McPherson v Mace

Grounds of Appeal

1. In his amended grounds of appeal Mr McPherson submits that the Tribunal made four errors of law, namely: 1. The Tribunal misdirected itself as to the issues to be decided in the proceedings and failed to make findings of fact about material facts in issue. 2. The Tribunal misunderstood the facts in arriving at its decision to attribute to Mr McPherson the responsibility of rectifying the defects. 3. The Tribunal misunderstood the law of causation. 4. The decision of the Tribunal was infected by a breach of procedural fairness, in that it failed to provide reasons for its decisions in relation to items 2 and 4.
2. These grounds of appeal were supported by written submissions of the appellant's counsel Mr Nolan, and amplified in Mr Nolan's oral submissions at the hearing. In his written submissions, Mr Nolan submits that the first three grounds are effectively directed to the same legal error, namely "the Tribunal's failure to deal with the anterior and material conflict between the parties as to liability for the alleged defects". He submits that the Tribunal gave no consideration to the issue of liability under the contract, which he submits is a "constructive failure to exercise jurisdiction". He submits that a constructive failure to exercise jurisdiction arises when a decision maker misunderstands the nature of its jurisdiction and, in consequence, applies a wrong test, misconceives its duty, fails to apply itself to the real question to be decided or misunderstands the nature of the opinion it is to form. He submits that, having identified that liability remained in issue and posing it as a matter for determination, by failing to engage at all with any of the arguments that were posited with respect to liability for the defects, and not disposing of the arguments in any other way, the Tribunal "failed to consider the real questions that it was duty bound to consider".
3. The appellant also submits that the issue could not be determined by reason of a hot tub of experts, as the experts could not be conferred with the power, nor were they qualified, to determine the legal questions which arose on the proper construction of the contract and the application of facts to the contract.
4. In relation to the final ground of appeal, the appellant submits that the Tribunal failed to provide adequate reasons for its decision. He submits that the Tribunal's reasons, despite raising liability as an issue, do not demonstrate that the issues relating to liability have been determined or that any relevant statutory requirements considered. The reasons being inadequate, the decision is vitiated and should be set aside.
5. At the hearing Mr Nolan submitted that the Tribunal failed to make the necessary findings of fact, that the Tribunal confused or conflated causation with liability, and did not address the material issues on the pleadings; that is what were the terms of the contract, whether the contract had been breached, and if so, why; whether the statutory warranties applied and what was the date of practical completion of the works the subject of the contract.
6. Mr Nolan also submitted that the reasons for decision did not record the scope of the work the subject of the dispute between the parties, that is whether the items the subject of the decision were within the scope of works contemplated under the contract. Mr Nolan submitted that the south wall forming part of the retaining wall did not form part of the contract and had been built as a favour or gift. Mr Nolan submitted that if the appeal were allowed, the matter would need to be remitted to the Tribunal for reconsideration. We note that Mr Jacobs, who appeared for the respondent, agreed that if this submission was accepted, remittal was the appropriate course.

Respondent's submissions

1. The respondent's solicitor filed written submissions. He submits that there is a fundamental error in the appellant's written submissions, that being the failure to take into account the resolution "(not determination)" of most of the issues in dispute between the parties on the day of the hearing. Here the respondent relies on the reasons for decision which relevantly state: In this matter there were 12 items of defective work in dispute between the parties. The dispute was resolved at the hearing as follows: . . . Items 2 and 4 liability remained in dispute following hot tub of experts. They were to be determined by the Tribunal.
2. The respondent submits that, when the determination of "liability" in respect of items 2 and 4 is considered in the context of the written reasons, it is clear that at that at the conclusion of the resolution processes used by the Tribunal on the day of the hearing, the only issues that were before the Tribunal for determination were whether the respondent was liable (ie had caused) the defects the subjects of items 2 and 4; and, if so, the costs to rectify those items.
3. In relation to the appellant's submission that no consideration was given to liability under the contract, or otherwise, the respondent submits that "it beggars belief that the parties, having resolved all issues (including the contract between them) relating to items 3, 5, 8, 9, 10 and 11 on the day of the hearing with the assistance of the Tribunal, would then submit items 2 and 4 only to be determined afresh and in a vacuum The respondent submits that such a result would render redundant the use of resolution processes under s 37 of the Civil and Administrative Tribunal Act 2013 (the Act), and be inconsistent with the guiding principle set out in s 36(1) of the Act.
4. In summary, the respondent submits that the Tribunal "clearly considered" causation of the defects relating to items 2 and 4, and that it could not be said that the Tribunal misunderstood the nature of its jurisdiction or misunderstood or misconceived its duties and responsibilities.
5. These submissions were amplified by Mr Jacobs of counsel who appeared at the hearing for the respondent. He submitted that while the language of employed in the reasons may be inelegant, on a fair reading it is clear that following the resolution or withdrawal of most of the items in dispute the only issue remaining was causation, specifically whether the defects in items 2 and 4 was caused by the builder. He submitted that the notion that the Tribunal should reflect the points of claim and defence in its reasons should not be accepted. He also submitted that if his submissions that there was no substance in the appellant's first three grounds of appeal was accepted, then the fourth and final ground must fail.
6. As to the adequacy of the reasons, he submitted that the reasons should not be construed minutely or with a "keenly attuned eye to the perception of error".

Nature of the appeal

1. The Act sets out the basis upon which appeals from decisions of the Consumer and Commercial Division may arise under s 80 of the Act. That section states that an appeal may be made as of right on any question of law, or with leave of the appeal panel on any other grounds (s 80(2)(b)).
2. The appellant raises, in essence two issues. The first was that the Tribunal by giving no consideration to the issue of liability under the contract, was a "constructive failure to exercise jurisdiction". The second error was that the written reasons were inadequate.
3. The appellant contends that both these errors are errors of law, and leave are not required for the appeal to proceed. We agree. We consider that if the alleged failure of the Tribunal was, in effect, "to ask itself the right question", or to fail to identify the correct question, would be an error in principle, and that no leave would be required for the appeal to proceed.
4. As to the failure to provide adequate reasons, it is well established that this is an error of law: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13].
5. Accordingly, we consider that the appellant does not require leave to appeal.

Consideration

1. The first matter raised by the appellant is that, in essence, the Tribunal did not consider whether or not the respondent was liable under the contract for items 2 and 4. He submits that in failing to do the Tribunal failed constructively to exercise its jurisdiction. The second matter is that the written reasons of the Tribunal were inadequate. To some extent, these matters overlap. If what the Tribunal was actually doing or considering had been better articulated, we would be in a better position to understand the reasons. No sound recording or transcript of the hearing has been provided. Absent evidence in the form of the transcript or other appropriate evidence we must consider the content of the reasons, the issues identified therein and the adequacy of what was said.
2. Section 62 of the Act provides that: 1. The Tribunal (including when constituted as an Appeal Panel) is to ensure that each party to proceedings is given notice of any decision that it makes in the proceedings. 2. Any party may, within 28 days of being given notice of a decision of the Tribunal, request the Tribunal to provide a written statement of reasons for its decision if a written statement of reasons has not already been provided to the party. The statement must be provided within 28 days after the request is made. 3. A written statement of reasons for the purposes of this section must set out the following: 1. the findings on material questions of fact, referring to the evidence or other material on which those findings were based, 2. the Tribunal's understanding of the applicable law, 3. the reasoning processes that lead the Tribunal to the conclusions it made.
3. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel said at [49]: One reason why reasons are generally required, notwithstanding a provision such as s 62, is that if reasons for decision are neither sought nor prepared and an appeal or application for leave to appeal is lodged, the findings of fact and legal reasoning of the decision maker at first instance would not be available to the appellate body by way of written reasons. In many instances not having findings of fact and legal reasoning explicitly available may render effectively worthless any appeal right because the appellate body does not have a statement of the findings of fact, the relevant law and explanation of how the law was applied to the facts as found, by the decision maker at first instance. and at [53]: The other basis upon which it has been held that reasons are generally required to be given was recently reiterated by the Court of Appeal in Keith v Gal [2013] NSWCA 339 (per Gleeson JA at [109] as being that failure to provide sufficient reasons promotes 'a sense of grievance' and denies 'both the fact and the appearance of justice having been done', thus working a miscarriage of justice, citing Mifsud v Campbell (1991) 21 NSWLR 725 at 729: Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 at 442 per Meagher JA. and at [57]: A number of propositions can be derived from the authorities concerning the nature and extent of the duty to give of reasons as follows: (1) notwithstanding that there have been many cases (some of which are collected in De Iacovo v Lacanale (1957) VR 553, at pp 558-559) in which it has been held that it is the duty of a judge, magistrate or other relevant decision maker to state reasons, that does not mean that a decision maker must give his or her reasons in every case. There is no "inflexible rule of universal application" that reasons should be given for judicial decisions. Whilst it is no doubt right to describe the requirement to give reasons as "an incident of the judicial process", it is subject to the qualification that it is a normal but not a universal incident - Public Service Board of New South Wales v Osmond (1986) 159 CLR 656 at 667 per Gibbs CJ; (2) the content and detail of the reasons for decisions to be provided will vary according to the nature of the jurisdiction which the body in question is exercising and the particular matter the subject of the decision - Wainohu v New South Wales (2011) 243 CLR 181 at [56] per French CJ and Kiefel J; (3) the administration of justice in this regard requires a pragmatic and functional approach to the obligations imposed upon decision makers at first instance - Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [46] per Basten JA; (4) not only is the obligation not universal in nature, but it is variable in its content and whilst transparency in decision-making is an important value, it is not cost free, and may involve separate parameters of quantity and quality - Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [48] per Basten JA.
4. To these observations should be added the comments of the observations of the Court of Appeal in Pollard v RRR Corporation Pty Limited [2009] NSWCA 110 conveniently summarised in Moussa Enterprises Pty Ltd v Stanford [2015] NSWCATAP 99 at [30]. In Pollard v RRR Corporation Pty Limited [2009] NSWCA 110 McColl JA, with whom Ipp JA and Bryson AJA agreed, noted the following relevant principles. (1) The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes "a sense of grievance" and denies "both the fact and the appearance of justice having been done", thus working a miscarriage of justice. (2) The extent and content of reasons will depend upon the particular case under consideration and the matters in issue: (3) While a judge is not obliged to spell out every detail of the process of reasoning to a finding, it is essential to expose the reasons for resolving a point critical to the contest between the parties. (4) The reasons must do justice to the issues posed by the parties' cases. Discharge of this obligation is necessary to enable the parties to identify the basis of the judge's decision and the extent to which their arguments had been understood and accepted. (5) Because a primary judge is bound to state his or her reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Where it is apparent from a judgment that no analysis was made of evidence competing with evidence apparently accepted and no explanation is given in the judgment for rejecting it, it is apparent that the process of fact finding miscarried.
5. In the present case, the appellant suggests that the issues to be resolved in relation to liability and quantum are to be determined by the points of claim and points of defence filed by the parties.
6. We do not agree with this submission for three reasons. Firstly, this approach presupposes the Tribunal is bound to determine every issue raised in points of claim and points of defence and to deal with the matter as if the claims were proceeding in court where pleadings are used to define the issues. Secondly, it ignores the fact that hearings are conducted in a manner designed to identify the real issues in dispute and to make necessary rulings in connection with those issues in order to resolve them in a just, quick and cheap manner as required by section 36 of the Civil and Administrative Tribunal Act, 2013.
7. Thirdly, and most significantly, it is evident from the decision that the case had substantially evolved and that many issues that might have been set out in the points of claim no longer required determination by the Tribunal.
8. In this regard, items 1 and 12 were withdrawn. Items 6 and 7 were not pressed. Items 3, 8, 9 and 11 were resolved at conclave. Items 5 and 10 were resolved as a consequence of the "hot tub" process in respect of expert evidence during the course of the hearing.
9. The only issues for determination were claims in relation to items 2 and 4. In this regard it seems clear that "liability and quantum remained in dispute following hot tub of the expert" and that these matters "were to be determined by the Tribunal". Further, the fact some issues were resolved make clear that there was a contract although, with respect to particular items claimed, there were issues relating to whether the appellant was liable.
10. The question for the Appeal Panel is whether or not the Tribunal's reasons for making the awards for each of these items was adequate. In this regard it will be necessary to consider what "liability and quantum" issues were to be determined and whether these issues were adequately identified by the Tribunal in giving reasons.
11. Item 2 related to a retaining wall.
12. It seems clear from the decision that there was an "existing footing" over which the retaining wall and masonry fence had been constructed. It also seems clear from the reasons that due to inadequate foundations and/or movement of a tree: 1. What had been constructed had cracked; and 2. There were disputes concerning the cause of the cracking and the method of rectification. The reasons also record that the appellant (referred to as the respondent in the reasons) gave sworn evidence that he had placed a lentil (sic-lintel) over the "palm tree bulge under the wall… to avoid cracking".
13. In its reasons, the Tribunal also said: "On the evidence before me, I am of the view that despite the respondent's contention that the wall cracked due to the tree root movement the respondent should have consulted an engineer prior to building the wall on the existing footing. He stated himself that he advised the homeowner that a colourbond fence should be placed on top of the wall. The homeowner insisted on the masonry wall. The respondent should have asked for the engineer's opinion prior to proceeding with erecting the masonry wall on the old footing, unless there was a written instruction obtained not to do so."
14. The Tribunal then goes on to conclude: "I accept the argument that the wall should be demolished and a new footing, suitable for the wall, be constructed in accordance with the engineers design."
15. However, inter alia, the Tribunal does not set out in its decision: 1. The contractual provisions or other reasons why the appellant was responsible for modifying an existing footing as part of the works he was required to do; 2. Why the appellant was responsible for tree root movement after the works were built and how this issue was resolved; and 3. Why the Tribunal accepted the argument that that the wall should be demolished with a new footing rather than having the existing footing "rectified as directed by the structural engineer".
16. It may be that some or all of these issues did not remain to be determined by the Tribunal. However, absent adequate reasons or a transcript of what occurred and all the relevant evidence, it is not possible for the Appeal Panel to determine whether the decision made was correct.
17. Consequently, an application of the principles set out above leads the Appeal Panel to conclude that the reasons given in respect of item 2 are inadequate and the decision in this regard should be set aside.
18. Item 4 related to a claim in respect of soffit lining.
19. As the decision records, the respondent (the applicant in original proceedings) contended: "The plasterboard lining has to be replaced. To avoid water damage in the future an adequate flashing and a water bar should be installed at roof to gutter junction."
20. On the other hand, as recorded in the decision the appellant's expert said: "(he) did not agree to the replacement of the soffit. (He) stated that if the soffit was made out of plasterboard, it would have been damaged (sic) beyond repair over the past four years. His opinion was that the paint had been damaged due to water ingress. He agreed with the applicant's expert that a flashing should be installed between the roof and the gutter. At the bottom edge of the facia board a metal angle ought to be fixed to the underside of the failure to act as a drip angle to prevent water from running down the face of the facia and back onto the ceiling sheeting. ….. (He) contended that the defect was not due to a fault in the builder's work but rather as a result of faulty design by the Designer of the project. He was instructed that the Fair Trading inspector did not find fault with the builder's work."
21. In reaching its conclusion on this issue, the Tribunal said: "I am persuaded by the respondent that the soffit does not require replacing. It has been in place for several years and it has not been damage to the extent to be replaced. I agree with the respondent that (sic) the soffit may be repaired by painting it. The material used for the soffit is not plasterboard as contended by the applicant. It appears from the concurrent evidence that villa board, which was used, is more akin to the fibrous (sic) cement sheeting rather than plasterboard. The respondent argued that the design was the reason for the defect. There was no evidence before me what the design was. I therefore reject the design argument. The builder ought to have completed the work in a proper and workmanlike manner. There is no evidence before me that the respondent was instructed in writing to (do) the work contrary to the advice of the respondent. I allow the sum of $5366.44 as estimated by the respondent. The applicant sought a sum of $9470.80. The parties (sic) have agreed on the method of rectification if the respondent's argument is adopted on the extent of the damage to the soffit."
22. It seems clear to us that there were only three issues to determine in relation to item 4: 1. Did the defect arise from faulty design of a design engineer or was the builder responsible? 2. Was the material used in constructing the soffit lining plasterboard or villa board? 3. Was the builder liable for replacing soffit lining or could it be repaired?
23. In our view, on a fair reading, the reasons for decision given by the Tribunal in the resolution of the issues concerning item 4 was adequate for the following reasons: 1. The member rejected an argument that a design had been provided by others for which the builder was not responsible because "There was no evidence before (the Tribunal) what the design was". 2. The builder was otherwise responsible to complete the work "in a proper and workmanlike manner"- a reference to the statutory warranty found in section 18B(a) of the HB Act; 3. There was no dispute between the experts that there was a defect which needed to be rectified and the Tribunal accepted the evidence that the proper method of rectification was painting of the soffit lining rather than its replacement; 4. The soffit lining was of villa board not plasterboard; and 5. The parties had agreed the method of rectification if the appellant's argument was accepted as to the extent of damage to the soffit, the amount allowed being "the sum of $5366.44 as estimated by the respondent."
24. It is to be noted that in reaching the conclusion concerning any responsibility of the builder for the design defect, the Tribunal said that the appellant had provided no evidence to the effect that he had been instructed in writing to do work contrary to the advice of the appellant. This is an obvious reference to the provisions of s 18F of the HB Act (as it applied until recently amended), which provided a defence to a claim for breach of statutory warranty in circumstances where a builder carried out inappropriate work upon instruction having provided "advice in writing" to a homeowner that the particular work should not be undertaken in the directed manner.
25. It is apparent from the analysis set out above of the decision that the Tribunal did not misdirect itself or fail to make findings of fact material to a determination of the builder's liability in respect of item 4. There is no issue relating to whether or not the Tribunal misunderstood the law of causation in respect of this item, and there is no suggestion in the material presented on appeal that the appellant did not in fact carry out work causing the damage to the soffit lining. Rather, the appellant says he constructed the work as required by the design of someone else and therefore he did not cause the damage. However the Tribunal rejected this claim as there was no evidence of any design he was required to build nor any warning in relation to a defective design.
26. In these circumstances, we are not satisfied that the reasons given by the Tribunal are inadequate in respect of item 4, and this ground of appeal fails.
27. Finally, we should note that in the written submissions the appellant sets out various terms of the contract regarding practical completion and the defects liability period.
28. Inter alia, the submissions suggest that the reasons of the Tribunal were deficient in not dealing with whether the owner had acknowledged the building works had reached practical completion and/or whether the defects liability period had come to an end (and therefore any rights under clause 29 of the contract had been exhausted). However, these submissions ignore the fact that the Tribunal's reasons, at least in respect of item 4, resolve the issue of the builder's liability in favour of the homeowner on the basis that the appellant had breached s 18B(a) of the HB Act, not the builder's obligations in respect of practical completion and obligations arising in the defects liability period,
29. Accordingly, having found liability on this basis, it was unnecessary for the Tribunal to deal with an alternative liability claim based on the terms of the written contract.

Conclusion and orders

1. The Appeal Panel was not provided with all of the evidence below. Consequently, we are unable to resolve the appeal by determining whether or not the award made in relation to item 2 should stand.
2. Further, this is a case where the parties have had a chance to present evidence on relevant issues they wish to raise and where, for the reasons indicated above, the award made in favour of the respondent against the appellant has not been adequately explained.
3. Having regard to: 1. The deficiencies we have identified in the reasons relating to item 2; 2. The fact that various matters were resolved by consent at the original hearing; 3. The failure of the appeal in relation to item 4; and 4. The fact that there appears to be a mathematical calculation error in the award originally made, it seems to us that the appropriate course in the present case is to vary the original money order to reduce it by an amount of $14,249.47 (being the value of item 2), and direct that the matter be remitted to the Tribunal as originally constituted to provide further reasons in respect of its decision in item 2 and to consider whether the total award should be varied by reason of any mathematical error which we identified above.
4. In doing so, we should make clear that if necessary the Tribunal as originally constituted may make such directions as it considers appropriate to resolve all issues in relation to liability and quantum in respect of item 2. In this regard the Tribunal is at liberty to allow the parties to reopen their cases, make further submissions or make such other directions as it considers appropriate in order to facilitate the just quick and cheap resolution of the real issues in dispute.

Orders

1. The Appeal Panel makes the following orders: 1. The appeal is allowed in part. 2. The award of $32,626.71 is varied to $18,394.44 by excluding the sum of $14,229.27 in respect of item 2 referred to in the reasons for decision dated 25 September 2014 3. the proceedings are remitted to the Consumer and Commercial Division of the Civil and Administrative Tribunal constituted by the member who made the original decision, to determine in accordance with these reasons and otherwise according to law: 1. the issue of what, if any, award should be made in favour of the applicant against the respondent in application (HB 13/02916) in respect of the claim identified as item 2 in these reasons; and 2. whether the award should otherwise be varied to correct any mathematical error. 1. Save as provided above, the appeal is dismissed. 2. Any application for costs is to be filed and served within 7 days from the date of these orders. Any application is to include written submissions and any other material to be relied upon in support of the application. 3. The party against whom any application for costs is made must file and serve any submissions and material in reply within 14 days from the date of these orders. 4. The applicant for costs is to file any submissions in reply within 21 days from the date of these orders. 5. The submissions by the parties are also to address the question of whether or not any application for costs should be dealt with on the papers and whether the Tribunal should make an order to allow this to occur. 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: 22 September 2015