FAI General Insurance Company Limited v Brookman & Anor

THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION

30091/99 - FAI GENERAL INSURANCE COMPANY LIMITED v BROOKMAN & ANOR

1 HIS HONOUR: This is an appeal from the Fair Trading Tribunal (hereinafter referred to as the Tribunal). The proceedings before the Tribunal involved a dispute arising out of a building contract between a home owner (who is the first defendant here) and the alleged insurer of a builder who had carried out work at the first defendant's home. 2 The issue before the Tribunal was whether the plaintiff here insured the builder. The resolution of that issue involved a determination as to who were the parties to the building contract. 3 The contract in question was a standard form contract produced by the Department of Fair Trading. Pursuant to s 7 of the Home Building Act 1989 the contract had to be in writing, dated and signed on behalf of the parties to it and by s 2 must contain the following:- "(2) A contract must contain: (a) the names of the parties, including the name of the holder of the licence shown on the licence, and (b) the number of the licence, and (c) a sufficient description of the work to which the contract relates, and (d) any plans and specifications for the work, and (e) the contract price if known, and (f) any statutory warranties applicable to the work." 4 Section 92 of that Act requires contract work involved to be insured. 5 Section 94 of that Act prohibits a person from obtaining damages if they enter into a contract in contravention of s 92. 6 The background to the dispute was that the first defendant on 9 October 1998 executed a standard form contract for work on her home at 29 Winchester Road, Clovelly. Gary Cohen, who was a licensed builder, having a licence contractor number 11288 also had control of a company known as Action United Pty Ltd, which was a company engaged in the building industry and holding a licence number 92491C. 7 The first page of the contract describes the parties as follows: "Owner Name(s) JUDY BROOKMAN Address 29 Winchester Rd Clovelly Postcode 2031 Address where work is to be done (site) 29 Winchester Road Clovelly Postcode 2031

Contractor Name (as shown on licence) Action United Pty Ltd Australian Company Number (if appropriate) 082 037 278 Address (as shown on licence) 50 Carrington Road Randwick Postcode 2031 Licence no. 92491C Expiry date 13/05/99 Category of work shown on licence Builder." 8 The attestation provision of the contract was in the following form: "Signed by the owner Where the owner is a company or partnership or the contract is to be signed by an authorised agent of the owner, the capacity of the person signing the contract, eg director, must be inserted. Signature Judy Brookman Name (print) JUDY BROOKMAN …………… Signed by the contractor Where the contractor is a company or partnership or the contract is to be signed by an authorised agent of the contractor, the capacity of the person signing the contract, eg. Director, must be inserted. Signature Gary Cohen Name (print) GARY COHEN Capacity (print) Builder." 9 Both signatures were witnessed by the same person. 10 Prior to the execution of the contract Mr Cohen had handed Ms Brookman an insurance certificate entitled:

"HOME BUILDING ACT 1989 - Section 92(2) CERTIFICATE IN RESPECT OF INSURANCE CONTRACT WORK" 11 The insurance certificate stated on its face: "A contract of insurance complying with section 92 of the Home Building Act 1989 has been issued by FAI General Insurance Co Ltd (ACN 000 327 855)

In respect of: Gary Cohen 54a Carrington Road, Randwick, NSW, 2031 Policy No: 1804738240." 12 It was common ground before the Tribunal that Action United Pty Ltd was uninsured. 13 In the event, the Tribunal held that Gary Cohen, personally, was in fact the contractor and not Action United Pty Ltd and thus held that Ms Brookman was entitled to be indemnified by the plaintiff under the contract of insurance between the plaintiff and Cohen personally. It is that finding which is the subject of the appeal. 14 Pursuant to s 61 of the Fair Trading Tribunal Act 1998 the plaintiff's right of appeal to this Court is limited to questions of law. 15 The defendant's contention was that the findings of the Tribunal challenged by the plaintiff are in fact findings of fact and that this appeal must fail. 16 The plaintiff's contention is that the manner in which the Tribunal approached the task of ascertaining who were the parties to the subject contract was wrong and thus constituted an error of law. 17 In essence, the Tribunal found that by using the term "builder" in connection with his name and signature, Cohen did not evince an intention to bind the company. 18 In so determining the Tribunal considered the matrix of facts in the case, including the proffering of the certificate of insurance by Cohen prior to the contract being executed. 19 In determining the matter the Tribunal relied, inter alia, upon what had fallen from the Court of Appeal in Scottish Amicable Life Assurance Society v Reg Austin Insurance Pty Ltd & Ors, (1985) 9 ACLR 909 and a decision of Giles J in Clark Equipment Credit of Australia Limited v Kiyose Holdings Pty Limited (1989) 21 NSWLR 160. 20 In Scottish Amicable Life Assurance McHugh JA at 923 observed: "The formation of a contract does not depend upon the actual intention of the parties. A contract exists because the law attaches rights and obligations to the external conduct of the parties, one at least of whom has expressly or impliedly made a promise. … The present case, therefore, depends on what the parties did and not on what they intended to do when they signed. … And what they did depends on the construction to be placed on the documents which they signed. A commercial document, however, must be construed in its commercial setting - in accordance with the surrounding circumstances known to the parties. 21 His Honour concluded: "In the end the decision must depend upon the terms of the document including the qualification attaching to the signature together with the surrounding circumstances. This is a question of fact, not law." 22 Giles J in Clark Equipment Credit of Australia Limited at 174 said: "I conclude that the proper approach is to inquire whether there is to be found an intention that the signatory be personally bound to the contract … meaning thereby not a subjective intention but an intention to be found objectively, notwithstanding a qualification attached to the signature, in the light of the surrounding circumstances to the extent to which evidence thereof is permissible." 23 In Australian Gas Light Company v the Valuer-General 57 WN 53 Jordan CJ analysed the rules which apply in appeals where the appellate court has jurisdiction to determine only questions of law. His analysis has not been overturned in the sixty years which have since passed. 24 Relevantly he found that a finding of fact by a tribunal of fact cannot be disturbed if the facts inferred by the tribunal upon which the finding is based are capable of supporting its finding and there is evidence capable of supporting its inferences. Furthermore, that such a finding can be disturbed only: (a) if there is no evidence to support those inferences, or (b) if the facts inferred by it and supported by evidence are incapable of justifying the finding of fact based upon those inferences. 25 In this case the Tribunal squarely stated in its reasons that the threshold question it had to determine was: "Who were the parties to the building contract dated 9 October 1998?" 26 In its reasons the Tribunal clearly appreciated the tension between the description of parties on the first page of the contract and the manner in which it was attested on behalf of the contractor by Mr Cohen. 27 The Tribunal properly took into account the contents of the certificate of insurance which had been handed to Ms Brookman prior to the execution of the contract. 28 The appellant contended that by concentrating its examination upon the form of attestation the Tribunal erred in law. 29 In my view the Tribunal had evidence before it which could support its findings of fact. Furthermore I am of the view that it cannot be said that the facts found and the supporting evidence are incapable of justifying the findings of fact made. 30 Accordingly, I am of the view that the matter before this Court involves a matter of fact and not a matter of law, thus the appeal fails and there will be a judgment for the defendants plus costs.

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