Paraiso v CBS Build Pty Ltd

NCAT Appeal Panel|2019-07-01|Before: Bailey AM

Overview

The present appellant, Ms Paraiso (the Owner) owns residential property at Dundas, New South Wales (the Property).
The present respondent, CBS Build Pty Ltd (the Builder) undertook the construction of a duplex of two dwellings on the Property, pursuant to a Building Contract bearing date 23 March 2016 with the Builder based upon the Master Builders Association BC4 Contract (the Contract).
Various disputes arose between the Owner and the Builder which brought two proceedings under the Home Building Act 1989 NSW (the HB Act) in the Tribunal's Consumer and Commercial Division, one by the Builder and one by the Owner. The Builder's initial application dated 26 July 2017 (the Builder's Claim) sought recovery from the Owner of amounts claimed for outstanding variations and adjustments to provisional sums in unpaid invoices.
The Owner brought a cross application on 6 September 2017 (the Owner's Claim) seeking orders of the Tribunal against the Builder and its director Mr Gagic in respect of incomplete and defective residential building work.
After a two day hearing on 12 and 13 June 2018 and the provision of a transcript and written submissions in July, August, September and October 2018, the Tribunal published Reasons for Decision on 14 March 2019 (Decision). In summary, the Tribunal: 1. (in the Builder's Claim) ordered the Owner to pay the Builder the sum of $94,381.21; 2. (in the Owner's Claim) made an order for rectification works pursuant to s 48O(1)(c) of the HB Act.
The Owner has appealed that part of the Decision which related to the Builder's Claim. No appeal was brought by the Owner in respect of that part of the Decision which related to the Owner's Claim.
For the following reasons, we have decided to dismiss the appeal from the Decision in the Builder's Claim, and to refuse to grant leave to appeal on any other ground.

Summary of the Tribunal's Decision in respect of the Builder's Claim

The Tribunal's Reasons are 144 pages in length and contain 686 paragraphs and an annexure (Reasons). Most of the Reasons address the Builder's Claim, the subject of this appeal.
The basis of calculation of the amount of $94,381.21, being the amount the Owner was ordered to pay the Builder, is as set out in the Reasons at [666] to [684]. The calculation relied upon the Tribunal's earlier findings of fact and law as to the proper interpretation of the Contract particularly as to the Builder's claims for variations on a contractual basis, and as to the Builder's entitlement to variations on a quantum meruit basis including the valuation of such claims, as well as adjustments against Provisional Sums and Prime Cost Allowances.
The findings were based upon the Tribunal's consideration of the application, points of claim and points of defence (Reasons, [6]), the prehearing and explanatory documents ([7] - [9]), post hearing written submissions ([10]), and the written and oral evidence of the Owner, the Owner's husband, Mr Gerado Gonzalez, the Builder's director, Mr Ross Gagic, the Owner's expert, Mr Brincat, and the Builder's expert, Mr Roberts: [14] - [37].
In making its findings the Tribunal concluded that significant parts of the Owner's evidence were untrue, particularly the Owner's evidence concerning an alleged refund agreement ([24]). Generally, the Tribunal preferred the Builder's evidence as "cogent and logical" and where there were differences between the parties as "in almost all instances the probability of accuracy fell with the Builder" ([35] - [36]).
Similarly, the Tribunal preferred the Builder's expert, Mr Roberts, whose evidence was found to be "measured and soundly based"; while the evidence of the Owner's expert, Mr Brincat, was found not to have the necessary independence and also it did not have proper regard to the question of what documents were, in fact, included in the Contract: [30] - [34], and [37].
The Tribunal dealt with the Builder's claims for variations, firstly, under Clause 14 of the Contract and secondly, on the alternative restitutionary basis of quantum meruit. The Tribunal concluded that the Owner had not established a breach by the Builder which had the consequence of disentitling the Builder from maintaining the agreements to and payments for the cost of variations under the Contract: [405]. In particular, the Tribunal did not accept the Owner's argument that for all variations there must be, under the terms of Clause 14 of the Contract, an agreement in writing signed by the parties. It found that once a variation is established by the supply of written instructions or post contract details including amended drawings issued by or on behalf of the Owner, and assuming the inevitable consent by the Builder to perform the work, the only issue to be addressed is the cost of the work: [147] - [151], and [396]. In this regard, the Tribunal did not accept the evidence of the Owner's expert that that the variation claims were excessive: [401] - [403].
Further, the Tribunal held that the alternative claim in quantum meruit could be sustained by the Builder. It found that in relation to all of the actual variations established under Clause 14 of the Contract, the Owner had been enriched by the benefit provided by the Builder's performance of each variation and the Owner would be unjustly enriched if allowed to retain the benefit of all the variations not paid by her: [433] - [437].
The Tribunal also rejected the Owner's claim that once an amount for a variation is agreed to, and paid by the Owner,, the agreement is 'on account only' and that the amounts agreed and paid are reviewable as a consequence of the terms of Clause 20(e) of the Contract. The Tribunal found that the amounts agreed to be paid for variations are, pursuant to Clause 14(g), added to the contract sum: [157], [386] and [440]. It also concluded that there was no reliable and cogent evidence which raised any doubt as to the reasonableness of the amounts agreed to and paid by the Owner. In fact, the Tribunal found that in many instances the Builder's expert, Mr Roberts, had carried out careful assessments which confirmed the general reasonableness of the amounts agreed to and paid: [438] - [493] and [511].
The Tribunal found that in addition to the original quotation of $550,000.00 the Contract included Provisional Sums totalling $80,000.00 making the Contract Sum $630,000.00: [74]. In this respect, the Tribunal had regard to the content of emails dated 15 January 2016, 25 February 2016 and 3 March 2016 from the Owner to the Builder and 3 March 2016 from the Builder to the Owner, and found that the emails formed part of the Contract and provided an "unambiguous explanation" as to how the initial Contract amount of $550,000.00 (including GST) was increased to $630,000.00 (including GST): [49] - [69].
The Builder pursued a number of claims on the basis that the work involved an adjustment of Provisional Sums or Prime Cost Items under the Contract. These claims, although disputed by the Owner, were accepted by the Tribunal: [494] - [522].

Notice of Appeal

The Notice of Appeal filed on 23 April 2019 contained 14 Appeal Grounds, which are variously stated.
Some grounds are clearly expressed as relating to questions of law; e.g. failing to afford procedural fairness, failing to give proper reasons, or identifying the wrong issue or asking the wrong question in respect of the interpretation of the Contract. There is an appeal as of right in respect of these grounds: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NCAT Act).
However, there are other grounds for which leave to appeal is required: s 80(2) (b) and cl 12 of Sch 4 of the NCAT Act. These are grounds where the Owner challenges the Tribunal's Decision in respect of the Builder's Claim on the basis it was not fair or equitable or that it was against the weight of the evidence.
Ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; or 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed: See Collins v Urban [2014] NSWCATAP 17 at [84].
Even if an appellant establishes that she may have suffered a substantial miscarriage of justice, the Appeal Panel then retains the discretion whether to grant leave under s 80(2) of the NCAT Act: Pholi v Wearne [2014] NSWCATAP 78 at [31].
The Owner's counsel provided written submissions as to the issues on the Appeal, which he then supplemented with further oral submissions at the Appeal hearing. In summary, the issues on the Appeal are whether: 1. The Tribunal erred in its interpretation of the Contract because in considering the operation of Clause 14 as regards the Builder's variation claims, it did not have proper regard to the whole of the Contract (in particular, Clause 20 and Clause 2A(b)) and further did not consider the requirements of the HB Act as to variations; 2. The Tribunal should have found that the payments made by the Owner to the Builder for variations were 'payments on account' to be treated and reviewed as such pursuant to Clause 20 of the Contract; 3. The Tribunal erred in making findings as to the Builder's case in contract, or alternatively quantum meruit, which followed from assessments of credit (particularly of the Owner's expert, Mr Brincat) and its dismissal of that expert's evidence, in circumstances where it is said the Builder's claim had a 'paucity of evidence' unsupported by documents such as third party invoices; 4. In making adverse credit findings against the Owner and her husband, the Tribunal misdirected itself and should have found that various plumbing and associated works were done by the Owner's husband gratuitously and were to be accounted as a nil disposition of the Provisional Sum by the Builder and repaid to the Owner; 5. The Tribunal should have found that the Builder was required to do the structural work related to the OSD detention tank and associated building works; 6. The Tribunal erred in finding that landscaping in accordance with a plan prepared by Greenland did not form part of the Contract works; 7. The Tribunal erred because there was no evidence of actual benefit to the Builder to support its claims for quantum meruit; 8. The Tribunal failed to give procedural fairness and failed to give adequate reasons because the presiding member directed a limitation on cross examination of experts on the basis of his own expertise but did not subsequently other than by referring to his acceptance of certain facts, disclose the basis for his conclusions on the value of the goods and services claimed; 9. The Tribunal should not have made various allowances for HOW insurance and the Builder's Margin; 10. The Tribunal's findings in respect of specific claims in the Builder's case were against the weight of the evidence and/or were not fair or equitable.

Reply to Appeal

The Builder filed a Reply to Appeal on 30 April 2019.
The Builder's counsel also provided written submissions which were supplemented by oral submissions at the appeal hearing. The Builder's Reply and submissions opposed the Owner's appeal on all grounds.
In essence, the Builder relied upon the reasoning of the Senior Member of the Tribunal who heard the Builder's Claim at first instance. The Builder argued that the Senior Member's Decision should stand, and that the appeal must be dismissed with costs.

Was there an error of law in the Tribunal's Decision?

A principal submission in the Owner's case on this appeal is that the Tribunal failed to properly construe the Contract, and that the construction it gave of Clause 14 was not consistent with the whole of the Contract; in particular Clause 2A(b), Clause 2(d) and Clause 20. While not pleaded in her points of claim in the proceedings before the Tribunal it was submitted on appeal that the Tribunal's determination of the Builder's claims for variation on a contractual basis was not in accordance with the HB Act in s 6(1)(b) insofar as that subsection refers to the requirements as to form (s 7) of contracts for residential building work.
The Tribunal dealt with these arguments in its Reasons, as follows: Alternative to Clause 14 144 The Tribunal understands that apart from the procedures under Clause 14 the parties are able to conclude separate agreements for the performance of variations which may involve different considerations to variations which are established under Clause 14. Such variations arise under an agreement between the parties rather than having been established by an action on the part of the Owner, or on her behalf. Such variations are not addressed within the terms of Clause 14. It is this category of variations under residential building contracts which are addressed in the Home Building Act 1989. No reliance upon Home Building Act 1989 145 It is significant that the Owner does not rely upon the statutory defences to claims for variations under Part 2 Division 1 of the Home Building Act 1989 but relies solely upon the terms of Clause 14 to assert that the Builder has no right to payment for variations which involve work which was not part of the work under the Contract, including amounts agreed to and paid for by the Owner. This is possibly a result of the well understood alternative entitlement of builders, in such circumstances, to recover for variations on a quantum meruit basis in the absence of writing. Owner's Conflation of Principles 146 The Tribunal observes that the Owner's submissions at times conflate the legal principles involved under the statutory exclusion of a right to recover payment with those which apply under Clause 14. The primary aspect of this conflation is the presumption of a requirement that for all variations there must be, under the terms of Clause 14, an agreement in writing signed by the parties. The Owner also seems to rely upon a presumed requirement under Clause 14 that there be an agreed cost for each variation before it is performed in order that it be enforceable. Initiation of variations 147 The first important aspect of the provisions of Clause 14 is that the process for the initiation and costing of a variation occurs in two stages. The first involves the establishment of a variation. Setting aside consideration of variations established by instructions by relevant authorities, the actions by or on behalf of the Owner which establish a variation include: 1. written instructions by the Owner or the Owner's representative; and or 2. the supply to the Builder of post contract details such as drawings, and or 3. the discovery of an otherwise unknown or latent condition. 148 If any of the above actions alters the work done, or to be done, or requires adjustments to an existing situation or the work which was otherwise expected to be done then a variation is established. It is of further note that a variation may be established by any of the above events alone, and not necessarily a combination of any of them. Incorrect Assumption of Need for Written Instructions along with Amended Drawings 149 The Owner's submissions seem to proceed on the incorrect assumption that there needs to be a written instruction along with, or in addition to, the supply of post-contract details or drawings. The amendments to the drawings prepared under the Owner's instructions indicate the fact that the Owner has made a choice to change the works to be performed, and the Owner has required the variation to be undertaken. The instruction to proceed is inherent in the supply of the amending drawings. There is no requirement for written instructions by, or on behalf of, the Owner, when the variation is established by the supply to the Builder of "post contract details such as drawings," or "the discovery of an unknown condition." It might be argued that the post contract details may be supplied orally, so long as it is apparent that the new details have the defined consequence. 150 In these proceedings there were numerous post-contract drawings issued, which had the consequence referred to in [148] and which have initiated the establishment of variations. These are identified in the considerations as to whether the work involved was outside the work under the Contract. 151 Once a variation is established by the supply of written instructions or post contract details including amended drawings issued by or on behalf of the Owner, and assuming the inevitable consent by the Builder to perform the work, the only issue to be addressed is the cost of the work. In such circumstances there is no necessity for the performance of such a variation to be the subject of an agreement, see H Build V Nixon [2018] NSWCATCD 20 at [153] to [161] as to the interpretation of Clause 14 (a) and (b).
We agree with the Tribunal's Reasons. As regards any failure to provide written instructions, the Tribunal properly construed the operation of Clause 14(d) and Clause 2(d) of the Contract in the particular circumstances of the case and found, correctly, that those clauses were not drawn up in exclusionary terms. Further, as stated in [149] - [151] the supply of amended plans and drawings operated as an instruction to the Builder to carry out further work.
For the foregoing reasons, we are satisfied that there was no error of law in the Tribunal's interpretation of the Contract as it applied to the Builder's variation claims.
The Owner's counsel also argued that the Tribunal should have found that payments made by the Owner to the Builder were progress payments to be reviewed and treated as payments made 'on account' only pursuant to Clause 20 of the Contract.
However, costs not previously agreed are not a condition precedent to performance of variation work or as to payment for such work. In this regard, we agree with the Tribunal's Reasons at [155] - [157]: 155 It should also be understood that if the Builder agrees to undertake a variation then the work involved can proceed and that the notification of the value of the variation is not a condition precedent to the variation work proceeding, or to the Builder's entitlement to be paid. The 'agreement' to proceed may be effected by the Builder proceeding with the varied work. The fact that an agreement may not have been reached as to the cost of the variation before proceeding with the work involved is obvious having regard to the provisions of subclauses 14 (f), (g), (h), and (i). The cost of dealing with unknown or latent conditions is frequently impossible to determine beforehand and will depend on the extent of work found to be necessary in the course of executing the work. 156 The Tribunal notes that subclauses 14 (h) and (i) contemplate that the Owner and the Builder may agree upon the cost of the additional work. Having reached an agreement as to the cost to be paid for the additional work, that completes the process and the amount agreed is added to the Contract Sum. The fact that progress payments under Clause 20 (e) of the Contract are considered as being "on account", does not alter the character of the agreement to pay an amount for additional work, see [157]. 157 The Owner's submissions incorrectly assume that once an amount for a variation is agreed to, and paid by the Owner, the agreement is 'on account' only. An agreement as the performance of, and the price to be paid for a variation, is no more and no less than a simple contract. Clause 14(g) of the Contract provides that "the cost of the extra work is to be added to the contract price". Subject to limited bases for challenging an agreement under a contract once an agreement as to the amount is reached, the additional cost becomes part of the Contract price. The basis for challenge would however be limited substantially to the same grounds as apply to a claim that the amount agreed under a contract was legally susceptible. See also [386] the explanation as to the application of Clause to variations.
Further, we do not accept the Owner's submissions as to the operation of Clause 14(g) of the Contract allowing for reassessment of amounts for variations agreed to and paid by the Owner; i.e. the argument that such payments are 'on account only' . This is succinctly dealt with by the Tribunal at [386]: The amounts agreed to be paid for variations are, pursuant to Clause 14(g), added to the contract sum. Progress payments may be made which assess the value of the work performed, or by the achievement of an agreed stage which the work has reached. The right to challenge the amount paid under progress payments does not extend to either a right to challenge the contract sum, or to challenge the amount agreed to be paid for variations. The right of review of amounts paid as progress payments permits adjustments to be made for any overpayment due to miscalculation of the value of the work performed, including accounting for the reduced value of the work performed due to defective work, or for contractual damages, which were not included in the valuation of the progress claim. It does not permit a reassessment of the amounts agreed and paid for variations.
As to any argument that the Owner's variation claims could not be made on a contractual basis (i.e. under Clause 14) because of non-compliance with the HB Act, the Tribunal understood that the Builder had an alternative entitlement, in the absence of writing (i.e. compliance with s 7 of the HB Act) to recover for variations on a quantum meruit basis: [145].
Even though the Owner did not plead non-compliance with the HB Act, the Builder nevertheless brought an alternative restitutionary claim. The Tribunal undertook a lengthy examination of the evidence in the Builder's case and concluded that there was evidence which established each element of the restitutionary claim: [433].
We are satisfied that the Tribunal correctly analysed in its Reasons at [406] - [424] the legal basis for a claim in quantum meruit. Relevantly, the Tribunal in referring to Ingate v Andrews [2018] NSWCATAP 99, said: 423 The Tribunal at first instance in Andrews v Ingate, with the addition of (4) by the Appeal Panel, described the principles applicable to the recovery of a restitutionary claim as being; (a) The Owner must have been enriched by receipt of the benefit. (b) The benefit must have been obtained at the contractor's expense (c) It would be 'unjust' in the circumstances to allow the principal to retain the benefit (d) The Owner knew that the builder expected to be paid for the work as a variation to the contract. 424 The Appeal Panel in Andrews v Ingate did not demur with this summary of principles. The Tribunal considers that these principles represent a legally-principled statement of the approach required, and account is duly given to the entreaties of McDougall J in BBB Constructions. They represent an amalgamation of recent approaches to the law of restitution with the analysis which was often applied under cases in which claims were made based upon implied contracts, or implied promises to pay.
In essence, a quantum meruit claim is not based in damages (for breach of contract), but as compensation for the reasonable costs of doing such work and not the actual cost of doing the work.
Through the expert evidence of Mr Roberts the Builder established quantum meruit claims totalling $265,565.65 (including GST). Nothing in the evidence provided by Mr Brincat, the Owner's expert, challenged this assessment since, incorrectly in the Tribunal's view (with which we agree) he treated the claims valued by Mr Roberts as falling within the scope of the Contract works and therefore assessed at $nil. In our view, contrary to the Owner's submission, it is of no moment that there were no third party invoices to support the various items in the Builder's quantum meruit claims (see Owner's submissions dated 1 July 2019 at 22] - [24]). Third party invoices were not required to support the Builder's quantum meruit claims.
For the foregoing reasons, we find that there was no error of law in the Tribunal's determination of the Builder's quantum meruit claims.
To the extent the appeal grounds allege that the Tribunal did not give proper reasons for the Decision in the Builder's claim (see, for example, paragraph [9] of the appellant's written submissions dated 1 July 2019), we do not agree. We find the Reasons were detailed and thorough and further that they addressed the substantial arguments in the Owner's case in response to the Builder's claim.
The Tribunal addressed the general aspects of the issues in dispute by making findings as to the credibility of the lay evidence (with particular reference to the Owner's claim for a refund of $80,000.00), as to the reliability of the Owner's expert evidence and the Senior Member's preference for the evidence of the Builder's expert, Mr Roberts, and as to the documents and terms comprising the parties' Contract.
Having considered the written evidence and the Transcript of the two day hearing before the Tribunal, we are satisfied that it was entirely open to the Tribunal not to accept the evidence of the Owner and her husband, particularly concerning the alleged refund agreement.
Referring to the fact that the Owner's husband did not make any progress claims to the Builder for plumbing and related works after the Builder had received the Tax Invoice for $4,000.00 on 18 May 2016, the Tribunal came to the view that any oral arrangement for the Builder to "refund" up to $80,000.00 must have been intended by the Owner and her husband, Mr Gonzalez, to avoid the payment of GST on the plumbing and related works performed by the Owner's husband: Reasons [25] and [107]. The Owner's counsel submitted that the Tribunal's view of this evidence, in some way, "infected" the Tribunal's determination of all issues in the building case: see Owner's submissions filed 17 June 2019 at [19]). We disagree. The Tribunal determined the issue of the refund agreement against the Owner principally because there was no evidence led by the Owner as to how the alleged agreement was reached. The Builder vehemently denied any arrangement for a refund and clearly by May 2016 any such arrangement had not been carried into effect. There was no evidence of conversations or documents after May 2016 demonstrating dissatisfaction on the part of the Owner that the alleged refund arrangement was not being honoured by the Builder. In the circumstances, we are comfortably satisfied that the Tribunal could find the Owner's case in respect of the alleged refund agreement was inherently improbable. In our view, in reaching that conclusion it was also open to the Tribunal to take into account, as it did, that there were a series of contradictions in the Owner's evidence as between the Owner and her husband, and the documents exhibited to the Owner's written evidence.
We see no error in the Tribunal's approach as to weighing the evidence of the Owner's expert, Mr Brincat, and the Builder's expert, Mr Roberts, and as to the Tribunal's preference for the evidence of Mr Roberts which the Senior Member found was measured and independent: Reasons [402]. The Tribunal identified, correctly in our view, that the Owner's expert, Mr Brincat, did not have proper regard to the essential question of what documents were, in fact, included in the Contract. In the course of his evidence at the hearing Mr Brincat, in many instances, abandoned the position that the Builder's variation and quantum meruit claims were Contract works and conceded that they were outside of the Contract. Nevertheless, this presented an inherent difficulty in the Owner's case in reply to the Builder's claims, because Mr Brincat had taken an 'all or nothing' approach to valuing the cost of the variations and quantum meruit claims. He did not provide an alternative costing.
In our view, there is also no reason to disturb the Tribunal's findings as regards documents (specifically, emails of 15 January 2016, 25 February 2016, and 3 March 2016) to be included in the Contract to give operative effect to the provisional allowances under the Contract. These documents set out the objective intention of the parties and how the provisional allowance of $80,000.00 was to be applied both as to the items of work to be performed and the allowance for each item. They explain the division of the original quote of $550,000.00 and the increase in the Contract price to $630,000.00 by the allowance of provisional sums totalling $80,000.00. In effect, these emails amount to the Item 12 table in Schedule 2 of the Contract for allowance of prime cost items as detailed in [66] of the Reasons. Such analysis also applies to the prime cost allowance for the cost of supply bricks at $1.00 per brick (Reasons [51]), and the provisional allowance for full length, or depth, of the bored piers found to be necessary: [206].
A further controversy arising out of the Tribunal's findings as to the formation, the terms and the interpretation of the Contract in the context of the emails of 15 January 2016, 25 February 2016, and 3 March 2016, related to the description "all plumbing work". Whereas the Builder argued that construction of the OSD detention tank and related work was "plumbing work", the Owner contended that construction of the OSD detention tank and related work was structural and therefore formed part of the Contract works. The relevant items in dispute were: item 41(39) storm water detention tank ($31,104.19), item 8(5) trench OSD ($9,463.00), item 9(6) Dincel wall ($3,267.00) and item 12(9) Steel for Stormwater tanks ($550.00). In making the Owner's argument on this issue, the Owner's counsel referred to the Specification dated 19 October 2015 of Ryleton Pty Ltd (Specification). Counsel submitted that the Specification did not include the OSD detention tank; i.e. that the tank is part of the structure of the residence and forms part of its framework.
We do not accept the Owner's submissions on this issue. We find there was no error of law made in the Tribunal's findings. The Tribunal found that the Builder's email to the Owner dated 3 March 2016 (sent at 10:37 AM) was a Contract document. The Builder's email annexed and amended a copy of page 12 of the Contract including the item 12 table which identified the amount of $56,000.00 as relating to "all plumbing works": Reasons [65] - [66].
The Tribunal also held that the Owner's (earlier) email sent at 12:32 AM on 3 March 2016 formed part of the parties' Contract. The relevant part of the email is set out in the Tribunal's Reasons at [64] and includes in relation to the Provisional Sum of $56,000.00 that it was an allowance for "plumber related works". At [75] the Tribunal concluded that "plumbing and associated work" under the Contract was to be executed by the Builder under a Provisional Sum of $56,000.00. Accordingly, it is incorrect for the Owner to contend that the Tribunal held the Provisional Sum of $56,000.00 was restricted to plumbing work, when, in fact, the Tribunal's finding was it included plumbing related works.
Nor do we accept that the Specification excluded the OSD detention tank: see paragraphs 101 and 102 of Division 2.7 of the Specification under the heading: 'Plumber: Stormwater Services'. At [306] of its Reasons, the Tribunal found, correctly in our opinion, that the Owner's husband, Mr Gonzalez, was to carry out substantial work involved in the construction of the concrete OSD detention tank and retaining walls as part of the performance by him of the plumbing and related works.
The cost of the work in respect of the stormwater detention tank and retaining walls (Item 41(39)) was an adjustment under Clause 15 of the Contract of the Provisional Sum of $56,000.00 for plumbing and related works. This was conceded by Mr Brincat at the hearing - see [306] - [307] and the Table at [511].
Similarly, the Tribunal found that the trench excavation and work associated with stormwater (Item 8(5)), the work in respect of the Dincel wall for stormwater tanks (Item 9(6)) and the work in respect of steel for the stormwater tanks (Item 12(9) were all plumbing related works and therefore were included in the adjustments of the Provisional Sum of $56,000.00: Reasons [195] - [202], [213] - [216] and the Table at [511].
Accordingly, we find that the Tribunal made no error in dealing with those Items.
The Owner also contended that extrinsic documents were Contract documents. For example, the Owner argued that landscaping in accordance with a plan prepared by Greenland in October 2015 formed part of the Contract works. However, we are satisfied as to the Tribunal's Reasons for excluding such documents in that either the documents did not exist or had not been provided to the Builder prior to or at the date of entering into the Contract: see Reasons at [45] and [165].
For the landscaping plan prepared by Greenland in October 2015, the Tribunal found that a landscaping plan was not provided to the Builder until 25 May 2016; i.e. two months after the Contract date of 23 March 2016, and moreover, that what was provided on 25 May 2016, was a detailed landscape drawing date 'October 2015', not 'Issue A' (DA landscaping drawing) rather 'Issue B' being for the Owner's Construction Certificate (CC) application to the local council which application was not approved until 12 May 2016. Issue B for CC substantially changed and updated the design in May 2016.
Accordingly, we do not accept the Owner's submission that the Tribunal made an error with respect to landscaping.
The Owner further argued that an absence of procedural fairness arose in the conduct of the two day hearing because the Tribunal had limited the cross examination of the experts and the presiding member had relied on his own expertise to determine appropriate costing of the Builder's claims.
Under the NCAT Act, the Tribunal may determine its own procedure (s 38(1)). It may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice (s 38(2)). It is also to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (s 38(4)).
There is no doubt that as presiding member of the Tribunal the Senior Member made clear to the parties' legal representatives during the hearing that he intended to have regard to his own expertise in determining the costing of the Builder's claims: see, for example, Transcript page 287 (Appeal Book page 1469). We are satisfied that limited cross examination of experts was warranted in circumstances where, as already referred to the Owner's expert, Mr Brincat, had taken an 'all or nothing' approach to valuing the Builder's claim and did not provide an alternative costing for the variations or quantum meruit claims which were proved in the Builder's case.
We are satisfied that the Tribunal took such measures as are reasonably practicable to ensure that the parties had a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings (NCAT Act, s 38(5)). There were six (6) volumes of Exhibits to the Affidavit of the Owner comprising 1,887 pages, yet as the Tribunal noted (Reasons [14]) only a few of those pages were referred to during the course of the hearing and in submissions. To the extent the Owner's case relied upon the opinions of the Owner's expert, Mr Brincat, the Tribunal placed little weight on that evidence, because it found that Mr Brincat was pre-disposed to act as an advocate in the Owner's case, particularly in respect of what constituted Contract documents and whether or not the Builder's claims were outside the scope of the Contract works. We are satisfied that those findings were open to the Tribunal on the available evidence and that there is no reason for us to disturb them.
Moreover, the Owner and her husband failed to adduce evidence to traverse or challenge the lay evidence of the Builder's director, Mr Gagic, or the Builder's expert, Mr Roberts, and in the main that evidence went in untraversed.
For the foregoing reasons, we find that there was no absence of procedural fairness in the conduct of the hearing by the Tribunal.
The Owner's submissions in this appeal also referred to errors as to the Tribunal's determination on specific issues including allowances made in the Decision for Home Warranty (HOW) insurance and the Builder's Margin.
We find no error in the Tribunal's approach to HOW insurance. The Builder had made two claims in relation to HOW insurance. The claims related to each dwelling on the Property. The Builder pursued one claim only. It was open to the Tribunal to accept the Builder's proposal of a deduction of $2,200.00 for HOW insurance on both dwellings: see Reasons [177], [353], [470] and the deduction of the amount of $2,200.00 in the Table at [511].
As regards the Builder's Margin, the Owner argued that there was no agreement on price plus Builder's Margin and that the Builder's claim for a margin of 15% was not consistent with the Builder's own actions in claiming that construction of the dwellings was completed and that it was entitled to final payment on 6 May 2017. However, we consider that these arguments do not engage properly, or at all, with the Tribunal's findings at [601] - [605] which were that the Owner's purported termination of the Contract was invalid and further that the purported termination was a repudiation of the Contract by the Owner. In our view, these findings were open on the available evidence and that the Tribunal made no error of law in making its determinations as to the legal relations between the parties. The Contract remained on foot and the Owner's obligations continued under the Contract. The Builder deliberately elected not to accept the Owner's repudiation of the Contract flowing from the Notice of Termination served on behalf of the Owner by her solicitors. The Tribunal, therefore, was entitled, in our view, to find that the Builder could reconcile and submit a final account in accordance with the Contract: see Item 1 in Schedule 2 of the Contract, which permits a percentage (15%) to be allowed for supervision, overhead and profit for variations - see [351] - [352].
We find that the Tribunal made no error in deciding the Builder's claim for a margin of 15%.

Should the Appeal Panel grant leave to appeal?

Apart from errors of law (for which leave to appeal is not required) the Owner's counsel argued that leave to appeal should be granted in respect of specific claims where it was submitted that the Tribunal's determinations in the Builder's favour were against the weight of the evidence or further and alternatively, that the Tribunal's Decision was not fair and equitable.
We have already dealt with some specific claims including stormwater detention tank and retaining walls, the trench excavation and work associated with stormwater, the work in respect of the Dincel wall for stormwater tanks, the work in respect of steel for the stormwater tanks, landscaping, HOW insurance, and Builder's Margin. To the extent it is submitted by the Owner that any of these particular claims are against the weight of the evidence or that the Tribunal's Decision was not fair and equitable, we are satisfied that what we said in our consideration of whether the Tribunal had erred in law applies equally as to whether the Owner has established grounds for leave to appeal.
The Owner also argued that there were various specific items where the Tribunal's determination was not fair or equitable and/or that the determination made was against the weight of the evidence.
In respect of the Builder's claim for additional pier lengths, the Tribunal found at item 1 of the Table at [511] of its Reasons that such claim (in the amount of $2,868.00) was a variation pursuant to subclauses 14(h) and (i) of the Contract, arising from an agreement reached as to the cost to be paid for additional work.
However, the Owner submitted that there was no evidence (beyond mere assertion by the Builder) of the total length of the piers.
We do not accept that submission. Nor do we agree that the Tribunal's Decision in respect of the claim was not fair or equitable.
The Tribunal at [206] of its Reasons found evidentiary support for the claim for additional pier lengths in the form of two references in the Standard Inclusions/Exclusions List at page 7 of the Contract: firstly, that the Owner was to pay for: "Any civil works relating to construction"; and, secondly a note which provided: "Note: We have allowed your new home estimate a nominated amount for concrete piers 1.5 m. Should it be necessary, due to filled or unsuitable ground conditions, or if affected by the 'zone of influence' of a sewer main, to provide more piering than allowance, additional piering will be charged at $95 per lineal metre". The Tribunal noted, correctly in our opinion, that these two references expressly required the work to be performed, obtained, or paid for, by the Owner "If Required" and held that when the work, or item involved has to occur, or be provided by the Builder and not by the Owner, then a variation or adjustment under the Contract is necessary.
There was also a dispute as to the required levels (RL's) that the Builder was to achieve under the Contract. There were two specific disputed items: the addition of steps to the patio and the raising of the backyard ground level. The Owner submitted that the Builder did not raise the level of the land at the rear of the Property in accordance with the Contract requirements (specifically, in accordance with hydraulic drawings and an architectural plan). The Owner also contended that the additional steps were works which were claimed by the Builder to overcome the Builder's mistake or for the Builder's convenience as a result of the failure to raise the RL's.
In our view, it was reasonably open to the Tribunal to make its determination in favour of the Builder as regards the addition of the steps to the patio and the raising the back yard level. We are satisfied there was evidence before the Tribunal to support its findings that these claims involved work which was not part of the work under the Contract and that such work was carried out at the request of the Owner and her husband. Further, although these claims were pursued by the Builder as variations and were found to be variations pursuant to subclauses 14(h) and (i) of the Contract, we agree with the Tribunal's finding that it would have been appropriate to assess the claim in respect of raising the backyard level as an adjustment of the provisional sum of $56,000.00 for plumbing and related works: see the Tribunal's Reasons at [345], [477] - [479]. There was no evidence of mistake by the Builder. We are satisfied the evidence established that the Builder was asked to carry out work which was not part of the Contract. Moreover, as indicated, there was no evidence in the Owner's case to challenge the quantum of such claims.
In respect of the Tribunal's determination to allow the Builder $26,598.00 for the waffle pod concrete slab (item 6 in the Table at [511]), the Owner submitted that allowing such amount was not fair or equitable. The Owner said the underlying price for this item (even though it was accepted as a variation) required justification by the Builder or the Builder's expert. In essence, the Owner's submission was that the Tribunal had "reversed the onus" and had required the Owner to establish that the price claimed by the Builder was unreasonable.
We do not accept the Owner's submissions in respect of the waffle slab item. In our opinion, the Tribunal's Reasons adequately address why it accepted the evidence of the Builder's expert. Mr Roberts and also why that evidence was preferred to the evidence of Mr Brincat. As indicated, the Owner's expert had adopted an 'all or nothing' approach to assessing variations in the Builder's case. The Tribunal found that in the absence of evidence or calculations to the contrary by Mr Brincat, the Builder's variation costs previously paid were reasonable. In our view, that finding was open to the Tribunal on the available evidence and ought not to be disturbed.
The Owner's submissions in this appeal further focussed on specific landscaping items allowed as variations for the Builder; i.e. the kerb and layback item, the boundary fence items and the structural retaining wall.
However, in our opinion, there is no basis to conclude that the Tribunal's Decision in respect of these specific claims was not fair or equitable. We are satisfied that the Owner's submission in respect of the kerb and layback item relies upon the Greenland Landscape Drawing prepared on 29 October 2015 being 'Issue B' and that this was work outside the scope of work in the Contract because the Drawing (Issue B) had not been provided to the Builder prior to or at the date of entering into the Contract.
Such was the position also in respect of the boundary fence items. The Tribunal found, correctly in our opinion, that the introduction of complex landscaping design drawings as post contract drawings was "a particularly significant impetus for variations" in the Builder's case: see Reasons at [165]. In essence, these claims were variations which were established by the supply to the Builder by the Owner of additional landscape drawings. The Contract drawings did not include any work associated with the removal of existing fences and replacement with new boundary fences: [274], [278] and [282].
Similarly, we are satisfied it was open on the available evidence for the Tribunal to find that the Builder's claims for the structural retaining walls were variations pursuant to subclauses 14(h) and (i) of the Contract and also for it to allow the amounts which had been agreed and paid for in respect of these items. The Owner submitted Mr Brincat did not concede that the work was outside the work provided for in the Contract. However, the evidence at the hearing does not support that submission. When called upon to indicate where the retaining walls appear on Contract drawings relied upon by the Owner, the Owner's expert was unable to identify where retaining walls were to be constructed pursuant to such drawings: see Transcript at pages 1405 - 1409 of the Appeal Book. The Contract drawing (SD03) was described by Mr Roberts as a "typical drawing" and "typical detail" (see Transcript, Appeal Book page 1406). That drawing and the other Contract drawing (DA 04) relied upon by the Owner do not show a placement of a retaining wall anywhere within the building or site plan.
Further, we are satisfied that the Tribunal could accept (as, in fact, it did) all of the specific claims of the Builder dealt with above on an (alternative) quantum meruit basis. This analysis applies to other specific items claimed by the Builder and allowed by the Tribunal as variations or provisional sum allowance and which were challenged in the Owner's submissions in this appeal. These other specific items were the tiling of the bathroom (floor to ceiling), the 2 in 1 light units to the laundry and powder room, the tiling from floor to ceiling in the laundry and powder room, the rendering to the feature wall for units 1 and 2, the upgrade of internal door furniture, the additional bricks and gutter, and the deductions for air conditioning and the subdivision of the site.
As indicated, for this alternative basis, the Tribunal had undertaken a lengthy examination of the evidence which had been identified in the Owner's submissions. The Tribunal had concluded (correctly, in our opinion) that there was evidence which established each element of the particular claims on a restitutionary basis: see Reasons at [433] - [437]. As importantly, the Tribunal found in relation to each specific claim that the Owner had been enriched by the Builder's performance of the work in each claim and that the Owner knew that the Builder expected to be paid for each item. We see no reason to disturb the Tribunal's findings in this regard.

Conclusion

We are not satisfied (as the Builder submitted) that the Owner's appeal is an abuse of process. Nevertheless, for the reasons given, we find no error law in the Tribunal's Decision.
Leave to appeal is refused. We are satisfied that the findings of the Tribunal were not against the weight of the evidence, nor were they not fair and equitable, in the context of the various claims of the Builder. We find that the Owner has not been deprived of a significant possibility or a chance which was fairly open: Collins v Urban at [76] - [79].
Further, even if the considerations in cl 12 of Sch4 of the NCAT Act were satisfied, we would not have been inclined to grant leave pursuant to s 80(2)(b) because in our view, there is no issue of principle involved, no question of public importance, no reasonably clear injustice and there is no clear mistake nor error in the fact finding process: Collins v Urban at [84].

Orders

For the foregoing reasons, the appeal must be dismissed.
We did not hear from the parties on costs.
Nevertheless, we are satisfied that r 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (the NCAT Rules) applies to the appeal by reason of r 38A(2). We must apply the first instance costs provisions (defined in r 38A(1)), in relation to the costs of the appeal. The first instance costs rules are contained in r 38 of the NCAT Rules. The amount in dispute in the appeal was more than $30,000. While the award of costs is discretionary, the 'usual rule' is that costs follow the event: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67].
Accordingly, our preliminary view is that there is no reason to depart from the 'usual rule' and that the Owner should pay the Builder's costs of this appeal as agreed or as assessed in accordance with the applicable costs assessment legislation, on the ordinary basis. If the parties contend for a different costs outcome, then provision is made in the orders for further submissions on costs.
We make the following orders: 1. The appeal is dismissed. 2. Subject to the orders below, the appellant is to pay the respondent's costs of the appeal as agreed or as assessed in accordance with the applicable costs assessment legislation, on the ordinary basis. 3. Direct that if a party contends for any different costs order, such application (including submissions of no more than 5 A4 size pages) and evidence (if not already filed) must be filed within 14 days of the date of these orders. 4. Direct that the respondent to any costs application is to file and serve submissions of no more than 5 A4 size pages and evidence (if not already filed) within 14 days thereafter. 5. Direct that the applicant for costs may file and serve submissions in reply of no more than 2 A4 size pages within 7 days thereafter. 6. Direct that any submission as to costs must include submissions addressing whether an order should be made dispensing with a hearing pursuant to section 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 7. If an application for a different costs order is made, the order for costs above shall cease to have effect.

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: 19 August 2019

At a glance

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Judgment (9 paragraphs)

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Legislation Cited (2)

Cases Cited (6)

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