Heritage Master Builders Pty Ltd v Lu

NCAT Appeal Panel|2017-11-07

Introduction

On 4 July 2017 the Tribunal made an order that the appellant pay to the respondent the sum of $6810 as compensation for defective residential building work, such amount to be paid on or before 4 August 2017.
The dispute arose in connection with work done at the respondent's premises at Strathfield. The respondent had filed home building application HB 17/06602. In that application, the respondent said that in August 2016 he had hired the appellant to paint exterior brick walls on both sides of his house to match the brick colour of the garage, which was part of a new house extension. The respondent said the appellant agreed, verbally and in writing, that it could "achieve a 90% colour match for these walls". The respondent said this obligation was not met and the respondent claimed a refund of $10,000 for the amount which had already been paid to the appellant.
The Tribunal accepted the respondent had established his claim and reached the following conclusion: The Tribunal accepts the evidence of the (respondent's) expert that the cost of rectifying the work is the sum of $19,250.00. There is no dispute that the (appellant) has been paid the sum of $10,000.00. Accordingly the (respondent) is entitled to an order that the (appellant) paid him the sum of $6810.00 (being the rectification sum plus the amount paid to the respondent, less the respondent's original quotation of $22,440.00.
In making its decision, and having considered s.48MA of the Home Building Act, 1989 (HB Act), the Tribunal concluded it was inappropriate to make a work order for rectification.

Notice of Appeal and submissions

The appellant filed a Notice of Appeal on 25 July 2017. The appeal was filed in time. The Notice of Appeal did not seek leave to appeal.
The grounds of appeal were as follows: 1. The Tribunal should not have accepted the second expert report provided by Mr Glen Sim of Awesim Building Consultants, which referred to a quotation provided by Sydney Tuck Pointing, because Sydney Tuck Pointing was not a licence contracted to do the relevant rectification work. 2. The respondent verbally reduced the claim amount to $5000 at the first hearing. In passing, we note there is no evidence of this fact. 3. The respondent provided the second building report on the day of the hearing. The Tribunal only gave the appellant "five minutes to read 20 pages and defend" itself. 4. The Tribunal did not explain why they did not base its decision on the first building report and did not accept the pricing for the work in that report. 5. The Tribunal failed to make any "background check on proposed contractors".
The appellant filed written submissions and made oral submissions at the hearing of the appeal. Those oral submissions were made by Mr Kara on behalf of the appellant.
In those submissions, the appellant referred to the reports prepared by Mr Sim, which had been relied on by the respondent in the original hearing. These reports became exhibits in the appeal as follows: 1. Exhibit A-Expert Witness Report of Glen Sim of Awesim Building Consultants dated 19 May 2017 (first report); and 2. Exhibit B-Expert Witness Report of Glen Sim of Awesim Building Consultants dated 14 June 2017 (second report).
In relation to the reports, the appellant made the following submissions.
The Tribunal made a decision based on the second report. The Tribunal should have had regard to the first report which provided a quotation for rectification work of $13,622.40.
In making this submission, the appellant indicated that he made a submission to the Tribunal in the hearing at first instance in the following terms: I point the building expert report's quotation and except (sic) the quotation and I refer deduct the quotation amount from our quotation amount and compensate the rest of the amount. We calculate the difference $1182.40 Mr Lu's brother-in-law wasn't happy with the amount, Honourable NCAT member asked him how much you should compensate he's comment was tens of thousands.
In oral submissions, the appellant reiterated that any decision should have been made on the basis of the first report. The appellant also said the expert reports did not state that the brickwork was not a 90% match. The appellant submits that the expert did not "even identify the bricks colour".
In discussions with the Appeal Panel, the appellant's representative was asked why, even if the Appeal Panel accepted the submission concerning Sydney Tuck Pointing being unlicensed, the Tribunal was not entitled to rely on both expert reports from Mr Sim and on the other quotations to which the expert referred. The appellant did not provide any meaningful response to this question.
Also during the hearing of the appeal, the appellant accepted the following: 1. At the hearing at first instance, the appellant had been given the opportunity to seek an adjournment of the hearing but did not do so. The written submissions on appeal confirm this fact. At page 1, the appellant says: Honourable Ncat member asked me if it is okay for me to take a look at the report and deal with it or just ask for an adjournment, I decide to go ahead and do my defence due to already lost so many working days, I didn't want to make this case continue any longer, 1. The appellant did not provide its own independent expert report in the proceedings at first instance, despite having an opportunity to do so.
In relation to the photos in the original reports, the appellant submitted they were not clear and did not demonstrate the matters about which complaint was made.
Finally, in relation to the second report, the appellant said the expert did not explain the different rates for the work in question.
The respondent filed a reply to appeal. The respondent also filed written submissions and provided oral submissions at the hearing.
At the hearing, the respondent sought to tender original printed photographs which had been taken by Mr Sim. It was made clear to the Appeal Panel that these photographs were not in evidence in the proceedings at first instance. Consequently, the tender was rejected on appeal because there was an issue concerning the colour of bricks and a decision made at first instance based on the brink colour as demonstrated in the expert reports. Accordingly, the Appeal Panel was required to evaluate the evidence before the Tribunal at first instance and not these alternative photographs.
The respondent's submissions can be summarised as follows.
The expert report, which the respondent provided in evidence, contained three quotations for remedial work to recolour the bricks. These quotations were for work necessary to match the brickwork with the extension.
The expert report set out the qualifications of the author, his industry expertise, his methodology in preparing his estimates and his adoption of the expert code of conduct. There was no basis to reject the report as evidence of the matters about which complaint was made.
The expert evidence, including the photographs, demonstrated there had been a breach of the obligation to match the brick colour and that the award of the Tribunal was therefore appropriate.
In oral submissions, the Appeal Panel noted that some of the brickwork depicted (first report at page 10) showed the application of colour treatment that had not been cleaned off and that the report did not appear to provide an opinion concerning the degree of variance in the colour. The Appeal Panel also raised the precise terms of the contract, namely whether there was an obligation that 90% of the bricks matched or, alternatively, that the shading of the bricks was within 90% colour variance.
In short, the respondent's answer to the matters raised was that the Tribunal made the correct decision, the expert provided relevant evidence as to breach and loss and the Tribunal was entitled to rely on the quotations in the second report, the first report being incorrect as to the cost.

Consideration

The appellant has a right of appeal on a question of law and otherwise requires leave: see s.80(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act). In order to obtain leave, the appellant must demonstrate it may have suffered a substantial miscarriage of justice by reason of the matters set out in Sch 4 cl 12 of the NCAT Act.
In John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel said at [12]: In circumstances where the appellants are not legally represented, it is apposite for the Tribunal to approach the issue by looking at the grounds of appeal generally. It is necessary for the Appeal Panel to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations that might arise to the respondent.
Having regard to the issues raised, and having regard to: 1. Section 36(1) of the NCAT Act (which requires the just, quick and cheap resolution of the real issues in dispute), and 2. Section 38(4) (which says the Tribunal should act with as little formality as the circumstances of the case permit and … without regard to technicalities or legal forms),
Although no application for leave to appeal has been made, we should consider all issues, whether or not they raise a question of law, and deal with any leave issues as necessary.
The starting point in resolving this appeal is a consideration of the reasons of the Tribunal.
The following findings are recorded in the Tribunal's reasons, from which we quote: The agreement between the parties required the bricks come within 90% of matching the bricks of the extension. The Tribunal has regard to the applicant's to expert reports. The expert states that "the newly sprayed walls were more of an orange colour with dark grey spots, and did not match the new brickwork, which consists of brown and tan colours". The respondent points out that the report did not apply the terms of the agreement and does not say that the bricks do not match the extension 90%. However, the Tribunal is satisfied that the photos in the expert show a significant variation between the colours. The photos at page 10 of the first report show an area of the wall which has been completed. The Tribunal is satisfied that the colour of the treated wall does not match the extension to the extent which would be required to meet the 90% contractual requirement.
Having rejected an assertion by the appellant that there had been a request to change the brick colour to match the charcoal bricks at the front of the house, the Tribunal then had regard to the second report and accepted the expert evidence that the cost of rectifying the work was $19,250.00.
It is clear from these reasons that, despite the absence of a statement from the expert to the effect that there was non-compliance with the colour matching requirement of 90%, the Tribunal formed an opinion that such non-compliance was evident from the photographic material at page 10 of the first report.
In this regard, we should note that on page 10 of Exhibit A, the Appeal Panel marked with circled numbers 1 and 2, the area of the new brickwork, which was adjacent to the original house to which colour treatment was to be applied to the existing brickwork. This marking was agreed following discussion parties so as to enable the Appeal Panel to understand the evidence to which it was being referred.
It is in this context that the comparison made by the Tribunal, in its reasons which we have set out above, needs to be considered.
In effect, the Tribunal accepted the evidence of the expert that the work undertaken by the appellant resulted in bricks of orange colour with dark grey spots which did not match the adjacent (new) brick work which was of brown and tan colours. The Tribunal formed its own opinion from viewing the photographic evidence and what the expert said that the mismatch represented more than a 90% variation.
There is no dispute in this appeal that the requirement for matching the colour was to ensure there was a 90% match. Rather, the issue raised by the appellant is that the expert did not offer an opinion about this matter. In this regard, the expert's opinion was that the statutory warranties were breached and a conclusion that the work was not done with due care and skill. This was because the colour had not been matched: first report at 7.1.16.
In essence, the appellant's complaint is that the Tribunal was not entitled to form its own opinion as to the extent to which the colour did not match and in the absence of expert evidence the claim was not established.
In our view, this submission must fail. The Tribunal has not, in the present case, used its own special knowledge or relied on facts about which the parties were not aware to make a decision. Such a course is not permissible and may give rise to procedural unfairness: see eg Commissioner of Police v Pecover [2014] NSWSC 1427 at [31].
Rather, the Tribunal made reference to the evidence provided, namely an expert report in which Mr Sims identified the particular colour of the painted bricks and the colour of the bricks in the new extension and the photographic material depicting those bricks in situ. The Tribunal then assessed that the "90%" requirement had not been met. This was an available finding on the evidence because the bricks in the different parts of the wall were of different colour, the painted bricks being orange colour with grey spots, the new extension brown and tan. As they were different colours, they could not meet the "90%" requirement in the absence of a statement by an expert to this effect was of no consequence. Secondly, the Tribunal was able to view the photographs to decide the extent of difference.
It follows that this ground of challenge fails.
The second matter is the amount awarded for damages.
The appellant says the amount assessed as rectification costs by the expert in the first report, namely $13,622.40, is the amount which the Tribunal should have used in calculating any loss and damage. The appellant says that the expert did not explain his change of position in the second report and relied on a quotation from a person who was not licensed to carry out work.
In relation to the first aspect, the expert in fact explains the discrepancy between his initial assessment in the first report and his subsequent assessment in the second report. Having identified the difference in rectification costs between the two reports of $5,627.60, at paragraphs 7.1.7-7.1.9, Mr Sim said: 7.1.7 The reason for this is that the Awesim Scope of works is deficient in the hours and bees and rates required to remediate the issue. 7.1.8 The Awesim Report recommended that a specialist contract or to tender on these works, to provide an accurate measured loss occurred (sic) to the Home Owner. 7.1.9 Therefore, based on the quotation is received, it is my opinion that $19,250.00 inc GST as quoted by Sydney Tucked Pointing is a fair and bees and reasonable measure of the Home Owners loss.
In reaching this opinion, the expert considered a quotation from Brick Pointing Team, one of three quotations on which the expert based his opinion. In relation to that quotation he said it "does not make allowance for the removal of the existing tuck pointing lines to the right-hand side of the dwelling. And does not allow for colour matching of the bricks". As a matter of logic, if this work was included the quotation from this builder the cost would have been higher.
It follows from what we have said that the explanation for any discrepancy was in fact provided by the expert, contrary to the submission made by the appellant. Accordingly, this ground of challenge fails.
As to the assessment made by the expert, in light of his conclusion concerning the Brick Pointing Team quotation, the expert assessed the two remaining quotations referred to in his report. Significantly, the quotation of Sydney Tuck Pointing was lower than the other quotation, which was from Premier Pointing in the sum of $20,812.00. As is clear from the second report, the expert formed an opinion that the lower amount of $19,250.00 inclusive of GST was "a fair and reasonable sum for the rectification works".
The appellant challenges this finding on the basis that the contractor who provided this quotation was not licensed. Evidence of this fact was certainly not before the Tribunal in the proceedings at first instance. Notwithstanding the material put forward on appeal, there has been no opportunity to test this fact. More particularly, there has been no opportunity for the expert, Mr Sim, to offer any view about the appropriateness of relying upon such a quotation. As this is material that could have been provided at the original hearing, in our view it is not material which should be allowed appeal because its veracity and significance has not been tested.
Further, and in any event, even if it was accepted that Sydney Tuck Pointing was not licensed to do the work in question, in our view that does not provide a sufficient basis to disregard the opinion of Mr Sim, namely that the reasonable cost of rectifying the defective work was $19,250.00.
There are a number of reasons for this view.
First, Mr Sim had available to him two other quotations which range from $18,150.00 to $20,812.00. Despite the appellant's suggestion to the contrary, there is no basis to conclude these companies were not licensed to carry out the work. Certainly in the case of Premier Pointing, its licence number was on its quotation dated 7 June 2017 which was attached to Mr Sim's second report.
Secondly, having regard to Mr Sim's opinion that the Brick Pointing Team did not provide a quotation for all of the necessary work, in assessing the information available and having regard to his industry knowledge and expertise, these two quotations when coupled with Mr Sim's earlier (albeit inaccurate) estimation of the rectification costs provides a proper foundation for the opinion which he offered, the amount assessed being less than the most expensive quotation which was received from Premier Pointing.
Thirdly, while Mr Sim relied on the quotation from Sydney Tuck Pointing, ultimately he formed his own opinion based on all of the material to which he has referred.
Fourthly, in the absence of any expert evidence from the appellant to contradict the evidence of Mr Sim, it was open to the Tribunal to accept this assessment, particularly having regard to the amount in issue and the content of the evidence provided both by an independent expert and through a process of obtaining quotations.
A final matter we should briefly deal with is the assertion that the provision of evidence by the respondent at the hearing, being the second report, constituted a denial of procedural fairness. As we set out above, the appellant was offered an adjournment which it declined to take up as it wanted to finalise the matter. Secondly, the appellant's representative was given an opportunity to read the second report prior to the original hearing commencing and there is no suggestion it was denied the chance to ask questions of the expert. Thirdly, the appellant accepted it had already been given an opportunity to provide its own expert evidence, but had not done so. In this circumstance, the suggestion the appellant has been denied procedural fairness is unfounded.
It follows that no error of law has been established nor has the appellant demonstrated it may have suffered a substantial miscarriage of justice so as to justify the grant of leave to appeal.

Order

For the above reasons, the Appeal Panel makes the following order: 1. Leave to appeal is refused and the appeal is dismissed. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar

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 18 January 2018 - Amend order and decision dates 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: 18 January 2018

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