Mr and Mrs Jannis had a verbal agreement with a contractor Ant-Hassa Pty Ltd (through its director Mr Hassarati) to construct a driveway at their residential property in Dural. It was agreed that the driveway would be constructed in two stages. The first stage was completed in December 2016 and the second stage was completed in August 2017. All monies owing were paid to the contractor company. Mr and Mrs Jannis complained that the first stage of the driveway was not properly constructed, and brought a claim to the Consumer and Commercial Division of the Tribunal seeking compensation in the amount of $18,889.
The Tribunal considered the application as effectively alleging breaches of the Home Building Act 1989 and of certain consumer guarantees under the Australian Consumer Law (NSW) (ACL), which applies as a law of New South Wales under s 28 of the Fair Trading Act 1987 (NSW). The Tribunal dismissed the Jannis' application. They now appeal to the Appeal Panel of the Tribunal in respect of part of the Tribunal's decision dated 10 October 2019 ("Decision").
[2]
The decision under appeal
The Tribunal concluded that any defects in the driveway were not major defects (in respect of which there is a six year limitation period), but were only capable of being characterised as non-major defects (in respect of which there is a two year limitation period). On the basis that a claim under the Home Building Act had not been lodged within two years of the date of completion of the work, the Tribunal dismissed the application for breach of the Home Building Act for lack of jurisdiction. Mr and Mrs Jannis do not appeal against this part of the Decision.
The Tribunal considered it did have jurisdiction to consider the dispute about the construction of the driveway as a consumer claim under the Fair Trading Act. The dispute was, and remains, limited to stage 1 of the construction of the driveway.
The Tribunal considered whether ss 60 or 61 of the ACL were breached by the respondent company in its provision of services to Mr and Mrs Jannis as consumers. Under s 60, a business must exercise due care and skill when providing services to consumers. Under s 61 the services provided must be reasonably fit for purpose (with some exceptions not presently relevant). In cases where consumers disclose they want services for a specified purpose, or to achieve a particular result, the business guarantees the services will be fit for the specified purpose. After consideration of the evidence before it, the Tribunal concluded it was not satisfied there had been a breach of ss 60 or 61 of the ACL.
The findings of fact are set out in the Decision dated 10 October 2019. It is not in dispute that Mr and Mrs Jannis initially wanted crushed granite for their driveway. The parties met on site on 16 September 2016. Mr and Mrs Jannis assert that Mr Hassarati told them, "you should use recycled road base, it will have a binder in it and will be as hard as concrete and won't rut or wash away and will cope with heavy trucks, 12 tonne". The respondent agrees the property owners initially asked for crushed granite, but maintains he told them concrete would be the best option. His version of the discussion was that Mr Jannis thought concrete was too expensive and did not like the concrete look. Mr Hassarati further said the driveway was not meant to be sealed and that this was made clear to Mr and Mrs Jannis. Mr Hassarati also gave evidence that he told them putting concrete with the road base would give it a better bind. He also told them such a driveway needs maintenance. The parties then came to an agreement that recycled road base would be used, with a binding agent (lime) in it.
When the construction of stage 1 of the driveway was completed in December 2016, Mr and Mrs Jannis made known on a number of occasions that they were not happy with the texture of the driveway as they considered it too loose. It was agreed that a skim coat (being a layer of gravel) would be applied to the stage 1 of the driveway, and this was done in August 2017 when work on stage 2 was being carried out. It was common ground that a higher percentage of binding agent was used for stage 2 of the driveway.
Various emails were exchanged from November 2017 and March 2018. Mr Hassarati came to inspect the driveway on 26 March 2018 and, according to Mr and Mrs Jannis, took photos and agreed the driveway should not look the way it did. Mr and Mrs Jannis obtained a report from the supplier Hanson, which tested samples for lime content. The lime content was 2% in the material purchased for the first part of the constructed driveway and 3% for the material purchased in the second stage. Tests conducted on the actual driveway showed a lime content of 2.6% for the first part and 4.2% for the second stage of the construction.
No resolution was reached by the parties in relation to the construction of stage 1 of the driveway. Mr and Mrs Jannis commissioned Durkin Constructions Pty Ltd to provide them with a report for the purposes of Tribunal proceedings. In a report entitled Pavement Investigation Report (issued on 15 July 2019), Mr Loney indicated that the purpose of the report was to: "assess the pavement and recommend treatment options to reduce issues occurring on site and to restore to its original intended state (unsealed and bound)".
The Tribunal found that that this report did not establish that the materials used for the driveway were not suitable, or that the construction failed to comply with national standards. It was noted that the author inspected the site in July 2019, and not when the work was completed in December 2016. The Tribunal continued at [35] of the Decision:
Page 12 of the report sets the design parameters for "rehabilitation of the pavement as per minor trafficked pavement with a single lane traffic according to table 5.3 of AustStab Pavement Recycling and Standards Guide 2015 for 20-year design life". Firstly, the report sets out what is required for the rehabilitation of the driveway. It does not point to the respondent not rendering the service with due care and skill. Secondly, it's an association guide setting the parameters for roads, not rural driveways. The report does not establish that the materials used are not suitable for a rural driveway. It does not show that the construction does not comply with any national standards".
Mrs Jannis' own evidence was that a truck may need to visit the property a few times a year to make deliveries. The Tribunal found there was no evidence to suggest that the driveway was not reasonably fit for the purpose of a driveway on a rural property where trucks may make deliveries several times a year.
[3]
Grounds of appeal
In their Notice of Appeal dated 11 November 2019, Mr and Mrs Jannis contend that the Tribunal made the following errors:
1. Failed to allow them to put any evidence in reply before the Tribunal after the respondent closed its case;
2. Erred in not finding that they made known to the respondent the purpose for which the services were being acquired as envisaged in s 61 of the ACL;
3. Erred in failing to find that the product resulting from the services was not reasonably fit for the disclosed purpose;
4. Erred in not finding that the product resulting from the services is of such a nature, quality, state or condition that they might reasonably achieve the result that Mr and Mrs Jannis wished the services to achieve;
5. Erred in failing to take into account all available evidence, including the photographs tendered by them, that the driveway was not bound;
6. Erred in giving insufficient weight to the expert report of James Loney because he did not inspect the driveway in December 2016;
7. Erred by failing to give sufficient or any weight to their uncontested evidence and that of James Loney;
8. Erred by failing to give any weight to the respondent's admission that the driveway is not bound and will never be bound;
9. Erred in failing to make a Jones v Dunkel inference in the respondent's failure to put photos and video taken by Mr Hassarati into evidence.
Mr and Mrs Jannis have a right of appeal on a question of law, otherwise they require leave to appeal: s 80(2)(b), Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). In relation to their Notice of Appeal, they argue that: grounds 1, 5 and 9 are questions of law; grounds 2, 3 and 4 are mixed questions of law and fact; and grounds 6, 7 and 8 are questions of fact only.
We had before us at the appeal hearing the Notice of Appeal, Reply to Appeal, written submissions from the parties, copies of directions made on 19 November 2019 in the appeal proceedings, the Tribunal's decision dated 10 October 2019, original application to the Tribunal (with supporting materials), and an Appeal Book lodged with Tribunal on 23 December 2019 (referred to in these reasons as "AB"). Mr and Mrs Jannis were represented by a solicitor at the appeal hearing (but not in the Tribunal proceedings below); the respondent company appeared through its director, Mr Hassarati, and was not legally represented at the appeal hearing (or at the Tribunal proceedings below where Mr Hassarati also appeared).
[4]
Issues on appeal
The issues on appeal may be summarised as follows:
1. Did the Tribunal make any error of law identified by the appellants? In summary, those alleged errors are:
1. the Tribunal failed to afford procedural fairness to the appellants by not allowing them to put evidence in reply after the respondent closed its case;
2. the Tribunal failed to take into account all available evidence that the driveway was not 'bound';
3. the Tribunal failed to draw an adverse inference from the company's failure to put photos and video taken by Mr Hassarati into evidence;
4. the Tribunal identified the wrong issue or asked the wrong question, and/or took into account an irrelevant consideration or failed to take into account a relevant consideration, in asking whether the driveway was 'fit for purpose' for a rural driveway, thus misdirecting itself as to the legal test in s 61 of the ACL;
5. the Tribunal erred by making a legally unreasonable decision.
1. Should leave be granted to appeal on questions other than questions of law, on the basis there has been a substantial miscarriage of justice in the Tribunal's evaluation of the evidence before it?
[5]
Whether Tribunal failed to afford procedural fairness
The appellants assert a denial of procedural fairness by reason of the manner in which certain aspects of the original hearing was conducted. In essence, they said they were denied an opportunity to adduce evidence in reply, both from their expert and by way of cross examination of the respondent's witnesses.
If made out, breach of procedural fairness is an error of law.
The Tribunal is entitled to exercise its discretion to direct how proceedings are managed and heard. In doing so the Tribunal must have regard to the guiding principle, namely the just, quick and cheap resolution of the real issues in dispute under s 36(1) of the NCAT Act. The Tribunal is also obliged to take such measures as are reasonably practicable to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings (s 38(5)(c), NCAT Act). The Tribunal may, itself, cross-examine witnesses (s 46(1)(c)).
In the present case, directions were made for the filing and service of evidence by the parties.
Complaint is made about two matters. Firstly, the appellants complain that their expert was not permitted to lead evidence to clarify his report. This was said to be evidence in reply. We note that Mr Loney's report was provided to the respondent and the Tribunal prior to the Tribunal hearing, in accordance with written directions of the Tribunal. The Tribunal admitted the report into evidence.
Where that evidence should have been provided in written form in accordance with directions previously made, denying a party the opportunity to examine their own expert witness to adduce additional evidence, will not, as matter of course, constitute a denial of procedural fairness. Moreover, if the appellants' expert witness had been allowed to give additional oral expert evidence at the hearing, beyond what was already contained in the report, there would have been a manifest unfairness to the respondent, who would not have had an opportunity to properly consider that expert evidence and, if necessary, to adduce further evidence in reply: Amos v PPT Investments Pty Ltd [2019] NSWCATAP 226 at [30].
Mr Loney was made available at the hearing by the appellants for cross-examination in accordance with the usual practice in the Consumer and Commercial Division. However there is no obligation on a party to question another party's witnesses. The respondent did not question the appellant's expert witness and in so doing, the respondent did not challenge the evidence given by Mr Loney in his written report. As the expert's evidence was not challenged by the respondent, it is difficult to see how the appellants were denied procedural fairness or a reasonable opportunity to be heard on their case on the basis asserted.
Therefore, we reject this challenge.
The second point raised by the appellants is that they were denied procedural fairness by not being provided with an opportunity to cross-examine the respondent's witnesses. The respondent's witnesses included the respondent's director, Mr Hassarati. This claim was initially framed, in the appellants' Notice of Appeal and written submissions, as a denial of an opportunity to "present evidence in reply". However nothing turns on this point, the parties having an opportunity to make relevant submissions to the Appeal Panel.
In their oral submissions at the appeal hearing, the appellants drew the Appeal Panel's attention to a number of points in the transcript of the hearing below which they say show they were denied an opportunity to cross-examine the respondent's witnesses. First, the appellants indicated that, at the conclusion of Mr Jannis' oral evidence, the Member asked Mr Hassarati if there was anything he wanted to ask the appellants about what he had just heard (transcript at AB p. 61). Mr Hassarati said no, and the Tribunal proceeded to invite him give his oral evidence. At the conclusion of Mr Hassarati's oral evidence, the Member did not ask whether the appellants wished to put any questions to Mr Hassarati about the evidence he had just led (transcript at AB pp. 68-69). Instead, the Tribunal proceeded immediately to have the respondent's second witness, Mr Mouhayet, give his oral evidence, after which she invited the appellants to question Mr Mouhayet (transcript at AB pp. 71-78).
The Appeal Panel was taken to the following exchange which occurred after the cross-examination of Mr Mouhayet, and after the appellants had already made a number of comments contradicting parts of Mr Hassarati's evidence (see transcript at AB p. 82-83):
Mr Jannis: Sorry. Can I keep going about [Mr Hassarati's] evidence, I mean I'll-
Member: I thought you'd finished sir.
Mr Jannis: No, I've got two pages, I've got two pages.
Member: You want to present-
Mr Jannis: Well, I've just written it by hand.
Member: Okay, what I'm going to do is I'm going to give you an opportunity just to address me.
Mr Jannis: Yes.
Member: I thought I had already done that, but you haven't finished?
Mr Jannis: No.
Member: And I'm going to ask everybody not to interrupt, because this is- including you ma'am.
Mrs Jannis: Yes.
Member: So if you could just tell me what it is you want to say.
Mr Jannis: Yes.
Member: And also-
Mr Jannis: This is in response to what he [Mr Hassarati] said this morning.
Member: And also address me in relation to the special circumstances that-
Mr Jannis: Yes, yes.
Member: -that will convince me to make that order.
Mr Jannis: Okay.
Member: So, continue, sir.
Prior to this exchange, in the transcript at AB 80-81, the following exchange occurred between the Member and the appellants:
Mrs Jannis: And with regards to him saying we said the materials are faulty, we never said that. We've got it in writing that he said the material was faulty and he was gonna get his solicitor contact them. I would like to know what did the solicitor do.
Member: He's not here, so.
Mrs Jannis: But we are -I'm asking Anthony what did-
Member: No, no it's not about asking. (Emphasis added) Um, you've presented your evidence, um, you've-you've got filed evidence. uh, I am now asking the questions just to clarify before I, um, give you an opportunity to sum up.
Mrs Jannis: And, with regards to the drainage, the-we paid for that, he didn't. We went and bought it ourselves. So, he didn't-he did not do that.
Mr Jannis: yeah, David said he-he did it.
Member: You didn't-you didn't put-you didn't.
Mr Jannis: David didn't do the drain.
Member: Okay.
Mr Jannis: He didn't do the drain. He didn't-Anthony didn't leave him-it was-I suggested because I have the parts already, um, on the property, I said what about if we put a drain here. And-and otherwise he wouldn't put any drains in and it would have been a lot worse. It's-it's on a bit of a slope, anyone who does a driveway knows that you have to put drainage in. You have to slow the water down and stop it. This water is just running through like a waterfall, and there is no drainage at all. I-I was the one that suggested the drainage.
At the appeal hearing the appellants indicated that the two page document mentioned in the transcript extract above at [26] contained specific questions to Mr Hassarati about his evidence, including questions about the manufacturer's guidelines that Mr Hassarati claimed to have followed, and whether Mr Hassarati had any evidence that Mr Mouhayet had worked on both stages of the construction of the driveway. The appellants contend that if the Member had allowed the appellants to ask Mr Hassarati these questions, the Tribunal may have ultimately given different weight to the evidence before it.
It is well-established that a failure by the Tribunal to allow a party an opportunity to cross-examine another party's witness may, in some situations, constitute a denial of procedural fairness: see e.g. Morgan v Shardlan Pty Ltd as Trustee for the Stumar Family Trust t/as Carpet One and Blinds Wagga Wagga [2018] NDSWCATAP 143 ("Shardlan") at [21]; Gallo v Duflou [2014] NSWCATAP 115 at [21] citing Wakim v Mathiew Pty Ltd [2002] NSWSC 405 at [30].
Further, where a party is unrepresented, a failure by the Tribunal to explain its procedures, if requested to do so, may also constitute a denial of procedural fairness, as well as a failure to comply with its obligations under s 38(5) of the NCAT Act: Shardlan at [21]; Lee v Cha [2008] NSWCA 13 at [48] (per Basten JA). This principle has, in some instances, led Appeal Panels in this Tribunal to decide that a failure to inform an unrepresented party that they had a right to cross-examine the other party's witnesses was an error of law (see, for example: Wilson v AR Browning Nominees Pty Ltd t/as Ad-Built; AR Browning Nominees Pty Ltd t/as Ad-Built v Wilson [2015] NSWCATAP 238 at [9], [44]; Renda v Wu [2016] NSWCATAP 238 at [2], [62]).
However, cross-examination is not an essential element of an oral hearing, nor is there a rigid rule that fairness always requires cross-examination to be permitted in administrative hearings: Aronson and Groves, Judicial Review of Administrative Action (6th ed 2017) at 612, citing O'Rourke v Miller (1985) 156 CLR 342 at 353 (per Gibbs CJ), Sullivan v Civil Aviation Safety Authority (2014) 226 FCR 555 at 595-596 (per Flick and Perry JJ) and other cases.
We referred earlier to s 46 of the NCAT Act which provides power for the Tribunal itself to call, examine and cross-examine witnesses. In comparison to legislation establishing other state civil and administrative tribunals, the NCAT Act does not expressly provide for a general right of the parties to cross-examine or examine witnesses (see e.g. s 102 of the Victorian Civil and Administrative Tribunal Act 1988 (Vic) and s 95 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld)). Rather, what is provided for by s 38 of the NCAT Act is that the Tribunal may determine its own procedure in relation to any matter for which the NCAT Act or procedural rules do not provide, and may inquire into and inform itself on any matter in such manner as it sees fit, subject to the rules of natural justice. As Harrison J found in Cheung v Yang [2013] NSWSC 1694 at [60] (in relation to s 28 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), which was in much the same terms), it is wholly within the power of the Tribunal to dispense with cross-examination if it thinks fit, provided it conforms to the rules of procedural fairness.
In this case, the Tribunal did advise both parties at the outset of the hearing that they would have an opportunity to "ask questions about the evidence" and "test the evidence" they heard (although it was not clear exactly who they could ask questions of) (see transcript, AB p. 38). It is clear that immediately following Mr Hassarati's oral evidence, the Tribunal did not specifically invite the appellants to ask questions, nor did the Tribunal invite them to do so later in the hearing. To the contrary, it would appear from the transcript provided to us that when Mrs Jannis sought permission to ask questions of Anthony (Hassarati) the Tribunal refused her permission to do so.
The Tribunal was in error in not allowing cross-examination and/or failing to offer the appellants with a chance to do so. Our reasons are as follows.
The Tribunal found the work undertaken by the respondent constituted residential building work within the meaning of the Home Building Act. It seems clear from the reasons that the work performed was pursuant to a contract between the appellant and the respondent. Claims were made arising from breaches of that contract and obligations imposed under the ACL.
In order to determine the claims, the Tribunal was required to ascertain the terms of the contract, including the scope of work to be performed. The terms would include those implied by the statutory warranties found in s 18B of the Home Building Act.
While the Tribunal refers to various conversations between the parties concerning the work to be performed, there is a conflict in the evidence concerning what was asked for and what was promised.
It seems clear the Mr and Mrs Jannis had initially asked for a driveway to be constructed of crushed granite and that they agreed to use a recycled road base as suggested by Mr Hassarati. They say they were told the material would have "a binder in it and it will be as hard as concrete and won't rut or wash away and will cope with heavy trucks, 12 ton": Decision at [6]. On the other hand, the Tribunal recorded that Mr Hassarati gave evidence that he told this Mr and Mrs Jannis that "putting concrete with the rate base would give a better bind" and that "such a driveway needs maintenance": Decision at [7].
Findings concerning the terms of the contract were critical in determining the claims made by the appellants in their application. These findings required the Tribunal to resolve the conflict in the evidence which we have highlighted above.
Having done so, the Tribunal was required to determine whether the contract had been breached and/or whether Mr Hassarati had breached the consumer guarantees found in the ACL. In this regard, amongst other things, evidence concerning what drainage was provided, who provided it, and the necessity for such drainage, may also be relevant to resolving the appellants' claims. Again, the evidence concerning drainage was in conflict.
In circumstances where Mr Hassarati had been provided with an opportunity to cross-examine Mr and Mrs Jannis and where the Tribunal had not permitted Mr and Mrs Jannis to cross-examine Mr Hassarati about the matters in dispute, it seems to us this failure constitutes a denial of procedural fairness.
Consequently, the decision should be set aside and the proceedings remitted for rehearing. The remitted proceedings should be heard by a differently constituted Tribunal and further evidence should be permitted.
It is unnecessary to deal with the other grounds of appeal.
[6]
Other matters
We make some brief observations about the reasons of the Tribunal and the matters which, in our opinion, will need to be considered at the rehearing:
First, the Tribunal determined the claim was a home building claim within the meaning of the Home Building Act, "residential building work" being work for which "the reasonable market cost of the labour and materials involved" is an amount greater than $5000.00 (Home Building Regulation, 2014 (NSW) cl 12) and being in respect of a dwelling which includes "driveways, paths and other paving" (Sch 1 cl 3(2)(k) Home Building Act). However, the Tribunal found that it had no jurisdiction to determine the claim which the Tribunal described as "proceedings for breach of statutory warranties" because the Tribunal said the claim did not relate to a major defect and had not been brought within the two year period as provided by s 18E of the Home Building Act.
This limit on the Tribunal's jurisdiction only operates in respect of claims for breach of statutory warranty: s 48K(7). Amongst other things, there appears to be no consideration by the Tribunal of the other provisions of s 48K of the Home Building Act and whether a claim for breach of contract might otherwise be pursued under that Act.
Secondly, in the absence of determining the exact services to be provided under the contract and what, if any work was expressly excluded (for instance drainage) and/or was to be carried out by the Mr and Mrs Jannis (personally or through another subcontractor/supplier), it is difficult to see how the claims under the ACL could be resolved. Similarly, having regard to the terms of the statutory warranties, and the fact they are implied terms in the contract, it may be necessary to consider the nature and effect of any warnings given by Mr Hassarati concerning the characteristics, need for maintenance and performance of the road surface provided, and whether such warnings are impacted by s 18F of the Home Building Act.
Thirdly, on the material provided to the Appeal Panel, there were photographs recording a significant pothole in the road. There was also evidence of erosion. It is unclear how this evidence was dealt with by the Tribunal and how it was evaluated against the obligations assumed by Mr Hassarati in terms of breach of contract and claims made under the ACL.
No doubt these, and any other issues raised by the parties, can be considered when the proceedings are reheard.
[7]
Orders
For the reasons above, the appeal is allowed and the following orders are made:
1. The orders made on 10 October 2019 in application HB 19/26920 are set aside and the proceedings are remitted for rehearing by a differently constituted Tribunal.
2. The parties have liberty to adduce further or other evidence.
3. The remitted proceedings should be listed for directions in the Consumer and Commercial Division as soon as possible.
[8]
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: 29 May 2020
Parties
Applicant/Plaintiff:
Jannis
Respondent/Defendant:
Ant-Hassa Pty Ltd
Legislation Cited (7)
Consumer, Trader and Tenancy Tribunal Act 2001(NSW)
Victorian Civil and Administrative Tribunal Act 1988(Vic)