Macquarie Grove Homes Pty Ltd v Tony Aylott & Glen Aylott t/as T&G Bricklaying; Tony Aylott & Glen Aylott t/as T&G Bricklaying v Macquarie Grove Homes Pty Ltd

NCAT Appeal Panel|2016-04-29|Before: Grove Homes P

Solicitors: Adams Partners - Macquarie Grove Homes P/L Mersal & Associates - T&G Bricklaying File Number(s): AP 15/65214AP 15/65327 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer & Commercial Division Citation: [2015] NSWCATCCD Date of Decision: 06 November 2015 Before: P Boyce, Senior Member File Number(s): HB 13/40548

Overview

Before the appeal panel are two internal appeals arising from proceedings which were heard by the Consumer and Commercial Division of the Tribunal. The reasons of the Tribunal were published on 6 November 2015.

Some additional factual background

Macquarie had been engaged by a home owner to carry out residential building work at the homeowners' premises in Harrington Grove, New South Wales. T&G were engaged as subcontractors by Macquarie to undertake some brick laying work at those premises. Macquarie sued the homeowners for moneys outstanding for their services. The homeowners sued Macquarie for breach of statutory warranties under the Home Building Act 1989 (HBA) including in respect to the brick work undertaken by T&G as subcontractor. Those proceedings were commenced in the Consumer Trader and Tenancy Tribunal ("the CTTT claims"). The CTTT claims were resolved by consent of the parties on 17 July 2013. The consent orders (Consent Orders), as subsequently amended by consent on 26 July 2013, relevantly provided: 1. The builder shall engage a contractor who is an accredited Acratex applicator to apply Acratex to the whole of the brick work in accordance with the methodology specified by Acratex. The builder will obtain the greatest standard Warranty for Acratex and provide that Warranty to the owners prior to the application of Acratex. 2. The builder will attend the site prior to the application of Acratex and carry out the following rectification works within a reasonable time: 1. To re-set the brick work window sills in contact with the aluminium sills; 2. In relation to item 15 of the Scott Schedule dated 14 February 2013, Mr Chris Polombo and Mr Barry Morris have agreed that the application of the Acratex should mask the problem…"
The Consent Orders also provided for the payment to the builder of certain moneys held in trust.
As noted, Macquarie and T&G had entered into a contract for T&G to provide bricklaying services. Those services were performed at the building site between May and June 2012 and were the subject of tax invoices issued on 24 May and 21 June 2012. T&G were paid $18,150.00 for the work they undertook. It is accepted that that work constituted "residential building work" within the meaning of the HBA.
Prior to the execution of the Consent Orders in the CTTT proceedings, there had been a joint conclave of experts retained by the homeowners and Macquarie. The conclave considered a Scott Schedule upon which handwritten comments were made at the conclusion of the conclave. The Scott Schedule was signed by each of the experts. It contains various items which were the subject of complaint and discussion between the experts. The items in the Scott Schedule relevant to the alleged defective brick work were items 11, 15, 17, 29 and a new item 31 which provided as follows: "New Head 31: Face brickwork issues, #17, #11, #15, #29: Experts agree brickwork is defective and does not comply with G & SAT2007 Experts agree on rectification of four alternatives (a, b, c, d, e) and to meet and cost these with parties approval. (A) Render & paint all exterior, 290 m2 approx.; (B) Coating "Acratex" or similar, 290 m2 approx.; (C) Demolition/rebuild brickwork in part, approx. 100 m2; (D) Trims & moulds and architraves and new expansion joints around doors and windows; (E) Stain to brick and mortar 290 m2 approx."
The costings for the alternatives were agreed by the experts at: 1. To render and paint exterior property: $19,146.60 inclusive of GST; 2. To apply a coat of Acratex or similar to entire exterior of property (290 m2) for a total price of $23,502.60 inclusive of GST; 3. To demolish and rebuild brickwork (100 m2) for a total price of $16,767.30 inclusive of GST; 4. To stain brickwork and mortar joints (290 m2) for a total price of $10,223.40 - $13,035.00 inclusive of GST.
Of these options, it was agreed by the Consent Orders that the Acratex would be applied to the premises. That was done and there was evidence before the Tribunal that the cost of the work carried out totalled $26,364.00 inclusive of GST. The Tribunal held that this work was in compliance with the first Consent Order in the CTTT proceedings.
T&G were not joined to the original CTTT proceedings.
The proceedings were commenced against T&G by Macquarie in the CTTT and determined by the Tribunal following its establishment. There is no dispute between the parties that, as the Tribunal explained in [7]-[11] of its reasons, the Tribunal had jurisdiction to continue to hear the proceedings which were originally commenced in the CTTT.

A brief summary of the arguments below

As observed above, in the proceedings below, Macquarie sought recovery of the amount paid by it to apply the Acratex to the home owner's premises together with a sum of approximately $53,800.00 representing the legal costs Macquarie had incurred in prosecuting and defending the CTTT proceedings against the homeowners.
The Tribunal accepted the submissions of Macquarie that it was entitled to payment by T&G of the sum representing the application of the Acratex to rectify the defective work, being the sum of $26,364.00. The Tribunal rejected Macquarie's application for legal costs of the CTTT proceedings in the sum of $53,830.00 and required submissions from the parties with respect to the issue of costs of the proceedings in the Tribunal.
Macquarie submitted below that T&G's works were subject to the statutory warranties contained in section 18B of the HBA as these warranties were implied into the contract between Macquarie and T&G for the bricklaying work at the premises. Macquarie submitted that its settlement with the homeowners, namely, the application of the Acratex to the entire exterior of the property, was a reasonable and necessary settlement of the proceedings. Macquarie contended that in circumstances where the scope of the rectification works necessary to fix the defective brickwork was agreed by the experts in the CTTT it could recover damages against the bricklayer who carried out the defective work provided that the settlement was objectively reasonable. Macquarie relied upon the decision of Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998) 192 CLR 603 in support of this submission.
Macquarie submitted that the settlement reached was both necessary and reasonable and therefore recoverable.
Macquarie also sought the legal costs it incurred in prosecuting and defending the CTTT proceedings against the homeowners. It submitted that in accordance with the general rule, it should be put in the same position, insofar as money can do it, as if the contract between it and T&G had been performed: Robinson v Harman (1848) 1 Exch 850; 154 ER 363. Macquarie submitted that there was a sufficiently close causal link between the breach of contract by T&G and the damage suffered by Macquarie that the legal costs incurred in defending the homeowners' claim in the CTTT proceedings for the defective brickwork were recoverable: Hadley v Baxendale [1854] 9 Ex.341.
As to the quantum of those costs, Macquarie tendered the invoices from its solicitors in the sum of $67,287.57 as proof that it had incurred those legal expenses. Macquarie led evidence from its solicitor in the CTTT proceedings, Mr Adams, that he estimated that, of the invoices he had rendered to the applicant in respect of the homeowners claim, about 80% of his time was spent in dealing with the bricklaying defects. That is, of the total invoices rendered, the sum of $53,830.00 (being 80% of $67,287.57) was claimed.
T&G opposed the relief on various bases. It disputed that the Tribunal had jurisdiction to hear and determine the claim. It denied that any of the HBA statutory warranties were implied into its contract with Macquarie. It alleged that the settlement reached was not agreed to by the experts and that it was not reasonable or necessary for Acratex to be applied to the whole of the premises. It said that on the evidence there were other less expensive methods of rectifying any defects in the brickwork. It submitted that Mr Aylott had offered several times to go back to the site to fix any defects, but such offers were rebuffed. As such, it alleged Macquarie had failed to mitigate its loss. It also raised issues of estoppel and that it was unfair that it had not been joined to the CTTT proceedings.

The reasons below

The Tribunal found that the bricklaying work performed by T&G was residential building work within the definition of clause 2 of Schedule 1 of the HBA.
Contrary to the submissions made by T&G, the Tribunal found that it had jurisdiction to hear and determine the claim. That was because the claim fell within s 48K of the HBA. It rejected T&G's submissions that there was no statutory warranty implied into the contract between Macquarie and T&G. It held that, even though the relevant wording of section 18B(2) had only been amended on 15 March 2015 to expressly deal with warranties of this nature applying to subcontracts between a principal contractor and a subcontractor, on a proper construction of the section as it stood at the relevant time, the warranties were implied.
In respect to the claim by Macquarie for the amount of $26,364.00 (being the amount paid to apply the Acratex to the dwelling), the Tribunal said at [71]: "The Tribunal has considered the evidence of both the applicant and the respondents and their respective submissions for the Tribunal to be satisfied that the cost of that work was reasonable. The Tribunal is satisfied that the cost of carrying out the remedial works was agreed between the experts in the claim by the home owner against the applicant. That is the cost of the works was both necessary and reasonable to remedy the defective work of the respondent. The Tribunal is satisfied that the scope of remedial work was objectively determined [by] qualified expert witnesses. The commercial terms of the settlement between the applicants and the homeowners are accepted by the Tribunal as a measure of the claim and the damages suffered by the applicants. On that basis and in accordance with Unity Insurance Brokers the Tribunal is satisfied that the amount claimed by the applicant is a reasonable measure of the damage it suffered as a result of the defective work of the respondents."
The Tribunal rejected the submissions by T&G that Macquarie had failed to mitigate its loss. It rejected the submission that Macquarie failed to supervise and direct the respondents and as a result had failed to identify the defects as and when they arose such as to give T&G an opportunity to remedy them at that time. The Tribunal said, at [81] of the reasons, that Macquarie was entitled to rely on the statutory warranties contained in section 18B and T&G had an obligation to comply with those warranties. The Tribunal was satisfied T&G failed to do so and were liable for the loss Macquarie suffered as a result. It held that T&G were experienced and skilled contractors and that any duty to supervise did not extend to micro-manage every bit of the work undertaken by the bricklayers. The Tribunal noted that it was not for Macquarie to "tell the respondents how to go about their work save for ultimately it must satisfy the statutory warranties under the HBA at a minimum."
The Tribunal found that the settlement reached by Macquarie with the homeowners on terms that both parties accepted as a reasonable compromise of the dispute between them, which amount was significantly less than the home owners had claimed, represented a settlement that was a commercial resolution to the dispute. The Tribunal accepted, therefore, the amount claimed was necessary and reasonable to remedy the defects caused by the defective bricklaying (see reasons at [77-78]).
The Tribunal found (see reasons at [82-85]) that the amount claimed by way of legal costs incurred by Macquarie in the CTTT proceedings against the homeowners was causally linked to the breach of the statutory warranties by T&G. However, at [87]-[90] the Tribunal found that the claim for this amount was too remote and could not be recovered. After quoting the relevant test from Hadley v Baxendale the Tribunal said: "[89] The Tribunal finds that the claim for the applicant's costs in the CTTT proceedings against the respondents' (sic) was not a kind of loss in the parties contemplation at the time they entered into the agreement for the respondents' to supply the brick laying services to the applicant."
The Tribunal therefore dismissed the claim by Macquarie for those costs.
The Tribunal held that if it was wrong in its determination with respect to the remoteness of the damages constituted by the costs incurred in the CTTT proceedings, the evidence of quantum led by the applicants with respect to those costs was not "able to be attributed with any precision". It said at [91]: "Mr Adam's estimate of attributing "about 80%" of the amount of his invoices to the claim for defective brickwork was without any particularity and based on what appeared to be a guess. The CTTT claim costs involved a claim by the applicant against the home owner for debt recovery under the building contract and a defence of the claim by the home owner for defective works. That defective work included the defective brick work. The costs incurred by the applicant involved all matters. The applicant bears the onus of proving its claim. The evidence of Mr Adams was not sufficient to make a finding as to the quantum of the amount claimed. If the applicant could bring a claim for damages for those costs, it would not have succeeded on the evidence before the Tribunal."

The appeals

Each party has appealed from the Tribunal's decision. We will deal with each appeal separately. It is convenient to deal with T&G's Appeal first.

T&G Grounds of Appeal

T&G appeals from the Tribunal's decision that they are liable to pay to Macquarie the sum of $26,364.00.
There are 10 grounds of appeal. They are: 1. The Tribunal made an error of law in finding that the Tribunal had the necessary jurisdiction to hear and determine the respondent's claims; 2. The Tribunal made an error of law in finding that the implied warranties at s18B of the Home Building Act 1989 were implied into the sub-contract between the appellants and the respondent; 3. The Tribunal made an error of law in finding that the damages of $26,364.00 awarded to the respondent was "the cost of carrying out the remedial works agreed between the experts in the claim by the home owner against the respondent" when there was no evidence of such an agreement; 4. The Tribunal made an error of law in finding that the amount of $26,364.00 was the cost of the works "that was both necessary and reasonable to remedy the defective work", where this finding was contrary to the expert evidence; 5. The Tribunal made an error of law in finding that "the loss that the applicant suffered was determined by the settlement of claim (sic) by the home owner". (In proceedings to which the appellant was not even a party); 6. The Tribunal made an error of law in finding that the respondent was not estopped from bringing its claims in the face of substantial probative evidence to the contrary; 7. The Tribunal made an error of law in rejecting the appellant's defence that the respondent failed to mitigate its loss. This finding was clearly against the weight of evidence (which included admissions by the respondent and the respondents' own expert); 8. The Tribunal made an error of law in finding that "it is not for the applicant to tell the respondents how they go about their work". The finding was made without any evidentiary basis and contrary to the evidence; 9. The appellants have suffered a substantial miscarriage of justice because: 1. The quantum of damages awarded to the respondent are manifestly excessive and were not based on the available expert evidence; and 2. The damages awarded were based on a "commercial settlement" between the respondent and the home owner. They do not reflect the damages which might perhaps otherwise have flowed from any breach of the sub-contract between the appellant and the respondent. 1. The appellants have suffered a substantial miscarriage of justice because the members' determination does not take into consideration the respondents' failure to mitigate and does not reflect the finding which was reasonably available on the evidence.
T&G's primary position is that, at least for grounds 1-8 inclusive they do not require leave as they relate to errors of law. If that is wrong, they submit that they ought to be granted leave with respect to grounds 9 and 10, as they may have suffered a substantial miscarriage of justice because the decision was not fair and equitable and against the weight of evidence.

T&G's appeal - is leave required?

We do not think that leave is required for any of grounds 1-8 as set out in T&G's Notice of Appeal. Each of those matters raise questions of law, including as to jurisdiction of the Tribunal, the proper application and construction of the HBA and assertions that the Tribunal made errors in applying legal principles such as with respect to estoppel and mitigation of loss.
Insofar as grounds 9 and 10 are concerned, if leave is required, we would be minded to grant such leave as the matter is not without complication and it appears to us, if T&G's arguments are correct and the Tribunal made its findings against the weight of the evidence, they may well have suffered a substantial miscarriage of justice: See Collins v Urban [2014] NSWCATAP 17 and clause 12 of Schedule 4 to the Civil and Administrative Appeal Tribunal Act 2013 (CAT Act).

T&G's appeal - consideration

We will deal with each of the grounds separately insofar as they remain pressed, however, some of the grounds will be dealt with together as they appear to relate to the same issues.

Ground 1 - The Tribunal made an error of law in finding that the Tribunal had the necessary jurisdiction to hear and determine the respondents' claims.

T&G's submissions

T&G submits that the Tribunal had no jurisdiction to hear the claim at all. That is because they submit that Macquarie's claims are based on a commercial settlement in earlier CTTT proceedings and included the substantial claim for legal costs incurred by Macquarie in those proceedings. (See [47] of T&G's submissions in chief).
Before the Appeal Panel, T&G repeat the submissions they made to the Tribunal on jurisdiction. They submit that the Tribunal's jurisdiction is found solely in the CAT Act. They refer to sections 28 and 29 of the CAT Act. They note that section 29(5) of that Act makes it clear that the Tribunal will not have jurisdiction "unless the conferral of jurisdiction by such means is expressly authorised by another Act". They submit that as Macquarie claims its legal costs in separate proceedings between it and the homeowners, they are unable to point to any enabling legislation which expressly gives jurisdiction to the Tribunal to deal with claims for legal costs incurred by Macquarie in earlier proceedings (in which T&G was not a party). T&G submitted that section 48A of the Home Building Act has no application "because it does not satisfy the requirement in section 29(5) of the CAT Act."

Macquarie's submissions

Macquarie submits that the Tribunal's jurisdiction to hear the matter was conferred on it by the HBA. It referred to section 48K of the Act expressly conferring jurisdiction on the Tribunal to hear and determine any "building claim" under $500,000.00.
Macquarie referred to section 48A of the Home Building Act which provides: In this Part: building claim means a claim for: (a) The payment of a specified sum of money; or (b) The supply of specified services; or (c) Relief from payment of a specified sum of money; or (d) The delivery, return or replacement of specified goods or goods of a specified description; or (e) A combination of two or more of the remedies referred to in paragraphs (a) - (d); that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. building dispute means a dispute that has been notified as referred to in section 48C. building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services: (a) Supplied by the person who contracts to do, or otherwise does, that that; or (b) Supplied in circumstances prescribed by the regulations to the person who contracts to do that work. (ii) Without limiting the definition of the building claim, a building claim includes the following: (a) An appeal against a decision of an insurer under a contract of insurance required to be entered into under this Act; (b) A claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C".
Macquarie submits that its claim against T&G was: 1. A building claim that arose from the supply of building goods or services (brick laying) by T&G; 2. Was for compensation from its loss arising from T&G's breaches of statutory warranty; and 3. Extended to the legal costs it incurred in the earlier proceedings brought against it by its Principal (the homeowners) under the head contract.

Ground 1 -consideration and determination

We reject the submission by T&G that the Tribunal had no jurisdiction to hear this matter. We agree with the submissions of Macquarie that the claim made by Macquarie against T&G to recover by way of damages the amount that it agreed to pay to the homeowners is a building claim, in that it arises from a supply of building goods or services which includes a claim for compensation for loss arising from a breach of statutory warranty.
Accordingly, jurisdiction is conferred on the Tribunal with respect to that claim. Further, in so far as the claim relates to the costs incurred by Macquarie in prosecuting and defending that claim, in our opinion, Macquarie's submission that this aspect of the claim also arises out of a supply of building goods or services is correct. As such, the tribunal has jurisdiction to hear and determine that claim.
We reject this ground of appeal.

Ground 2 - The Tribunal made an error of law in finding that the implied warranties in section 18B of the Home Building Act 1989 were implied into the sub-contract between the appellants and the respondent.

We do not need to set out the submissions of either party with respect to this ground because, at the hearing of the appeal, the Appeal Panel brought to the attention of counsel for T&G the decision of the Appeal Panel in Lee v Ace New South Wales Pty Ltd [2016] NSWCATAP 29. That decision held that the statutory warranties in section 18B of the HBA in the form which that provision stood before the amendments introduced by the Home Building Amendment Act 2014 (that is, the section as it stood at the time of the entry onto the sub-contract in this case) were implied into contracts between head contractors and sub-contractors.
After considering this decision, T&G did not press this ground of appeal.

Grounds 3 - 5

These grounds can be dealt with together. They relate to the orders of the Tribunal that Macquarie was entitled to recover the $26,364.00 which was the amount incurred to comply with paragraph 1 in the Consent Orders with the home owner, namely the cost of applying Acratex to the whole of the premises. The grounds raise alleged errors of the Tribunal in its findings with respect to the evidence about this issue, particularly the Tribunal's finding that the amount was agreed by the experts as the cost to carry out any remedial works as a result of the defective bricklaying or that the amount was both necessary and reasonable to remedy the defective work.

T&G's submissions

T&G emphasises that the Points of Claim originally made by the homeowners against Macquarie in the CTTT proceedings alleged defects going well beyond the bricklaying work undertaken by them. They submit that the findings by the Tribunal that the costs of carrying out the remedial works were agreed between the experts to support the finding that the $26,364.00 was necessary and reasonable is factually incorrect. In support of that submission T&G refer to the Scott Schedule, parts of which we have extracted above, together with extracts of the cross-examination of Macquarie's expert to show that the Tribunal was wrong to find that the experts agreed that the amount of $26,364.00 was the amount necessary to rectify any defects.
T&G further submit that it was not reasonable for the Acratex to be applied to the whole of the premises to remedy the defects in the brickwork which could have been remedied by any one of the other cheaper options agreed to by the experts. T&G further submits that the whole of the hearing of the first proceedings leading to the consent orders was unfair in that they were not joined as party to the proceedings.

Macquarie's submissions

Macquarie submits that it is a settled principle of law that where, as in these proceedings, a builder (contractor) reaches a settlement with its principals (the homeowners) in respect of a claim by the principals for a sub-contractor's defective work, the builder may recover damages from the sub-contractor in subsequent proceedings by reference to the cost of the settlement of the earlier proceedings, provided the settlement was reasonable as objectively determined: Unity Insurance Brokers Pty Ltd v Rocco Pezzano, ibid. Macquarie submits that in this case, the builder settled its case with the homeowners on the basis that it would engage an accredited applicator to apply Acratex to the whole of the principal's property to cover defects in the work performed by T&G. Additionally, the builder had agreed in the consent orders to reset the bricks in the window sills that were in contact with aluminium sills.
Macquarie submits that in reaching this settlement, the builder was guided in the large part by the outcome of the expert conclave. It referred to the four options of rectification of the major defects that we have identified above. It submits that objectively viewed, the settlement reached with the homeowners having regard to the amount that they were actually claiming from the builder was objectively reasonable. Macquarie accepts that the Tribunal's finding at [71] that the costs of the works had been agreed by the experts was not strictly correct, but submits that, when one has regard to the context of that statement, what the Tribunal was actually finding was that there was an agreement between the experts as to the scope of the remedial works which were necessary to fix the defective bricklaying work. That is, it submits that the finding was that the experts had agreed there were several alternatives as to the method of fixing the defective brickwork and that that agreement reflected the scope of the works, albeit in several alternatives, which would be necessary.
It submitted that, in choosing one of the alternatives, even though it was the most expensive, it was reaching a commercial settlement with the homeowners. It submits that the settlement should be considered in the context of the much larger claim made by the homeowners, and that the Tribunal did not fall into error in finding it was a reasonable settlement in that context.

Grounds 3-5 - consideration and determination

We accept that the test as to whether or not Macquarie can recover the amount for which it settled with the home owners falls within the principles enunciated in the Unity Insurance Brokers decision. In that decision Brennan CJ said at [6]: "The plaintiff must show that the sum accepted in settlement was reasonable. The test of reasonableness is, as Hayne J says, an objective one…".
In issue in that case was a breach by an insurance broker of its obligations to the insured. The resultant dispute between the insurer and the insured was resolved. The Court found that the fact that the dispute between the insured and insurer may be resolved by agreement does not preclude recovery by the insured from the broker of the settlement amount (provided it was reasonable) as it was the broker's breach of its obligations that caused the insured to obtain an insurance policy that was open to doubt or challenge. That was what caused the loss to the insured.
In Unity Insurance Brokers Hayne J said at [122]: [122] … The loss suffered by the insured, if the compromise is reasonable, is caused by the broker's breach of obligation… [123] No doubt the broker may be wholly excluded from any negotiations to resolve the differences between the insured and insurer and it seems that that was the case here. That does not mean that the broker is left to the mercies of parties over which it has no control or that those parties may impose on the broker any liability that they choose. The settlement between the insurer and insured must be reasonable. (It will be necessary to explore what is meant by saying that the settlement must be "reasonable"). [124] Next and most importantly, to require the insured to prove, as part of its case against the broker, the case which the insurer would have mounted against it is to encourage the prolonging of litigation and to discourage settlement. If the insured must prove the insurer's case, that is a significant reason not to settle its claim against the insurer but to conduct alternative claims against the insurer and the broker. If, without working injustice to the broker, the settlement of disputes can be encouraged, the desirability (some may say necessity) of doing so is obvious."
In the present case, by analogy, it is the fact that the bricklayers have undertaken defective work which caused Macquarie loss by exposing it to a claim for damages by the homeowners. The fact that the dispute between the homeowners and Macquarie was resolved by agreement (subject to what is said below as to reasonableness) would not lead to any different result than that Macquarie had suffered loss by reason of T&G's breach.
In respect to how it is determined whether the settlement of such a claim was "reasonable" Hayne J said: [129] Whether the compromise of a claim was reasonable must be judged objectively, not subjectively. Thus whether a party to litigation has received advice to settle may be important in deciding whether that person's conduct in settling the case was reasonable but, standing alone, the fact that a litigant was advised to settle at a particular figure reveals little or nothing about whether the settlement reached was reasonable. That is not to say that evidence may not be led, that such advice was given and adopted; it may. But evidence of that kind does not conclude the issue. What would usually be much more important is the reasoning that supported the advice that was given for that would ordinarily reveal why it was thought reasonable to compromise the claim as it was. [130] Next, the question whether the settlement was reasonable must be judged by reference to the material the parties had available to them at the time the compromise was reached. It is not to be judged according to whether material which was obtained later shows that the opposite party could or could not have prosecuted or defended the claim successfully but according to the assessment that could properly be made at the time of settlement of the chances of success or failure. [131] Often that will require consideration of whether the party that later seeks to say that settlement was reasonable had made sufficient enquiries and had sufficient information available to it to warrant reaching a compromise. In turn that may invite attention to whether the cost of seeking further information would outweigh the benefit that it was reasonable to expect may be obtained from doing so, but it does not assume knowledge of the opposite party's brief to counsel. [132] All of these and no doubt other considerations may bear upon the question of whether the settlement arrived at was reasonable. And it is inevitable that there will be no single answer to the question "for what amount was it reasonable to compromise this claim" - there will be a range of answers. What is a reasonable compromise of the claim will almost always require consideration of the chances of the parties succeeding in their respective claims or defences and that prediction of likely outcomes must always be imperfect and imprecise. To state the obvious, that is why the compromise of the claim, which is a monetary claim that will succeed entirely or fail entirely, will usually fasten upon a figure that is less than would be recovered if the claim were to succeed and why it is that there will be a range of figures within which the reasonable observer may conclude that settlement of the claim would be reasonable. [133] No doubt this may be contrasted with the case which is fought to judgment. Then the liability of the party in the position of the insurer in this case would be fixed by judgment. The broker's argument in this case … is that its liability should be fixed by reference to that sum and no other and if the liability of insurer has not been fixed by judgment in an action brought against it, it should be fixed in the action between insured and broker. [134] I do not agree. First, as I have indicated, acceptance of this argument will discourage settlement of the claim between insured and insurer. Secondly, to subject the broker to liability based upon a settlement that is found to be reasonable is not unjust. And it is not unjust even though there may well have been a range of figures within which settlement could reasonably occur and even though the decisions whether to settle and at what figure to settle are decisions over which the broker has no control. It is always necessary to recall that the broker was in breach of duty. There is no injustice in leaving the wrong doer to bear the consequences of the decisions made in response to that wrong doing by the party harmed - so long as those decisions are reasonable. Reasonableness informs much of the law of contract and in particular the assessment of damages for breach. This means, for example, that if the party wronged has acted reasonably, the wrongdoer may be liable for all of the loss that the plaintiff has suffered, even if the plaintiff's conduct has increased the loss. Conversely, the party wronged is not bound to take all possible steps to mitigate its loss, only those steps which are reasonable.
The findings of the Tribunal as to whether the settlement between Macquarie and the homeowners was reasonable are critical. We will set them out in full: [71] The Tribunal has considered the evidence of both the applicant and the respondents and their respective submissions for the Tribunal to be satisfied that the cost of that work was reasonable. The Tribunal is satisfied that the cost of carrying out remedial works was agreed between the experts in the claim between the homeowner against the applicant. That is the cost of the works was both necessary and reasonable to remedy the defective work of the respondent. The Tribunal is satisfied that the scope of the remedial work was objectively determined [by] qualified expert witnesses. The commercial terms of the settlement between the applicants and the homeowners are accepted by the Tribunal as a measure of the claim and damages suffered by the applicants. On that basis and in accordance with Unity Insurance Brokers the Tribunal is satisfied that the amount claimed by the applicant is a reasonable measure of the damage it suffered as a result of the defective work of the respondents … [76] The respondents contend that it was neither reasonable nor necessary to carry out rectification work that involved all the brickwork. They rely on the admission of Expert Palombo in his cross examination that no more than 15 m2 required to be redone, had not recommended that the entire dwelling be rendered and that the brickwork would have been repaired at a far less cost than the amount agreed in the commercial settlement between the applicant and the homeowner. [77] Nevertheless, the applicant reached its settlement with the homeowner on terms that both parties accepted as a reasonable compromise in order to resolve the dispute between them. That amount was significantly less than the home owner claimed. It represented a settlement on terms that both parties agreed was an amount they were prepared to accept as a commercial resolution to the dispute. [78] The Tribunal accepts the applicant's contention that the amount claimed was necessary to remedy the defects and reasonable.
It can be accepted, having regard to the material that was before the Tribunal, that the statement of the Tribunal that "the cost of carrying out the remedial works was agreed between the experts in the claim by the homeowner against the applicant" is wrong if it was meant to be a finding that the experts had agreed that the only remedial work which could be undertaken was the application of the Acratex. As we have observed from the Scott Schedule referred to above, what in fact occurred was that the experts agreed that there were four possible alternative methods of rectifying the defective brickworks. Application of the Acratex was only one, and as it turns out the most expensive, of those four alternatives.
In our opinion the findings we have referred to in paragraph [71] of the reasons do not amount to the Tribunal finding expressly that the experts agreed that the cost of the application of the Acratex was the only scope of work which could fix the defects in the brickwork. If that was the finding of the Tribunal it would be wrong and T&G would succeed in their appeal. In our opinion, as Macquarie submits, what the Tribunal was dealing with in [71] of the reasons, was that there had been agreement by the experts as to the scope of works for the several alternatives which would enable the defective brickwork to be fixed. The experts then agreed the costs of each of those alternatives. That is, there were a range of possible figures to fix the defective work which were "on the table" by reason of the objective determination of the scopes of works by the experts in the case. The question then became, as the Tribunal then considered, whether in selecting the application of the Acratex to the whole of the premises the settlement between Macquarie and the homeowners was reasonable within the meaning of the principles we have set out above.
As the Tribunal observed, the homeowners had claims against Macquarie for significantly more than the amount that was reached by way of compromise. True it is that that claim included matters over and above defective brickwork, but the clear and unchallenged finding of the Tribunal, based upon the conclusions of the experts, was that the brickwork was defective and something needed to be done to remedy the brickwork. The parties then engaged in settlement negotiations. The amount reached by way of settlement was significantly less than the homeowner claimed and represented a settlement on terms that both parties were prepared to accept as a commercial resolution of the dispute. The question is whether such a compromise was "reasonable".
It appears that the evidence before the Tribunal on the issue of reasonableness was the un-contradicted findings of the experts that the brickwork undertaken by T&G was defective and the material which indicated that the settlement represented a sum significantly less than the amount the homeowners had claimed. We have misgivings as to whether or not, ordinarily, a decision as to whether in such cases a settlement was reasonable could be based upon such a consideration alone. Ordinarily, one would expect there to be additional evidence dealing with the nature of the claim, the prospects of success of the claim, legal advice that the settlement was reasonable and appropriate and perhaps evidence of negotiations between the parties leading to the settlement. That is, as Unity Insurance Brokers indicates, evidence of the material before the parties at the time of the settlement so as to be able to objectively assess whether the settlement based on those materials was reasonable. In this case, there was none of that, save for the evidence of the experts that the brickwork was defective such that it can be safely concluded that the homeowners would have succeeded against Macquarie at least on that aspect of their claim.
We note that Mr Adams, the solicitor for Macquarie, did give evidence before the Tribunal. That evidence, however, only went to the question of the quantum of the costs claimed by Macquarie, in prosecuting and defending its claim against and by the homeowners. Insofar as the material before us indicates, there was no evidence of any legal advice given by Mr Adams or any other lawyer to Macquarie with respect to its prospects of success and whether or not it should settle the claim. Receipt of such evidence was discussed in the passages we have extracted above in the Unity Insurance Brokers case. It has been said that in such cases "evidence from legal advisers involved in negotiations is admissible and will ordinarily be essential": see BNP Paribas v Pacific Carriers Ltd [2005] NSWCA 72 at [17] per Handley JA. In that case, Handley JA made that comment in reference to what was said by the High Court in the Unity Insurance Brokers case. Handley JA noted that the Unity Insurance Brokers case does not establish a general principle that a settlement can be upheld without evidence from the legal advisers or that the failure of the opposite party to cross-examine can fill gaps in the evidence. His Honour commented that in order to discharge the onus that a settlement was reasonable the party so asserting: Requires proof not only that the result was reasonable but also that the negotiations were conducted with proper care and skill. The settlement must reflect the plaintiff's true prospects of success if the proceedings had been conducted with care and skill because otherwise it would merely reflect his impaired prospects.
As we have observed, in respect to the prospects of success, it can safely be inferred that Macquarie would have lost the claim brought by the homeowners with respect to the defective brickwork. That is because of the unequivocal finding of the experts in conclave that the brickwork was defective. As such, in the present case unlike the position in BNP Paribas, evidence of negotiations leading to the settlement and legal advice with respect to prospects of success is not essential.
We are left, therefore, to consider whether the Tribunal erred in reaching the finding it did on the material before it. We have reached the conclusion that the finding made by the Tribunal was open to it and, accordingly, it did not err. As we have observed, there were several possible methods of rectifying the defective brickwork which had been agreed between the experts. One of those was by way of application of the Acratex to the whole of the property. That cost (amounting to some $26,000.00) was significantly less than the total amount of the claim lodged by the homeowners. The other methods agreed as being within the scope of remedial works to fix the defective brickwork were valued at $10,223.00 through to $19,146.00. One of those was to demolish and rebuild the defective brickwork (100 square metres) for a total price of $16,767.00 inclusive of GST. We do not think, however, that the difference in the least expensive method of possible rectification through to the most expensive method of applying Acratex is such that we could conclude that it was not open to the Tribunal to consider it objectively reasonable having regard to the fact that it resolved the dispute in total in circumstances where there was a significantly larger claim. As Hayne J said in the Unity Insurance Brokers case, there will often be a range of figures within which settlement could reasonably occur and even though the decision whether to settle and at what figure are decisions over which the party sought to be made liable, in this case T&G, had no control, it is necessary to recall that it was the defective brickwork undertaken by T&G which caused the consequence of Macquarie having to meet a claim by the homeowners and face the decision of having to settle the proceedings.
As to the failure to join T&G to the earlier CTTT proceedings, when pressed to identify any specific legal consequence that flowed from the failure of T&G to be joined which would necessitate the appeal being allowed, counsel for T&G was unable to do so. He repeated his submission that it was unfair that they had not been joined and they ought to have been joined. We do not think there is any basis upon which the failure to join T&G to the earlier CTTT proceedings could be held to have the consequence that Macquarie are now disentitled to claim the amounts they do in these proceedings.
We conclude that, on balance, it was open to the Tribunal to reach the conclusion it did as to the reasonableness of the settlement and we reject these grounds of appeal.

Ground 6 - The Tribunal made an error of law in finding that the respondent was not estopped from bringing its claims in the face of substantial probative evidence to the contrary.

T&G's submissions

T&G submits that the Tribunal erred in rejecting the estoppel claim. As we understood it, the estoppel was said to be an estoppel by conduct arising in circumstances where T&G, as sub-contractors, were working under the direction and supervision of Macquarie as the head contracting builder. Thus, it was submitted, T&G were entitled to rely on any instructions or approvals given to them by Macquarie in respect to the work to be undertaken. T&G submitted that the evidence established that at no stage did anyone from Macquarie inform them that any part of the brickwork was defective. They were permitted to complete the brickwork without any suggestion that any or all of it was defective and may need to be rectified. Thus, it was submitted, T&G were entitled to assume that the standard of work product was acceptable to the applicant. They say that they continued to complete the work on the understanding that the work that they had undertaken was acceptable and had been approved. It was only after the complaints by the homeowners to Macquarie about the brickwork that an issue was raised with T&G. Thus, it was asserted, Macquarie was estopped from asserting that T&G are liable to it for any defective brickwork after the brickwork was completed under Macquarie's control, supervision and on its instructions.
It has to be said that at the hearing of the appeal, counsel for T&G seemed to retreat to some degree from pressing this ground. He did, however, formally maintain it. He submitted that the estoppel would arise after Macquarie had had a reasonable period to inspect the bricks and require them to be fixed. He submitted that if, after inspection, the defects were not picked up and required to be fixed then Macquarie would be estopped forever after from asserting that the brickwork was defective. It was submitted that there were three times when Macquarie could have required T&G to fix the brickwork. Firstly, after the work had been completed. Secondly, after the scaffolding at the premises had come down. Thirdly, when the bricklayers offered to go back and fix the work.

Macquarie's submissions

Macquarie noted that the evidence elicited from Mr Aylott under cross-examination at the Tribunal was that: 1. It was he who supervised the bricklaying work of his workers on site; 2. He was aware that Macquarie relied upon him to exercise skill and care in the performance of his work; and 3. The work performed by the bricklayers at the site was in fact defective.
Macquarie submitted that the foundation for establishing an estoppel by conduct requires proof of: 1. A promise by Macquarie or the creation by Macquarie of an assumption; 2. Reasonable reliance by T&G on that promise or assumption; and
Macquarie submits that none of those elements was satisfied by T&G in their evidence before the Tribunal.

Ground 6 - consideration and disposition

We reject the claim for estoppel. We accept the submissions by Macquarie that none of the evidence to which we were referred is sufficient to establish an estoppel by conduct either at common law or in equity (See The Commonwealth v Verwayen (1990) 170 CLR 394 per Brennan J at 422. See also, Halsbury's Laws of Australia, paragraphs 190-240 and 190-315). Both forms of estoppel require that the party said to be bound by the estoppel have by its conduct represented or promised to the other party, or otherwise induced the other party to understand, that a particular state of affairs existed or would exist, and that the other party had acted to its detriment in reliance upon that representation or understanding.
There was no evidence before the Tribunal, or before us, which would support a conclusion that, by its conduct, Macquarie had represented or promised to T&G, or induced an assumption on the part of T&G, that they would never be held responsible for any defective building work, or that T&G had acted in reliance upon any such representation, promise or assumption.
We reject this ground of appeal.

Ground 7 - The Tribunal made an error of law in rejecting the appellants' defence that the respondent failed to mitigate its loss. This finding was clearly against the weight of evidence (which included admissions by the respondent and the respondents' own expert).

T&G's submissions

T&G submit that by failing to properly supervise and inspect the brickwork, Macquarie failed to mitigate its loss. It is submitted that Macquarie should have instructed T&G to carry out any rectification work at a time when it was being carried out, and when it was still practicable and inexpensive to do so. It submits that the evidence was that no fault with respect to the brickwork was raised by Macquarie until 3 months after the brickwork had been completed. By that stage, Macquarie was in dispute with the homeowners over many issues, including the homeowners' failure to make payment and the defective brickwork. It was submitted that by that stage the opportunity for Macquarie to have the defects in the brickwork addressed by T&G at no cost had already been lost. This was because the homeowner would not accept the limited repairs which may have then been required.
T&G submit that the evidence of Mr Aylott before the Tribunal was that there had been numerous offers to go back to the site to fix the brickwork after this time but that he was never asked or given the opportunity to do so. In these circumstances, T&G submit that the only reason there was any cost to Macquarie in respect to the defective brickwork was because Mr Ferguson (one of Macquarie's employees) was negligent in his supervision of T&G's work and failed to properly give instructions to T&G to do any work at the time it was reasonable and necessary for him to do so. On any view, it was submitted, Macquarie failed to mitigate the loss of which it now complains despite having successive and repeated opportunities to do so. As such, T&G submit that Macquarie should not be now permitted to recover any costs it incurred directly on account of its own failure to mitigate its loss.

Macquarie's submissions

Macquarie submits that the Tribunal was correct in finding that there is no basis to the allegation that it had failed to mitigate its loss. Macquarie submitted that it had not acted unreasonably in the manner it did and this aspect of the appeal should be dismissed.

Ground 7 - consideration and disposition

A consideration of the principles of mitigation of loss was undertaken in Chand v The Commonwealth Bank of Australia Ltd [2015] NSWCA 181 at [178-182] by Ward JA. The following principles can be extracted from Her Honour's judgment: 1. The onus of establishing a failure to mitigate lies on T&G: Wenkart v Pitman (1998) 46 NSWLR 502 at 523; 2. There is no "duty" to mitigate loss - rather Macquarie cannot recover what is "avoidable loss". That is, losses consequent upon T&G's breach of the implied warranties that could by reasonable action have been avoided by Macquarie are not losses caused by T&G; and 3. Macquarie's conduct in not taking positive steps to reduce its loss will not be weighed by "nice scales" at the instance of T&G, being the party who occasioned the loss. The ultimate question is not whether there was a better way of doing the things that Macquarie did, but whether what Macquarie did was reasonable in the circumstances.
Once it is understood, as Macquarie itself submitted, that by the time there was discussion with respect to the defects in the building works, the homeowners were in dispute with Macquarie and that the homeowners would not accept the possible remedy of T&G being allowed back to repair the defective work, we are of the view that this ground of appeal falls away. That is, it cannot be said that it was unreasonable in those circumstances for Macquarie to defend the claim by the homeowners (whom we presume still did not wish T&G to return to their premises to rectify the defective brickwork) and settle the claim in the manner that it did. The reasonableness of the settlement, of course, is a separate question which we have dealt with above.
We are of the opinion that, in these circumstances, the loss claimed by Macquarie was not an avoidable loss within the meaning of the principles referred to above.
The Tribunal did not err in finding that Macquarie had not failed to mitigate its loss. As such, there is no substance to this ground of appeal and we reject it.

Grounds 9 -10

We are of the view that these grounds have been covered in the grounds dealt with above. Ground 9 in reality challenges the reasonableness of the settlement amount reached between Macquarie and the homeowners. We have dealt with that in dealing with grounds 3-5 above.
Ground 10 raises an allegation that there was a substantial miscarriage of justice because the Tribunal did not take into account the failure to mitigate by Macquarie and that the finding that Macquarie had not failed to mitigate was against the weight of the evidence. We have dealt with the failure to mitigate in ground 7 above.

Macquarie Grounds of Appeal

Macquarie appeals from the orders of the Tribunal with respect to its refusal to allow it the costs of prosecuting and defending the proceedings against the homeowners. As we have observed above, the Tribunal found that such losses were too remote and thus not available. The Tribunal also found that, if it was wrong on that conclusion, the evidence placed before it by Macquarie was not sufficient to enable it to properly calculate any loss
In its Notice of Appeal Macquarie sets out its Grounds of Appeal as: 1. The Tribunal erred in determining at [89] that the Applicant's losses in the form of its costs in earlier proceedings were too remote; 2. The Tribunal erred by failing at [91] to give proper weight to the applicant's evidence that 80% of its legal costs incurred in the earlier proceedings were attributable to the claims made in respect of the Respondent Bricklayer's defective work where to do so would have affected the determination that there was not sufficient evidence to make a finding as to quantum; 3. The Tribunal erred by failing at [91] to apply the correct standard of proof when it determined that the applicant had not discharged its onus of proof".
Macquarie seeks an order that T&G pay to it compensation in the amount of $80,194.00 (being the $26,364 for the in the Consent Orders to fix the defective brickwork and $53,830 for its costs).
The primary position of Macquarie is that the errors made by the Tribunal as set out in the Grounds of Appeal amount to errors of law and no leave is required. Alternatively, if leave is required, it submits that leave ought be granted as there has been a substantial miscarriage of justice in that the decision was not fair and equitable and/or was against the weight of the evidence.
At the conclusion of the hearing of the appeal, each of the parties was given leave to make additional submissions on the principles governing the calculation of damages. Submissions were received from each of Macquarie and T&G. We have considered those submissions in reaching the conclusions which follow.

Macquarie's submissions

Macquarie submits that the Tribunal erred at law in finding that its losses arising through the costs it incurred in prosecuting and defending the proceedings commenced by the homeowner were too remote. It referred to several decisions which, it submitted, established that legal costs reasonably incurred by a party (such as itself) in defending a claim (such as that brought by the homeowners) would be recoverable as damages in Macquarie's claim against T&G: Provident Capital v Papa (No 2) [2013] NSWCA 156 at (13)-(17); Skinner v Australian Telecommunications (1992) 27 NSWLR 657 at 678D; Gray v Sirtex Medical Ltd (2011) 193 FCR 1 at [37].
Macquarie submits that the Tribunal erred in concluding that if such damages were not too remote, it had failed to establish on the evidence what those damages were. In respect to assessment of damages, Macquarie submitted that the following principles may be distilled from the case law: 1. Exactitude in the assessment of damages will usually be impossible: Commonwealth of Australia v Cornwall [2007] HCA 16 at [65]; 2. The mere fact that assessment of damages might be difficult and attended by uncertainty does not relieve the Tribunal from the responsibility of attempting to assess those damages as best it can: The Commonwealth v Amann Aviation (1991) 174 CLR 64 at 83, 102, 125; McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 at 411-412 and Chaplin v Hicks (1911) 2KB 286 at 292 where Vaughan Williams LJ said: "The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages for his breach of contract". 1. Sometimes, the assessment of damages of necessity involves guesswork on the part of the court rather than estimation: The Commonwealth v Amann Aviation, ibid, at 83; 2. It is for Macquarie as the party asserting loss to put the Tribunal in the position of being able to quantify, in money, the damage it has suffered: Watts v Rake (1960) 108 CLR 158 at 159. However, where precise evidence is not available, the Tribunal must do the best it can to assess the damages: The Commonwealth v Amann Aviation, ibid, at 83; and 3. Although the amount of damage must be proved with some certainty, all that is required is as much certainty as is reasonable in the circumstances: Gerrard v Slamar [2004] WASCA 253 at [32].
Macquarie submitted that in applying these principles to this case, there was evidence before the Tribunal below to satisfy it that Macquarie had suffered loss in the form of legal costs in the earlier CTTT proceedings which costs arose from T&G's breach of implied warranties. The evidence before the Tribunal included the relevant invoices for those costs and evidence given by Mr Ferguson, a director of Macquarie, as to the fact of payment of those invoices and other payments to expert witnesses. Macquarie also submitted that the Tribunal had before it the evidence of Macquarie's solicitor, Mr Adams, that, on his estimate, about 80% of the professional fees and disbursements in the earlier proceedings were incurred in respect of time spent by him and others in addressing issues that arose directly from T&G's breach of contract. Macquarie submits that as he was the solicitor with the carriage of the earlier proceedings, he was in the best position to provide that evidence.
Macquarie submits that, contrary to the Tribunal's findings at [91] of the reasons, that evidence was sufficient to allow the Tribunal to make a finding as to the quantum of the builders' damages and to do so with a degree of certainty and precision that was consistent with the principles set out above.

T&G's submissions

T&G submitted that there is no error in the Tribunal's findings in this regard. It submits that the Tribunal was correct to find that damages of this kind were too remote and would not have been in the reasonable contemplation of the parties at the time the sub-contract was entered into between Macquarie and T&G.
T&G submitted that the finding of the Tribunal, that the evidence of Mr Adams, quantifying the proportion of the costs incurred in the earlier proceeding which were incurred with respect to T&G's breach of warranties at 80%, appeared to be a "guess", was correct and the Tribunal was correct to give that evidence no weight. T&G submitted that the onus was on Macquarie to put the necessary probative evidence before the Tribunal in a form sufficiently particularised to support its claim for the costs and it is not enough that there was "some evidence" before the Tribunal.

Macquarie appeal - consideration and disposition

We accept the submissions of Macquarie that the authorities it has referred to establish that damages of this kind are ordinarily not considered as being too remote. The references given by Macquarie to Provident Capital Ltd v Papa (No 2), ibid, confirm that the costs of Macquarie incurred in the proceedings it defended against the homeowners may fairly and reasonably be considered to have arisen naturally, that is according to the usual course of things from T&G's breach and thus fall within the first limb of the rule in Hadley v Baxendale. The other authorities referred to by Macquarie support such conclusion.
We agree that the Tribunal erred as a matter of law in making the contrary finding in paragraph [89] of its reasons.

Did the Tribunal err in concluding that there was no appropriate evidence before it?

Having concluded that the Tribunal erred as a question of law with respect to the remoteness of such damages, the question arises as to whether or not, on the material before it, the Tribunal was correct to conclude that Macquarie had not discharged its onus of proof as to the quantification of the loss.
We accept at the outset that the principles enunciated by Macquarie in its submissions that we have referred to above are applicable in this case.
Similar principles were recently considered by the Appeal Panel in Baak v Concrete Services Group Pty Ltd [2016] NSWCATAP 42. In that case the tribunal had found that the applicant had established an entitlement to damages but had not proved on the evidence the amount of those damages. It awarded nominal damages of $1,000.00. It is useful to set out some passages from those reasons, which although lengthy, are apposite: 81 Nominal damages are just that. The usual meaning of "nominal" is; "being such in name only, a price or consideration, etc nominated as a mere matter of form, being trifling in comparison with the actual value" ( Maquarie Concise Dictionary 4th Ed), "existing in name only; not real or actual, (of a sum of money, rent, etc ) virtually nothing; much below the actual value of a thing" (Australian Concise Oxford Dictionary second Edition 1992). In The Australian Law Dictionary, University Press 2010, "nominal" is described as: in name only. Thus nominal damages are small and as a token of the legitimacy of the plaintiff's claim rather than being compensatory in nature. They are: awarded as a demonstrable mark or vindication of the plaintiff's rights in a situation in which the plaintiff cannot establish substantial loss. They are awardable only in torts actionable per se and in breaches of contract. …However, if the plaintiff fails to satisfy the court that substantial damages have been suffered, the plaintiff run the risk of an award of a nominal award of damages or of no damages. (See Halsbury's Laws of Australia Vol 9 pp 260286-260287, par [135-590]) Another category of decisions is where the breach is proved and there is some evidence relevant to deciding the amount of the damage but insufficient evidence to prove precise quantification of the damage or loss. In Chaplin v Hicks [1911] 2 K.B. 786, the submission of the appellant was that because the amount of the loss that would be suffered was subject to contingencies, only nominal damages of 1 shilling should be awarded. That was rejected and the jury verdict of 100 pounds was upheld. Farwell LJ said (at p 799): In my opinion the existence of a contingency, which is dependent on the volition of a third person, is not enough to justify us in saying that the damages are incapable of assessment. Vaughan Williams LJ said (at 792) Sometimes however, there is no market for the particular class of goods but no one has ever suggested that, because there is no market, there are no damages. In such a case the jury must do the best they can, and it may be that the amount of their verdict will really be a matter of guess work. But the fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages for his breach of contract. That decision was followed by the Full Bench of the NSW Supreme Court in Howe v Teefy (1927) NSWSR 301 and there Street CJ said (at 306): There may be cases where it would be impossible to say that any assessable loss had resulted from a breach of contract, but short of that, if a plaintiff has been deprived of something that has a monetary value, a jury is not relieved from the duty of assessing the loss merely because the calculation is a difficult one or because the circumstances do not admit of the damages being assessed with certainty. This line of authorities was continued in the High Court decision of Fink v Fink [1946] HCA 54(1946) 74 CLR 127. There Dixon and McTiernan JJ (with whom Latham CJ and Williams J agreed) held (at p143): Where there has been an actual loss of some sort, the Common Law does not permit difficulties of estimating the loss in money to defeat the only remedy provided for breach of contract, and award of damages Similarly in Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54, Mason CJ and Dawson J said (at [31]: The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can: Fink v. Fink [1946] HCA 54; (1946) 74 CLR 127, at p 143; McRae v. Commonwealth Disposals Commission [1951] HCA 79; (1951) 84 CLR 377, at pp 411-412:, Chaplin v. Hicks (1911) 2 KB 786, at p 792. Indeed, in Jones v. Schiffmann [1971] FICA 52; (1971) 124 CLR 303, Menzies J went so far as to say that the 'assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation': at p 308. Where precise evidence is not available the court must do the best it can: Biggin and Co. Ltd. v. Permanite Ltd. (1951) 1 KB 422, per Devlin J. at p 438. And uncertainty as to the profits to be derived from a business by reason of contingencies is not a reason for a court refusing to assess damages: see McGregor on Damages, 15th ed. (1988), pars 357-359. Deane J said (at [4] of his reasons) : One such subsidiary rule is that, even in an action for repudiation or breach of contract where damage is not an element of the cause of action, a plaintiff bears the onus of establishing the extent of her loss or injury on the balance of probabilities. To satisfy the requirements of that rule, a plaintiff must, if she is to recover more than a nominal amount in such an action, affirmatively establish assessable damage, that is to say, loss or injury which is capable of being measured in monetary terms (see e.g. Luna Park (NSW) Ltd. V Tramways Advertising Pty Ltd [1938] HAC 66; (1938) 61 CLR 286 at pp 301, 307, 311, 312). Toohey J (at [11] of his reasons) said: However, to say as a general proposition that it is for the plaintiff to prove his damages is not to say that, in some instances, damage may be not be inferred or presumed: see Mc Gregor on Damages, par 1785 in relation to damages in tort. Nor is it to fail to recognise that the quantification of damages is 'in many cases no more than approximation lacking in mathematical or economic accuracy or sufficiency' (Pennant Hills Restaurants, at p636) or even that the assessment of damages 'does sometimes, of necessity, involve what is guesswork rather than estimation': Jones v Schiffman [1971] HCA 52; (1971) 124 CLR 303, at p 308. In the Victorian decision of JLW (Vic) Pty. Ltd v. Tsiloglau and Anor [1994] (Vic) Rp 16: [1994] 1VR 237, a decision of the Appeal Division of the Supreme Court of Victoria, Brooking J, who wrote the leading judgment said (at [9] of his reasons): A plaintiff cannot recover substantial as opposed to nominal damages unless he proves both the fact and the amount of damage: The Commonwealth v Amann Aviation Pty Ltd 11991] HCA 54; (1991) 174 CLR 54; (1991)174 CLR 64; 104 ALR 1, at CLR at 80, per Mason CJ and Dawson J, at CLR at 99, per Brennan J., at CLR at 118, per Deane J. and at CLR at 137-8, per Toohey J. If he proves the fact of the loss but does not call the necessary evidence as to its amount he cannot be awarded substantial damages (McGregor on Damages, 14th ed., at 190 and 222): he must put the tribunal in the position of being able to quantify in money the damage he has suffered: Watts v Rake [1960] HCA 58; (1960)108 CLR 158, at 159, per Dixon CJ. So juries in personal injuries cases are often directed that the plaintiff must prove to their satisfaction what he has suffered and will suffer and what is fair and reasonable compensation in respect of that. It is often said that the amount of the damage must be proved with certainty, but this only means as much "certainty" as is reasonable in the circumstances: Ratcliffe v Evans [1892] 2 QB 524, at 532-3. Where precise evidence is obtainable, the court naturally expects to have it; where it is not, the court must do the best it can: Biggin and Co Ltd v Permanite Ltd [1951] 1 KB 422, at 438; The Commonwealth v Arnann Aviation Pty Ltd, at CLR at 83, per Mason CJ and Dawson J. The nature of the damage may be such that the assessment of damages will really be a matter of guesswork, as in the well-known case of Chaplin v Hicks [1911] 2 KB 786, where the plaintiff had lost a chance of winning an engagement as an actress as a prize. So damages will be assessed for the wrongful detention of a racehorse even though it may be necessary to guess at the amount: Wilson v Matthews [1913] VicLawRp 54;119131 VLR 224; compare Howe v Teefy [1927] NSWStRp 41; (1927) 27 SR (NSW) 301. Claims for damages for loss of publicity are another example of cases of inherent difficulty in assessing the plaintiff's loss with any approach to certainty: see the decisions cited in Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286, at 301. An interesting decision is Aerial Advertising Co v Batchelors Peas Ltd (Manchester) (1938) 2 All ER 788, where the loss suffered could not have been proved with precision. Atkinson J. awarded three hundred pounds as all he could allow on an absolutely safe basis, saying that it was undoubtedly too little, but that the plaintiff could have called better evidence if it had wanted a larger figure. But while in some cases guesswork may be permissible in assessing damages, in others it is not. Guesswork was not good enough in Williams v Stephenson (1903) 33 SCR 323 (breach of contract by preventing plaintiff from continuing to conduct hotel; trial judge wrong in assessing damages by guessing); Wood v Grand Valley R Co 16 DLR 361; affirmed 22 DLR 614; 51 SCR 283 (breach of contract to construct railway line; any estimate of loss practically guesswork); Toronto Transit Commission v Aqua Taxi Ltd 6 DLR (2d) 721 (violation of exclusive right of ferry; no intelligent conclusion possible as to amount of loss); Sunley (B) and Co Ltd v Cunard White Star Ltd [1940] 1 KB 740 and Woodman v Rasmussen [1953] St R Qd 202 (breach of contract to carry machinery; in Sunley trial judge wrong to assess damages while admitting that any attempt at analytical analysis of award must fail); Luna Park (NSW) Ltd v Tramways Advertising Pty Ltd [1938] HCA 66; (1938) 61 CLR 286 (breach of advertising contract; impossible to reach any estimate of damage suffered); Noske v McGinnis [1932] HCA 32; (1932) 47 CLR 563, at 599 (breach of contract for sale of hotel; Evatt J, dissenting as to sufficiency of evidence, holds that it will not found a fair estimate of damages); and Ashcroft v Curtin [1971] 1 WLR 1731 (diminution of profitability of business as result of plaintiffs injuries; quantification quite impossible). It all depends on the circumstances. Where a vessel was damaged by negligence and there was evidence that it was impossible to make a reasonably accurate estimate of the cost of repairs, the Full Court of Queensland upheld a direction that in estimating the cost of repair the jury must do its best on what seems to have been the exiguous material before it: Wheeler v Riverside Coal Transport Co Pty Ltd [1964] QdR 113. The plaintiff may have been fortunate in the briefly noted case of Bovet v Walker (1917) 62 Sol Jo 104, where no evidence to enable the diminution in value to be quantified seems to have been led; I should have thought that expert evidence would have been available and should have been called. His Honour said later in the judgment (at [11]): There is no rigid dividing line between cases in which guess work is permissible in assessing damages and cases in which it is not. The borderline between guess work and rational assessment is itself indistinct, as it the line between evidence that is "precise" (The Perminite Case Dictum) and evidence that is not. His Honour also stated (at [27]): We were asked by Mr McInnes, if we were not prepared to order a retrial on damages, to substitute for the award of damages below an award of nominal damages. But this we cannot do. ""Nominal damages" is a technical phrased which means that you have negatived anything like real damage, but that you are affirming by your nominal damages that there is an infraction of a legal right, which, though it gives you no right to any real damages at all, yet gives you a right to the verdict or judgement because your legal right has been infringed. ("The Mediana" v "TC, Cint"" [1900] AC 113 at 116 Lord Halsbury LC, cited by Griffiths CJ in Baune v The Commonwealth [1906] HCA 92: (1906) 4 CLR 97 at 116 In Yan Tun Wwu; Dong Fang Chen; Feng Wei L; Lei Wang: Wei Kang Jiang; Hong Lian Zhu; Zhi Fen Adele Dai; Shao Hua Chen v Great Wall Travel Service Pty. Ltd [2014] NSWCA CD 50. The Tribunal member determined (at [64]): There is uncertainty as to the applicant's loss and damage, but nevertheless the Tribunal must do the best it can: Biggin and Co Limited v Permanite Limited (1951) 1KB 422 at pp 438-439 per Develin J (as he was): by forming what was described in Callaghan v William C Lynch Pty Limited (1962) NSWR 871 at p877 as 'conclusions on matters, on slender material; to make allowance for contingencies, even to the extent of guess work or speculation…. many cases illustrate that uncertainty in the quanification of damage, either in cases of contract or Tort, does not prevent an assessment: provided that some broad estimate can be made'". The Tribunal member (at [65]) relied upon the approval of these principles in NZ Enzed Ltd v Wynthea Pty. Ltd [1984] SCA 373: FCR 450 at [68] where it was held: The principle is clear. If the court finds damage has occurred it must do its best to quantify the loss, even they agree that speculation and guess work is involved. Furthermore, if actual damage is suffered, the award must be for more than nominal damages. We should add that we can see no reason why this principle should not apply in cases under the Trade Practices Act as well as in cases of Common Law. We emphasise, however, that the principle applies only when the Court finds that loss or damage has occurred. It is not enough plaintiff merely to show wrongful conduct by the defendant. Another decision where these principles were applied is Marskell & Anor v Davis & Ors t/as TV Local Bloke Removals [2015] NSWCATCD 34. The evidence in the proceedings was insufficient to precisely quantify the cost of rectifying the cracking of the floor along the walls sustained as a result of the poor workmanship by the builder in breach of the contract and implied warranties. It was not a case where there could not have been evidence establishing the extent of the breach, available methods of rectification and the likely cost of each. There could have been evidence by an expert as to the preferable method of rectification and evidence as to the cost of rectification. Neither the extent of this breach nor the damage was incapable of proof. It was not a situation where, according to the authorities, the damages should be nominal. But the damages of $1,000.00, despite the Member describing them as nominal, were not nominal damages. In the context of these proceedings $1,000.00 was not a token amount. The member erred in describing the amount as "nominal damages". He was not making an order for nominal damages (bold emphasis added)
Critically from those principles, it can be seen that it is for Macquarie to put the Tribunal in the position of being able to quantify, in money, the damage that it has suffered: Watts v Rake, ibid. Further, as Macquarie accepts, although the amount of damage must be proved with some certainty, all that is required is so much certainty as is reasonable in the circumstances: Gerrard v Slamar, ibid. Where the circumstances are that precise evidence of the damage suffered is available, it is for Macquarie as the party asserting loss to put that evidence before the Tribunal. If it doesn't it is not entitled to substantial damages, but only nominal damages.
We accept that there was evidence before the Tribunal that Macquarie had, in fact, suffered a loss in that it had incurred costs in prosecuting its claim and defending the claim brought by the homeowners. However, it was also accepted by Macquarie that the costs were incurred in relation to other matters over and above the aspect of that claim dealing with the defective brickwork. The evidence presented to the Tribunal was the invoices for the legal costs incurred and other costs of the experts for all work undertaken. As such, there had to be a breakdown or allocation of all of the costs which were truly payable by reason of T&G's breach of the implied warranties. It was for Macquarie to establish this assessment. Such a breakdown between the costs attributable to the work undertaken dealing with the defective brickwork could have been undertaken. It might not have been exact, but it could have been reasoned and logical.
We are of the view that the Tribunal was correct in reaching the conclusion it did that Macquarie failed to put before it proper evidence so as to be able to assess this loss. It was clearly open to Macquarie to lead evidence by a costs assessor or other qualified person, by reference to each of the accounts tendered in evidence in support of its claim for these costs, that a calculated percentage of those costs were referable to the defective brickwork.
The only evidence before the Tribunal in this regard was given by Mr Adams, the solicitor for Macquarie. That evidence was not led in chief but came in re-examination over objection by counsel for T&G. We have been provided with a copy of the transcript of the proceedings below, including the evidence of Mr Adams (at Court Book 412-426). Mr Adams established his credentials as solicitor for Macquarie and that he had issued invoices to Macquarie (Court Book 412 at line 20). Mr Adams was then cross-examined by Mr Zikmann, counsel for T&G. That cross-examination focused on the nature of the claim brought against Macquarie by the homeowners and established that there were different aspects of the claim as well as Macquarie's claim against the homeowners for payment of outstanding sums. It was accepted by Mr Adams that the Consent Orders settled both the proceedings commenced by the homeowners for damages and Macquarie's proceedings against the homeowners for payment of outstanding amounts. Mr Adams was cross-examined (see for example Court Book 418-421) as to the fact that not all of the costs incurred by Macquarie were for the defective brickwork but included costs incurred for the other aspects of the claims before the CTTT. He conceded that the costs being claimed by Macquarie were the costs as set out in the Statement of Mr Ferguson (Court Book 104). Those costs were sought to be proved by Mr Ferguson by simply tendering all of the invoices from Adams & Partners to Macquarie incurred in respect to the earlier proceedings in the CTTT.
It was only late in the cross-examination where Mr Adams, when being challenged as to the fact that his client was claiming all of the legal costs in the CTTT proceedings said: "Or a proportion of those costs as awarded by the Tribunal". (See Court Book 421 line 45).
Mr Adams was then re-examined by Mr Hand, Counsel for Macquarie (at Court Book 422 line 30) as follows: Q. Given your knowledge of the matter and your involvement in the matter, are you able to say to the Tribunal in percentage terms, what of your work from 17 December 2012 - what of the legal fees, or percentage, in your mind is attributable exclusively to this question of brickwork? Objection Zikmann: They could have put on evidence from Mr Adams putting that evidence in saying what the percentage it was. We could have cross-examined on that. This is new evidence in chief …"
A little later Mr Hand, counsel for Macquarie (at Court Book 423, line 15) said: … you are going to be faced with a situation as a Tribunal member to either go through each bill and apportion it yourself as to what you think the damages might be - the respondent is going to put - I assume, if this objection is upheld, that the respondent is going to say the costs are zero rather than a hundred per cent so, therefore, you are playing with two opposite ends of the spectrum, zero per cent or one hundred per cent. The proper course is that you be given some guidance as to what, from the solicitor's perspective that was involved in this matter, he perceives that the percentages of his involvement are, and that will have to be made good by reference to - I have to make good that in submissions by reference to the content of those invoices. MEMBER: I will allow the question and, in allowing the question, I am mindful of section 36 of the NCAT Act in informing myself. WITNESS: Can I say that I have not sat down and done a mathematical calculation, but on my estimate 80% of the costs incurred in this matter were incurred directly because of the brickwork. At the end of the day - and this may not have any relevance to the question that's been asked, however, the only item in the settlement was the brickwork, the Acratex application to brickwork and in the same orders there was an order that the money claimed, or part of the money claimed by the builder was to be released. Even though the matter's gone away, it was the brickwork that was the context and it was the work that I did … on brickwork and dealings with the conclave and the experts to try to get costings of the four or five different options available for, to rectify the brickwork that my time was spent on. ZIKMANN: Member - WITNESS: That was, that's, I'm just saying 80%. OBJECTION. PREJUDICIAL." (bold emphasis added)
It is important to note that Mr Hand, for Macquarie, submitted that he would have to make good by reference to the relevant invoices the solicitors' estimate of the percentages of the relevant involvement. Implicit in that submission was a concession that the invoices themselves, and the "estimate" of Mr Adams was not sufficient for Macquarie to prove this aspect of its loss. The exercise foreshadowed by Mr Hand was, as far as we know, never done.
There then continued some debate about the appropriateness of the evidence and the objection to its receipt was continued by Mr Zikmann. Mr Hand submitted that the Tribunal ought take a "broad brush approach" by reference to the claim. He again said "I will make good this by way of submissions as to where the state of the expert evidence was at different stages of the process …" We are not aware of any such submissions.
The Tribunal allowed the evidence of Mr Adams as to his estimate of 80% of the costs being referable to the brickwork. Mr Zikmann noted his objection and, quite properly in our view, asked how he could possibly cross-examine on that 80% figure. Whilst there is no appeal by T&G against the Tribunal receiving that evidence, its weight is questionable.
In our opinion, it was not unreasonable for the Tribunal to conclude that the evidence of Mr Adams as to the 80% figure was a guess. There is no evidence from the transcript that Mr Adams was taken to any of the invoices and asked to estimate by reference to each of them what percentage of the work was referrable to the defective brickwork. Further, as we have observed, there is no indication that submissions were ever made by counsel for Macquarie, as he accepted ought to have been made, making good the estimate by reference to those invoices.
It is one thing to say that where damages are difficult to assess, a Tribunal must do its best to assess them. However, it is quite another thing to say that in circumstances where a party has the onus of proving a loss it has incurred, and proof can easily be put before the relevant Tribunal, the Tribunal is bound to act on insufficient evidence. We have formed the view that Macquarie has failed to discharge its onus to prove on the balance of probabilities the amount of costs it incurred referrable to the breach of the statutory warranties by T&G.
This is not a case where Macquarie has proved it has suffered a loss by reason of the breach of contract by T&G but has failed to prove the amount of that loss for any of the heads of damage it claimed and would therefore be entitled to nominal rather than substantial damages. In this case, Macquarie has proved that T&G breached the contract to undertake the bricklaying work. It claimed two heads of damage it says were caused by the breach: the amount to apply the Acratex and the legal costs it incurred in respect of the home owners' claim. It has been successful in recovering substantial damages as it proved that the amount paid by way of the settlement to apply the Acratex was reasonable. It has established an entitlement to the second head of damage claimed, namely the costs, but it has not proved, as it had the onus to do, the amount of that loss. Its claim for that loss is therefore denied.
We therefore would dismiss Macquarie's appeal.

Conclusion and Orders

For the reasons above, we have reached the conclusion that the T&G appeal should be dismissed. Whilst Macquarie succeeded in establishing that the Tribunal erred in finding the costs it incurred were too remote to be recoverable, it has not proved the quantum of that loss and therefore its appeal will also be dismissed. In respect to costs of the appeal, each party has failed on its appeal. Our preliminary view is that there should be no order as to the costs of each appeal. We will make orders providing for submissions by the parties on this preliminary view if they so choose.
The orders we therefore make are: 1. In matter AP 15/65214 the appeal is dismissed. 2. In matter AP 15/65327 in so far as is required, grant leave to appeal but dismiss the appeal; 3. If any party wishes to make submissions with respect to the costs of the appeals, such submissions should be received by the Tribunal no later than 14 days following publication of these orders and to be no longer than 3 pages in length; 4. If no party makes submissions in accordance with Order (ii) above, the order will be that there is no order as to costs in each of the appeals. 5. The stay of the operation of order 1 made on 6 November 2015 in matter number HB 13/40548, granted on 9 December 2015, extended on 23 December 2015 and further extended on 9 March 2016 is discharged.

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: 28 June 2016

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (34 paragraphs)

Cases Cited (31)

Cited By (2)