Giro Constructions Pty Ltd v Smith

Grounds of appeal and submissions

1. Giro Constructions' grounds of appeal were set out in its Notice of Appeal, as expanded in written and oral submissions.
2. There were five grounds of appeal raised in the Notice of Appeal. During oral submissions it emerged that Giro Constructions did not press Ground 5, alleging a lack of procedural fairness and a reversal of the onus of proof by not requiring Mr Smith to establish the floorboards were laid with excessive moisture, and accepted that Ground 4, being the statutory defence raised against Weyitin Trading and Mr Smith as successor in title, was not relevant given the finding by the Tribunal that the floorboards were not unsuitable. A further ground alleging inadequacy of reasons was raised by Giro Constructions during oral submissions when Counsel was explaining why the findings were said to be inconsistent with other findings in the written reasons. While this ground was not included in the Notice of Appeal or written submissions, both respondents addressed this issue in oral submissions in response.
3. The grounds of appeal which were pressed by Giro Constructions at the hearing can be summarised as follows: 1. The Tribunal erred because there was no evidence before the Tribunal capable of supporting the finding made by the Tribunal that the moisture content of the floorboards was excessive before they were laid (Ground 1); 2. Giro Constructions was denied procedural fairness because the Tribunal made a finding about the moisture content yet did not give Giro Constructions notice that this was the key issue on which the Tribunal was proposing to find Giro Constructions liable for defective installation of the floorboards (Ground 2); 3. The reasons were inadequate in that the basis for the findings about the high moisture content was not clear (Ground 3); and 4. The decision of the Tribunal was against the weight of evidence and not fair and equitable and therefore should be set aside because there may have been a substantial miscarriage of justice (Ground 4).
4. It is therefore apparent that the issue at the core of Giro Constructions' appeal is the finding of the Tribunal at first instance at [31] that "the timber floor was laid with a moisture content that was too high which caused cupping and movement in the boards and so the defect in the flooring is not due to the type and dimension of the boards used." It is contended by Giro Constructions that this finding has no evidentiary basis, was made in circumstances where Giro Constructions was denied procedural fairness and has not been adequately explained (Grounds 1 to 3). These grounds may be cumulative or in the alternative. Ground 4 is in the alternative in the sense that even if there was evidence to support the finding or if there was no denial of procedural fairness, Giro Constructions contends leave to appeal should be given and the decision set aside because there may have been a substantial miscarriage of justice.

The Respondents' Reply to Appeal and submissions

1. Mr Smith contended that the finding that the floorboards must have been laid with excessive moisture content was open to the Tribunal on the evidence. There was no denial of procedural fairness. The parties made extensive submissions and the case was decided on the basis of the evidence. The statutory defence raised by Giro Constructions that wide Blackbutt flooring was unsuitable to be laid in coastal regions and that the developer had been warned about this was irrelevant given the factual finding by the Tribunal that the flooring was not unsuitable. (Ultimately this was common ground between the parties.) In so far as Giro Constructions sought to challenge the decision on the basis it was against the weight of evidence or not fair and equitable, leave to appeal was required. There is no proper basis warranting leave. The Appeal Panel should dismiss the appeal with costs.
2. Weyitin Trading contended that the finding of the Tribunal that the timber flooring was too moist when laid was open to the Tribunal. It could not be said that this decision was not fair and equitable or that it was against the weight of evidence. The evidence about the moisture levels of the timber flooring and the written reasons outlining the basis of the findings, when read in context, make it clear that the Tribunal was relying on the evidence of the experts to support this "pivotal" finding. The appeal should therefore be dismissed with costs.

Nature and scope of the Appeal

1. The Civil and Administrative Tribunal Act 2013 (NSW) (the Act) provides for internal appeals as of right on any question of law, and appeals with leave of the Appeal Panel on any other ground: see s 80(2)(b) of the Act.
2. The Appeal Panel in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 considered the requirements for establishing an "error of law" giving rise to an appeal as of right. Without expressing exhaustively possible questions of law, the Appeal Panel in Prendergast gave examples of matters that would constitute errors of law at [13] to [21] as including, relevantly, the failure to provide proper reasons, the failure to afford procedural fairness and making a finding of fact where there was no evidence to support the finding.
3. There is no dispute between the parties that Grounds 1, 2, and 3 each raise a question of law and as such do not require leave to appeal. Ground 4 does not raise an error of law and leave is therefore required.
4. Schedule 4, clause 12 of the Act states that the Appeal Panel may grant leave to appeal only if the Appeal Panel is satisfied 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).
5. 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 of the Tribunal concluded at [84]: The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) 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.

Grounds 1 and 3: No evidence to support the finding and inadequate reasons

1. Giro Constructions submitted that there was no proper basis for the Tribunal's finding of fact that the Blackbutt flooring had been installed with too high moisture content because: 1. There was evidence, being the opinion from one of the experts (Mr Harris) that the moisture content of the timber in the area of allegedly defective workmanship was within the stipulated range at the time that it was installed; 2. The Tribunal appears to have accepted, at [18], that the timber had been stored in a moist location, in the garage, however, Mr Smith's expert resiled from that contention in a letter dated 28 February 2012; 3. The Tribunal's conclusion to the effect that the timber had been installed with excessive moisture content was speculative and appears to have been based on the inability of Giro Constructions and its installer to recall the moisture content at the time of the floor installation; 4. The finding of fact at [30] was inconsistent with the Tribunal's determination; and 5. The Tribunal did not properly explain why, if the timber flooring had been installed with an excessive moisture content, the defects had not manifested in other areas.
2. These particulars refer to the findings of the Tribunal and to asserted inconsistencies and deficits in the reasoning process said to be disclosed in the written reasons. In summary, Giro Constructions contended there was no evidence capable of supporting the finding about excessive moisture but even if there was, the evidentiary basis for those findings is not apparent from the written reasons. In other words the reasons are inadequate.
3. Given the overlap between these two grounds, it is convenient to deal with Grounds 1 and 3 together.

No evidence capable of supporting the finding of excessive moisture

1. As already noted, where there is no evidence capable of supporting a finding, there is an error of law (Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390). However, as observed in Fordham v Davies [2014] NSWCATAP 60 at [22] citing the relevant authorities, "once there is some evidence for a finding, any error is one of fact not law."
2. The respondents both submitted that there was evidence before the Tribunal that the moisture content of the timber at the time it was laid was high. We accept this submission.
3. The opinion of the expert for Weyitin Trading, Mr Bruce Harris (at page 12) was that "much of the flooring boards were high in moisture content when they were installed and may have subsequently shrunk, leaving gaps between the boards." Giro Constructions challenged this opinion by referring to a letter dated 28 February 2013 from Mr Harris where he resiled from the contention that the timber was stored in a moist location for six weeks prior to installation. However, it is clear this did not affect Mr Harris' opinion as he expressly notes "the findings in the report were not based on the assumption of the flooring having been stored in the garage."
4. The expert for Mr Smith, Mr Brad Inwood, also opined (at page 6 of his report) as follows: The cause of the gaps is generally due to insufficient seasoning of timber flooring prior to it being laid. As timber originally is living, a high proportion of the board has water residue. After the timber has been chopped down, the timber tends to dry out. As it dries out it shrinks in size. If the boards were laid when there is still too much moisture in the timber, then as the timber dries, it shrinks and then leaves gaps between the joints of the board. This is our professional expert opinion for the cause of the large gaps between the boards at the above-mentioned address.
5. In contrast, the expert for Giro Constructions, Mr Le Compte, opined that the timber flooring was stored and laid with the correct moisture content and that the width of the Blackbutt timber was susceptible to shrinkage and cupping in coastal climates.
6. The Tribunal specifically dealt with the moisture content of the timber flooring in its reasons at [11] and [28] to [31]. At [11], the Tribunal stated as follows: In a letter from MacLeay River Hardwoods to Belmont Timber, which was then forwarded to the builder, it is stated in the final paragraph in regard to the moisture content of the timber; "At the time of dispatch the 7 packs supplied would fall within the ranges allowable under the Australian Standards." However the experts, Mr Harris and Mr Inwood agree that the moisture content in the flooring was too high at the time the floor was laid.
7. It can be seen from the reasons of the Tribunal referred to in the foregoing paragraphs, that the Tribunal: 1. Records (and appears to accept) the opinions of Mr Inwood and Mr Harris that the moisture content of the floor was too high at the time was laid (at [11]); 2. Prefers the evidence of Mr Harris about the nature of the defects (at [28]); 3. Discounts the assessment made by Mr Harris as part of the experts conclave that the moisture content of the floor when it was laid was 14%, which would have been in within the range allowed by Australian Standards, because the moisture content was not known at that time (at [29]). It is implicit that the Tribunal gave no weight to this opinion because it was speculative; 4. Rejects the opinion of Mr Le Compte that the Blackbutt product being used was unsuitable (at [30]); 5. Finds on the balance of the evidence before him, that the moisture content was too high which caused cupping and movement in the boards and thereby rejects the assertion that this defect was caused by the type and dimensions of the flooring used (at [31]).
8. In this case, there was no dispute between the experts, nor indeed the parties, that there are gaps and cupping between the floorboards. There was dispute about the nature and extent of any rectification but this issue was not raised in this appeal. There was also dispute about the cause of these defects. On the one hand, Mr Inwood and Mr Harris opined that the gaps and cupping must have been caused by the high moisture content of the timber flooring at the time it was laid. On the other, Mr Le Compte opined that this was more likely to have been caused by the width of the Blackbutt product being used. As already noted, this was rejected by the Tribunal and in the absence of any other plausible explanation (none was raised), the Tribunal accepted the evidence of the two experts retained by the respondents.
9. The Tribunal did not make a finding which was "speculative" or based on the inability of Giro Constructions to record the moisture content at the time of installation. This latter fact was relevant to explain the paucity of evidence about the moisture content in the floorboards at the time they were laid. Because there was no evidence about this, all experts made a speculative assessment. Mr Le Compte concluded the moisture content was "correct" after viewing the floor on 26 February 2013. He also noted that his opinion was based on documents provided to him, which included letters from the suppliers dated 2010. This opinion may be equally as speculative as the assessment of 14% made by Mr Harris as part of the conclave because, as the Tribunal correctly noted at [29], "the moisture content of the timber at the time of laying is not known." This was a matter that Giro Constructions, as builder, should or could have recorded. If it had this may have resolved the controversy about the moisture content definitively but it did not and the Tribunal was therefore left with the evidence of the experts, doing the best they could.
10. This is not a case where there was no evidence capable of supporting the finding that the timber flooring had high moisture content at the time it was installed. There was evidence. Giro Constructions does not agree with the finding but this does not raise an error of law. Accordingly, this ground fails.

Inadequate reasons

1. The nature and extent of the obligation to give written reasons under the general law and pursuant to s 62 was discussed by the Appeal Panel in Collins v Urban at [43] to [64]. Relevantly, the Appeal Panel referred to Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 in which Basten JA observed at [48] as follows: When an appellate court is invited to find that a trial judge provided inadequate reasons, it is important to understand the nature of the function being invoked. It is not the function of an appellate court to set standards as to the optimal, or even desirable, level of detail required to be revealed in reasons for judgment. Rather it is to determine whether the reasons provided have reached a minimum acceptable level to constitute a proper exercise of judicial power. Transparency in decision-making is an important value, but it is not cost free, and may involve separate parameters of quantity and quality.
2. In this case, the Tribunal provided written reasons and was therefore obliged to comply with the requirements set out in s 62(3) of the Act.
3. The critical issue is whether the reasons meet the minimum standard contemplated by Resource Pacific Pty Ltd v Wilkinson and by the Appeal Panel in Collins v Urban and comply with s 62(3) of the Act.
4. In assessing the adequacy of reasons, it is not best approached with an "eye keenly attuned to the perception of error": Minister For Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259. Substantial compliance with the obligation to give reasons is required, not perfection: Bisley Investment Corporation v Australian Broadcasting Tribunal [1982] FCA 58 and P v Child Support Registrar [2015] FCA 116. Reasons should be considered as a whole rather than any isolated part. If the decision as a whole discloses sufficient consideration of the important facts, evidence and law, this will be adequate: O'Brien v Repatriation Commission (1984) 1 FCR 472.
5. In our view, the reasons adequately set out the findings, evidence and reasoning process on which the Tribunal relied to conclude that the floorboards had high moisture content at the time they were laid and this, not the unsuitability of the product, was the reason for the defects. These matters can be discerned from reading the whole of the decision and, in particular, paragraphs [11] to [20] and paragraphs [28] to [35]. It is clear that there is a typographical error at [30] where the Tribunal notes that the evidence of the builder "does," rather "does not," "satisfy the Tribunal that the problems that now manifest in the flooring was the type of timber selected." There is otherwise no inconsistency in the reasons. The reasoning process is summarised above (at [28]). While the reasons could have been more expansive, it is clear that the Tribunal identified the moisture content of the floorboards at the time they were installed as a critical issue and relied on the opinions of the respondents' experts, in preference to the opinion of the expert for Giro Constructions, on this issue.
6. This ground of appeal also fails.

Ground 2: Lack of procedural fairness

1. Procedural fairness is concerned with avoiding practical injustice: Re Minister for Immigration and Multicultural and Indigenous Affairs; ex parte Lam (2003) 214 CLR 1 at [37]. As observed by Katzmann J in P v Child Support Registrar at [109] "procedural fairness does not require that the Tribunal disclose what it is minded to decide or that it give a running commentary on what it thinks about the evidence."
2. In the proceedings at first instance, Giro Constructions focussed much of its defence on the contention that the floorboards were unsuitable and, because this had been the subject of a written warning to Weyitin Trading, the builder had no liability for any defects under s 18F of the Home Building Act 1989 (NSW). Ultimately, this defence had no application because the Tribunal rejected Giro Constructions' contention that the Blackbutt floorboards were unsuitable. Giro Constructions may have been surprised by this but there was no practical injustice. The parties were legally represented and it was clear that the issue of the moisture content of the Blackbutt timber flooring at the time it was laid would be an important issue in the proceedings. All experts addressed the issue and it was discussed at the conclave. Both Mr Harris and Mr Inwood opined that this was the reason for the cupping and movement of the floorboards.
3. As such, there is no substance to this submission and the appeal on this ground fails.

Ground 4: Decision against the weight of evidence and not fair and equitable

1. Giro Constructions requires leave to appeal in respect of these grounds.
2. For the reasons already outlined, this decision was not against the weight of evidence nor can it be established that the decision was not fair and equitable. There was evidence to support the findings and all parties were on notice that the moisture content of the floorboards would be an issue. The parties were legally represented and extensive submissions were made about the case. Evidence was tendered and the experts were cross examined. There were numerous directions hearings.
3. We have set out above the principles stated in Collins v Urban. For leave to appeal to be granted, an appellant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact. Ordinarily it is appropriate to grant leave to appeal only in matters that involve issues of principle, questions of public importance or matters of administration or policy which might have general application, an injustice which is reasonably clear, a factual error that was unreasonably arrived at and clearly mistaken; or that the Tribunal went about its fact finding process in such an unorthodox manner that it produced an unfair result.
4. We are not satisfied that Giro Constructions has established any of these matters.

Conclusion

1. In summary, Giro Constructions has raised three errors of law. For the reasons given above, these grounds of appeal are dismissed. In addition, Giro Constructions contends it should be given leave to appeal on the basis that it may have suffered a substantial miscarriage of justice. We are not so satisfied. We refuse leave and otherwise dismiss the appeal.

Costs

1. Mr Smith and Weyitin Trading submitted that Giro Constructions should be ordered to pay the costs of the appeal. Giro Constructions submitted there should be no order as to costs.
2. Costs in this jurisdiction are governed by s 60 of the Act. That section provides that: (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant.
3. Section 60 has been considered in many recent decisions: see for instance CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120; Kurmond Homes Pty Ltd v Spiteri [2015] NSWCATAP 48; and Rose Nettis Pty Ltd v Three Tall Trees Pty Ltd [2015] NSWCATAP 51. As the Appeal Panel noted in eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]: The authorities considering the meaning of the expression "special circumstances" were recently reviewed in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]. From those authorities, it can be seen that "special circumstances" are circumstances that are out of the ordinary, they do not have to be extraordinary or exceptional. Further, the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. Each situation must, of course, be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs.
4. Rule 38 of the Civil and Administrative Tribunal Rules 2014 provides that in proceedings for the exercise of functions in the Consumer and Commercial Division, the Tribunal may award costs in the absence of special circumstances if the amount claimed or in dispute is more than $30,000 (r 38(2)(b)) or if the amount is more than $10,000 but less than $30,000, where the Tribunal has made an order under cl 10(2) of Schedule 4 of the Act about conduct causing disadvantage (r 38(2)(a)).
5. In Megerditchian v Kurmond Homes Pty Ltd the Appeal Panel held at [15] that, while this rule did not apply in an appeal, the "expectation of an unfettered discretion" to award costs at first instance was a relevant factor that the Appeal Panel may take into account in deciding whether special circumstances exist under s 60(3)(g) of the Act. Both respondents relied on this case.
6. Mr Smith also relied on the decision in Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 and, in particular at [80] where the Appeal Panel stated that in an unsuccessful appeal, the fact that a costs order was made against the appellant at first instance was a relevant matter to consider. Relevantly the Appeal Panel stated: A successful respondent to an appeal who has been awarded costs at first instance has a strong claim to a costs award in relation to the appeal. The respondent has been exposed to a second round of litigation.
7. Mr Smith was awarded costs, albeit only 10% (an order from which he has appealed) and Weyitin Trading was awarded all of its costs. The respondents submitted that the award of costs at first instance was relevant.
8. Weyitin Trading further contended there were special circumstances because there was a level of complexity in the proceedings, Weyitin had "no choice" but to appear because it did not want the proceedings to be remitted, the appeal was untenable and Giro Constructions raised new issues at the hearing which disadvantaged the respondents.
9. Taking into account the matters referred to in subs (3) and the submissions of the parties, we find as follows: 1. While the Giro Constructions did not raise the adequacy of reasons until the hearing, the respondents were not disadvantaged and were able to respond to the submissions made, principally relying on written submissions previously filed and served. This is because the submission about the adequacy of reasons and the submission that the evidence was not capable of supporting the findings made were related. The proceedings were not unreasonably prolonged. As such, there is nothing about the way in which the Appeal was conducted that would weigh in favour of an order for costs (s 60(3)(a) or (b)); 2. The Appeal did not succeed but this does not mean it had no tenable basis (refer(s 60(3)(c)). Relevantly, the Appeal Panel accepts that the reasons could have been more expansive. This does not weigh in favour of an order for costs; 3. The proceedings were not unduly complex and the amounts in dispute were ultimately modest (s 60(3)(d)); 4. We are not persuaded that the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance (s 60(3)(e)): CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley at [37]; 5. Giro Constructions was late in complying with directions (s 60(3)(f)) but this did not impact on the hearing; 6. While we accept the costs orders made at first instance may be a relevant factor under s 60(3)(g), the cost awarded in favour of Mr Smith were modest and subject to a 'cross appeal.' The costs appeal did not significantly add to the costs of the hearing but it nonetheless militates against a costs order in Mr Smith's favour. In so far as Weyitin Trading was successful at first instance, was awarded costs and was exposed to a "second round of litigation," it is relevant to note that Weyitin Trading took an active role in opposing the appeal because it wanted to ensure the proceedings were not remitted. Giro Constructions sought an order that the decision be set aside and the proceedings at first instance be dismissed. It did not seek an order that the proceedings be remitted. It is therefore not correct to state that Weyitin Trading had "no choice" but to appear.
10. When considering the circumstances of the case as a whole and the matters referred to above, we are not satisfied that there are special circumstances warranting the displacement of the usual order that each party is to pay their own costs.

Orders

1. For the above reasons, the Appeal Panel makes the following orders: 1. The appeal in respect of Grounds 1, 2 and 3 are dismissed. 2. Leave to appeal in respect of Ground 4 is refused. 3. The appeal is dismissed. 4. Each party is to pay their own costs.

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

Amendments 01 October 2015 - Coversheet - amended case title Paragraph [7] - changed heading "Decision under appeal" to "Decision at first instance" 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: 01 October 2015