On 18 January 2011, the appellant, as builder, and the respondents, as owners, entered into a standard form Housing Industry Association New South Wales Residential Building Contract for New Dwellings. A dispute ensued, and proceedings were brought by both parties to the contract in the Tribunal below.
The Tribunal below, in delivering two decisions, concluded that in the proceedings brought by the builder, the owners pay the builder $14,813.38 and in the proceedings brought by the owners, that the builder pay to the owners $49,215.94. The net result was that the builder pay the owners $34,402.56.
The builder appeals, he asserts as of right, on questions of law, in both matters. The builder was represented by experienced counsel who eschewed any amendment of either Notice of Appeal. We therefore have considered those grounds as drafted. For the reasons which follow, both appeals are dismissed.
We deal first with the appeal from the owners' claim below.
[2]
The owners' claim in proceedings HB 12/34727
These proceedings were a cross-application heard at the same time as the builder's claim against the owners. The applicant sought damages for the cost of rectifying building defects, completion of building works and other relief including liquidated damages. The result is noted above.
The builder's Notice of Appeal asserted that there was an error of law in making that decision, namely "by denying the appellant procedural fairness, both failing to consider and determine the appellant's argument that the home building contract dated 18 January 2011 had not been terminated by the respondents". The builder's argument focused on paragraph 172 of the reasons below, which stated:
"Since the owners do not claim damages arising from the termination of the contract, I have not dealt with the issue of which party was entitled to terminate the contract and whether the termination of the contract by the owner was given in accordance with the terms of the contract."
A denial of procedural fairness amounts to a question of law within the meaning of s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the Act). In John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, it was said at [17] that questions of law include:
"…a failure to afford procedural fairness: Italiano v Carbone [2005] NSWCA 177; Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143 at [8]. Section 38 of the Act prescribes the procedure of the Tribunal generally. Relevantly, s 38(2) expressly requires the Tribunal's procedures to accord with natural justice. Sub-sections 5 and 6 also embody aspects of procedural fairness. These rules were previously reflected in s 28 of the Consumer, Trader and Tenancy Tribunal Act (NSW). Procedural fairness concerns the fairness of the proceedings and not the decision: Aronson, Dyer and Groves, Judicial Review of Administrative Action, 4th Ed; (2009) Lawbook Co at [7.20]."
The short answer to this ground of appeal is that it is not a denial of procedural fairness for a tribunal, having considered a submission on a particular point raised by the parties, to decide, in the manner that it did, that it is not necessary to deal with it. We reject this ground.
The builder also raised a second matter in submissions in relation to the failure of the Tribunal to make an order under s 48O(1)(c) of the Home Building Act, which provides that:
48O Powers of Tribunal
(1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate:
…
(c) an order that a party to the proceedings:
(i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or
(ii) do or perform, or refrain from doing or performing, any specified act, matter or thing.
The Tribunal, when declining to exercise the discretion conferred under that provision simply said this:
"175 The discretion given to me to order a work order is in my view to be exercised when that would be an appropriate means of bringing finality to a dispute between owner and builder. When there is a degree of animosity between the parties, evidenced in this case by their preparedness to engage in lengthy litigation, and the owners' opposition to a work order being made, one of the requirements for a successful work order, which in my view is the ability of the parties to cooperate to some degree to allow the successful completion of the work, is lacking.
176 Having regard to what I see as the parties' inability to cooperate, and to the fact that the owners oppose the making of a work order, I have decided not to make a work order."
It can be seen from the passage cited that the decisive discretionary consideration leading to refusal of the order sought by the builder was the animosity between the parties, and their inability to cooperate. We note that the builder accepted that the findings as to animosity were a discretionary finding of fact which could not be challenged as a question of law.
The complaint appeared to be that this discretion was exercised in such a fashion that the relief miscarried in a House v The King (1936) 55 CLR 499 sense because there was a failure to have regard to a mandatory relevant consideration, namely that the contract remained on foot. While there was no application to amend the grounds of appeal, if one had been made to this effect we would not have allowed it because we regard the argument as bound to fail.
Whether a matter is a mandatory relevant consideration in the sense mentioned, is to be determined by a construction of the statute conferring the discretion and may include matters expressly stated, or other matters determined by "implication from the subject matter, scope and purpose of the act": Minister for Aboriginal Affairs v Peko-Wallsend Limited (1986) 162 CLR 24 at pp 39-40 per Mason J.
There was no attempt on behalf of the builder to meet this test. We conclude there is no basis in authority, or in the subject matter, scope and purpose of the Act including in the language of s 48O(1)(c) for finding that in every case, it is a mandatory relevant consideration to consider whether the contract does or does not remain on foot. That being so, the argument of the builder would fail.
We therefore dismiss the appeal in relation to the claim brought below by the owner.
[3]
The builder's claim in proceedings HB 12/23324
The builder below claimed that he was owed $40,724.86, being payment for claims made under the building contract between the parties. There were two grounds of appeal, namely, the assertion that the Tribunal below erred in law:
1. In determining that the builder's entitlement to be paid the balance of the contract price on practical completion was contingent upon him submitting an invoice for the balance of the contract price at the time of giving a notice of practical completion; and
2. Denying the builder procedural fairness in relation to the first ground.
In relation to the first ground, we find that the proper construction of the terms of a written contract in these circumstances is a matter of law. We adopt what was said by Underwood J in Fitzallen v Rosebery-Toorak Football Club [2003] TASSC 112 in relation to an appeal from a Tribunal on a question of law. His Honour said at [7]:
"This issue required the Tribunal to construe the written words. Construction of a contract involves a determination of the meaning of the words used by the parties in the document and the legal effects of those words. In the case of a written contract, its construction is a question of law. See Moore v Garwood [1849] EngR 1122; (1849) 4 Exch 681; Francis v Lyon [1907] HCA 12; (1907) 4 CLR 1023 at 1040. In Pioneer Shipping Ltd v BTP Tioxide Ltd [1982] AC 724, Lord Diplock ascribed the origin of the rule to the illiteracy of juries and said, at 736:
"Nevertheless, despite the disappearance of juries, literate or illiterate in civil cases in England, it is far too late to change the technical classification of the ascertainment of the meaning of a written contract between private parties as being 'a question of law' for the purposes of judicial review of awards of arbitrators or decisions of administrative tribunals from which an appeal to a court of justice is restricted by statute to an appeal upon a question of law.""
See also White Constructions (NT) Pty Ltd v Ronald Mutton & Flavious Pty Ltd [1988] NTSC 53.
However, we also conclude that there was no error of law in the construction adopted by the Tribunal below, for the following reasons.
The builder drew our attention, first, to the Tribunal's decision below at paragraph 16 where it made the apparently unobjectionable point, that:
"When the parties have entered into a written agreement that contains clear and unambiguous provisions which set out the basis upon which the builder may claim for the contract price in stages and in addition, deals with the builder's rights to paid additional money due to variations and delay, I find that it was the intention of the parties that the builder would comply with the relevant terms regarding the making of such claim. The owners, on receipt of a claim properly made under the contract, were then obliged to make payment in accordance with the contract."
At paragraph 18, the Tribunal noted that the contract contains no right for the builder to present an account for work after completion, so as to allow an aggregation of all claims not previously made.
It is important to note that in this aspect of the decision, the Tribunal was considering rights to claim under the contract between the parties. It was accepted by the parties that it might have been open for the builder to make a claim in quantum meruit. Indeed, such a claim for unrelated work was made by the builder. It was not however made in relation to this work.
The Tribunal then, at paragraphs 29 to 46 below, considered whether Invoice 1101 dated 18 January 2012 (the decision below incorrectly refers to '2013') for the sum of $30,000 had been correctly claimed under the contract. The Tribunal had already noted at paragraph 5 that this invoice, as lodged, was not a claim for delay damages as alleged by the builder - and there is now no complaint by the builder about this - and was also not a claim for the final payment due under the contract, as it predated the owner's asserted date of practical completion by some two months, and the date of Mrs Pavier's inspection by some three months.
The Tribunal then concluded at [46]:
"As a result of the reasons set out above, I find that the builder has no right under the contract to obtain an order in his favour for the payment of Invoice 1101. His claim for payment of $30,000 pursuant to this invoice is therefore dismissed."
Thus, the essential reasoning of the Tribunal was that for such a claim to be successful, it needed to be made under clause 26 of the contract, which dealt with "practical completion". Clause 26 required the builder to give a notice to the owner 5 days before practical completion being reached. The notice was to attach the builder's progress claim, state a date and time for the parties to meet on site to inspect the building works, and then, either for the owners to make a payment, or they did not agree that practical completion had been reached, to give the builder a list of the work they say remained to be done.
The Tribunal found that the email which attached the invoice did not comply with clause 26 of the contract, because it did not attach the builder's final progress claim and did not call for a meeting onsite to carry out an inspection of the building works. Counsel for the builder accepted that the invoice as lodged did not fall within the terms of clause 26 of the contract and confirmed that he was not challenging the factual finding of the Tribunal that it did not do so.
Rather, the builder's point was that there was an error of law by the Tribunal because the conclusion that clause 26 was the only way that such a claim could be made under the contract "misconstrued the contract read as a whole", or alternatively, because the issue of this construction of clause 26 was not raised at the hearing below the builder was denied procedural fairness.
We agree with the owner that it was open to the Tribunal below to find as a matter of fact that the only final tax invoice issued to the builder was that attached to the letter of 16 April 2012 and that this was self-evidently not a document which complied with clause 26 of the contract. Nothing further was provided by the builder that would establish that the works were carried out as set out in the tax invoice.
In relation to the construction point, we reiterate that the Tribunal below was specifically considering only claims under the contract, and was not dealing with the capacity to make a claim in quantum meruit.
On the asserted question of misconstruction, we conclude that the builder did not establish any error in the conclusions below or indeed in any of the paragraphs cited. Rather, there were vague statements made on his behalf that it would be 'unfair' if the contract did not permit some other sort of claim. The builder submitted that:
1. The approach to the contract which had been taken by the Tribunal led to an absurd and unjust result;
2. As the contract was a standard Housing Industry Association contract "a practical and common sense approach" was necessary to avoid inconvenience; and
3. Both parties could expect that work would be performed in accordance with the contract and always paid for in full.
We do not accept any of these arguments. In fact, as the owner demonstrated in his submissions, there are good reasons why clause 26 needs to be carefully followed. Principally this is so that the owner has an opportunity to object to any claim, and so the parties can join issue at the time when the works have recently been completed as to whether the works have been done properly or not. Thus we find that the Tribunal's construction of clause 26 was correct.
The builder also appeared to be submitting that as a matter of business efficacy, the contract as a whole could not be construed in the fashion it was in relation to clause 26 because this would "defy common sense". When pressed, the builder did not identify a particular condition to be implied as a matter of business efficacy, nor explain how he would meet the five-fold test of implication set out by the Judicial Committee of the Privy Council in B. P. Refinery (Westernport) Pty. Ltd. v. Hastings Shire Council (1977) 52 ALJR 20, at p 26, which remains the relevant test:- see French CJ, Bell and Keane JJ in Commonwealth Bank of Australia v Barker [2014] HCA 32 at [21], footnote 41, namely:
"For a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying'; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."
Accordingly, no error of law was established on this ground.
The second point concerning denial of procedural fairness can be swiftly disposed of. In a passage frequently cited with approval in Commissioner of the Australian Capital Territory Revenue v Alphaone Pty Ltd [1994] FCA 1074; (1994) 49 FCR 576 (itself cited with apparent approval by a majority of the High Court in Re Minister for Immigration and Multicultural and Indigenous Affairs [2003] HCA 56; 216 CLR 212 at [21]-[22]) a Full Court of the Federal Court said at 591-592:
"Where the exercise of a statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decision-maker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decision-maker. It also extends to require the decision-maker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decision-maker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decision-maker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question."
The builder accepted, as indeed was clear from the parts of the transcript referred to, that the issue of whether the invoice fell within the terms of clause 26 was indeed a live issue between the parties. The issue being a live one, it was not necessary as matter of procedural fairness for the Tribunal to raise with the parties all possible permutations of the possible construction of the clause.
We therefore dismiss this appeal. The owners should have an opportunity to seek costs. We thus order:
1. Within 7 days of this decision, the respondent is to file and serve any application for costs of the appeals, such application is not to exceed 3 pages in length.
2. Within a further 7 days, the appellant to file and serve any submissions in response, such response is not to exceed 3 pages in length.
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
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Decision last updated: 04 June 2015