves findings of fact depending upon the particular circumstances of the case at hand. That principle does not change in cases where a written contract defines "completion". Generally, it means the point where all building work is complete, or all but completed, in accordance with the contract, and the premises are reasonably fit for occupation. This was precisely the Tribunal's finding. For these reasons, we do not consider that the Tribunal misdirected itself or failed to consider practical completion under the contract. There is no error of law.
Further, this was not an issue raised in the appellant's case below nor in its initial submissions here, and the respondent was not previously called upon to answer it. The appellant ran its case below on the issue of completion based on the variation letter. In those circumstances, where the respondent may have called different evidence or conducted its case differently, the appellant should be held to the way it conducted its case below and should not be permitted to raise the issue on appeal, see Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1.

Ground 2 - the retention moneys

We are not persuaded the Tribunal erred in law in finding that the retention moneys were wrongly calculated. It is not contentious that the starting point for calculation of retention funds must be based on a finding as to when the works were complete. The homeowner's contention is that the Tribunal erred at law when it arrived at a finding that the works were complete, based on the issue of an interim certificate thus: "to adopt the date that an interim certificate was issued for the property was plainly wrong. By dint of s 109H(1)(a) of the Environmental Planning and Assessment Act 1979 (NSW), an interim Occupation Certificate is, by its very definition, evidence that the works were incomplete".
This does not address the real issue, as defined by the contract, of what constitutes a "minor defect" for the purpose of determining practical completion.
The issue of an interim occupation certificate does not preclude a finding that the defects set out in any interim certificate are "minor" in nature, but otherwise permitting use of the premises for their ordinary purposes. For the reasons set out above, the ground of appeal must fail.

Ground three - rectification of tiles

It was not contested on appeal that the experts agreed at the conclave that that appropriate cost of rectification for defective tiles was $2376. The owner contends this amount should have been awarded. The builder does not resile from the agreed conclave finding, but contends that the Tribunal below may have inferred that the homeowner, having incurred $1155 for cleaning and resealing, was not entitled to the cost of rectification. We do not agree that this inference can be drawn from the findings at paras 7 and 31 of the Tribunal's reasons, which state: '[7] There is one further issue, being rectification of tiles in the ensuite bathroom. The joint Scott Schedule suggests that liability, rectification and cost has been agreed although the builder's counterpart to the Scott Schedule suggests that liability is still to be determined. In any case, the owner now alleges that she has spent the sum of $1,155.00 for this rectification work, although the sum agreed at the conclave had been $2,376.00.' … [31] Before going on to consider other specific items, it is necessary to address the abovementioned differences between the parties' versions of the agreements reached at the expert conclave. These are set out in the attached summary of the conclave joint Scott Schedule. I refer in particular to items 6.1(a), (b) and (c); 6.2 and 6.3(a), (b) and (c). Member Topolinsky's notes are very clear and not ambiguous. The owner agrees with the Member's notes (of course, as would be expected). I find that these items were all agreed at the conclave, in relation to liability ("responsibility"), method of rectification and cost of rectification and I allow those amounts. There is a necessary variation to the allowance for the ensuite tiles as it is now known what they actually cost to be rectified, being an amount less than that agreed at the conclave. For that item I allow $1,155.00.'
The builder agrees that the evidence showed that an amount of $1155 was spent on cleaning and resealing only. It appears that there was no evidence before the Tribunal that could have supported its finding that the actual cost of rectification was only $1155. We cannot agree with the respondent that there was an evidentiary basis for the finding that the rectification, rather than the cleaning, costs should be awarded. That is, there was no evidence to support that conclusion. It is an error of law if there is no evidence to support a finding of fact: Australian Broadcasting Tribunal v Bond [1990] HCA 33; (1990) 170 CLR 321 at 355-6; The Australian Gas Light Company v Valuer-General [1940] NSWStRp 9; (1940) 40 SR (NSW) 126 at 138; John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [20]. We would allow the appeal on that ground. Even if we are wrong about it being a question of law, we would grant leave to appeal on this discrete issue because it is such an obvious error and the interests of justice favour that course.
Accordingly, the appeal should be allowed so as to vary the amount payable by setting aside the finding in paragraph 31 below of $1155 and substituting it with the figure of $2376.
The parties are to bring in consent orders giving effect to these findings.

Orders

In relation to Appeal 14/59781, the Tribunal orders that: 1. The application for leave to appeal out of time is dismissed. 2. The appeal is otherwise dismissed.
In relation to Appeal 15/10590, the Tribunal orders that: 1. The appeal is allowed in part. 2. The appellant is to file and serve orders giving effect to these reasons within 7 days together with no more than 3 pages of explanatory submissions on this and costs. 3. The respondent is within a further 7 days, to file and serve any alternative orders together with no more than 3 pages of submissions in response as to relief and costs. 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: 09 June 2015

At a glance

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Judgment (10 paragraphs)

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Legislation Cited (2)

Cases Cited (16)

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