The appellant is the homeowner Mr Bo Li who appeals from a decision published on 10 August 2015 requiring the respondent builder to immediately pay the appellant the sum of $730. The notice of appeal was filed 1 September 2015. The appellant, in the Tribunal below, sought compensation for:
1. incomplete and defective work set out in the Scott Schedule in the sum of $17,830;
2. overcharged amounts or allowances under the contract in the sum of $7,021;
3. rental loss from 29 April 2014 to date in the sum of $22,121.26;
4. cost of an expert witness report in the sum of $1,056.
The total now claimed by the appellant is therefore $48,028.26. The application originally filed dated 9 October 2014 sought the total amount of $20,880, claiming a breach of statutory warranty. None of the alleged incomplete or defective work has been repaired by the homeowner, according to the submissions made to the Appeal Panel.
The dispute arises from the construction of a granny flat at the property of the appellant. The parties entered into a contract dated 30 January 2014. This was the standard form contract issued by the Master Builders Association NSW for Residential Small Renovations & Additions, version February 2008 (the "contract"). The contract sum was $87,450.
[2]
Notice of Appeal
In the notice of appeal, the appellant states that the orders made are challenged because of the "dismissal of the vast majority of claims from the applicant". The appellant described the grounds of appeal as:
(1) Question of law;
(2) Decisions made are not fair and equitable;
(3) Decisions made are against the weight of evidence; and
(4) Significant new evidence now available which was not at the time of the hearing.
The grounds of appeal elaborate upon the assertion that the Decision was not fair and equitable by stating that the decision was "based on opinionated excuses, misleading submission and untrue documentation. The respondent did not follow procedural direction. No expert evidence from the respondent. No conclave as ordered by the Tribunal was ever possible".
The appellant elaborated upon the ground that the Decision was against the weight of evidence by stating that "opinion evidence was admissible and eventually outweighed expert evidence. Oral submission overrode written evidence when contradiction arose". The appellant also stated that the respondent tendered a "forged contract page" which had been "tampered" with by the respondent.
In elaborating upon the ground that evidence is now available that was not reasonably available at the time of the hearing, the appellant listed the evidence that he now seeks to produce to the Tribunal as follows:
1. Forged contract copy and fabricated copy of insurance documents;
2. Construction certificate, Basix certificate, architectural drawings;
3. Meeting minutes and translated transcript;
4. Photos proving the statement from respondent is misleading and false;
5. Written Quote from third party service provider;
6. Electronic evidence.
The appellant alleges that there was an error of law in the reasons of the Tribunal. To the extent that the appellant requires leave of the appeal panel the appellant says that the decision was not fair and equitable, and was against the weight of the evidence.
The notice of appeal requires the appellant to state when he first became aware of the evidence described above and in response to that requirement the appellant gave various dates commencing in January 2014 and continuing until April 2015. The Appeal Panel notes that the proceedings before the Consumer and Commercial Division were heard on 24 March 2015, 7 May 2015 and 17 July 2015 with the Decision being published on 10 August 2015.
The appellant thus conceded before the appeal panel that the evidence he sought to rely upon in the appeal was available at the time of the hearing. The appeal panel received the electronic recording and did not see a need to have it played. The appeal panel also had the plans and other documents referred to before it in the appeal papers. No oral evidence was taken at the hearing and the parties made oral submissions. Consequently the appeal panel did not have regard to any additional evidence.
[3]
Reply
The respondent has filed a reply to the appeal and relevantly it may be summarised as follows:
1. The respondent states that it supports all orders given by the Tribunal below;
2. The appellant fails to show an error of law;
3. The appellant fails to demonstrate that any of the leave grounds described above have been satisfied;
4. The assertion that the appellant has new evidence not reasonably available at the time of the hearing is disputed;
5. The appeal is "frivolous, vexatious, lacking in substance and misconceived'; and
6. The allegation concerning a forged contract page and a fabricated copy of an insurance document is disputed.
The appellant and Mr Hua who appeared for the respondent were both provided Mandarin interpreters. The appellant indicated that the interpreter was really for his mother who was present in the appeal hearing room. The appellant had a reasonably proficient use of the English language. Mr Hua addressed the appeal panel in English. The appeal panel had no difficulty understanding the appellant or Mr Hua when they spoke English. The appellant was, with respect, an articulate and clearly intelligent man who had a detailed knowledge of the documents upon which he relied. The respondent's representative, Mr Hua, was also clearly intelligent and understood the process and was able to make cogent submissions in English.
[4]
Relevant Legal principles concerning the appeal
The Appeal Panel is satisfied that the Tribunal has jurisdiction to hear this claim: Home Building Act 1989 (NSW), sections 48A, 48I, and 48K. Neither party raised objection to the jurisdiction of the Tribunal or the Appeal Panel.
This is an internal appeal: see sections 4 and 32 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the Act"). Section 81 of the Act provides:
81 Determination of internal appeals
(1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following:
(a) the appeal to be allowed or dismissed,
(b) the decision under appeal to be confirmed, affirmed or varied,
(c) the decision under appeal to be quashed or set aside,
(d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it,
(e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel.
(2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when varying, or making a decision in substitution for, the decision under appeal.
An internal appeal from a final decision in the Consumer and Commercial Division is heard by the Appeal Panel. The basis upon which appeals from decisions of the Consumer and Commercial Division may arise is referred to in section 80(2)(b) of the Act. That section states that an appeal may be made as of right on any question of law, or with leave of the Appeal Panel on any other grounds. The grounds for which leave may be granted are limited by Clause12 Schedule 4 of the Act.
The Appeal Panel therefore has the capacity to make a different decision to that of the Tribunal below if the appeal is allowed.
The decision of the Appeal Panel in Collins v Urban [2014] NSWCATAP 17, constituted by the President Justice Wright, Deputy President Westgarth and Principal Member Harrowell, comprehensively discussed the processes of an internal appeal such as this one.
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 and noted at [12] that in circumstances where an appellant is not legally represented, the Tribunal may approach the issue by looking at the grounds of appeal generally. The Appeal Panel in Prendergast while not expressing exhaustively possible questions of law, referred to the following at [13]:
1. Whether there has been a failure to provide proper reasons.
2. Whether the Tribunal identified the wrong issue or asked the wrong question.
3. Whether a wrong principle of law has been applied.
4. Whether there was a failure to afford procedural fairness.
5. Whether the Tribunal failed to take into account a relevant (mandatory) consideration.
6. Whether the Tribunal took into account an irrelevant consideration.
7. Whether there was no evidence to support a finding of fact.
8. Whether the decision was so unreasonable that no reasonable decision-maker would have made it.
The appellant seeks leave under the first two limbs of clause 12 of Schedule 4 of the Act, if leave is required. As discussed earlier in these reasons, the third limb of the clause is not able to be relied upon by the appellant. That limb refers to leave on the basis of a substantial miscarriage of justice in relation to fresh evidence which was not available before the Tribunal. The first two limbs of this provision are as follows:
(1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because:
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence,...
These provisions were extensively discussed in Collins v Urban at [65]-[84], and will be dealt with later in these reasons.
[5]
Question of Law
The written reasons of the Tribunal have been provided for the consideration of the Appeal Panel. The hearing in the Tribunal took place on 24 March 2015, 7 May 2015 and 7 July 2015. The evidence was concluded on 17 July 2015 and the matter was then reserved for the delivery of written reasons which were published on 10 August 2015. The written reasons in the Tribunal below shall be referred to as "the Decision" in these reasons.
The appellant has not provided the Appeal Panel with the transcript of the hearing in the Tribunal. The reasons of the Tribunal incorporate identification of each of the Scott Schedule items, and the quantification of the cost of rectification for each item as determined by the expert called on the part of the appellant. The respondent did not dispute before the Appeal Panel the accuracy of the references to the quantification or the identification of each of the matters which were referred to by the Tribunal in the Decision. The Appeal Panel proceeds on the basis that each of those matters is correctly identified by reference to the Scott Schedule numbering and that the quantum of rectification determined by the expert report is not challenged by the respondent. The respondent did not put before the Tribunal any different expert's report nor did he seek to rely upon such evidence before the Appeal Panel.
The Tribunal correctly identified in the Decision that the burden of proof in relation to the claim by the appellant lies upon the appellant and that the standard of proof is on the balance of probabilities. There is no error identified in that approach.
The appellant relies upon the statutory warranties pursuant to section 18B of the Home Building Act 1989. The appellant also relies upon schedule 2 of the contract and its reference to and listing of the following documents (which appears under the heading: "List the documents describing the works to be done by the Builder"):
1. Architectural Plans,
2. Structural Plans,
3. Site Stormwater Drainage Plan,
4. Erosion and Sediment Control Plan,
5. Construction Certificate dated 23 January 2014,
6. BASIX Certificate dated 13 January 2014,
7. Quotation by the builder dated 28 January 2014,
8. The 2007 Guide to Standards and Tolerances-NSW Office of Fair Trading.
The contract at Clause 1 (a) states that:
The work to be undertaken by the Builder (the "work") and documents particularising the work are detailed in Schedule 2. The contract sum is based upon those details. If those details are incomplete the contract sum payable by the Owner may change.
The quotation by the builder dated 28 January 2014, for the sum of $87,450, states:
This quote is base (sic) on the provided architectural and structural engineer Plans, inclusions BASIX COMMITMENTS and BCA NOTES with your letter and requirement, also with our on-site inspection and discussion.
The quotation does not include provision of awnings to the windows, ceiling fans to two rooms, gas outlet, neither for a flued heater in a bedroom, but does provide for plumbing as specified in the Quote. Much of the plumbing work was in fact not performed by the respondent but by a different plumber to the builder's plumber and retained independently by the appellant.
Under the heading "Granny flat plumbing" in the Quote there appears the following:
Hot and cold water services to bathrooms, laundry and the kitchen.
Toilet, vanity, shower screens and their installation.
Storm water connection to existing system.
Sewer connection to existing system.
Rainwater tank 2000L with pump system.
There are also some particulars concerning other categories of work to which we will refer later in these reasons.
The BASIX certificate states that "this certificate confirms the proposed development will meet the NSW Governments requirements for sustainability, if it is built in accordance with the commitments set out below". The certificate also states that it is a "it is a condition of any development consent granted, or complying development certificate issued, for the proposed development, that BASIX commitments be complied with".
Clause 3 of the contract provides that the work done under the contract will comply with:
1. the Building Code of Australia to the extent required under the Environmental Planning & Assessment Act 1979 (including any instruments made under that Act); and
2. all other relevant codes, standards & specifications that the work is required to comply with under any law, and
3. the conditions of any relevant development consent or complying development certificate & any construction certificate.
The Tribunal below accepted that the respondent was only responsible to build what was expressly agreed to in the Quote and specified in the plans and drawings referred to in Schedule 2 to the Contract, but subject to any agreed variations. The Tribunal did not accept that simply because the BASIX certificate referred to certain works that were to be performed to comply with that certificate that the respondent had agreed to perform those works where they were not specified in either the Quote, or provided for in the drawings provided by the appellant. The respondent's position is that it did what it quoted for and that it has built in accordance with the drawings and the Quote.
The BASIX certificate includes reference to certain heating and cooling measures which were not expressly referred to in the drawings provided to the respondent.
Additionally, there is no dispute that the appellant obtained a separate quotation for plumbing works for which he sought an allowance in relation to the contract. The respondent was not a party to negotiating that agreement between the appellant and the plumber. The respondent is not named in the quotation from the plumber. The quotation from the plumber obtained by the appellant specifically excludes supply/installation of floor waste grates, hot water heaters, and the greywater system if required by certifying authorities. The BASIX certificate specifies a greywater system should be installed. The appellant has not explained in his evidence or submissions why he did not from the outset insist upon and obtain a quotation from the respondent, or from the plumber he sourced, to specifically include a quotation for installation of the greywater system.
As stated, the appeal notice contains the following grounds of appeal:
(1) Question of law;
(2) Decisions made are not fair and equitable;
(3) Decisions made are against the weight of evidence; and
(4) Significant new evidence now available which was not at the time of the hearing.
The question of law which the appellant raises before the Appeal Panel hearing is whether the Tribunal correctly interpreted the contract and identified the specified works to be performed under the contract. The appellant did not identify in the appeal document precisely the question of law asserted. It is convenient to characterise the appeal on a question of law as one challenging the correctness of the contractual principles applied by the Tribunal and the interpretation of the contractual provisions.
Both parties signed the quotation dated 28 January 2014. No further amendment to that Quote was sought by the appellant prior to entering into the contract. There had been two prior versions of the Quote submitted by the respondent. Neither of those earlier quotes were apparently accepted by the appellant homeowner. The contract was signed on 30 January 2014. The anticipated completion date was 28 April 2014. Practical completion in terms of clause 6 of the contract was given on 29 May 2014.
[6]
Home Building Act Provisions
The Home Building Amendment Act 2014 (NSW) ("the Amending Act") came into force on 15 January 2015. The Appeal Panel has previously considered the effect of those amendments in relation to licensing requirements in Commissioner of Fair Trading, Office of Finance and Services, NSW Fair Trading v Kassem [2015] NSWCATAP 173. The Home Building Regulation 2004 (the 2004 Regulation) was also repealed and replaced by the Home Building Regulations 2014 ("the 2014 Regulations") on the same date consequent upon the passage of the Amending Act and pursuant to the regulation making powers conferred by the Act.
The transitional provisions for the Amending Act are set out in Schedule 4 particularly Part 20 of the Amending Act, and in clause 75 of the 2014 regulations.
The relevant statutory warranty section, that is section 18B, was amended by the Amending Act with effect from 15 January 2015: Amending Act, (2014 No 24), Sch 1 [25] [26]. At the time of entering into the contract on 30 January 2014, and at the time of commencement of these proceedings in the Tribunal on 9 October 2014 the relevant part of the section read as follows:
18B Warranties as to residential building work
The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work:
(a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract,
(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,
(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,
(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,
(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling...
After the amending Act came into force the relevant section was changed to read:
18B Warranties as to residential building work
(1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work:
(a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract,
(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,
(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,
(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,
(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling...
The relevant extract from the savings and transitional provisions in Part 20 of Schedule 4 to the Act are:
121 General operation of amendments
(1) Except as otherwise provided by this Part or the regulations, an amendment made by the amending Act extends to:
(a) residential building work or specialist work commenced or completed before the commencement of the amendment, and
(b) a contract to do residential building work or specialist work entered into before the commencement of the amendment (including a contract completed before that commencement), and
(c) a contract of insurance entered into before the commencement of the amendment, and
(d) a loss, liability, claim or dispute that arose before the commencement of the amendment, and
(e) an application for a licence or certificate that is pending on the commencement of the amendment.
(2) However, an amendment made by the amending Act does not apply to or in respect of:
(a) proceedings commenced in a court or tribunal before the commencement of the amendment (whether or not the proceedings were finally determined before that commencement), or
(b) a claim made before the commencement of the amendment under a contract of insurance (whether or not the claim was finalised before that commencement).
...
123 Form of contracts
(1) An amendment of section 7 (except section 7 (8)) by the amending Act does not apply to a contract entered into before the commencement of the amendment.
(2) The amendment of section 7A by the amending Act does not apply to a contract entered into before the commencement of the amendment.
124 Deposits and progress payments
An amendment of section 8, 8A or 16E by the amending Act does not apply in respect of a contract entered into before the commencement of the amendment.
125 Statutory warranties
(1) Section 18BA (Duties of person having benefit of statutory warranty) does not apply in respect of a contract entered into before the commencement of the section.
(2) The amendment of section 18F by the amending Act does not apply in respect of a contract entered into before the commencement of the amendment.
Section 18BA of the Act now provides:
18BA Duties of person having benefit of statutory warranty
(1) Breach of a statutory warranty implied in a contract constitutes a breach of the contract and accordingly:
(a) a party to the contract who suffers loss arising from the breach has a duty to mitigate their loss, and
(b) the onus of establishing a failure to mitigate loss is on the party alleging the failure.
(2) The duty of a party to a contract to mitigate loss in respect of a breach of a statutory warranty extends to a person who has the benefit of the statutory warranty or who is entitled to the same rights as those that a party to the contract has in respect of the statutory warranty.
(3) The following duties apply to a person who has the benefit of a statutory warranty but do not limit any duty the person has to mitigate loss arising from breach of a statutory warranty:
(a) when a breach of the statutory warranty becomes apparent, the person must make reasonable efforts to ensure that a person against whom the warranty can be enforced is given notice in writing of the breach within 6 months after the breach becomes apparent,
(b) the person must not unreasonably refuse a person who is in breach of the statutory warranty such access to the residential building work concerned as that person may reasonably require for the purpose of or in connection with rectifying the breach (the "duty to allow reasonable access" ).
(4) A breach of warranty "becomes apparent" for the purposes of this section when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach.
(5) If a failure to comply with a duty under this section is established in proceedings before a court or tribunal concerning a breach of a statutory warranty, the failure is a matter that the court or tribunal may take into account. If the failure is a failure to comply with the duty to allow reasonable access, the court or tribunal must take the failure into account.
Section 18F of the Act prior to the amending Act provided:
18F Defence
In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from instructions given by the person for whom the work was done contrary to the advice in writing of the defendant or person who did the work.
The relevant statutory warranty provisions and the defence provision which apply are those unamended provisions which were in force at the time of the entering into the contract and the commencement of proceedings in the Tribunal: sections 5(2) and 30(1)(b),(c) and (e) of the, Interpretation Act 1987 (NSW); see Roads and Traffic Authority of New South Wales v Barrie Toepfer Earthmoving and Land Management Pty Ltd (No 7) [2014] NSWSC 1188, at [199]-[200], per Price J (as he then was); ADCO Constructions Pty Ltd v Goudappel [2014] HCA 18, at [11], [12], and [27] per French CJ, Crennan, Kiefel and Keane JJ, and at [49]-[52] per Gageler J. References to provisions of the Act in the balance of these reasons should be read in that way.
The relevant regulations which apply therefore for the same reasons are the Home Building Regulation 2004 because the Home Building Regulation 2014 provides:
75 Repeal and savings consequent on that repeal
(1) The Home Building Regulation 2004 is repealed.
(2) Any act, matter or thing that, immediately before the repeal of the Home Building Regulation 2004, had effect under that Regulation continues to have effect under this Regulation.
(3) If the Chief Executive had requested that a person pay a fee under the Act prior to the commencement of this Regulation, the amount payable is the amount that applied at the time that the request was made.
Pursuant to schedule 2(1) of the Home Building Regulation 2004 (the "Regulations") plans and specifications for work to be done under the contract form part of the contract, and "[a]ny agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf of each party to this contract." The owner's checklist required in Schedule 3 to the Home Building Regulation 2004 is apparently not part of the contract documentation provided to the Tribunal.
Regulation 2 requires all work done to comply with the matters referred to in Regulation 2 (1) (a), (b) & (c). These essentially replicate clause 3 of the contract.
It is to be observed that clause 16 of the contract expressly incorporates the statutory warranties into the contract.
[7]
Contract Provisions
As noted earlier schedule 2 of the contract lists the documents describing the work to be done by the Builder. These documents include all plans, the Quote and the Basix certificate. The Quote expressly states that it is based on the plans and the "BASIX COMMITMENTS".
The drawings or plans which are referred to in Schedule 2 to the Contract do not incorporate all of the matters referred to in the BASIX certificate. In particular, there is no reference in the plans to window awnings or shades, nor is there reference to the greywater system in those plans. In architectural drawing CC-01 of the plans provided to the builder and which forms part of the contractual documents is a statement upon which the homeowner relies: "REFER TO LOCAL AUHORITY (sic) CONDITIONS OF APPROVAL FOR ANY ADDITIONAL REQUIREMENTS." These additional conditions of approval are not clearly specified in the contractual documents.
Additionally, there is no reference in the architectural plans (esp. CC-02) to ceiling fans or gas outlets and location of any heaters. The quotation dated 28 January 2014 which is referred to in schedule 2 to the contract similarly makes no reference to ceiling fans, the greywater system, window awnings or shades, gas outlet points (other than three being those specified in the kitchen, lounge, and for the hot water system). The quotation also contains exclusions, in Part F, in relation to all appliances (cooktop, oven, dishwasher, range hood et cetera), all light fittings, bathroom or ensuite and laundry all other fittings or accessories, and landscaping.
It is a principle of construction of contractual documents that they should be read as a whole so as to yield an harmonious, not unworkable, reading which might result otherwise if clauses given their normal operation would be in conflict: Morgan Equipment Co v UMW Corporation Sdn Bh D [2002] NSWCA 193 at [10]. A conflict between documents may be resolved by an internal aid to construction within the contract. The construction to be preferred is one which will render documents and provisions consistent with each other. However, as stated by Jessel MR in Re Phoenix Bessemer Steel Co (1875) 44 LJ Ch 683: "...that if one of two contemporaneous documents is ambiguous in its terms, but the other is clear, then force is to be given to the one whose terms are clear, so as to interpret the one containing ambiguous terms".
Clause 16 of the contract relevantly provides as follows:
16 Statutory warranties for residential building work
The Builder in relation to work which is residential building work under the Home Building Act 1989 warrants that:-
(i) the work will be performed in a proper and workmanlike manner and in accordance with the drawings, specifications, and details identified in Schedule 2;
...
(iii) the work will be done in accordance with, and will comply with, the Home Building Act or any other law;
...
(vi) if the Owner expressly makes known to the Builder a particular purpose for which the work is required or a particular result the work is to achieve, then the work of the Builder is to be reasonably fit for such a purpose or result.
With reference to clause 16 (vi) any such purpose is to be detailed and written in this contract as a special condition. If there is no such special condition then there will be no particular purpose or particular result for the works other than completion of the work under the contract.
Further to point 16 (vi) if a purpose listed as a special condition alters the work to be done relative to the contract drawings then a variation will be involved.
If the Owner does not sign a variation for such work then the drawings will override any special purpose or result listed as a special condition.
In other words in such circumstances the drawings represent what is required to be done by the Builder and if a special purpose alters that position then a written variation must be provided by the Owner to the Builder. The costs consequences of such a variation will be dealt with under Clause 8. (Emphasis in the original)
Clause 16(vi) envisages that if a contract contains a special condition detailing a particular purpose or result for the works and that purpose alters the works to be done relative to the contract drawings then a variation will be involved. Further if the owner does not sign a variation for such work then the drawings override any special purpose or result listed as a special condition. Accordingly in some circumstances (but not all) the drawings override the special purpose clause. In any event these proceedings do not contain any evidence that a special condition as to the purpose or result of the work was sought or agreed.
The Quote dated 28 January 2014 describes the scope of works proposed. It incorporates the drawings which were provided to the Builder. It incorporates the "BASIX COMMITMENTS". The owner accepted the Quote, which was the last in a series of quotes provided by the Builder none of which were previously accepted by the homeowner. The plumbing work was excised to a large extent by the subsequent employment of the plumber retained directly by the homeowner.
[8]
The appellant's and respondent's submissions
The appellant's submissions dispute the finding made in the Decision that certain items, which were not constructed, were not part of the scope of works required to be undertaken by the respondent. The respondent submitted that these items (details of which we will deal with below) were not part of the Quote and therefore not part of the scope of works. The Decision supported the respondent's contention. The appellant seeks to demonstrate that the Decision was wrong in defining the scope of works.
The appellant made submissions in respect of each of the items dealt with in the Decision and it is necessary to set out the appellant's submissions in respect of each item. It is convenient to also deal with the respondent's submissions in respect of each item.
[9]
Claim for ceiling fans
As stated in the Decision the appellant claimed that the respondent should have installed two ceiling fans. The Decision rejected that claim. The appellant submitted that it was an item in the BASIX certificate that fans be included. That certificate states that there must be a ceiling fan in at least one living area and one bedroom area, unless a system with a higher energy rating is installed.
The respondent submits (and the Decision below accepted this submission) that although there was a requirement for two fans as part of the BASIX certificate, that requirement was not part of the Quote or the contract. The respondent submitted that it was only in so far as the BASIX certificate requirements were relevant to the work which the respondent agreed to undertake in the Quote that the BASIX certificate set out the obligations of the respondent. The appellant relied upon the report of an expert witness, Mr Gordon Xue (the Xue Report). His report assessed the cost of providing ceiling fans at $330.00.
[10]
Window shading devices
The appellant submits that the respondent was responsible for the installing of window shading devices as that was a requirement of the BASIX certificate in circumstances where the eaves were less than 450mm in width (as was acknowledged to be the case). The Decision decided that as neither the Quote, the drawings nor any other documents expressly provided for the installation of window shades the respondent was not responsible for their installation or supply.
The appellant submits that the plans are not determinative because they contain a statement to the effect that it is necessary to refer to local authority conditions for any additional requirements. The appellant also submitted that the BASIX certificate stated that there must be installed "windows, glazed doors and shading devices described in the table below, in accordance with the specification listed in the table".
The appellant relied upon the Xue Report. That report stated that in this case (by reasons of the width of the eaves) there was a requirement to provide window shading. The report included evidence of the cost of installation in the sum of $2,200.00. Again, the respondent submitted that as neither the Quote nor drawings refer to shades there was no express obligation to provide shading and thus the respondent was not responsible. The Decision agreed with the respondent's submissions.
[11]
Grey water system
The appellant submits that the respondent should have supplied and installed a grey water system. The basis of this submission was that it is a requirement of the BASIX certificate. That certificate states that there must be installed a "grey water treatment system on the site". As with the window shades, the Decision rejected this claim and agreed with the respondent's submission that there was no express obligation on the respondent to install a grey water system.
[12]
Heating system
The appellant submits that the BASIX certificate required the installation of a gas flued heating system in the bedroom and that therefore the respondent was required to install a gas connection point. The BASIX certificate states that the applicant (referring to the homeowner/the appellant in this case) must "install the following heating system, or system with a higher energy rating in at least one bedroom: gas fixed flued heater". The respondent denies that it is obliged to comply with these specifications and also submitted that the Quote specifically required only three gas points. There was no dispute that three gas points had been installed.
The respondent submitted that it was not responsible for this work and additionally that the parties had agreed that the appellant would engage a plumber to do plumbing work. The respondent submitted that the installation of a gas connection point was part of that work.
The Decision rejected the appellant's submission and accepted the respondent's submissions.
[13]
No ventilation system in laundry
The Decision rejected the appellant's claim for $470.00. The basis for the Decision was that neither the BASIX certificate required installation of a ducted fan and that paragraph F of the Quote excluded laundry fittings.
The appellant submitted that the contract (Schedule 4, subparagraph (iii)) expressly provided that "all fittings to be installed". The appellant also submitted that the BASIX certificate required installation of a ducted fan. The appellant submitted that the Quote also provided for the installation of a ventilation system.
[14]
Window and sliding door architraves
In the appeal submissions the appellant sought to add a new claim. This was a claim that there had been no window or sliding door architraves installed. However this was not a claim which was raised in the proceedings which were the subject of the Decision and therefore cannot be considered on this appeal.
[15]
Defective work Including Decision with respect to Defective work
The appellant appeals against the decision to reject a number of claims identified under the heading "defective works - items 5.1, 5.5, 5.9, 5.10 and 5.12". These are each dealt with in the following paragraphs.
[16]
Item 5.1 - floor grate dispute
The Decision dealt with the competing evidence in relation to this item and found that the appellant had changed his mind and sought to have the grates which were in fact installed. The appellant argues that the evidence did not justify that conclusion. However, the submissions of the appellant do not point to any error of law and nor do the submissions identify any basis upon which the Appeal Panel could give leave to appeal under one of the provisions of cl 12 of Sch 4 of the Act.
[17]
Item 5.5 - laundry door not installed as per approved plan
The Decision below found that the evidence on this matter was contradictory and that the claim was "ambiguous and confusing". The Decision found that the appellant had been unable to establish the breach alleged and any loss that flowed from it. The essence of the respondent's evidence had been that the construction of the door was the consequence of changes agreed with the appellant.
The appellant's submission asserts that the respondent had misled the Tribunal. However, the submissions do not point to any evidence which would satisfy one of the leave grounds identified in clause 12 of Schedule 4 of the Act.
[18]
Item 5.12 - incomplete corking around bathroom fittings
The Decision found that this claim concerned an assertion that there was incomplete sealing around the basin installed by the plumber engaged by the appellant. The Tribunal found that the respondent was not responsible. The appellant asserts that the respondent was the "principal contractor" and should be held responsible. There is no basis, in our view, for upsetting the Decision.
[19]
Overcharged amount
The first item disputed by the appellant concerns the Decision in relation to the claim arising out of the kitchen installation. The appellant had claimed that the installation cost should be deducted from the contract price because it was the responsibility of the respondent to install the kitchen. The Decision referred to the fact that the Quote expressly excluded the kitchen in section F of the Quote. As a consequence the Decision decided that the respondent had no obligation to install the kitchen.
It appears to the Appeal Panel that the Decision was in error in stating that the Quote expressly excluded the kitchen in section F of the Quote. An earlier quotation (dated 26 January 2014) expressly excluded the kitchen but the Quote (dated 28 January 2014) did not contain such exclusion. Nevertheless, it is the opinion of the Appeal Panel that there is insufficient evidence before the Appeal Panel put forward by the appellant to explain why the appellant should be reimbursed by the respondent the sum of $650.00 which the appellant had allegedly paid a kitchen company to install the kitchen.
The appellant disputes the Decision in rejecting the claim for $150.00 being the cost of installing a range hood cabinet. The Decision stated that section F of the Quote specifically excluded kitchen appliances. It is the case that section F of the Quote excludes "all appliances (cooktop, oven, dishwasher, range hood and etc)". Accordingly, it is the view of the Appeal Panel that the Decision was right in rejecting this claim.
The appellant disputes the rejection in the Decision of the claim for the cost of a shower screen installation. The amount claimed is $594.00. The Decision records that the Quote provided for shower screens to be allowed at $800.00 each. The respondent arranged for the supply and installation of the shower screens at a cost of $1,200.00 and remitted to the appellant the sum of $400.00 (being the difference between $1,600.00 for the costs of two shower screens and the amount which the respondent paid to the supplier for the supply and installation). The Decision accepted the respondent's submissions that this was the correct amount.
However, in the opinion of the Appeal Panel the correct approach to the refund would have been to consider evidence as to the value of the two shower screens supplied and then to have deducted that amount from $1,600.00 to produce the amount of the refund. The appellant produced evidence from an expert that the cost of installation was $600.00 and there was evidence that the respondent paid $1,200.00 for the supply and installation of the shower screens. Accordingly, $600.00 must have been the cost of the shower screens and that would result in the appellant being entitled to the refund of $1,000.00. (ie. $1600 allowed less actual cost of $600). As $400 has been allowed the further allowance is $600. We should add that we are of the view that the allowance of $800 each in the Quote is for supply only. This view is based upon our interpretation of clause 5 of the contract which refers to allowance for items and allowances for work.
The appellant makes a claim in respect of the cost of drilling a hole for the vent of the range hood. The claim is for $200.00. This claim was rejected (see paragraph 34 of the Decision). It is the opinion of the Appeal Panel that there is insufficient evidence put forward by the appellant to explain why the appellant should be paid by the respondent the sum of $200.00 when the appellant had paid a kitchen company to install the kitchen. We also agree with the Decision and reasoning concerning bathroom accessories - see paragraphs [35], [36] of the Decision.
[20]
Decision with respect to incomplete work
The task of the Appeal Panel in relation to 5 items (ceiling fans, window shades, grey water system, heating system and laundry ventilation) not built or installed is to determine whether there was an error of law in the decision which had construed the contract as not requiring those items to be built or installed. As stated earlier this task requires the Appeal Panel to determine the scope of works under the contract.
As stated earlier it is a principle of construction of contractual documents that they should be read as a whole so as to yield a harmonious, not unworkable reading. In a contract regulated by the Home Building Act (such as here) s18B of the Home Building Act (HBA) implies certain warranties into the every such contract including a warranty that the "work will result, to the extent of the work conducted in a dwelling that is the reasonably fit for occupation as a dwelling". In Builders Insurers Guarantee Corporation v the Owners - Strata Plan 60845 [2012] NSWCA 375 the Court of Appeal agreed with a submission that there are aspects of building work that would be reasonably incidental to the work a builder is contracted to construct. For instance if a builder is contracted to construct windows in a building and fails to install appropriate flashings therefore allowing water ingress , the failure would fall within the expression "to the extent of the work conducted" in s18B of the HBA (per Bergin CJ in Equity at [46]). We now turn to each of the five claims.
[21]
Claim for Ceiling fans
The Quote required the building of a "granny flat" comprising one bedroom and an area described on the plan as a "living/lounge" room. In our view the requirement for constructing such a dwelling included complying, to the relevant extent, with the obligations contained in the Basix certificate and that, accordingly, those relevant requirements were part of the scope of works subject to any contrary indication in the contract documents. The respondent's submission is described in paragraph 17 of the Decision to this effect: "the Quote sets out the work that it [the builder] was to be liable for and although the Builder was bound to comply with the Basix certificate, it was only insofar as the Basix certificate requirements were relevant to the work the builder agreed to do in the Quote". This statement is a statement with which the Appeal Panel would agree but it appears to the Appeal Panel that the Decision did not in fact follow that submission. It did not find that the respondent was obliged to comply with obligations contained in the Basix certificate insofar as those requirements were relevant to the work the builder agreed to do in the Quote. Rather, in the case of the ceiling fans, the Decision was based upon the finding that there was no express agreement to install the fans. That finding is inconsistent with the submission
However paragraph 9 of the Quote describes the electrical work and expressly describes the extent of that work. This description does not include the installation of ceiling fans. The absence of any reference to such fans in the Quote means, in our view that the scope of the works did not include such fans notwithstanding the requirements for them is part of the Basix commitments. In our view when the Quote defines the scope of the works in a particular respect it does not necessarily follow that the Basix commitments are incorporated. The claim is therefore rejected.
[22]
Window Shades
We are of the view that the Decision was in error in being based upon the fact that there was no express provision in the Quote, the drawings or other document (other than the Basix certificate) which provided for the respondent to install window shades. We are of the view that the scope of works included the requirement of the respondent to do that which was necessary to comply with the Basix certificate unless the Quote defined the scope more narrowly. In this case (unlike the position with respect to the ceiling fans) this scope was not defined in the Quote in a way which made it clear that the Basix commitments were not included. In our view, the appellant is entitled to the amount identified in the Xue Report namely $2,200.00.
[23]
Grey Water
In our view the Decision was in error in basing the rationale for rejection of the claim upon the basis that the documents comprising the contract had not expressly provided for the builder to supply and install the grey water system. In our view, the scope of works included plumbing the details of which have been set out earlier in these reasons. In our view, the obligation to undertake plumbing included the further obligations contained in the Basix certificate. However there was evidence that after the contract was entered into the parties agreed that plumbing would be excised from the scope of work. The extent of the plumbing work that was excised was agreed by the parties to be contained in a quotation headed "Parberv 1.3". That document expressly provided that the builder (i.e. the respondent) remained responsible for installing the grey water system.
In our view the agreement between the parties to excise plumbing from the scope of works had the effect that any obligation to install a grey water system was also removed. The fact that the appellant obtained independently of the respondent a quote which did not incorporate a requirement for the appellant's plumber to install a grey water system is the appellant's responsibility. The Decision was correct in rejecting the claim.
[24]
Heating system
In our view the Decision was not in error in basing the rationale for rejection of the claim upon the basis that the documents comprising the contract had not expressly provided for the builder to supply and install the heating system. The Quote refers to three gas points in the kitchen, lounge area and for hot water and in our view that has the effect of defining and limiting the scope of works. Because the Quote was limited in its scope the Basix commitments were not incorporated into the scope.
[25]
Ventilation system in laundry
In our view the Quote did not specify that the respondent was to install a ventilation system. Paragraph F of the Quote, which lists items which are described as "Exclusive" (which we take to mean "Excluded"), refers to "bathroom or Ens and laundry all other fittings or accessories". The plans or drawings do not refer to the installation of a ducted fan in the laundry, nor do they specify fans in the kitchen or bathrooms. The Quote only refers to the installation but not the supply of exhaust fans in the two bathrooms. The BASIX certificate refers to installation by the appellant of a ducted fan in the laundry, at least one bathroom and the kitchen, and in our view, for the reasons identified with respect to the above items, the Decision was not in error in rejecting this claim. The value of this claim as identified in the Xue Report is $470.00.
[26]
Costs
The appellant has claimed costs. In these proceedings costs incurred in the proceeding in the Consumer and Commercial Division are regulated by Rule 38 of Civil and Administrative Tribunal Rules (the Rules) and the costs incurred in the appeal by s60 of the Act. Under both Rule 38 and s60 the Tribunal may award costs in some circumstances. In the Decision costs were not awarded. In our view there should be no order for one party to pay the other party's costs in these proceedings. The Appellant has not demonstrated that the Decision was in error or that a miscarriage of justice has occurred in not awarding costs. So far as the appeal costs are concerned there are no special circumstances justifying an award of costs. Special circumstance must be found to exist before costs can be awarded - see s60(2). The appellant made allegations against the respondent that some documents had been fraudulently altered or tampered with. In our view these allegations were not relevant to the just resolution of the matters the subject of the appeal and accordingly, the Appeal Panel has not expressed any view on them.
[27]
Conclusion
In summary for the reasons previously stated our conclusions are
1. Ceiling Fans - rejected.
2. Window Shades - accepted and the amount payable is $2,200.
3. Grey Water Systems - rejected.
4. Heating System - rejected.
5. Laundry Installation - rejected.
6. Defect Claim - Floor grates - rejected.
7. Defect Claim - Laundry Door - rejected.
8. Defect Claim - Incomplete corking - rejected.
9. Overcharging re: Kitchen Installation - rejected.
10. Range Hood - rejected.
11. Shower Screen - refund due $600.
12. Drilling a hole - rejected.
The Appeal Panel has found that there was an error of law in the construction of the contract in so far as the scope of works carried with it the obligations to install window shades. The Appeal Panel has found that there was an error in the calculation of the refund in respect to the shower screens, Accordingly the Appeal Panel will grant leave to appeal on the grounds that the Decision in that respect was clearly mistaken: Collins v Urban at [65]-[84]. The result is that the Appeal should be upheld and that the respondent should pay the appellant the sum of $2,800 in addition to the sum of $730 already awarded by the Tribunal.
The orders of the Appeal Panel will be that:
1. Leave to appeal is granted.
2. Appeal upheld.
3. The order made in proceedings HB 14/49405 is set aside.
4. The respondent is to pay the appellant the sum of $3,530 immediately.
Finally, we note that the appellant appeals the Decision to reject the appellant's claim for the loss of rent. We are of the view the Decision in this respect is correct: see paragraphs [39] to [41] of the Decision. As the Decision records loss of rent was not loss which was reasonably foreseeable when the contract was entered into. There was no evidence that it was reasonably foreseeable at the time the contract was entered into that the Granny Flat would be rented.
[28]
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: 09 February 2016