Builders' Registration Act 1939, s 3(1a)

Home Building Contracts Act 1991, s 3, s 4, s 5, s 7, s 10, s 12, s 13, s 17

Interpretation Act 1984, s 18

Justices Act 1902, s 196, s 199

Bull v Attorney General (NSW) [1913] HCA 60; (1913) 17 CLR 370

Devries v Australian National Railways Commission (1993) 177 CLR 472

Waugh v Kippen [1986] HCA 12; (1986) 160 CLR 156

1 HASLUCK J: This is an appeal against the whole of the decision delivered on 18 December 2000 by his Worship Mr R Burton SM in the Perth Court of Petty Sessions. The learned Magistrate dismissed three complaints brought against the respondent, Darval Lindsay-Smith, pursuant to provisions of the Home Building Contracts Act 1991. The appellant sought to challenge certain findings of fact made by the learned Magistrate and contended that the learned Magistrate erred in law in finding that the respondent had not carried out home building work within the meaning of the Act.

2 In 1997, Mr and Mrs Price engaged a registered builder trading as Hewster & Stone to construct a residence for them at 58 Lenori Road, Gooseberry Hill. They eventually paid to the builder a sum amounting to $223,000, although this figure did not include the roof, the plumbing or site work. Mrs Price agreed, under cross-examination, that the construction costs as a whole probably came close to $330,000.

3 It seems that, after the initial phase of construction, the house was left with uncovered concrete floors in the lower and upstairs areas. Mr and Mrs Price then approached the respondent who was trading as Lindsay-Smith & Sons at 280 Glendower Street, Parkerville to provide wooden floor coverings. At that time, the respondent had been a registered builder for 20 years, although he was not being approached by the Prices in that capacity.

4 The respondent submitted to Mr and Mrs Price a written quotation dated 20 July 1998 whereby at a quoted price of $13,640 he offered to provide "timber flooring installation".

5 The scope of the works covered by the quotation is described in the relevant document as follows:

"1. Supply and installation of 12mm DD structural ply to slab within games room, meals, lounge, kitchen, hall and main entrance.

2. Supply and installation of 91 metres of messmate strip flooring as indicated on ground floor.

3. Supply and installation of 34 metres of jarrah strip flooring to first floor bedroom and walk-in robe.

4. High grade sanding, sealing and polishing."

6 The price breakdown included $2,728 to be paid as a 20 per cent deposit. It is important to note that this quotation, upon acceptance by the owners, gave rise to a contractual relationship directly between the house-owners and the respondent in regard to the provision of timber flooring installation.

7 The respondent proceeded to do the work the subject of the quotation. He described his method in evidence. He said that he laid 10ml plywood on the floor. He then glued and nailed 10ml strips of timber flooring to the ply and then sanded and polished the exposed surface. He distinguished this process from traditional flooring whereby 19ml tongue and groove lengths of "structural" timber are attached to timber joists and become part of the structure of the house.

"The ply and timber strips is equivalent to carpet or anything being laid on a structural floor, and in the instance of bearers, joists and 19ml tongue and groove flooring, you have to put that down to be able to work above that in the house for the walls and ceiling, it is part of the actual construction."

9 He went on to say in the course of his evidence that, in regard to the timber floor installation undertaken in the present case, there were no attachments to the wall. There was a gap left between the timber and the walls known as an expansion gap. Consistently with his quotation, his work did not include adjustment to door clearance over floor, rehanging of doors or splay beading around the kitchen and windows. He said that this was pretty close to a standard floor covering quote whether it was carpets, or vinyl, or timber.

10 He said further that he was only responsible for the floor covering and not for anything that was relevant to the structure of the house. He did not put any skirting boards in. He asserted that floor covering such as carpets, linos, vinyls, tiles, cork, and matting and timber were all floor coverings and none of them were structural.

11 He also said in evidence that the house was not occupied while he was working there to complete his contract. He said that other tradesmen were working and the supervisor used to call in. He had sought a deposit in excess of 61/2 per cent of the quoted price because the money in question went straight to the supplier as a way of securing a cheap buying price for the materials.

12 The evidence given by Mrs Price was similar in effect. She said that the floor installation work in question was being done while the house was being finished off. She and her husband were waiting for the floor to go down before the kitchen went in with this to be followed by skirting boards and painting.

13 She said that the floor installation work was throughout most of the house, including the bottom living room and bedroom and bed sitting room upstairs. She said that the ply was put down on top of the concrete and that was nailed to the concrete and then floorboards were placed on top of the plywood and nailed down. The exposed surface was then sanded and a light stain and seal put on it. She said that something in excess of $15,000 was paid to the respondent for the entire job.

14 It was common ground at the hearing before the learned Magistrate and before me that the respondent did not arrange for the owners, Mr and Mrs Price, or either of them, to sign a contract. He did not give the owners a notice as prescribed by s 4(3) of the Act. He took a deposit that exceeded 61/2 per cent of the contract price.

15 It was against this background that the appellant in his capacity as Registrar of the Builders' Registration Board brought the following three complaints against the respondent, namely:

"1. That being a builder who was a party to a home building work contract, he failed to reduce the contract to writing, setting out all terms, conditions and provisions of the contract, showing the date of the contract and being signed by both parties to the contract as required by section 4(1) of the Act.

2. That being a builder who was a party to a home building work contract, he failed to provide the owner for whom the work was carried out with a prescribed notice setting out the owner's rights under the Home Building Contracts Act as required by section 4(3) of the Act.

3. That being a builder he entered into a home building work contract which provided that he was entitled to receive a deposit in excess of 61/2 per cent of the total contract price contrary to section 10(1)(a)(i) of the Act."

16 The central matter for determination at the hearing before the learned Magistrate on 18 December 2000 was whether the respondent had contracted to carry out "home building work" as defined by the Act. At the conclusion of the hearing, his Worship dismissed the complaints after finding that the respondent had not contracted to carry out home building work.

17 In the course of his reasoning, the learned Magistrate said that he had come to the conclusion that what the respondent had done could not be characterised as "associated work". Further, he did not consider that the contract in question involved structural work or work that improved the premises. In his belief "putting in flooring in these circumstances" was not caught by the Act with the result that the charge had to be dismissed.

18 In obtaining leave to appeal, the appellant relied upon a single ground of appeal, namely, that the learned Magistrate erred in law in finding that in relation to each complaint the respondent had not carried out home building work within the meaning of the Act.

19 Section 4(1) of the Act provides that a contract, that is to say, a home building work contract, must be in writing and must be signed by the builder and owner, or their respective agents. By s 4(3), the owner must be given a notice containing an explanation of the relevant provisions of the Act. By s 10(1)(a)(i), a builder must not enter into a contract which provides that the builder is entitled to demand or receive from the owner any payment before the commencement of the home building work to which the contract relates unless the payment is a deposit of not more than 6.5 per cent of the total amount payable to the builder under the contract for the home building work.

20 By s 3(1), a home building work contract means a contract between a builder and an owner for the performance by the builder of home building work, but does not include a cost plus contract or a contract for the performance of home building work for a builder who is, in turn, obliged to perform the work under another contract; if the amount payable under the contract for the work is $6,000 or less; or if the amount payable under the contract for the work is $200,000 or more.

21 The term "builder" is defined by s 3(1) to mean a person who carries on a business which consists of or includes the performing of home building work for others.

22 The outcome of the present case turns upon the meaning of the term "home building work". I will therefore set out the relevant provision in its entirety:

"'home building work' means the whole or part of the work of -

(a) constructing or re-constructing a dwelling including an existing dwelling and/or strata-titled dwelling;

(b) placing a dwelling on land;

(c) altering, improving or repairing a dwelling, including a strata-titled dwelling; or

(d) constructing or carrying out any associated work in connection with -

(i) any work referred to in paragraph (a) or (b); or

(ii) an existing dwelling, including a strata-titled dwelling;"

23 By s 3(1) of the Act, unless the contrary intention appears, "associated work" includes site works, swimming pools, spas, pergolas, carports, garages, sheds, fencing, retaining walls, paving, driveways, landscaping and other like works.

24 One of the arguments presented to the learned Magistrate by counsel for the respondent at the hearing in the Court of Petty Sessions concerned the meaning of the term "home building work contract" and especially that part of the definition which purports to exclude a contract for the performance of home building work for a builder who is, in turn, obliged to perform the work under another contract if the amount payable under the contract is $200,000 or more. It was submitted that in the context of this case, where the value of the construction work taking place at the Gooseberry Hill site, considered as a whole, was close to $330,000, and therefore in excess of the sum of $200,000 mentioned in the relevant statutory provision, the respondent's contract was not caught by the provisions of the Act.

25 The learned Magistrate was not persuaded by this submission. Counsel for the respondent did not press a submission to this effect at the hearing before me. However, for the sake of completeness, I am obliged to say briefly that, in my view, such a line of argument is not available to the respondent. The crucial factor in the present case is that a direct contractual relationship was established between the owners and the respondent for work exceeding $6,000 in value and it therefore cannot be said, within the language of the relevant provision, that this was a contract for the performance of home building work for a builder who was, in turn, obliged to perform work to the value of $200,000 or more.

26 It follows, then, as reflected in the appellant's ground of appeal that the question to be determined is whether the respondent agreed to carry out "home building work" having regard to the meaning ascribed to that term by the Act.

27 I begin by noting that the Act is an Act for the regulation of contracts between consumers and builders for the performance of certain home building work. It is clear from the interpretation provision in s 3 that the term "builder" is not confined to a registered builder or to a person with particular building qualifications. It simply means a person who carries on a business which consists of or includes the performing of home building work for others. The provisions of the Act generally suggest that the Act is designed to ensure that contracts for comparatively modest amounts, that is to say, less than $200,000, will be reduced to writing, signed by the parties, and that each party is acquainted with its respective rights and obligations. Various provisions are directed to ensuring that the terms of home building contracts are not oppressive or arrived at by unconscionable conduct.

28 I note in passing that s 18 of the Interpretation Act 1984 provides that in the interpretation of a provision of a written law, a construction that will promote the purpose or object underlying the written law (whether that purpose or object is expressly stated in the written law or not) shall be preferred to a construction that would not promote that purpose or object.

29 The prescription contained in s 18 of the Interpretation Act is reinforced by the rule of construction that beneficial and remedial legislation is to be given a liberal interpretation rather than one which is literal or technical. Nevertheless, the task remains one of statutory construction. Thus, a court is not at liberty to give it a construction that is unreasonable or unnatural: IW v City of Perth [1997] HCA 30; (1997) 191 CLR 1 at 12.

30 In Waugh v Kippen [1986] HCA 12; (1986) 160 CLR 156, in the context of a claim for breach of statutory duty brought by an injured employee under Queensland factory legislation, a majority of the High Court noted at 164 that the rule, formerly accepted, that statutes creating offences are to be strictly construed, has lost much of its importance in modern times. In determining the meaning of a penal statute, the ordinary rules of construction must be applied, but if the language of the statute remains ambiguous or doubtful, the ambiguity or doubt must be resolved in favour of the subject by refusing to extend the category of criminal offences.

31 The same members of the High Court went on to say, however, that if a conflict were to arise between this rule of construction and the rule that remedial legislation should be construed to give the fullest relief, then the court had to proceed with its primary task of extracting the intention of the legislature from the fair meaning of the words by which parliament expressed that intention, remembering that the statute was a remedial measure passed for the protection of the worker. The statute should not be construed so strictly as to deprive the worker of the protection which parliament intended he should have.

32 I have already noted that the scheme of the Home Building Contracts Act in the present case strongly suggests that the intention of parliament was to afford some measure of protection to consumers of building services in respect of modestly priced domestic dwellings. The decided cases suggest that remedial legislation of this kind should not be construed narrowly, notwithstanding the imposition of penalties for non-compliance. A finding that a builder did not enter into a home building contract would deny to consumers in cases of this kind the general protection of the Act and recourse to the Building Disputes Committee pursuant to s 3(1a) of the Builders' Registration Act 1939 as amended.

33 It seems quite clear from the evidence in the present case that at the time the floor installation work was carried out the subject dwelling was still being completed. A question therefore arises as to whether the subject work can be regarded as part of the work of "constructing" the dwelling in question. I note that by s 3(1) of the Act "construct" in relation to a dwelling means "perform any work commencing with the preparation of the site and ending with the completion of the dwelling (including any associated work)" and includes (a) painting where that is part of the work included in a contract; and (b) the provision of lighting, heating, water supply, drainage, sewerage, gas and other like services.

34 This suggests that the notion of constructing embraces the various activities which will make the dwelling fit for occupation. It is important to note that the term "construct" in relation to a dwelling embraces the performance of "any work" and includes painting and the provision of services. The broad definition of "construct" clearly embraces aspects of the dwelling which are not necessarily an integral part of its structure. The most obvious example in that regard is the activity of painting which lies within the definition of "construct".

35 I am prepared to accept that there may be matters of interior decoration, such as the attaching of mirrors to walls or the provision of curtains and moveable carpets which do not lie within the definition of "construct". However, in the circumstances of the present case, where the subject work consisted of the installation of a floor, measured to fit the owners' requirements, by using glue and nails with the obvious intention of ensuring that the floor thus installed is to be a permanent feature of the dwelling, I consider that the subject work was undertaken in the course of constructing the dwelling in question and falls within the definition of home building work.

36 In my view, a liberal interpretation of this kind is consistent with the remedial purpose of the legislation. It follows from earlier discussion concerning the effect of the decided cases that such an approach is to be preferred to a narrow approach, notwithstanding the imposition of penalties for non-compliance.

37 Further, and in the alternative, in my view, the work constituted an improvement to the dwelling in a manner which brings the work within subpar (c) of the definition of home building work; that is to say, work of "altering, improving or repairing a dwelling ... ".

38 The term "improve" is not specifically defined by the Act. According to the Concise Oxford Dictionary, the term "improve" means to "make or become better". The term "improvement" means "improving or being improved; addition or alteration that adds to value".

39 To my mind, a floor installation of the kind undertaken in the present case was clearly designed to, and had the effect of, adding value to the building and enhancing the appearance of and the use to which the dwelling could be put. Accordingly, the subject work should be regarded as falling within the concept of "altering, improving or repairing a dwelling".

40 Finally, for the sake of completeness, I must look at a further question addressed by the learned Magistrate, that is to say, whether the work performed by the respondent amounted to the carrying out of "associated work" within the meaning of subpar (d) of the definition of home building work.

41 The learned Magistrate held that the floor installation work was not associated work and the indications are that he arrived at this conclusion because the term "associated work" was said to include certain forms of work such as site works, swimming pools, carports, and so forth, being a list that did not make any specific mention of floors.

42 Where a word or phrase is being defined in legislation it is usual to find expressions such as "means" or "includes". The orthodox approach to an understanding of the effect of these expressions is that "means" is used if the definition is intended to be exhaustive, while "includes" is used if it is intended to enlarge the ordinary meaning of the word. Pearce: Statutory Interpretation (3rd ed) par 6.35; Sherritt Gordon Mines Ltd v Federal Commissioner of Taxation [1977] VicRp 42; (1976) 10 ALR 441 at 455. The term "includes" is a way of bringing within the word in question something that would not otherwise be within it. Savoy Hotel Company v London County Council [1900] 1 QB 665 at 669.

43 In Cohns Industries Pty Ltd v Deputy Federal Commissioner of Taxation (1979) 24 ALR 658, the term "manufacture" was defined to include a range of precisely described activities, save for the combining of materials in a way which, in the opinion of the Commissioner, was customarily done by the consumer. The Court of Appeal was not prepared to hold that the special definition of the term "manufacture" was exhaustive. The orthodox approach prevailed because there was no indication elsewhere in the statute that the term "includes" was to have other than an enlarging effect.

44 The reasoning in the cases just mentioned took account of a comparatively narrow qualification to the orthodox approach which is derived from Dilworth v The Commissioner of Stamps [1899] AC 99. In that case, the Privy Council said, at 106:

"But the word 'include' is susceptible of another construction, which may become imperative, if the context of the Act is sufficient to shew that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to 'mean and include', and in that case it may afford an exhaustive explanation of the meaning which, for the purposes of the Act, must invariably be attached to these words or expressions."

45 Reasoning of this kind caused a majority of the High Court in YZ Finance Co Pty Ltd v Cummings [1964] HCA 12; [1964] ALR 667 to hold that a list of security transactions was intended to be exhaustive notwithstanding use of the word "includes", but this was because the draftsman had used "means" and "includes" somewhat inconsistently when drafting their depositions.

46 It emerges, then, from a consideration of the decided cases, that where a term such as "associated work" is defined so that it "includes" certain specified forms of work such as swimming pools and carports, the list should not be regarded as exhaustive. One is entitled to give proper weight to the ordinary meaning of the words, that is to say, work "associated" with the construction of a dwelling. I noted in earlier discussion that an interpretation that will promote the purpose of the statute is to be preferred to an interpretation that would not promote the purpose.

47 According to the Concise Oxford dictionary, the verb to "associate" means to join or to connect as an idea or to combine for a common purpose. I have already observed that the installation of a floor can be regarded as something that enhances or improves the utility of a house. Looked at in that light, it seems to follow that flooring of a reasonably permanent kind that is measured and made up to fit specific areas in a particular dwelling, such as the flooring in the present case, can properly be regarded as a form of work that is connected to or combined with other work in order to complete the dwelling. I therefore consider that the respondent in the present case was carrying out associated work in connection with the constructing of the subject dwelling.

48 It follows from these various findings that the appeal should be allowed on the basis contended for by the appellant, namely, that the learned Magistrate erred in law in finding that the respondent had not carried out home building work within the meaning of the Act.

49 This brings me to the question of the appropriate form of relief.

50 By s 196 of the Justices Act 1902 the Court shall determine the appeal on the material before the Court below. By s 199, the Court may dismiss the appeal, or set aside, quash or vary the decision, substitute a decision that ought to have been made, or remit the case for rehearing. The Court is not required to set aside, quash or vary because the Magistrate omitted to make any necessary finding if the facts or evidence in substance support the decision or justify the finding. If the Court considers that no substantial miscarriage of justice has occurred, it may dismiss the appeal notwithstanding that a point raised in the appeal has been decided in favour of the appellant.

51 The relief may take the form of remitting back to the court below with or without any direction to the court.

52 It is apparent in the circumstances of the present case that the areas of factual disagreement between the parties were comparatively narrow. The matter in issue was essentially a point of statutory interpretation concerning the meaning of the term "home building work". If the matter was referred back to the learned Magistrate for rehearing, then, having regard to the reasons for upholding the appeal given by this Court, the learned Magistrate would inevitably be obliged to convict the respondent. It therefore seems to me that I should exercise the power allowed to me by s 199(a)(d) of the Act and substitute a conviction in respect of each offence as a decision that ought to have been made by the learned Magistrate.

53 The only matter remaining in contention is the question of penalty. I note in passing that by s 4(4), the penalty in respect of the two offences under s 4 is given as $2,000. The penalty under s 10(1)(a)(i) concerning the deposit is given as $10,000. By s 9(2) of the Sentencing Act 1995, if the statutory penalty for an offence is a fine of a particular amount, then that penalty is to be regarded as the maximum penalty for that offence and a lesser penalty of the same kind may be imposed.

54 It would be open to me to hear from the parties as to penalty and to make the appropriate orders. However, on balance, I consider that with a view to preserving parity between sentences, this aspect of the matter should be remitted to the learned Magistrate. In summary, then, pursuant to the powers allowed to the Court, I will set aside the learned Magistrate's decision and order that in lieu thereof judgment of conviction be entered in respect of each of the three complaints. I will remit the matter to the learned Magistrate to be dealt with according to law for the imposition of the appropriate penalties. I will hear from the parties as to the costs of the appeal.