Fantastic Cement Rendering Pty Ltd v Virtuoso Construction Services Pty Ltd

The Application to Tender New Evidence

1. The appellant sought to tender an affidavit of Dr John Cunniffe affirmed on 15 June 2022. Dr Cunniffe was a building expert who had given evidence on behalf of the appellant at the hearing and had inspected the disputed works prior to giving that evidence.
2. One of the disputed facts in the proceedings was whether the appellant had completed all of the work contracted for, namely, whether the appellant had applied all coats of the contracted for Rockcote colour render system to certain walls.
3. The Rockcote system comprises a five-stage process in which named products are applied to a wall, one after the other (each being referred to as an "application"). Keycote is applied first, followed by Quick Render PM100 and mesh, then Texprime followed by Sandcote and Clearcote (JAD 73). The appellant's case was that the Clearcote could be mixed with the Sandcote and applied at the same time, resulting in four applications rather than five.
4. In short, the appellant's case was that it had completed the work except for 20 m2 of wall area (JAD 843 [13]), and sought full payment of certain identified invoices issued in relation to that work and which had not been paid at all, or had only been partly paid. The appellant's case was that the full Rockcote system had been applied to all walls with the exception of the 20 m2.
5. The respondent's case was that in some areas (and totalling much more than 20 m2) only three applications had been applied rather than the full five (or four if the last two applications were combined).
6. This dispute of fact was reflected in the pleadings (there were statements of claim, defences and cross-claims as the proceedings were originally commenced in the Local Court before being transferred to the Tribunal).
7. This dispute of fact was also reflected in the parties' evidence. Mr Ayoub gave evidence on behalf of the respondent that in certain areas the five-layer Rockcote system was not applied, with only Keycote, mesh and Sandcote colour having been applied. Mr Ayoub said that he had subsequently had an entity trading as Ozi Render and Construction complete the work.
8. Mr Doueihi gave evidence on behalf of the appellant that "all the rendering works" were completed at the end of September 2018 (JAD 250 [63]).
9. Therefore, on both the pleadings and the evidence there was a clear dispute of fact. That disputed fact was resolved in favour of the respondent. The Tribunal said at [139]: "To the extent that invoices 17, 19, 28, 30, 32, 34, 35, 37 and 38 relate to the application of the Rockcote Coloured Render System I am not satisfied that the contractor has established that it completed the five steps. The evidence of Mr Ayoub in [56]-[58] of the Ayoub statement as to the incomplete rendering works carried out by the contractor was not challenged in cross-examination."
10. The nub of the new evidence sought to be tendered was Dr Cunniffe's opinion that: "From my recent inspection I can say that Sandcote has not been used as a finish on the internal lobbies and hallways of the building at Marrickville. If it has been, it's application is by 'a hawk and trowel' and by use of "a plastic float/trowel" as stated in the manufacturer's specification."
11. In explaining the significance of that new evidence the appellant said in its written submissions of 16 June 2022: "6. Given the representations made by the respondent's Director in his sworn evidence and the contemporaneous invoices of Ozi Render, accepted by the appellant as to the finish used, the evidence now adduced was not evidence reasonably available to the appellant in a relatively small quantum building application by a subcontractor. 7. The respondent has misrepresented to the Tribunal below, a fundamental issue which is the subject of appeal. 8. The invoices of Ozi Render suggesting the use of internal 'Sandcote' are unreliable, particularly where no evidence was called below from this company. 9. The new evidence supports the theory of the appellant that Ozi Render did no substantial rendering work on the Marrickville building and that its banking records and payments relate to a 'foreign order' to render the two storey building of Stephen Ayoub at (address deleted), a theory rejected by the Member in refusing to admit the expert report of Dr John Cunniffe to advance that theory."
12. In its written submissions of 17 June 2022, the appellant submitted: "5. Given the Ozi Render invoice showing the use of Sandcote, the email 25 September 2018 and the sworn evidence of Mr Ayoub over successive hearing days that Sandcote had been used, Fantastic had no reason to doubt the evidence that a final coat of Sandcote had been internally applied and that there was no need for a physical inspection of the Marrickville building to confirm what appeared to be true on the basis of that evidence."
13. As we understand the submission, this new evidence seems to raise a credit point rather than the evidence being directed to a fact in issue. That is because the new evidence would contradict the appellant's evidence that it had applied Sandcote to all of the walls (other than for 20 m2).
14. A party is entitled to seek leave to appeal in the Tribunal on the basis that it may have suffered a substantial miscarriage of justice because significant new evidence is now available that was not reasonably available to it at the time of the hearing at first instance: Sch 4, cl 12(1)(c) of the Civil and Administrative Tribunal Act 2013 (NSW) (the "NCAT Act").
15. "Not reasonably available" in cl 12(1)(c) means that, judged objectively, the evidence in question was unavailable because no person could have reasonably obtained the evidence - Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 at [23].
16. We do not accept the appellant's submissions for five reasons.
17. First, the appellant did not accept the "representations" and invoices, nor that the appellant "had no reason to doubt the evidence that a final coat of Sandcote had been internally applied". The question whether the rendering work in relation to certain walls (and invoices) was completed was clearly in dispute on the appellant's pleadings and its evidence in chief.
18. Second, the fact that this dispute existed and was known to the appellant was reflected in the appellant's closing submissions to the Tribunal in which the appellant submitted that all rendering work had been completed except for 20 m2 (JAD 843 [13]).
19. Third, Dr Cunniffe inspected the rendering works prior to the hearing before the Tribunal. He said in his report which was tendered to the Tribunal that the "Sandcote finish was evident on all rendering areas available to me at the time of inspection" (JAD 72 [4.04]). Those areas included the common areas which included the internal lobby and stairwell with which some of the disputed invoices were concerned.
20. For that reason we do not accept the appellant's submission that "there was no need for a physical inspection of the Marrickville building to confirm what appeared to be true on the basis of" Mr Ayoub's evidence and the Ozi Rendering invoices. There was a need (because there was a dispute fact of which the appellant was aware), and an inspection had in fact taken place by the appellant's expert and which confirmed that Sandcote had been applied. Thus, contrary to the appellant's submission, no opportunity was lost to the appellant to inspect the work before the hearing.
21. Fourth, the Tribunal dismissed the respondent's claim for damages against the appellant for its failure to complete the rendering work for reasons we need not repeat (but substantially revolved around an absence of evidence). That claim included the charges made by Ozi Rendering. Thus, the true issue was not what work Ozi Rendering did (which was the focus of the appellant's submission on the appeal) but what work was not done by the appellant. Dr Cunniffe's new evidence did not address that true issue.
22. In that regard the Tribunal obviously had in mind the rule in Browne v Dunne (1894) 6 R 67 (HL) when it said what it did at [139] of its reasons. There are a number of possible sanctions for breach of that rule, and in this case we infer from the terms of [139] of the Tribunal's reasons that the Tribunal concluded it would have been unfair to reject Mr Ayoub's evidence on which there had been no cross-examination. The tender of new evidence on that topic on this appeal would heighten the degree of unfairness arising from the failure to cross-examine Mr Ayoub since there would be no opportunity for Mr Ayoub to respond to that new evidence and to cross-examine Dr Cunniffe on his apparently contradictory evidence (between that at JAD 72 [4.04] and the new evidence).
23. Fifth, to fall with Sch 4, cl 12(1)(c) of the NCAT Act the evidence has to be "significant". We do not regard this evidence as significant. That is because (in the passage quoted above) Dr Cunniffe is equivocal whether Sandcote was applied. He first says it was not, but then says that if it "has" been applied then: "… it's (sic) application is by 'a hawk and trowel' and by use of 'a plastic float/trowel' as stated in the manufacturer's specification."
24. The appellant's solicitor accepted, and properly so with respect, that this evidence was equivocal. He submitted that we should read the word "has" as "had". If we did so, the appellant submitted that this was simply an opinion as to how to apply Sandcote. There is no warrant for re-drafting the evidence in that way in the absence of some compelling evidence that that change reflected Dr Cunniffe's intended meaning when drafting the affidavit.
25. We reject the application to tender the new evidence.

Whether the internal render rate was $85 per m2 or $65 per m2

1. There was a dispute between the parties whether the rate payable for the work was $85 plus GST for external walls and $65 plus GST for internal walls, or $85 plus GST for external and internal walls. For ease of reading, we shall not repeat the words "plus GST" hereafter unless necessary.
2. The parties gave evidence on the issue, but neither party made any submissions on this issue at the hearing.
3. The Tribunal applied the legal principles referred to by Slattery J in Curnow Consulting Pty Limited v JPD Media and Design Pty Ltd t/a Durie Design [2017] NSWSC 1171 at [235]-[237] in resolving the conflict between the witnesses about the conversation in which discussion of the rate to be paid was discussed.
4. Having done so, the Tribunal said at [92]: "Having regard to the principles in Campbell at [79] and in Curnow at [235]-[237], I am satisfied that the building contract included a term that the rate payable by the builder to the contractor for the application of Rockcote acrylic render was $85.00 per m2 plus GST for external walls and $65.00 per m2 plus GST for internal walls for the following reasons: (1) Mr Ayoub's version of the conversation at which the rate for external and internal walls was agreed was not challenged in cross-examination; (2) invoice 35, which was prepared by the contractor, included one m2 measurement at $65.00 for the garbage room which was clearly an internal wall. This charge, which was unexplained, is consistent with the builder's version."
5. The question of law the appellant said arose was the proper application of the passage from Fox v Percy quoted above at [7].
6. The appellant submitted that, contrary to the Tribunal's finding at [92(1)], Mr Ayoub was cross-examined on his evidence as to rate. However, the passages in the transcript the appellant took us to did not support that submission.
7. The appellant submitted that invoices other than invoice 35 (expressly referred to by the Tribunal at [92(2)]), were relevant to the issue, were not referred to in the Tribunal's reasoning and supported the appellant's case. The appellant referred us to invoices 31, 34 and 36 which, the appellant submitted, showed that $85 per m2 was paid for rendering various internal walls without complaint and that this was contemporaneous corroboration of the appellant's version that that was the agreed rate for internal walls (and not $65 per m2).
8. We do not accept the submission that the Tribunal erred for the following reasons.
9. First, the appellant made no submissions on this issue at the hearing.
10. Second, there was no cross-examination by the appellant of Mr Ayoub on these invoices to establish that Mr Ayoub knew that $85 per m2 had been charged in invoices 31, 34 and 36 for internal areas.
11. Third, whilst invoice 31 does contain handwriting showing a rate of $80 per m2 (not $85 per m2) it also has handwriting stating that a rate of $65 per m2 was charged (or chargeable) for the same items and for which a total was given. It is evident that the two handwritings are different, but we were not taken to any evidence which identified whose handwriting was on the page. Be that as it may, on the appellant's case the higher rate shown is not the $85 per m2 contended for.
12. Invoice 34 contains five items charged at $85 per m2 but another four charged at $65 per m2. This does not seem to support the appellant's submission, and neither does the fact the bank record shows $13,345.75 was paid and not the total shown on the invoice which was $14,446.30.
13. Invoice 36 seems to indicate a rate of $85 per m2 for "bottom lobby ground floor", but we do not know whether that was for the internal or external walls of the lobby.
14. Fourth, the Tribunal asked the appellant's solicitor about invoice 35 which included one m2 measurement at $65. The solicitor responded that he would need to take instructions on that, but no instructions were subsequently provided to the Tribunal. Thus, the issue of invoices containing $65 per m2 rates (for internal areas) was drawn to the appellant solicitor's attention, but none of the documents now referred to on the appeal were drawn to the Tribunal's attention.
15. The appellant also drew our attention to an email from the respondent to the appellant dated 25 September 2018 in which, the appellant submitted, the respondent made statements corroborative of a rate of $85 per m2 for internal surfaces. But the respondent's director was not cross-examined on this email and the email was not the subject of submissions to the Tribunal.
16. Ultimately, the invoices now referred to are either equivocal or are supportive of the respondent's case, and none were cross-examined upon. In those circumstances the application of the rule in Browne v Dunn was available and we infer the Tribunal applied that rule (as seems clear from the [92(1)] of the Tribunal's reasons). Therefore, it cannot be said that the Tribunal erred in arriving at its finding of fact that that rate agreed for internal walls was $65 per m2.

Whether only 3 coats of render was applied internally

1. No question of law is identified in the appellant's submissions in relation to this topic, nor is any other ground of appeal identified for which leave to appeal might be granted under Sch 4 cl 12 of the NCAT Act.
2. The closest the appellant comes to a ground of appeal is the submission that "there is no cogent evidence from anyone which can be relied upon to say that only 3 coats of render were applied" but that is incorrect. It is in the written evidence of Mr Ayoub expressly referred to by the Tribunal at [139] of its reasons and which is found at JAD 275 [57].

Quantum Meruit

1. No question of law is identified in the appellant's submissions in relation to this topic, nor is any other ground of appeal identified for which leave to appeal might be granted under Sch 4 cl 12 of the NCAT Act. Be that as it may, we note the following.
2. Two sections of the Tribunal's reasons are identified, those dealing with the appellant's claims for invoices 35 and 37.
3. Each of those invoices claimed for completing the Rockcote system in different areas, but those were areas in which the Tribunal found (by accepting the evidence of Mr Ayoub at [56]-[58] of his statement at JAD 275) that only three of the five applications had been applied. The appellant had not been paid for the three coats applied and the Tribunal, doing the best it could on the evidence it had, applied a rate of $45 m2 to the areas concerned and awarded the appellant the total of that calculation.
4. The appellant submitted that Dr Cunniffe's opinion as to the value of that work should have been accepted. The appellant submitted: "However, it is submitted as a mathematical possibility to use Dr Cunniffe's report (rather than the invoices) to determine what would be an adjusted quantum meruit value for his report in the manner identified in Annexure 'B'".
5. No submissions were made as to why it was erroneous for the Tribunal to calculate the amount which should be paid in the way it did, or why it was erroneous not to use Dr Cunniffe's report.
6. In the absence of any assistance as to what possible error the Tribunal was alleged to have fallen into, we reject this submission.
7. In addition we note that the Tribunal applied the principle that contract rates are a ceiling upon reasonable remuneration where a builder's non-contractual quantum meruit claim arises from termination of a contract through the fault of the owner (at [95]) and which the appellant conceded should be applied in this case (at [111]). Having made that concession, the appellant is not entitled to resile from it on appeal.

The Cross-claim

1. No question of law is identified in the appellant's submissions in relation to this topic, nor is any other ground of appeal identified for which leave to appeal might be granted under Sch 4 cl 12 of the NCAT Act. Be that as it may, we note the following.
2. The nub of the appellant's submission was: "3.7 Where claims concerning defective rendering (absence of Sandcote) were dismissed for the Ozi Render invoices (no witnesses called), it is submitted that the Member erred in accepting Mr Ayoub as a truthful witness concerning an alleged internal rate for rendering at $65.00 per m2. He failed to establish a cross-claim for work by Ozi Render and obviously a Jones v Dunkel inference was available that calling a witness from Ozi Render would not help Virtuoso's case. 3.8 Where it is impossible to approve Virtuoso's rendering claims of $49,907.99, it is submitted as impossible to discount the invoiced claims of Fantastic, at all, for the purposes of a quantum meruit."
3. We reject those submissions.
4. A rejection of one claim because of an absence of proof does not mean that a witness should not be believed on the evidence that the witness does give. In any event, the Tribunal did not regard Mr Ayoub as a witness of truth (see [7] above).
5. Rejecting the respondent's claims for damages for the cost of completing work not completed by the appellant did not overcome the problem for the appellant that it had failed to persuade the Tribunal (on its own evidence) that it had completed the five steps involved in the Rockcote system and had not cross-examined Mr Ayoub on his evidence that only three steps had been completed (in the relevant areas).

Estoppel

1. No question of law is identified in the appellant's submissions in relation to this topic, nor is any other ground of appeal identified for which leave to appeal might be granted under Sch 4 cl 12 of the NCAT Act. Be that as it may, we note the following.
2. Before the Tribunal the appellant sought a set off against the respondent for $18,870.00 in respect of the value of rendering work not charged for. The appellant submitted that an equitable estoppel arose because it had provided work "free of charge" in the expectation that its invoices would be paid in full, when this was not the case. Accordingly, it submitted that it had suffered detriment and the respondent, in conscience, must at least reduce its cross-claim by an amount equivalent to the sum of $18,870.00.
3. The Tribunal accepted it had jurisdiction to decide that claim, but dismissed it for the following reasons at [211]: "I am not satisfied that the contractor has established the defence of set off arising from an equitable estoppel. There was no evidence of any of the five elements of equitable promissory estoppel identified in Equititrust. In particular, as held in Caringbah Investments detrimental reliance is not to be presumed."
4. The appellant now submits that the Tribunal dismissed the estoppel claim on the basis that "detrimental reliance is not to be presumed, but therefore pleaded".
5. That submission is incorrect as the passage from the Tribunal's reasons quoted above establishes. The Tribunal said that reliance was not to be presumed as a matter of fact and said nothing about pleadings.

Joinder of Parties

1. The respondent was named below as "The Trustee for Virtuoso Construction Services Pty Ltd". The appellant said the proper name of the company is and was "Virtuoso Construction Services Pty Ltd".
2. The respondent agrees, as do we. We shall therefore amend the name of the respondent to "Virtuoso Construction Services Pty Ltd".

Invoices 17, 26, 28 and 32

1. These four subject matters can be dealt with together.
2. No question of law is identified in the appellant's submissions in relation to this topic, nor is any other ground of appeal identified for which leave to appeal might be granted under Sch 4 cl 12 of the NCAT Act.
3. Further, the appellant makes no attempt to grapple with the Tribunal's reasons in relation to each invoice, nor to make any attempt to identify any error in the Tribunal's reasons.
4. In the absence of any attempt to identify any error in the reasons the Tribunal gave, in circumstances where the appellant was legally represented both before the Tribunal and on this appeal, we dismiss the appeal in relation to these invoices. It is one thing to examine the reasons of a Tribunal for any obvious error when parties are not legally trained or represented for obvious reasons, it is another thing entirely to do so when the party is legally represented because, in a case such as the present, one could not avoid at least the perception of it being a partisan analysis.

Costs of the Tribunal Hearing

1. At first instance the Tribunal indicated its preliminary view that in light of the partial success of each of the parties there should be no order as to costs of each of the two proceedings (at [212]).
2. Nevertheless, the Tribunal granted leave to both parties to seek a different order if either party so desired.
3. The appellant made no such application.
4. The appellant now asks us to make an award of costs in its favour for the first instance proceedings.
5. We do not have the power to do so. In LMA Contractors Limited v Changizi [2017] NSWCATAP 145 at [19] the Appeal Panel said: "We are of the view that section 81 of the Act does not allow us to make a costs determination in relation to the proceedings before the Tribunal Member at first instance, in circumstances where there was no application for an order for the costs of those proceedings. The Tribunal at first instance was not able to consider the question of costs if there was no application and therefore we as the Appeal Panel are not able to do so either."

Costs of the Appeal

1. Both parties were directed by the Appeal Panel on 2 March 2022 to include any submissions on costs of the appeal at the same time as their submissions in relation to the appeal.
2. Neither party did so.
3. It appears to us that the amount claimed or in dispute on the appeal is greater than $30,000, and thus there is no need for a party to establish special circumstances under s 60 of the NCAT Act in order to be awarded costs.
4. It also appears to us, unassisted by the parties, that costs should follow the event, the appellant being wholly unsuccessful on the appeal.
5. However, the parties, and most particularly the appellant, have not been heard on the costs of the appeal and there may be matters which would affect the exercise of that discretion of which we are unaware including whether the amount claimed or in dispute was greater than $30,000.
6. In those circumstances we shall make orders to allow the parties the opportunity to seek a different order to the one foreshadowed if they so wish. Should we not hear from the parties in the time allowed in our orders we shall enter an order that the appellant pay the respondent's costs of the appeal on the ordinary basis as agreed or assessed.

Orders

1. We make the following orders: 1. The name of the respondent is amended to "Virtuoso Construction Services Pty Ltd". 2. Appeal dismissed. 3. If any party desires to make an application for costs of the appeal different to the order foreshadowed in these reasons then: 1. the applicant for a different costs order is to lodge with the Appeal Panel and serve on the respondent to the costs application any written submissions of no more than five pages on or before 14 days from the date of these reasons; 2. the respondent to any costs application is to lodge with the Appeal Panel and serve on the applicant for costs any written submissions of no more than five pages on or before 28 days from the date of these reasons; 3. any reply submissions limited to three pages are to be lodged with the Appeal Panel and served on the other party within 35 days of the date of these reasons; 4. the parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs application, and if they do not consent, submissions of no more than one additional page as to why an oral hearing should be conducted rather than the application being determined on the papers.

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: 19 July 2022