Forbes v P T White Builder P/L

LOWER COURT Local Court JURISDICTION : LOWER COURT 116/00 FILE NUMBER(S) : LOWER COURT Mr Coombes LCM JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

10130/2004 - GARY FORBES & LUELLA FORBES v P T WHITE BUILDER PTY LIMITED

JUDGMENT (Appeal decision of LCM - adequacy of reasons) 1 MASTER: By summons filed 18 January 2004 the plaintiffs seek: firstly an order pursuant to Part 51B f 6(2)(a) of the Supreme Court Rules 1970 (NSW) (SCR); and secondly, an order that the verdict and judgment for the defendant (the plaintiff in the court below) of Mr Coombes LCM given in Sutherland Local Court on 1 December 2003 be set aside and in lieu thereof, there be a verdict for the plaintiffs (the defendants in the court below) with costs. The plaintiffs relied on three affidavits of Elizabeth Ramsay 25 May 2004 and 7 June 2004. As the plaintiffs in these proceedings (Gary and Luella Forbes) were the defendants in the Local Court and P T White Builder Pty Limited (White), the defendant, was the plaintiff in the Local Court, for convenience I shall refer to the parties by name. 2 At the outset, it may be helpful to make some brief comments concerning the remedy pursued by the plaintiff. Section 69(2) of the Local Courts (Civil Claims) Act 1970 (NSW) permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this Court. The onus lies on the plaintiff to demonstrate that there has been an error of law. What is a question of law (as opposed to a question of fact) was considered, inter alia, in Allen v Kerr & Anor (1995) Aust Torts Reports 81-354 and Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156 and two more recent cases, namely Carr v Neill [1999] NSWSC 1263 and R L & D Investments Pty Ltd v Bisby [2002] NSWSC 1082. Section 69(4) of the Act provides that the court may determine an appeal by either (a) setting the judgment or order aside or (b) by varying the terms of the judgment or order or (c) by setting the judgment or order aside and remitting the matter for determination in accordance with the court's directions or (d) by dismissing the appeal.

Grounds of appeal 3 The plaintiffs appeal from the whole of the decision of Mr Coombes LCM dated 1 December 2003 and seek that judgment be entered for the defendant on its statement of liquidated claim. The plaintiffs' cross-claim be dismissed and the plaintiff pay the defendant's costs of the proceedings. The grounds of appeal are firstly, that the Magistrate, in breach of his duty to do so, failed to give sufficient reasons for his decision in that he (a) failed to take into account or consider in his reasons the evidence of the plaintiffs; (b) failed to identify in his reasons, the constituent facts on which he relied for his reasoning; (c) failed to take into account or consider the evidence of the plaintiffs of their payments for goods and services claimed for by the defendant; and (d) failed to take into account or consider the facts that the defendant's claim under the building contract was not made with a supporting approval by the superintendent architect. Secondly, the Magistrate failed to take into account the plaintiffs' evidence of defects in the works carried out by the defendant including: (a) the plaintiffs' photographic and documentary evidence of the defects in the works; (b) the evidence of some of the defendant's witnesses of defects in some of the works performed by it; and (c) the expert opinion and lay evidence of defects in the works carried out by the defendant. Thirdly, the Magistrate had regard to the credit of the plaintiffs and the respondent without taking into account the plaintiffs' objective evidence of the defendant's breach of contract including the photographic evidence of the defects of the work carried out by the defendant and the documentary evidence of the repairs carried out by or on behalf of the plaintiff. Fourthly, the Magistrate had regard to the credit of the plaintiffs and Mr White of the defendant without taking into account the plaintiffs' objective evidence as to the costs incurred by them in rectifying the defects of the works performed by the defendant when he dismissed the plaintiffs' cross claim.

Extension of time to appeal 4 On 1 December 2003, the Magistrate gave an ex tempore judgment. On 18 January 2004 the summons was filed. The appeal was filed about three weeks out of time. The plaintiffs seek leave to extend the time to appeal on the grounds that Gary Forbes suffers from Non-Hodgkin's lymphoma and is being treated with chemotherapy and radiation. He continues to suffer from Basal Cell carcinoma at multiple sites, which include a malignant melanoma on his face. His ongoing health problems have affected Gary Forbes's ability to properly consider his position in relation to this matter. The defendant has not demonstrated that it has suffered prejudice by this delay. Taking the above factors into account an extension of time to lodge this appeal is granted.

The Local Court proceedings 5 Essentially the plaintiffs' appeal concerns the adequacy of the Magistrate's reasons. I shall refer to the framework of the proceedings as set out in the pleadings. On 25 January 2000, White, a building company, claimed $18,053.00 and interest being for non-payment by Forbes for work done by White for the defendant at the defendant's request. The work performed comprised of alterations and additions at the Forbes's residential premises (S/C). Liability was denied (defence, 2 March 2000). The Forbes's (Forbes) alleged that White wrongly cancelled the contract and withdrew his services on 2 October 1999 and that the faulty workmanship and delay meant that no money was owing by White. This was set out in Harrison's letter dated 13 February 2000. Forbes cross-claimed against White alleging breach of contract for failure to complete, unsatisfactory work, which required rectification, and failure to carry out certain work. White sought damages (which were specified) in the sum of $40,000.00 (XC 2 March 2000). By defence to the cross-claim, White alleged that Forbes demanded the return of keys, a demand with which White complied. As a result, White was then unable to access the site. Other matters were raised in the cross claim which need not be detailed here. 6 Evidence was tendered at the hearing by way of statements and affidavits on behalf of all parties. Expert reports and statements on behalf of Forbes and White, a statement of Mr Ring for White dated 11 November 2002 and a report by Mr K E Pearson-Smith made on 22 December 2000 for Forbes, and Scott schedules were relied upon by both parties, which arose out of the Forbes cross-claim. Photographs tendered by Forbes showed defects in the works. Documents were tendered as to the expenditure incurred by Forbes for the rectification of the works. Forbes, White and Mr Pearson-Smith were all cross-examined. The hearing took 3½ days. 7 I shall reproduce the whole Magistrate's short reasons for his decision. They are: "The Court has evidence both from the plaintiff and from the defendant and there have been experts on both sides who have supported the arguments of both sides. The Court has to then consider where the best evidence lies to make any determination in this matter which undoubtedly ought to have been determined in accordance with the contract under the rules for mediation and arbitration that are implied, not merely implied but expressed in the contract. It appears as though certainly the defendant had absolutely no intention of abiding by that part of the contract and the plaintiff wasn't much better. As to the two parties their evidence in the witness box was less than impressive on both sides and it was really just a question in terms of assessing their evidence which of them was the more believable considering that there were significant deficiencies in the evidence of both of them. It's the view of this Court that the best evidence and indeed the evidence of the late Mr Harrison, and notwithstanding the claims made by the defendant about the adequacy of the work, his supervising architect or administrating architect if that's the term available, must be given appropriate weight in all circumstances because it was ultimately his responsibility to decide whether or not claims made by the builder should be met and one has to assume that he took into account everything that had been done and given that if you take the experts reports on both sides they do not assist in coming to a conclusion about that in the way that Mr Harrison's certification does. I think a correct reading of the documents, and in particular the 13 February document from Mr Harrison, are sufficient for me to FIND FOR THE PLAINTIFF ON THE CLAIM AND TO FIND FOR THE DEFENDANT ON THE CROSS-CLAIM." 8 After these reasons were delivered ex tempore, the Forbes' counsel sought further clarification. The Magistrate then articulated that there was a verdict for the cross-defendant on the cross-claim. The Magistrate then asked whether the parties need any further …… (transcript does not record what) but it would most likely be reasons for the decision on the cross-claim. White's counsel replied "No" (t 24.15). Forbes' barrister then asked what the quantum of the claim was for the plaintiff in terms of the amount of the statement of liquidated claim because reference in the reasons was made to the Harrison certification and there was not one for $18,053.00 (being the amount claimed in the statement of claim). The Magistrate replied "When you take into account the various matters that are raised in the documents you get very close to that figure". Mr Gye then asked for a certain sum and the Magistrate stated that "I'm making the sum certain $18,053.00".

Duty to give sufficient reasons 9 The duty of a judicial officer to give reasons for his or her decision is uncontroversial (see Pettitt v Dunkley (1971) 1 NSWLR 376; Housing Commission (NSW) v Tatmar Pastoral Co Pty Ltd (1983) 3 NSWLR 378 at 385-6 per Mahoney JA; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247). While a judgment need not be a detailed exposition of the minutiae of every aspect of evidence adduced in a particular case, of necessity, a judicial officer should turn their mind to and articulate the core aspects of a matter. To paraphrase the notes at Part 26.0.10 of the Local Courts Civil Procedure NSW, this includes firstly, the what, where and when of the matter; secondly, the evidence that goes to liability; thirdly, the findings on the evidence; and fourthly, an indication, where there is conflict, why some rather than other evidence is preferred. 10 In Jung v Son, NSWCA 18 December 1998, Stein JA stated: "While a judge does not have to state reasons for every aspect of the case, his reasons must be sufficient to satisfy the requirements of Pettit v Dunkley [1971] 1 NSWLR 376. The reasons must be sufficient to enable an appellate tribunal to gain a proper understanding of the basis of the verdict. Not to do so is an error of law (Asprey JA at 382 and Moffitt JA at 388). Failure to give reasons also makes it impossible for an appellate tribunal to give effect to a plaintiff's right of appeal. Issues critical to the case, as these were, must be dealt with by reasons (Samuels JA in Mifsud v Campbell (1991) 21 NSWLR 725 at 728)." 11 In short, the judicial officer should make it clear what he or she is deciding and why. Additionally, the plaintiff referred to Divune Pty Limited v Gould Ralph Services Pty Limited [2004] NSWSC 8 where Sully J stated that where the appeal is against a liquidated sum the sum should be ascertained by positive data. 12 It seems that the Magistrate offered to give reasons for his decision in relation to the cross-claim but was told by the successful party's barrister (White) that reasons were not required. At that point, the Forbes's barrister did not make the Magistrate aware that he required the supply of those reasons, so he cannot now complain that they were not given. 13 The Magistrate's process of reasoning appears to be that the evidence of White and Forbes was less than impressive and there were significant deficiencies in the evidence given by both parties. These deficiencies were not identified. The experts on both sides did not assist because each expert's evidence supported the party that engaged them. The Magistrate appeared to prefer the evidence of the supervising architect Mr Harrison (who had died prior to the hearing). 14 It is necessary to ascertain how the sum of close to $18,053.00 was arrived at. The Harrison certificate of payment 7 dated 20 October 1999 stated that the amount of $12,792.00 was due on 31 October 1999. On 4 January 2000 White wrote to Forbes and requested the sum of $12,792.00 be paid. Additionally White estimated that a sum of $1,150.00 was owed for the outstanding work to be done which left a further sum of $5,261.00 owing. On White's assessment the amount of $19,203.00 was due to be paid by Forbes. Progress certificate of payment 8 dated 13 February 2000 refers to the amount due of $5,989.00 being due by 13 February 2000. 15 However, the Harrison covering letter forwarding certificate number 8 stated that: "The reduction in the contract sum reflects the following: 1. Amounts paid directly by yourselves $19,203.00 (Kitchen) 2. Variation amounts not agreed $7,995.00 (Electrical & Painting)

In addition to the above amounts, the certified Value of Works allows a sum of $2,500.00 to cover works incomplete at the date of termination. The combined effect of all these amounts is a reduction in the amount outstanding to $5,989.00 instead of the previous Certified amount of $12,792.00 Still in dispute are the two variations nomination in 2 above. Some or all this amounts, may be liable to be paid. The amount allowed for incomplete works plus the retention sum is $5533.00. The value of the incomplete works may be subject to challenge, as it includes an amount to cover repair of defective work which will not be carried out by Terry White. However, this combined total should be sufficient to cover outstanding works & defect repairs." 16 From the reasons given, I am unable to ascertain how the sum of $18,053.00 was arrived at particularly in light of the Harrison letter, which states that instead of the certified amount of $12,792.00 only $5,989.00 is owing. Nor is it clear from the reasons given, what parts of the evidence had significant deficiencies. They are not identified so as to allow the reader of the judgment to understand how they affected his decision, if at all. It is my view that the Magistrate did not provide sufficient reasons so as to enable there to be a proper understanding of his decision. There is an error of law. The appeal is upheld. The decision of Magistrate Coombes made on 1 December 2003, including the decision made in relation to the cross claim, is set aside. The matter is remitted to the Local Court to be determined according to law. 17 Costs are discretionary costs usually follow the event. The defendant is to pay the plaintiffs' costs as agreed or assessed. The defendant is to have a certificate under the Suitor's Fund Act 1951 (NSW).

(2) The decision of Magistrate Coombes made on 1 December 2003, including the decision made in relation to the cross claim, is set aside.

(3) The matter is remitted to the Local Court to be determined according to law.

(4) The defendant is to pay the plaintiffs' costs as agreed or assessed.

(5) The defendant is to have a certificate under the Suitor's Fund Act if eligible. **********

Last Modified: 12/17/2004 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.