Dick v Buildingwise Constructions Pty Ltd

Dick v Buildingwise Constructions Pty Ltd - [2023] NSWCATAP 214 - NSWCATAP 2023 case summary — Zoe

[4]

Leave to appeal

Clause 12 of Sch 4 of the NCAT Act provides that, in an appeal from a decision of the Consumer and Commercial Division of the Tribunal, an Appeal Panel may grant leave to appeal only if satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel conducted a review of the relevant cases at [65]-[79] and concluded at 84 that: Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) Issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
Even if an appellant establishes that they may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave under s 80(2) of the NCAT Act. An appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32].

[7]

Reply to Appeal

The Reply to Appeal relevantly states: Reply to Appellants' Grounds of Appeal 1 The learned Senior Member was correct in construing the terms of the Contract and in his calculations of amounts payable in respect of variations 2, 3, 4 and 8 of the Builder's Claim. 2 The learned Senior Member was correct in finding that the variations could be assessed on a quantum meruit basis. 3 The learned Senior Member did not fail to provide adequate reasons in respect of variation 4 of the Builder's Claim. The reasons spanning 321 paragraphs over 69 pages, were detailed and, with respect, the decision was appropriately reasoned. 4 The learned Senior Member's calculations in respect of variation 5 were correct. The findings made by the Senior Member was not against the weight of the evidence. 5 The learned Senior Member did not err in his calculation of variation 8. The learned senior member did not reverse the onus, nor did he fail to provide adequate reasons. The learned Senior Member's finding was not against the weight of the evidence. 6 The Respondent opposes the granting of leave to rely on those grounds said to require leave. 7 The outcome was fair and equitable, there is no basis to contend that leave ought to be granted. There is no issue of principle, no issue of public importance, no injustice, no procedural unfairness or factual error that was unreasonably arrived at and clearly mistaken. 8 The Appellant is continuing the pattern of "litigation warfare" [118] by challenging findings that were plainly correct and open for the learned Senior Member to make.
To place that statement in its context, we reproduce [118] of the Primary Decision: Item 110(i). This claim for $97.36 ($130.55 if builder's margin and GST are added) illustrates how these proceedings are better described as litigation warfare than dispute resolution given that the time spent during the hearing (with counsel briefed and instructing solicitors attending), and in preparing written submissions, involved a cost far exceeding the disputed amount. The Tribunal is required to decide, and to provide reasons, for whether the gap between the rear of a toilet pan and the wall should have been sealed.

[10]

Appellants' submissions

At [11] of their written submissions, the appellants submit that: In short compass, the definition of "prime cost item" in the Contract excludes labour as a variable cost for which a homeowner will be responsible. Whereas the term "provisional sum item" expressly includes labour as a component for which a homeowner will be responsible as part of that particular item. Variations 2, 3 and 4 were found to be "prime cost items" by the learned Senior Member but notwithstanding this, he allowed labour to be included as part of the variable costs for those relevant items.
At [12] to [15] of the submissions, the appellants then set out a summary of the Tribunal's relevant reasons. At [16] the appellants refer to pars [46] to [48] and [51] of Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 25. The appellants submit that (foot notes omitted): 17. … In light of the commercial purpose and objects and using the text of the contract, read as a whole: what would a reasonable business person have understood the term "prime cost item" to have meant in the Contract? 18. Reading the Contract as a whole means consideration of clauses 20.4 and 20.5. No express consideration is found in the Judgment, those clauses clarify the distinction between the two terms. Those clauses state: 20.4 Each prime cost item must have an allowance stated next to it. The allowance is the estimated price to supply the item and does not include an amount for the builder's margin. (sic) 20.5 Each provisional sum item must have an allowance stated next to it. The allowance is the estimated price of providing the work and does not include an amount for the builder's margin. 19. In light of the objects and the Contract as a whole what would a reasonable person understand in respect of the term "prime cost item" and whether it includes labour? If that reasonable person was Mr Moroney, the director of the respondent, the reasonable person would understand that the term "prime cost item" did not include labour. … 20. With respect, any reasonable person reading the Contract and the Tender? would understand that "prime cost items" did not include labour. If the inclusion of variable labour costs was to be an additional cost it would be encapsulated in the term "provisional sum items". This, of course is contrary to the findings of the learned Senior Member, who wrongly found that labour costs are included as "prime cost items". 21. No legal analysis or legal reasoning is provided by the learned Senior Member for this view. The term "supply and install" is used throughout the Tender for items that are not prime cost items. Further, the term "supply" (without "and install") is used on items that were clearly intended to be installed. In short, there is no particular meaning to the term "supply and install". In order to arrive at the view the learned Senior Member arrived at, one would have to come to the view that the phrase "supply and install" used in the Tender was intended to override the clear language of the defined term "prime cost item" within the Contract and change give the term "prime cost item" the same meaning as "provisional sum item". 22. Such a reading makes a commercial nonsense. (emphasis as in original)
The appellants submit that when the labour component is removed from the respondent's claim, as otherwise calculated by the Senior Member, the award made should be adjusted as follows: 1. as to variation 2, the appellant should be entitled to a credit of $878.92 (and not to the $3,332.04 awarded); 2. as to variation 3, the appellant should be entitled to a credit of $3,707.39 (and not to the $7,426.13 awarded); 3. as to variation 4, the appellant should be entitled to a credit of $3,751 (and not to the $5,014.90 awarded); and 4. as to variation 8, the respondent should be entitled to $0 (and not to the $29,203.68 awarded).

[11]

Builder's submissions

In summary, the Builder submitted: Legal Principles 15 The appellant cites Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 for the well-settled principles of contractual interpretation. In that case, the Court held, amongst other things, that in determining the meaning of the terms of a commercial contract it is necessary to ask what a reasonable business person would have understood those terms to mean. That inquiry requires consideration of the language used by the parties in the contract. In the event of ambiguity, 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. 17 It is plain that the Contract was for the provision of labour and goods to undertake alterations and additions to the property at 2 Roslyn Avenue, Islington. The proposition that this was to be done with as few variations as possible is only supported by the self-supporting statement of Mr Dick whose evidence, the Tribunal found, should be viewed with caution [J41]. His evidence was that he was firm with Mr Moroney from the start that there were to be no variations. [CB253]. That evidence is completely implausible, that it came from someone who was ostensibly involved in the building industry makes it even less tenable. Contrary to what is submitted by the appellants; however, it would have made eminent sense to include as many items as prime cost items and provisional sum items as possible. 18 In light of the objects and the Contract as a whole, in circumstances where the words deployed in the description were supply and install items and where it was plain that the items would require installation labour, the reasonable person would, of course, understanding the items referred to in this passage to include labour. 19 The appellant seeks to superficially interpret the tender document in a way that is suggestive that the words "install" that plainly contemplates labour, should be ignored. 20 The nature of the item and valuation of it must be determined objectively having regard to its description. Given that these items contemplated installation works, they were properly claimable and recoverable. The appellant's interpretation of the contract and application of it to the factual matrix, is, with respect unduly laboured.

[12]

Variation 2

The Tribunal found, and no party on appeal disputes, that there was a written fixed price contract between the parties dated 13 August 2018 (the Contract).
Clause 20 (Prime Cost and Provisional Sum Items) provides: 20.1 The owner must give the builder written notice of the owner's selection of a prime costs item within 5 working days after the builder's request to do so. 20.2 If a prime cost item selected by the owner is not available, the owner must give the builder written notice of an alternative selection within 5 working days of the builder advising that the item selected is unavailable. 20.3 If the owner fails to give written notice under sub-clause 20.2, the builder may select an alternative item that is similar in quality to the unavailable item. 20.4 Each prime cost item must have an allowance stated next to it. The allowance is the estimated price to supply the item and does not include an amount for the builder's margin. 20.5 Each provisional sum item must have an allowance stated next to it. The provisional sum allowance is the estimated price of providing the work and does not include an amount for the builder's margin. 20.6 In relation to each prime cost item and provisional sum item, if the actual price is: (a) less than the allowance, the difference is deducted from the contract price; (b) more than the allowance, the total of the difference and the builder's margin applied to that difference is added to the contract price. 20.7 Any adjustment to the contract price for a prime cost item or a provisional sum item is due and payable with, or deductible from, the next progress payment, unless a different time is agreed in writing. The builder is to provide to the owner such invoices, receipts or other documents as may reasonably be expected to evidence the actual price of a prime cost item or provisional sum item. (emphasis as in original)
The definitions of "prime costs item" and "provisional sum item" are respectively set out in cl 1 (Interpretation) as follows: 'prime cost item' means an item (for example a fixture or fitting) that either has not been selected or cannot be costed exactly at the time that the contract is entered into and for which the builder has made an allowance in the contract price 'provisional sum item' means an item of work (including labour and materials) which cannot be costed exactly at the time the contract is entered into and for which the builder has made an allowance in the contract price
Schedule 7 to the Contract is titled "Prime Cost and Provisional Sum Items (cl 20).
There then appears a table for each of the prime cost items and the provisional sum items allowing for a detailed description of each item, the estimated quantity allowed for, the estimate dollar value of each item and the allowance for each of the items claimed.
In both cases, prime cost items and provisional sum items, the words "Refer to tender" appear.
It is common ground that "the tender" refers to the Amended Tender dated 12 July 2018 (the Tender) and that the Tender forms part of the Contract.
Variation 2 is described in the Primary Decision as "based on an invoice 1912-14 (2/793) relating to metal screening which was described as a prime cost item in the tender (1/301), with an amount of $10,728 (plus GST)".
"1/301" is a reference to p 301 of the joint tender bundle before the Tribunal. Relevantly that page states: 18 METAL SCREENING P.C. ITEM $10,728.00 Supply and install Hi-Light Industries Aluminium Shade Mesh or approved equal with a maximum 2m distance between supports in powdercoat finish in 3 panels fixed to galvanised PFC with pre drilled bolt fixing holes - P.C. item (emphasis added)
It is to be noted that, not once but twice, in that part of the Tender, item 18 is referred to as a "P.C." item, that is, as a prime cost item.
The Primary Decision relevantly states: 58. There is no evidence of compliance with clause 18.1, as to variations, and it would appear there was only belated compliance with clause 20.7, regardless of whether the supporting documents were provided with the invoice on 16 December 2019 or later, as part of Mr Moroney's affidavit. The effect of the use of the words "supply and install" is that the cost of materials to supply and labour to install fall within this item. 59. The fact that this is a prime cost item permits the builder to recover the excess of the actual cost over the estimated cost. The supporting documents provided only included an invoice for $8,623.40 (not the $9,748.08 claimed at 2/794) in respect of the screening. An amount of $101 for nuts, bolts, and washers is adequately supported by taking the total ex-GST cost of $252.49, adding the 20% builder's margin and dividing by three to allow for these items also being used on the handrails and stairs. There is a schedule for the labour charge of $4,760 to which it is noted no builder's margin was applied and that no charge was made for the use of a scissor lift. Mr Dick's photos (3/1085-1098) do not contradict the claim for labour. The total of those three amounts, namely $8,623.40, $101, and $4,760, is $13,484.40 which exceeded to tender estimate of $10,728 by $2,756.40. Adding GST gives $3,032.04 for this claim. 60. If this claim were to be considered on a quantum meruit basis, there are text messages (2/811-814) which suggest the owners were consulted, contrary to the evidence of Mr Dick (1/266 at [113]). The attempt of Mr Dick to give expert evidence that the hours claimed are not reasonable (1/266 at [114]) is rejected. It is noted that the builder also had evidence from Mr O'Brien that the amount claimed was reasonable (5/2112-2113).
The appellants' submissions are summarised above. In short, they submit that the Tribunal erred in including "labour" in its calculation of the amount to be allowed for variation 2.
This submission is primarily based on the fact that in the definition of prime cost item labour is not referred to, whereas in the definition of provisional sum item labour is included.
The difficulty is that there is a contract where, on the one hand, labour is not included in the definition of prime cost item in cl 1, but, on the other hand, labour is included in the prime cost items set out in the Tender which also forms part of the Contract.
In relation to variation 2, we see no error in the Tribunal's analysis and conclusion. In this respect we accept the Builder's submissions set out at [28] above. That is to say, in summary, we accept that: 1. the Contract was for the provision of labour and goods to undertake alterations and additions to the property; 2. in light of the objects and the Contract as a whole, in circumstances where the words deployed in the Tender description were supply and install items and where it was plain that the items would require labour to install, the reasonable person would understand the items referred to include labour. This reasoning is not changed by the commercial nature of the contract.
The appellants submit that no legal analysis or legal reasoning is provided by the Tribunal as to why labour should be included in any calculation of the allowance for the variation. The appellants point to the use of the expression "supply and install" for items listed in the Tender that are not prime cost items. They also submit that the term "supply" (without "and install") is used on items that were clearly intended to be installed. In short, the appellants submit that there is no particular meaning to the term "supply and install". They submit that, in order to arrive at the view the learned Senior Member arrived at, one would have to come to the view that the phrase "supply and install" used in the Tender was intended to override the clear language of the defined term "prime cost item" within the Contract and change give the term "prime cost item" the same meaning as "provisional sum item".
We disagree. In our view, it is not a case of the Tender documentation overriding the defined terms in the Contract. Both the Tender and the defined terms form part of the (whole) Contract. It is a case of the Tribunal to determining as a whole how the Contract should be interpreted as a harmonious whole: see Morgan Equipment Co v UMW Corp SDN BHd [2002] NSWCA 193 at [10] per Meagher JA.
In conclusion, while we find that the appellants have raised a question of law, we see no error in the Tribunal's approach, analysis or conclusion.

[13]

Variation 3

The Tribunal found that Variation 3 was based on invoice 1912-15 for $13,385 (plus GST), relating to the staircases, with a description which read: Supply and fix stringers with timber tread stair cases to both units Supply and install timber wall handrails fixed on stainless steel brackets to both units Note: This is as per the client's request (emphasis added)
The Tribunal found that: 62 There is no evidence of compliance with clause 18.1, as to variations, and compliance with clause 20.7 was late. Again, the fact that this is a prime cost item in the tender (1/309) permits the builder to recover the excess of the actual cost over the estimated cost. 63 The supporting documents provided do no match the schedule for materials. Unless otherwise indicated, amounts referred to exclude GST. For example, a claim for iron bark timber of $1,481.70 was made but the invoice (2/823) was for an amount of $2,931.34 with a credit of $191.43 giving a net amount of $2,739.91 inclusive of GST. The second component was a claim for screws anchors of $304.13 but the invoice (2/819) was for $264.06. The third component was for $1,481.70 blackbutt timber. The invoices (2/820-822), after adding a builder's margin of 20% gives the claimed amount of $1,481.70 which is allowed. The fourth component was another claim for screw anchors, but the supporting invoices (2/824-825) only suggest $157.57. The fifth component is $101 for galvanised buts, bolts, and washers, being a cost shared with the previous item and a subsequent item. The sixth component was for stair stringers for which an invoice for $5,100 (2/839) supports the claim for $6,120 when a 20% builder's margin is added. 64 For materials, the Tribunal adopts amounts of $1,481.70, $264.06, $1,481.70, $157.57, $101, and $6,120 which adds to $9,606.03. Adding the $10,530 labour component, due to the inclusion of the words "supply and install" in the tender, gives an amount of $20,136.03. Deducting the tender amount of $13,385 gives $6,751.03 and adding GST gives $7,426.13 as the amount the Tribunal considers should be awarded for this variation. (emphasis as in original)
For the same reasons as appear above, while we find that the appellants have raised a question of law, we see no error in the Tribunal's approach, analysis or conclusion.

[14]

Variation 4

Variation 4 is described in the Primary Decision as being based invoice 1912-16 (2/848) which related to metal balustrade and the pool fence, described as a prime cost item in the Tender (1/297) with an amount of $19,020 (plus GST) and a Tender description which, in relation to each of six bullet points, commenced with the words "supply and install": 18 METAL WORKER P.C. ITEM $19,020.00 Supply and install 21.5m long standard colour powder coated 304 grade stainless steel balustrading with 38×38 SHS posts, 50×25 top rail, 32×32 SHS bottom rail, 16 diameter vertical tube intermediates to deck on units 1 & 2 Supply and install 3.5m x 1.2m clear frameless glass pool balustrading held in position with spigot posts, magnetic latch and self closing gate to unit 2 Supply and install glass stair balustrade to unit 1 to details Supply and install glass balustrade to unit 2 to detail Supply and install floor to ceiling glass screen with galvanized steel frame to unit 2 glass to be viridian scala texture square light Supply and install 1800h steel fence to be similar to balustrade details
In relation to variation 4, the Tribunal stated: 65 Variation 4. This claim for $5,014.90 was based on an invoice 1912-16 (2/848) which related to metal balustrade and the pool fence, described as a prime cost item in the tender (1/297) with an amount of $19,020 (plus GST) and a description which, in relation to each of six bullet points, commenced with the words "supply and install". 66 Having checked the ex-GST amounts claimed for materials and labour (2/849-866), the Tribunal is satisfied that the amount claimed, namely $5,014.90, should be allowed. Mr Dick's photos (3/1089-1095) would carry weight if the labour claim related solely to the balustrades and did not include the pool fence. (emphasis as in original)
Again, for the same reasons as appear above, while we find that the appellants have raised a question of law, we see no error in the Tribunal's approach, analysis or conclusion.

[19]

Relevant principles

A convenient summary of the relevant principles relating to quantum meruit were set out in SDL Project Solutions Pty Ltd v Kim; Kim v SDL Project Solutions Pty Ltd [2022] NSWCATCD 10 as follows: 485 Quantum meruit claims arise where a builder has performed work under unenforceable provisions of a contract, and it would be unjust for the homeowner to retain the benefit of the work done without paying for the reasonable value of the work. 486 Relevant principles have been discussed in a plethora of decisions, including Suecha Pty Ltd v VSD Glass & Timber Pty Ltd [2020] NSWCATAP 170; Woodward v Warwick Green Building Pty Ltd [2021] NSWCATAP 210; Rekrut and Scott v Champion Homes Sales Pty Ltd [2017] NSWCATAP 187; Roude v Helwani [2020] NSWCA 310; Rice v JR and SD Farmer t/as Urban Bespoke Homes [2020] NSWCATAP 208; and Paraiso v CBS Build Pty Ltd [2020] NSWSC 190. 487 The principles can be summarised as follows: (1) If the quantum meruit claim involves an unenforceable variation, the builder must prove the homeowner had actual knowledge of the additional works; that the works were outside the contract; and the builder expected to be paid for the additional work. (2) In respect of all quantum meruit claims, the onus is on the builder to establish the reasonable value of the work that performed and accepted by the homeowner. This is a question of fact. Relevant evidence will include any invoices/receipts of the builder; time sheets of the builder; rates under the contract for labour and materials; and expert evidence that analyses the work actually performed and the reasonable cost of such work. (3) The amount recoverable in a quantum meruit claim cannot exceed the amount that would have been payable under the contract for that component of the work.
And in Lucien v Mullally; Mullally v Lucien [2021] NSWCATCD 145, the Tribunal stated: 497 In Vasco Investments Ltd v Morgan Stanley Australia Ltd [2014] VSC 455 (Vasco) at [339]-[342], [344]-[347] Vickery J set out following principles which apply to an action in quantum meruit, as derived from Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5, Brenner v First Artist Management Pty Ltd [1993] 2 VR 221, Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 635; [2008] HCA 27 and the cases cited therein: "[339] The law may impose an obligation to make restitution on a quantum meruit basis, under what I will call the first class of case, where the plaintiff proves: a. Actual or constructive acceptance of the benefit of the provider's goods or services by the recipient; b. The recipient of the goods or services should have realised that the provider expected to be paid; and c. It would be unjust for the recipient to take the benefit of the goods or services provided without paying a reasonable sum for them. [340] A second class of case falling under the umbrella of a claim in quantum meruit is the long established and well-recognised category of cases constituted by claims for work and labour done or money paid at the request of another. [341] In both classes of case, the law imposes an obligation independent of contract to pay a fair and reasonable sum for the goods or services, founded on the principles of restitution for unjust enrichment. [342] A third class of case giving rise to a claim described as quantum meruit is where goods or services are provided under an existing and enforceable contract which contains an express or implied term to pay a fair and reasonable sum for them, but such sum is not quantified. The action is directed to determining the fair and reasonable sum payable. … (emphasis added)

[24]

Variation 7

As to variation 7, the Tribunal found: 79 Variation 7. Invoice 2002-04 dated 6 February 2020 claimed $2,976.83 as a variation. It related to the cost of home owners' warranty insurance. This claim arises from the tripartite agreement dated 5 July 2019 which recorded, in its recitals, that the builder and Mrs and Mrs Gillam had agreed to additions to the building work covered by the contract with Mr and Mrs Dick, that Mr and Mrs Gillam would be responsible for the costs of those additions, and that they would pay such costs directly to the builder. That agreement, in Schedule 1, included the words: Builder to supply Home Owners Warranty Insurance - $5,678.00 estimate 80 The documents attached to the affidavit of Mr Moroney include a page (2/978) which suggested: The Home Owners Warranty Insurance adjustment will be lodged once payment is made. 81 However, the following pages supplied in support of this variation (2/979-981) were an invoice from the builder to Mr and Mrs Dick for $2,706.21 plus GST, and an exchange of emails in early February 2021 between the builder and an insurer which under a heading "Dual Occupancy - HBCF18048279" suggests an additional premium of $5,972.21 and, under a heading "Alternations & Additions - HBCF18044856" an additional premium of $1,469.21. 82 The total of those two amounts is $7,441.42 which exceeds the estimate of $5,678 by $1,763.42. Yet, an amount of $2,706.21 plus GST is claimed? 83 This claim is rejected for the following reasons. First, the email provided does not appear to be any more than a quote. Secondly, no tax invoice has been provided. Thirdly, there is no evidence of the amount claimed having been paid by the builder. Fourthly, the builder's evidence (2/978), quoted above, was that the insurance adjustment would only be lodged with the insurer after payment was made. Fifthly, there is no evidence which supports the amount claimed. (emphasis as in Primary Decision)
Clearly, variation 7 was part of the Contract. We see no error in the Tribunal's reasoning and do not accept that an error has been established on the basis propounded by the appellants, that is, that this variation was assessed on the quantum meruit basis.

[25]

Consideration of Ground Three

Ground Three is that the Tribunal failed to provide any or adequate reasons in respect of variation 4 of the Builder's claim.
The Tribunal stated: 64 Variation 4. This claim for $5,014.90 was based on an invoice 1912-16 (2/848) which related to metal balustrade and the pool fence, described as a prime cost item in the tender (1/297) with an amount of $19,020 (plus GST) and a description which, in relation to each of six bullet points, commenced with the words "supply and install". 65 Having checked the ex-GST amounts claimed for materials and labour (2/849-866), the Tribunal is satisfied that the amount claimed, namely $5,014.90, should be allowed. Mr Dick's photos (3/1089-1095) would carry weight if the labour claim related solely to the balustrades and did not include the pool fence. (emphasis as in Primary Decision)
We agree that this ground raises a question of law in that it raises the issue of the adequacy of the Tribunal's reasons on this point: Prendergast at 13.
We reject the proposition that the Tribunal failed to provide any reasons on this point. That is plainly not correct.
As to the adequacy of the reasons provided, we consider that the reasons meet the minimum acceptable standard of the type described by the Chief Justice of NSW (with whom Ward JA (as the President of the Court of Appeal was then agreed) in NSW Land and Housing Corporation v Orr [2019] NSWCA 231. The Chief Justice relevantly stated: 66. In the context of appellate review of the adequacy of reasons, the function of an appellate court is to determine not the optimal level of detail required in reasons for a decision but rather the minimum acceptable standard: Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [48] (Resource Pacific). The standard is not one of perfection: Bisley Investment Corporation v Australian Broadcasting Tribunal (1982) 40 ALR 233 at 255 (Bisley). … 71. That having been said, even in the less formal setting of a tribunal which has significant powers the exercise of which is capable of affecting the lives of citizens in profound ways, there are certain minimum characteristics that a Tribunal's reasons must possess. These are really supplied, in relation to the Tribunal, by s 62(3) of the CAT Act which, as noted at [52] above, requires there to be set out in reasons (when requested by a party): (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, and (c) the reasoning processes that lead the Tribunal to the conclusions it made. (emphasis added)
We accept that the reasons provided by the Tribunal were concise. However, we have noted that the Tribunal's reasons must be read in the context that the Primary Decision was 71 pages in length, and involved the consideration of eight variations and more that 360 disputed items.
Importantly, the Tribunal's reasons in relation to variation 4 follow the Tribunal's consideration of: 1. variation 2, at [57] to [60] of the Primary Decision; and 2. variation 3, at [61] to [64] of the Primary Decision.
In relation to variation 2, the Tribunal stated: 57 Variation 2. This claim for $4,269.19 was based on an invoice 1912-14 (2/793) relating to metal screening which was described as a prime cost item in the tender (1/301), with an amount of $10,728 (plus GST), as follows: Supply and install Hi-Light Industries Aluminium Shade Mesh or approved equal with a maximum 2m distance between supports in powdercoat finish in 3 panels fixed to galvanised PFC with pre drilled bolt fixing holes - P.C. item 58 There is no evidence of compliance with clause 18.1, as to variations, and it would appear there was only belated compliance with clause 20.7, regardless of whether the supporting documents were provided with the invoice on 16 Decem ber 2019 or later, as part of Mr Moroney's affidavit. The effect of the use of the words "supply and install" is that the cost of materials to supply and labour to install fall within this item. 59 The fact that this is a prime cost item permits the builder to recover the excess of the actual cost over the estimated cost. The supporting documents provided only included an invoice for $8,623.40 (not the $9,748.08 claimed at 2/794) in respect of the screening. An amount of $101 for nuts, bolts, and washers is adequately supported by taking the total ex-GST cost of $252.49, adding the 20% builder's margin and dividing by three to allow for these items also being used on the handrails and stairs. There is a schedule for the labour charge of $4,760 to which it is noted no builder's margin was applied and that no charge was made for the use of a scissor lift. Mr Dick's photos (3/1085-1098) do not contradict the claim for labour. The total of those three amounts, namely $8,623.40, $101, and $4,760, is $13,484.40 which exceeded to tender estimate of $10,728 by $2,756.40. Adding GST gives $3,032.04 for this claim. 60 If this claim were to be considered on a quantum meruit basis, there are text messages (2/811-814) which suggest the owners were consulted, contrary to the evidence of Mr Dick (1/266 at [113]). The attempt of Mr Dick to give expert evidence that the hours claimed are not reasonable (1/266 at [114]) is rejected. It is noted that the builder also had evidence from Mr O'Brien that the amount claimed was reasonable (5/2112-2113).
In relation to variation 3, the Tribunal stated: 61 Variation 3. This claim for $7,504.87 was based on an invoice 1912-15 (2/816) for $13,385 (plus GST), relating to the staircases, with a description which read: Supply and fix stringers with timber tread stair cases to both units Supply and install timber wall handrails fixed on stainless steel brackets to both units Note: This is as per the client's request 62 There is no evidence of compliance with clause 18.1, as to variations, and compliance with clause 20.7 was late. Again, the fact that this is a prime cost item in the tender (1/309) permits the builder to recover the excess of the actual cost over the estimated cost. 63 The supporting documents provided do no match the schedule for materials. Unless otherwise indicated, amounts referred to exclude GST. For example, a claim for iron bark timber of $1,481.70 was made but the invoice (2/823) was for an amount of $2,931.34 with a credit of $191.43 giving a net amount of $2,739.91 inclusive of GST. The second component was a claim for screws anchors of $304.13 but the invoice (2/819) was for $264.06. The third component was for $1,481.70 blackbutt timber. The invoices (2/820-822), after adding a builder's margin of 20% gives the claimed amount of $1,481.70 which is allowed. The fourth component was another claim for screw anchors, but the supporting invoices (2/824-825) only suggest $157.57. The fifth component is $101 for galvanised buts, bolts, and washers, being a cost shared with the previous item and a subsequent item. The sixth component was for stair stringers for which an invoice for $5,100 (2/839) supports the claim for $6,120 when a 20% builder's margin is added. 64 For materials, the Tribunal adopts amounts of $1,481.70, $264.06, $1,481.70, $157.57, $101, and $6,120 which adds to $9,606.03. Adding the $10,530 labour component, due to the inclusion of the words "supply and install" in the tender, gives an amount of $20,136.03. Deducting the tender amount of $13,385 gives $6,751.03 and adding GST gives $7,426.13 as the amount the Tribunal considers should be awarded for this variation.
We consider that, when read as a whole, the Tribunal's reasons on this point are not inadequate, in particular following its consideration of variations 2 and 3.
As was noted in Upton v Martin and Stein Antiques Pty Ltd [2017] NSWCATAP 175 at [18], the role of the Appeal Panel is to examine the decision appealed from in a sensible and balanced way and not to go over the reasons for decision with a fine tooth comb and an eye keenly attuned to a perception of error: Politis v Federal Commissioner of Taxation [1988] FCA 446 at [14] per Lockhart J.

[29]

Builder's submissions

The Builder relevantly submits: 1. ground 4.2 "plainly" requires a grant of leave, which should not be granted; 2. the appeal ground is mischaracterised; the pool finding not being against the evidence or the weight of the evidence. Mr O'Brien's expert evidence was before the Tribunal without any evidence in rebuttal; 3. the weight of the evidence was that the amount of the invoice was reasonable on a quantum meruit, which was also supported by the expert report; and: 4. as set out in [60] of its submissions: Contrary to the appellant's submissions, Mr O'Brien does not simply assert that the sum is reasonable. He obviously applied his independent mind to the task an identifies an error in the calculation of the claim. He states that the Variation amount was reasonable based on his opinion and experience based upon other pool construction projects. It was not put to him in cross examination that he derogated from his duties under the expert code of conduct. The evidence was therefore not bald assertion as contended for by the appellant. It was open for the Tribunal to have regard to that evidence and to place weight upon it. This aspect of the evidence was not meaningfully challenged and no counter-narrative or contrary opinion was proffered by the appellant. (emphasis added)
We pause here note that we do not accept that last underlined submission. The report of Mr Sharman of Collective Construction Management Pty Ltd states the following at pars [50] and [79]: 50. I am unable to assess costs associated with the pools because there is insufficient detail to do so, and this must be taken into consideration when finalising the contract value. I have however been able to analytically assess what items are to be considered when calculating the final value, and accordingly this is included in my summary. … 79(a) I agree that a second pool has been built. (b) In my opinion, without the scope of works being outlined by the builder, does not permit one to make an accurate assessment of the cost of the pools. It cannot be determined whether the pool support structure (i.e. footings, reinforced block wall and suspended slab) is included. A credit is also to be taken into account for the roof that was documented at the rear of the garage where the additional pool has been situated, and other deletions to the documented scope occurred. (c) Whilst I can assess building element costs, I am not a pool expert, and cannot accurately assess the price of the pool-specific components. (d) I question whether Justin O'Brien has been made aware that both pools are defective in their construction, to the extent that an Expert Witness specialising in pool construction has condemned them from use as there is a risk of death to anyone using the pool from improper suction apparatus and also electric shock (which has already ben experienced by one owner). I do note however that this is being addressed with the Applicant's building defects claim. Not only does the owner dispute the cost of the pools, but I understand that payment has not been made due to the status of the pools. (e) I assess there is no variation.

[30]

Consideration

The Tribunal's reasons were as follows: 66 Variation 5. This claim for $36,963.47 was based on an invoice 1912-17 (2/871) relating to the pool, described as a prime cost item in the tender upon which the contract was based (1/310), being the amended tender dated 12 July 2018. The amount shown was $25,000 (plus GST), said to have been revised down from $40,000 in an earlier tender dated 9 May 2018. The description was: Supply and install plunge pool to first floor of Unit 2 only - P.C item 67 Accordingly, while the pool for unit 2 is a prime cost item for which the builder has a contractual entitlement to recover the excess of the cost over $25,000, the addition of a pool for unit 1 constitutes a variation for which the procedure set out in clause 18 was not followed. Thus, to the extent that this variation relates to the pool for unit 1, it must be assessed on a quantum meruit basis. 68 It is clear the pool for unit 1 was known to be outside the contract, was requested, and that it was work for which it was clear the builder expected to be paid. The Tribunal considers the builder is entitled to recover on a quantum meruit basis for the pool for unit 2 [sic - 1]. It remains to consider what amount should be awarded, treating any claim for defective work separately. 69 Upon reviewing the supporting documents (2/872-911), the Tribunal noted the two transposition errors detected by Mr O'Brien. In the invoice upon which this claim is based, the total costs are set out, labour and materials, and then deductions were made to reduce the amount claimed by the $25,000 specified in the tender and $12,500 charged in a separate invoice. 70 It is sufficient to record that the Tribunal agrees with Mr O'Brien that the amount claimed, less $240, is reasonable. As a result, an amount of $36,723.47 is allowed for this variation. 71 The suggestion in closing submissions that there was an agreement for a variation that the cost of unit 1 would be $25,000 is rejected as the evidence does not support that view. It is not accepted that the builder, having specified $25,000 as a prime cost item for the pool for unit 2, agreed to charge a fixed price of $25,000 for a pool for unit 1.
These reasons were based on Mr O'Brien's expert report where he stated: The difference in costings relates to what I believe to be data entry errors in regards to Buildingwise' supplied Materials calculation spreadsheet. Following review of the supplied invoices to support this spreadsheet I noted an apparent error with the following entries: - Swimform Construction invoice dated 4/09/19. Invoice totals $1,994, plus builders margin of 20% = $2,2.80 (entry on spreadsheet equates to $2,280); and - Elite Pool and Spa Renovation invoice dated 7/12/19. Invoice totals $13,040, plus builders margin of 20% = $15,648 (entry on spreadsheet equates to $15,648) However with the exception of the items noted above I believe the Variation amount to be reasonable based on the inclusions within the invoices and my opinion on overall expected costs based on pricing I have seen for various other pool construction projects. I highlight my assessment assumes builders margin of 20% has been incorporated in the hourly rates for Buildingwise' labour. If this is not the case I believe an additional 20% should be applied to the labour component.
We note that it appears to us the variation referred to in the second last paragraph relates to the variation claim for pool 2, not the quantum meruit claim for pool 1: here see Mr Sharman's report at p 2675 of the joint tender bundle.
We consider that the Tribunal erred in its approach to the calculation of the cost of pool 1.
We reach this conclusion on the following bases.
First, the Tribunal's finding as to the reasonable cost of the supply and construction of pool 1, is based: 1. on Mr O'Brien's opinion that the cost of both pool 1 was reasonable, "based on the inclusions within the invoices and my opinion on overall expected costs based on pricing I have seen for various other pool construction projects;" and 2. his deduction of his assessed the cost of pool 2, as varied under the contract from the amount claimed by the Builder in a purported variation under the contract for both pools, in order to arrive the reasonable cost of pool 1.
The Tribunal did not refer to report from Mr Sharman which advised that: 1. in his opinion there were insufficient details provided to enable the costs of the pool to be assessed; 2. in making that assessment a credit should be allowed for deletions from the original scope of works given the decision to build pool 1; and, 3. there was a risk of death to those using the pool as constructed.
The Tribunal's failure to take Mr Sharman's report into account raises a number of questions associated with the assessment of restitution awarded to the builder. Principal among these is the issue of whether the failure of the Tribunal to have regard to that evidence may have resulted in a substantial injustice to the appellants because the decision was not fair and equitable and was against the weight of the evidence.
That concern is exacerbated by the very slim nature of the evidence going to the reasonable costs of constructing pool 1 relied on by the Tribunal. The Tribunal criticised the quality of the evidence supporting the quantum meruit claim, but proceeded to accept Mr O'Brien's evidence in any case. This is so despite Mr O'Brien's failure to explain what his "opinion of expected costs based on pricing I have seen" was actually based on. In addition, Mr Sharman's report raises the prospect that the appellants were entitled to credits for deletions from the scope of works.
Further, the prospect, raised in Mr Sharman's report, that the pool was effectively unusable and a danger raised the issue of precisely what benefit the appellants received that merited restitution being awarded to the Builder.
The evidence relied on by the appellants was not originally produced in support of a claim for reasonable restitution for work done, but was based on contractual entitlements under a purported variation. While the amount of the latter usually constitutes a ceiling to what can be recovered on a quantum meruit (Mann), the two are not the same. The reasonable costs associated with work done is not necessarily the same as how much a builder might charge for it under a contract. That the variation did not set out to demonstrate the reasonable costs of the work, goes explains it deficiencies and the tortuous reasoning underlying Mr O'Brien's assessment of the reasonable costs associated with the construction of pool 1.
All these concerns, when combined, lead us to conclude that the decision with respect to pool 1 may have resulted in a substantial injustice to the appellant, because the decision was not fair and equitable and was against the weight of the evidence. We will grant leave to appeal accordingly.

[32]

Conclusion

For the above reasons, we reject all Grounds of appeal save for Ground 4.2.
Section 81 of the NCAT Act provides: 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following - (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
Our view is that the better course is for the Appeal Panel to redetermine the Decision limited to the issues raised in ground 4.2.
However, we will direct the parties to file submissions on the following issues: 1. whether the matters the subject of Ground 4.2 should be re-considered by the Appeal Panel or the Tribunal, and the reasons why; 2. if the matters the subject of Ground 4.2 are to be considered by the Appeal Panel, that is that the Appeal Panel calculate the cost of Pool 1, on a quantum meruit basis, submissions: 1. quantifying the amount of the quantum meruit and the reasons in support. These submissions must include references to the evidence before the Tribunal; and 2. proposed final orders of the Appeal Panel in substitution for the decision of the Tribunal of 29 March 2023.
We propose to determine these matters "on the papers" and without hearing, pursuant to s 50(2) of the NCAT Act. If either party opposes that course, they should address the issue in their submissions.

At a glance

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Judgment (35 paragraphs)

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Legislation Cited (1)

Cases Cited (27)

Cited By (3)