Fantastic Cement Rendering Pty Ltd v Virtuoso Construction Services Pty Ltd

Background

The proceedings arise out of an oral building contract entered into between the parties on or about 12 December 2017 in respect of rendering work the appellant agreed to provide to the respondent at a building at Marrickville, NSW.
The nature of this appeal is such that we need not set out here the background to the disputes between the parties and the appeal, it being sufficient to recite any relevant background facts when we deal with each of the eleven subject matters to which we were taken by the appellant together with the application to tender new evidence.
We should mention here that a director of each company was the principal witness for each of the parties, they gave irreconcilable evidence in relation to a number of central facts and the Tribunal had "significant reservations about the reliability and credibility" of both witnesses. The Tribunal, therefore, correctly with respect, applied the approach recommended by Sackar J in Campbell v Campbell [2015] NSWSC 784 at [73]-[79], which, with no disrespect to his Honour, reflects the plurality's injunction in Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [31], that: "Considerations such as these have encouraged judges, both at trial and on appeal, to limit their reliance on the appearances of witnesses and to reason to their conclusions, as far as possible, on the basis of contemporary materials, objectively established facts and the apparent logic of events. This does not eliminate the established principles about witness credibility; but it tends to reduce the occasions where those principles are seen as critical."
Sackar J added that witnesses' testimonies could be tested against and judged in light of the contemporary materials, objectively established facts and the apparent logic of events, and their motives.
We shall firstly determine the application to tender new evidence. We shall then determine the eleven subject matters raised by the appellant which were (as expressed by the appellant): 1. Whether the internal render rate was $85 per m2 or $65 per m2. 2. Whether only 3 coats of render was applied internally. 3. Quantum meruit. 4. The cross-claim. 5. Estoppel. 6. Joinder of parties. 7. Invoice 17. 8. Invoice 26. 9. Invoice 28. 10. Invoice 32. 11. Costs of the first instance proceedings.

[3]

The Application to Tender New Evidence

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.
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.
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.
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.
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).
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).
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.
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]).
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."
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."
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."
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."
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).
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").
"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].
We do not accept the appellant's submissions for five reasons.
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.
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]).
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.
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.
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.
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).
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."
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.
We reject the application to tender the new evidence.

[4]

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

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.
The parties gave evidence on the issue, but neither party made any submissions on this issue at the hearing.
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.
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."
The question of law the appellant said arose was the proper application of the passage from Fox v Percy quoted above at [7].
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.
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).
We do not accept the submission that the Tribunal erred for the following reasons.
First, the appellant made no submissions on this issue at the hearing.
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.
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.
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.
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.
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.
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.
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.

[6]

Quantum Meruit

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.
Two sections of the Tribunal's reasons are identified, those dealing with the appellant's claims for invoices 35 and 37.
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.
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'".
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.
In the absence of any assistance as to what possible error the Tribunal was alleged to have fallen into, we reject this submission.
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.

Fantastic Cement Rendering Pty Ltd v Virtuoso Construction Services Pty Ltd - [2022] NSWCATAP 237 - NSWCATAP 2022 case summary — Zoe

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Judgment (14 paragraphs)

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Legislation Cited (1)

Cases Cited (6)