(xiii) Mr and Mrs Kostas repudiated the Contract by terminating without proper cause. (The above paraphrases, uncontentiously, the list of findings contained in the written submissions of Mr and Mrs Kostas.)
Denial Of Natural Justice
77 At some stage, HIA Insurance submitted that the Tribunal was not bound by the rules of natural justice. This submission, in such absolute terms, was put faintly. Rather, the major thrust of the submission was that, if the rules of procedural fairness were applicable, they did not prevent the Tribunal from relying upon the affidavit of Mr Turrisi.
78 Where the exercise of power of a tribunal (or court) may adversely affect the rights of a party (or enforce them) the rules of procedural fairness apply unless the legislature provides otherwise. The exclusion of the rules of procedural fairness must be effected expressly or by plain words of necessary intendment: Annetts v McCann (1990) 170 CLR 596 at 598 (per Mason CJ, Deane and McHugh JJ).
79 HIA Insurance refers to the provisions of the Consumer, Trader and Tenancy Tribunal Act and, particularly, section 28 and following. Section 28: reposes in the Tribunal the power to determine its own procedure (subsection (1) of section 28); exempts the Tribunal from the rules of evidence and, [subject to the rules of procedural fairness], allows it to inform itself in such manner as it thinks fit (subsection 2); requires the Tribunal to act with appropriate informality and in accordance with "equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms" (subsection 3).
80 Provisions of similar kind (expressed in some respects in identical language) are familiar to any practitioner before tribunals in Australia and elsewhere. The term "equity, good conscience and the substantial merits of the case" is used more often than not to describe the tasks of tribunals that are required to alter the rights of parties and those terms apply the rules of natural justice: see Conciliation and Arbitration Act 1904-1983 (Cth) sections 40 and 41, ibid, 1983-1988, sections 110 and 111; Industrial Relations Act 1988 (Cth) sections 110, 111; Workplace Relations Act 1996 (Cth) sections 110, 111; Industrial Relations Act 1996 (NSW) sections 162, 163; Industrial Arbitration Act 1940 (NSW) section 83; Industrial Arbitration Act 1912-1949 (WA) section 69.
81 The earliest reference to these expressions discovered by the Court was by Henry VIII, later codified in "an act for the recovering of small debts and for the relieving of poor debtors in London" (3 James I C. 15, section 11), which, in 1606, gave similar procedural functions to the Commissioner who constituted Courts of Request or Court of Conscience under the statute. Its first use in this State seems to have been in 1842 (6 Vict. 15) and it was inserted in both the State (Industrial Arbitration Act 1901 (NSW)) and Federal (Commonwealth Conciliation and Arbitration Act 1904 (Cth)) industrial arbitration statutes when first enacted and into statutes dealing with small debt recovery: see Small Debts Recovery Act 1912 (NSW) section 7 and the article by O. Howard Beale at 10 ALJ 349. Whatever else it may connote, it certainly includes the rules of natural justice and procedural fairness: Barlow v Orde (1870) L.R. 3 P.C. 164 per Westbury LJ; Skinner v Naunihal Singh (1913) 40 Indian Appeals 105 at 114, per Shaw LJ. It has been applied in Australia as that which is right and fair, which has included natural justice at least since 1903: Colliery Employees Federation v Northern Colliery Proprietors Association [1904] 3 A.R. (NSW) 182 at 185; Greater Wollongong City Council v Dunn [1973] 1 NSWLR 36 at 42 (per Hutley JA).
82 The Consumer, Trader and Tenancy Tribunal Act (section 28(2) and section 35, which relates to ensuring that all parties have the right to call or give evidence and otherwise present their cases) confirms, rather than excludes, this approach. The Tribunal is bound by the rules of natural justice or, as they are often called, procedural fairness.
83 The rules of procedural fairness are neither immutable nor uniform. They will vary depending on the nature of the tribunal and the context of the proceedings before it. This Tribunal, when determining a matter utilising powers and jurisdiction of this kind, is exercising judicial power, i.e. it is determining existing rights according to law, albeit in a deliberately less formal context.
84 The rules of natural justice have been held, for example, in certain circumstances, not to include a right to cross-examine: T.A. Miller v Minister for Housing [1968] 1 WLR 992 at 995. However, even then it will necessarily include the right of a party to be informed of the evidence adverse to its interests in order to have the opportunity to controvert it. Often, the only practical means of controverting evidence will be to cross-examine: see Australian Postal Commission v Hayes (1989) 23 FCR 320 at 324-327 (per Wilcox J).
85 In the instant proceedings before the Tribunal, at least following the agreement as to procedure on 10 November 2004, it was necessary if HIA Insurance were wanting to rely on the affidavit of Mr Turrisi (or if the Tribunal were so desirous) for Mr and Mrs Kostas to be informed.
86 It is correct that the Tribunal may inform itself as it sees fit. It may, for example, rely on Royal Commission reports or Select Committees or even evidence in previous proceedings [see FEDFA v BHP (1913) 16 CLR 245 at 261 (per Griffith CJ)], but it must at all times give the parties an opportunity of controverting the material, and in the case of Mr Turrisi's affidavit in these proceedings, cross-examining him upon it. In order for Mr and Mrs Kostas to be given such an opportunity, they would have needed to be informed that the affidavit was to be used. They were not.
87 The reliance in this Court by HIA Insurance on the filing of the affidavit is misplaced. The record before the Tribunal discloses an understandable and appropriate level of formality in the receipt into evidence of the affidavit material. Objections to evidence were taken and upheld. Notwithstanding the provisions of the Act dispensing with the rules of evidence, the Tribunal applied many of those rules, presumably because of the attitude of the parties and the matters to be determined. No criticism is made because those rules were applied; and none could be. But the process adopted necessarily involved an understanding that affidavits (and other material), while filed with the Tribunal and perhaps physically read by the Tribunal, were not formally before the Tribunal until admitted and would not, until that time, be utilised by the Tribunal nor relied upon by the parties. Reliance on the affidavit of Mr Turrisi in these circumstances was impermissible.
Reliance On Tender Bundle And Extension Of Time
88 Thus far, for the purpose of the discussion of the submissions, it has been assumed that the Tribunal relied upon the affidavit of Mr Turrisi. The Tribunal does not expressly state any such reliance. Mr and Mrs Kostas submit that the evidence must have been relied upon in order for the Tribunal to have come to its conclusion.
89 However, the Tribunal was entitled to rely upon the Tender Bundle on which much of the cross-examination was based and which HIA Insurance tendered at the hearing on 10 November 2004. That Tender Bundle included the claims for extension dated 31 March 2000 (page 245 of the Bundle) and 23 May 2000 (pages 301-302 of the Bundle).
90 Each of those letters is addressed to Mr and Mrs Kostas at the address of the construction site, which was their residence prior to the commencement of the works. There is no suggestion of personal service on either Mr or Mrs Kostas. Further there is no reference to any facsimile number (or the ownership of a facsimile) on either letter (or on any other document) disclosing a facsimile address for Mr or Mrs Kostas. The construction site address is the address of Mr and Mrs Kostas in the Contract.
91 One may therefore infer, as was submitted by the HIA Insurance and Sydney Construction to the Tribunal, that each claim was sent to Mr and Mrs Kostas. Without any other evidence, such an inference would arise from the existence of each of the letters. However, as earlier stated, the content and efficaciousness of the letter of 23 May 2000 is, at least in part, inconsistent with the terms of the letter of 31 March 2000.
92 Contrary to the implication in the Tribunal decision at [11] infra at [72], there is no "deemed service". Moreover, given that service must be effected by fax, personal service or certified mail, and there is no suggestion of personal or fax service, Sydney Construction would have needed to send the letters by certified mail for it to have complied strictly with the terms of Clause 27 of the Contract.
93 If certified mail were used, then there would be in existence a receipt. No receipt is in evidence before the Tribunal. Nor is there a receipt for the certified mail attached to any affidavit of Mr Turrisi (or any one else). The inference must be that any such evidence of mailing, if it exists, does not support the case of HIA Insurance or Sydney Construction: Jones v Dunkel (1959) 101 CLR 298.
94 The issue that next arises is whether strict compliance with the means of service outlined in Clause 27 is required: Project Blue Sky v ABA (1998) 194 CLR 355. I have already referred to the use of the word "must" in the clause, which prima facie suggests strict compliance. There are, it seems, two purposes in Clause 27: first, certainty of delivery (and knowledge by the other party); and secondly, the date from which liability (or response) is calculated. If one party to the Contract did not strictly comply with the terms of the clause, but could otherwise prove actual receipt of the notice or other document, and the date of its receipt, that, it would seem, would be sufficient for service under the Contract i.e. substantial compliance of that kind would satisfy the purpose of the clause or such evidence would prove that personal service had been effected.
95 There is no evidence that either letter was sent by fax, was handed to either Mr or Mrs Kostas, was left with a person over 16 years of age at the address, or was sent by certified mail. Nor is there evidence that either letter was actually received by Mr or Mrs Kostas at any relevant date (i.e. before the Contract had been terminated) or the date of its receipt. (There was evidence, unsurprisingly, that Mr Kostas saw the document when served with the affidavits in the proceedings before the Tribunal.)
96 The mere fact that the Tribunal did not believe Mr Kostas and would not accept his evidence without corroboration does not mean that there is evidence to the opposite effect. In other words, while the Tribunal may have properly (on which I will comment later) taken the view that it would not accept evidence that Mr Kostas did not receive the letters, this would, absent other evidence of compliance with Clause 27, say nothing about receipt of the letters - it would leave the evidence neutral.
97 That this issue was never addressed, or was not adequately addressed, arises from the error in not considering Clause 27 of the Contract as relevant to the decision and misunderstanding either or both: the effect of not believing Mr Kostas on the state of the evidence concerning the receipt of the letter; and the onus of proof.
98 The material (including the Affidavits) filed in the Tribunal and relied upon in these proceedings discloses a contract, in original form, extended by the parties, on or shortly after 24 January 2000, by a period of 12 weeks to 1 July 2000 (Tender Bundle at page 113, as explained in evidence and submissions before the Tribunal). This aside, the evidence is incapable of supporting a finding that any further extension of time was effective.
99 Even if, contrary to the view already expressed, the Tribunal were entitled to rely on the affidavit of Mr Turrisi, it does not suggest personal or fax service; nor does it suggest certified mail was used. There is no evidence or material suggesting compliance with Clause 27 of the Contract.
Defective Work And The Notice Of It
100 As earlier stated (paragraphs 45 and following, infra) the parties corresponded concerning the progress payment (in the case of Sydney Construction) together with the Notice of Suspension of Work given by it. I have also referred to the letters sent by Mr and Mrs Kostas, or solicitors on their behalf.
101 As earlier stated, the letter of 4 May 2000 from Mr and Mrs Kostas to Sydney Construction, apart from denying an entitlement to the progress payment already claimed, listed 42 incomplete items and rejected claims for payment for 3 variations. On the same day Sydney Construction replied conceding some of the work had not been completed and giving notice of a suspension from Monday 8 May 2000.
102 The uncontested and uncontradicted evidence (and not subject to cross-examination) was that the builder in fact suspended works for at least some substantive time in May and made little or no progress from that time until the termination of the Contract on 29 June 2000. The uncontroverted evidence of the architect, tradespersons and Mrs Kostas, to this effect, does not depend upon the Tribunal's non-acceptance of the evidence of Mr Kostas.
103 While it is in accordance with the evidence that, as the Tribunal found, the builder was on site during that time, the uncontroverted evidence is that the "work" that was done was the removal of the builder's sign on the garage of the premises and the removal of work done as part of variation 11. There is correspondence during May between Sydney Construction (Mr Turrisi) and the architect (Paul Rappoport) concerning some work that Sydney Construction was required to do. It does not seem to have been performed or completed.
104 The removal of the work in variation 11 is instructive. Payment for variation 11 was one of the payments declined by Mr and Mrs Kostas. The submission put by Sydney Construction (and the evidence before the Tribunal) was that variation 11 was necessary and became part of the Contract. The position of Mr and Mrs Kostas was also that the work done and claimed in variation 11 was part of the Contract. The work, they said, was necessitated by defective work originally carried out by Sydney Construction. Therefore, there was no issue between the parties that the work itemised in variation 11 was a necessary part of the Contract. The only issue between the parties was which of them should bear the cost of that work. As a consequence, the removal of the work that formed part of variation 11 was, as a matter of fact and law, necessarily the reversing of progress of the works.
105 Of the 42 items the learned Tribunal Member found that only 8 of them fell into the category of work to be performed by Sydney Construction. Of those 8 items, the Tribunal found that Sydney Construction was attending to 5. That left 3 items of work to which, on the findings of fact of the Tribunal, Sydney Construction were not attending, notwithstanding the demand of Mr and Mrs Kostas of 4 May 2000. There is no finding as to whether or not the unattended items of work "substantially affects the work" as required by Clause 24 of the Contract. The Tribunal determined that, because there was another 4 months more for the Contract to last (the Tribunal having decided that the extensions of 31 March and 23 May 2000 were effective), it could be said that the items that were not being attended to could have been carried out, within the timeframe of the Contract, by Sydney Construction.
106 Further there is simply no evidence that was before the Tribunal on which it could have come to a view that as at 4 May 2000 Sydney Construction was attending to the items listed or any of them. Nor was there a submission to that effect by HIA Insurance.
107 HIA Insurance submit that the terms of the letter of 4 May 2000, which terms require Sydney Construction to rectify and/or remedy "within 10 days", does not comply with Clause 24 of the Contract because, it is said, the notice "did not give the Builder 10 days as required under Clause 24".
108 Clause 24 of the Contract entitled Mr and Mrs Kostas to notify Sydney Construction that "unless the default is remedied within 10 days or such longer period as specified, [Mr and Mrs Kostas] will end the contract".
109 There are obvious answers to the submission in this Court of HIA Insurance. First, the terms of the letter of 4 May 2000 are relevantly identical to the provisions of the Contract. Secondly, the letter demands remedy within 10 days failing which Mr and Mrs Kostas will end that Contract "in accordance with Clause 24" thereof. If, as is submitted, Clause 24 required 10 days to remedy (rather than remedy within 10 days) then the notice of 4 May 2000 would have required Mr and Mrs Kostas to provide that time.
110 However, Clause 24 allows notice to be given in the terms used. Furthermore, the notice of 4 May 2000, while referring to the 42 listed items on which attention has been focused, makes clear that those items adumbrate incomplete tasks and that Mr and Mrs Kostas also rely on a previous suspension of works by Sydney Construction without reasonable cause and the failure to proceed diligently.
Letter Of 12 May 2000
111 The Tribunal determined that the extension of time granted on 24 January 2000 waived any delays up to and including that date. There can be little doubt that a necessary inference of the grant of the extension is that the delays that are included in the extension are, to the extent of the extension, forgiven. It does not mean that, if, in the extended period allowed, the work were still not performed, reliance may not be placed upon the non-performance of the work.
112 Fundamental to the finding on both law and fact on the issue raised by the Notice of 4 May 2000 is the finding, without evidence, that the Contract still had 4 months or so to run. It did not.
113 The Tribunal found that the Notice of 12 May 2000 given by Mr and Mrs Kostas to Sydney Construction was insufficient to be a default notice under the Contract.
114 The insufficiency was the failure to provide particulars of the defective work requiring remedy. The Tribunal held that in order to invoke the right to determine the Contract on the basis of defective work, it was necessary to specify the work that it was said required remedying.
115 The letter of 12 May 2000 reiterated the notice of 4 May 2000, which alleged failure to proceed diligently, previous suspension without reasonable cause and inability or unwillingness to complete the work. The 12 May letter responded in detail to the comments of Sydney Construction on the allegations relating to the 42 items. It was necessary, given that some (albeit far more than three) items were still alleged to be incomplete, for the incomplete work allegation to be repeated in a manner that confined the allegation to that work not, by them, accepted as irrelevant to the claim. This was done.
116 As to the efficaciousness of the allegation of defective work, Mr and Mrs Kostas submit in this Court, and submitted below, that it was unnecessary to specify the defective work and rely on Brenmar Building Co v University of Newcastle, NSW Court of Appeal, unreported, 12 December 1977, BC7700142.
117 The Tribunal distinguished Brenmar on the basis, it seems, that the notice in Brenmar was for a different kind of breach. This distinction is partly correct. Brenmar was a judgment of the Court of Appeal (Hutley, Glass and Samuels JJA) in which notice had been given to a builder under a similar clause on the ground of a failure "to proceed with the Works with reasonable diligence or in a competent manner".
118 The Court in Brenmar, relying on Baron Parke in Pauling v The Mayor etc Borough of Dover 156 ER 644, Megarry J in Hounslow London Borough Council v Twickenham Garden Developments (1971) 1 Ch 233 and Moffitt J in Stewardson Stubbs & Collett v Bankstown Municipal Council [1965] NSWR 1671, held that in alleging "a failure to maintain those standards of building and building organisation which a builder can be expected to have, having taken on the responsibility of the task", such a written allegation was sufficient to put the builder on notice and requires the builder to do the work competently and expeditiously. A failure so to do can, thereafter, be objectively determined.
119 It seems to me that Brenmar is authority for the sufficiency of the notice (given on 4 May 2000 and reiterated on 12 May 2000) of unwillingness or inability to complete the works, unreasonable suspension of the works and failure to proceed diligently. In those respects the notices were good.
120 However, I agree with the Tribunal that to the extent that a party requires another party to remedy defective work, it is necessary, subject to any contrary implication in the Contract itself, to particularise the work that is said to be defective.
Conduct after 12 May 2000
121 As already stated, HIA Insurance relied upon a letter entitled "Claim for Extension of Time" dated 23 May 2000. The Tribunal determined that this letter was sent. The Tribunal stated at [11] that it was served in accordance with the Contract, despite taking the view that the relevant clauses of the Contract did not include the clause dealing with service (Clause 27).
122 The Tribunal relied on the letter (and some other material, I assume) to conclude that Mr and Mrs Kostas had caused delays. The first mention by Sydney Construction, in any purported claim for extension, of failures of Mr and Mrs Kostas causing delays was in the letter dated 23 May 2000. The provisions of Clause 6, Extension of Time, relevantly required Sydney Construction to notify Mr and Mrs Kostas of the cause of the delay and its length "within 10 working days of the occurrence of the event". Therefore, if the delay were caused by Mr and Mrs Kostas failing to provide materials, we can infer that the delay to which Sydney Construction was referring, as at 23 May 2000, was 10 days.
123 Further, we can assume, whatever delays Mr and Mrs Kostas caused prior to 13 May 2000, Sydney Construction could not utilise such delays for an extension of time under the Contract.
124 As already stated solicitors for Mr and Mrs Kostas wrote to the solicitors for Sydney Construction on 21 June 2000. They referred to their letters of 4, 12 and 16 May 2000 and the breaches of the Contract therein alleged. A copy of the report of the architect, Paul Rappoport, was enclosed. That report listed 51 separate items falling short of the standards required for work (and specified the standard required). It also lists a further 12 other excessive delay claims or general observations of failures by Sydney Construction.
125 The report concluded that Stage 5 had not been completed, and that "much of the work already carried out under previous claims is now either defective or incomplete". Mr Rappoport summarised his conclusions in the following terms:
"1. Water continues to seep into the basement area as a result of the Ag. Pipe not having been completed and signed off as adequate by an engineer in accordance with the Scope of works.
2. The first floor walls do not extend behind the eaves thus exposing the affected rooms to the elements.
3. The windows and door have not been properly flashed and may therefore admit moisture into the interior of the house as a result of water becoming entrapped in the brickwork. Weepholes have not been provided and the flashing is both incorrectly installed and incomplete.
4. Many windows and doors have not been glazed and may therefore permit continued exposure to the elements.
5. There is no evidence that the specified membrane has been installed to the horizontal slabs - both above slabs and below. Failure to have installed these membranes may result in the continued ingress of moisture into the interior long after the finishes have been applied.
6. Lack of adequate surface and roof water drainage provision to the rear patio, the bottom of the driveway where it meets the house, the incompleteness of the downpipe installation, the incorrect design having been applied to the portico roof drainage and potentially inadequate or insufficient drainage to the first floor roof terrace area may result in continued ingress of moisture into the interior of the house long after the finishes have been applied.
7. Parapet flashing and capping not having been provided may result in the ingress of moisture long after finishes have been applied."
126 Mr Rapport recommended as follows:
"For the reasons enunciated above, we recommend that until such time that the builder makes good the defects identified in this report and that he proceeds diligently to complete the works so that the interior space of the house is adequately protected from the ingress of moisture, whether via window elements, door elements, horizontal slab elements, roof elements, retaining wall elements, surface water drainage elements or any penetration not properly flashed or protected against the elements, payment for the claimed Stage 5 works should be suspended."
127 An affidavit of Mr Rappoport, sworn 23 December 2003, was filed in the Tribunal on 24 December 2003. It was relied upon in the proceedings on 10 November 2004. It was admitted and read without objection, there was no cross-examination of Mr Rappoport and there was no expert evidence otherwise adduced. The affidavit purports to be expert evidence. At least in proceedings governed by the rules of evidence, there would be issues associated with Mr Rappoport's independence, given that Mr and Mrs Kostas engaged him prior to the commencement of the litigation and to act in their interests.
128 Whatever view one may take of that, the evidence of Mr Rappoport is unassailable and, in fact, unchallenged. As at 21 June 2000, Sydney Construction was on notice of the precise matters that it was said were incomplete, the precise matters said to be defective and the precise manner that it was said Sydney Construction was not proceeding diligently.
129 Further, the Tribunal, on the evidence before it, was required to find those allegations against Sydney Construction proved. Sydney Construction was required, in order to avoid Mr and Mrs Kostas proceeding to terminate the Contract, to confirm, by 5pm 23 June 2000, that it would rectify items 1-57 in the report of Mr Rappoport and it would commence such rectification by 9am 28 June 2000. Sydney Construction was required, also, and amongst other things, to proceed to complete the works according to the Contract as per the requirements of Mr Rappoport. On 23 June 2000, Sydney Construction sought an extension of time before which any action to terminate the Contract would be taken. The extension sought was to 28 June 2000. At the time of that request Mr and Mrs Kostas had not indicated the date on which they would act to terminate.
130 It seems that, quite reasonably, Mr and Mrs Kostas took the request to be for further time by which Sydney Construction could respond to their letter. The deferral was granted and notified by letter also dated 23 June 2000.
131 No response from Sydney Construction was forthcoming and on 29 June 2000, Mr and Mrs Kostas terminated the Contract.
132 HIA Insurance submits that the deferral granted on 23 June 2000 was an election to keep the Contract on foot and/or waived all previous notices. A fair reading of this correspondence makes clear that Mr and Mrs Kostas continued to reserve its right to terminate (and expressly so) previously notified. Both parties relied in this Court on Immer (No 145) Pty Ltd v Uniting Church (1993) 182 CLR 26. On an objective view of the conduct of Mr and Mrs Kostas, it is not open to take the view that they elected not to exercise their contractual right, but simply waived their right to do so before 28 June 2000.
133 In Immer, the High Court said:
"[20] This appeal does not turn simply on whether the conduct of Immer, viewed objectively, constituted an election not to exercise its contractual right of rescission. Rather, the question as argued is whether, in the light of Immer's knowledge or lack of knowledge of relevant circumstances, it can be held to have so elected. In Sargent v. A.S.L. Developments Ltd. Stephen J. said: