Pastrovic & Co Pty Ltd v Farrington

District Court of NSW|2011-07-07|Before: Ms J

Judgment 1The defendant was the owner of a house constructed by the plaintiff, a builder. On 16 June 2007, following heavy rain, the retaining walls constructed by the builder at the rear of the premises failed to contain the slope behind, with the result that there was significant slumping of soil into the rear of the premises. 2This appeal concerns the decision of a member of the Consumer Trader and Tenancy Tribunal (the Tribunal) on 29 April 2010 in relation to the construction of the retaining walls in which he decided that the builder was liable to the owner for the damage caused. 3The Tribunal held that the builder had failed to comply with statutory warranties under the Home Building Act 1989 , and that the builder was negligent in its construction of the retaining walls. 4The house had been constructed pursuant to a contract between the builder and the owner's predecessor in title, Berkeley Road Developments Pty Limited, which company sold the house to the owner prior to the land slump episode on 16 June 2007. 5The owner alleged that the retaining walls did not comply with the specifications in the contract and that they were not suitable for the purpose of retaining the material behind them, especially after the builder had carried out excavation work into a highly reactive site. 6The builder complains that the Tribunal member wrongly decided various questions with respect to matters of law. 7The grounds of appeal are set out in the Summons Commencing an Appeal. They will be addressed in turn.

Ground 1 - The builder's contractual obligation 9Ground 1 of the appeal complains that: "The Tribunal failed to identify the extent of the builder's contractual obligation in respect to retaining soil at the rear of the premises and whether this included soil placed by others and soil beyond the site boundary." 10The builder submitted that the Tribunal's finding that the builder was in breach of section 18B of the Home Building Act 1989 involved an error with respect to a matter of law because the Member failed to identify the extent of the builder's contractual obligation in respect of the erection of the retaining walls. The builder was only asked to build landscaping walls, constructed from timber sleepers, intended simply to retain the garden soil behind them. The builder was not asked to build a wall capable of retaining or restraining either the totality of the land above the walls or indeed any additional fill inserted subsequent to the construction of the walls wherever it may have come from. The builder merely provided what he had quoted for. 11It was submitted that a necessary prerequisite to a finding that the builder had breached the statutory warranties set out in section 18B of the Act and his duty of care was to identify exactly what the contract required the builder to do, in the circumstances as they existed at the time of the contract, in this case the variations of the contract pursuant to which the retaining walls were constructed. 12Accordingly, the owner would need to establish that the site conditions at the time the builder entered into the agreement made it necessary to build the type of walls he contended were necessary to meet those conditions, and thereby prevent the damage that actually occurred. 13The builder submitted that the absence of such findings by the Tribunal as to what the contract required is an error of law. 14The owner, on the other hand, submitted that the builder was required to build a retaining structure that complied with the specification and the Australian Standard (AS4678-2002), and that is what was found by the Tribunal. 15Accordingly, the builder breached the statutory warranties and failed to construct the retaining walls in accordance with the applicable standard and the specification. No defence was raised pursuant to section 18F of the Home Building Act 1989 . Nor was there any evidence in writing informing the then owner of the non-compliance with the specification and that relevant standard. 16Accordingly, the owner submitted, that was no error of law on the part of the Tribunal. Any contractual finding such as that for which the builder contended does not arise where there is no question concerning the facts as to who built the wall or how it was built and what was the cause of its failure. The significance of these factual findings is that it was incumbent on the builder to obtain engineering input into the construction of the retaining walls. His failure to do so put him in breach of the specifications and, therefore, the warranties provided for in the Act. 17In my view, there was no decision amenable to appeal, in that there was no relevant decision with respect to a matter of law concerning the contract, the application of the specification, or the requirements placed on the builder by reason of the statutory warranties. 18In any event, I am not persuaded that the Member made any erroneous decision concerning the builder's contractual obligation, which was to obtain engineering input into the design and construction of the wall, which the builder failed to do. 19Ground 1 of the appeal therefore fails.

Ground 2 - The builder's duty of care 20Ground 2 of the appeal complains that: "The Tribunal erred in finding a breach of the builder's duty of care without first defining the content of that duty of care." 21The builder submitted that the Member found that the builder was negligent in failing to provide itself with engineering advice and failing then to follow such advice, but he did not describe the content of the builder's duty of care to the owner. It cannot be the case that the builder is required or was required to ensure that any wall built by it retained all of the soil above the house regardless of the actions or inactions of others subsequently and whether or not the soil was present at the time the work was undertaken. 22The owner, on the other hand, submitted that the evidence was clear that the builder excavated the site. The finding of the Member was that there was no imported fill. The builder was required to build a wall that was fit for the purpose of retaining the soil from the excavation that the builder had carried out and any landscaping that was obviously going to be installed subsequently. Accordingly there was no error of law. 23In my view, there was no decision amenable to appeal, in that there was no relevant decision with respect to a matter of law concerning the content of the builder's duty of care. 24In any event, I am not persuaded that the Member made any erroneous decision concerning the builder's duty of care, which was to obtain engineering input into the design and construction of the wall, which the builder failed to do. 25Ground 2 of the appeal therefore fails.

Grounds 3, 4 and 5 - The cause of the land slump 26Grounds 3, 4 and 5 of appeal complain that: "The Tribunal erred in finding the builder liable in circumstances where it did not find the cause of the land slump at the rear of the owner's property." "The Tribunal erred in failing to determine the cause or extent of the land slump and whether it was causally related to factors over which the builder had no control or responsibility." "The Tribunal erred in failing to consider the expert evidence of Mr Welham that an engineering retaining wall on the site would not have prevented or retained a land slump." 27The builder submitted that the Tribunal failed to make any findings as to the cause of the land slump and that evidence concerning the cause was available from a number of sources including a council report which identified five causes only one of which related to the construction of the walls in question by the builder. These included:

Excessive site slopes
Filler materials
Poor quality unconsolidated fill of excessive depth
Structural underperformance of a landscaping wall at the base of the slope
Filtration of water to the fill from three sources namely direct filtration, garden bedding filtration and subsurface migration
Uncommon weather events leading to excessive rain fall and runoff. 28It was submitted that landscaping work above the walls on the site had been carried out by others at the direction of the developer and that the developer was also likely to have been involved in the placement of unconsolidated fill above the rear fence. It cannot have been the intention that the walls constructed by the builder were intended to retain landscaping works to the slope above the walls as well as unconsolidated fill in the vicinity of the council footpath. There was some 400 tons of soil involved in the land slump and there was evidence from the builder's expert that even an engineered retaining wall on the site would not have prevented or retained such a land slump. 29The Tribunal did not make it clear in its reasons that it took this factor into account in making its findings that the builder was in breach of the statutory warranties or had been negligent. 30The builder submitted that the cause or causes of the land slump are relevant because the owner's case by inference was that the contract required a retaining wall capable of preventing the events of 16 June 2007 regardless of what conditions were know to or were foreseeable on the part of the builder. The contractual arrangements, the statutory warranties and the builder's duty of care cannot exist in a vacuum applying to circumstances as they may materialise from time to time in the future. The absence of any finding as to what the contract required and what was foreseeable at the time the contract was entered into gives rise to an error of law. 31The owner, on the other hand, submitted that the builder's liability is derived from its failure to build the retaining walls in accordance with an engineer's design. It is not a case of the builder being held accountable in a vacuum. The finding of fact was that the walls simply did not comply with either the specification or the standard. The fact of the non-compliance only came to light after the failure of the walls. The fact is that the walls did not comply nor could they comply. It was reasonably foreseeable that a failure to build a retaining wall in accordance with the relevant standard as required by the specification involving engineering input and proper building practice could lead to a failure of the walls resulting in loss and damage. The Tribunal specifically considered the evidence of the builder's expert, but he preferred the evidence of the owner's expert, Mr Thompson. 32Accordingly the Tribunal found that the statutory warranty was breached and that the builder was responsible for the loss and damage that flowed as a result. Implicit in that finding is that the causation of the failure of the walls to retain the material comprised the land slump. 33In my view, there was no decision amenable to appeal, in that there was no relevant decision with respect to a matter of law concerning the cause of the land slump. There was evidence on these matters to which the Member referred in his reasons. He made clear findings as to the cause and extent of the land slump and the causal effect of the construction of the retaining walls and the damage, notwithstanding the evidence of Mr Welham, preferring the evidence of the owner's expert, Mr Thompson. 34In any event, I am not persuaded that the Member made any erroneous decision concerning the cause of the land slump. 35Grounds 3, 4 and 5 of the appeal therefore fail.

Grounds 6, 7, 8 and 9 - Causation 36Grounds 6, 7, 8 and 9 of the appeal complain that: "The Tribunal erred in finding that excavation carried out by the builder in the slope at the rear of the property was causally significant when the only evidence was that minor excavation was done by the builder to define the tow of the slope and that apart from a variation to install timber walls landscaping works were excluded from the contract and in the further circumstances that landscaping contractors independently engaged by the developer carried out other works." "The Tribunal erred in purporting to rely upon Mr Thompson's evidence determining the extent of excavation by the builder from the presence of apparently excavated materials in circumstances where Mr Thompson did not see the site at any time prior to the land slump, did not review relevant surveys of the site and was unaware that landscapers had been independently engaged by the developer." "The Tribunal erred in failing to take into account that the owners evidence that at about the time he purchased the property vegetation had been newly planted on the batter at the rear of the property and the slope was otherwise covered in saturated mulch in circumstances where such work was not done by the builder." "The Tribunal failed to take into account the removal of vegetation at the rear of the site by others. The presence of newly planted vegetation and mulch and the likelihood that landscapers had imported fill on to the batter above works carried out by the builder." 37The builder submitted that there was evidence that others engaged by the developer carried out landscaping works to the slope above the walls. There was also evidence that the slope was battered and was quite a different shape to the landform that appears in the photographs taken in April 2005. That together with other evidence leads to the conclusion that the only reasonable inference was that work carried out by landscapers, including reshaping the rear yard with fill, occurred subsequent to the erection of the retaining walls. The builder was not required by the contract to do any landscaping works and the construction of the walls were merely a variation to the contract and they were the only landscaping work undertaken. All other landscaping work was undertaken subsequently, by other persons. The only excavation carried out by the builder for the purposes of constructing the walls was to even out the ground and to define the tow of a cut of less than 400 millimetres for a few metres in distance. The Tribunal, however, rejected this evidence and preferred the evidence of the owner's expert Mr Thompson as to the extent of cut and fill. It was submitted that such a finding was not open as Mr Thompson only attended the site on one occasion after the land slump had occurred and based his assumption of cut and fill on the part of the builder by reason of the presence of terrace. The evidence was, however, from photographs produced by the owner of the rear of the yard at the time of purchase show a battered slope above the walls constructed by the builder. 38On this basis, the builder submitted, there was no evidence upon which the Member could have properly based a finding that the excavation of the site by the builder was greater than described in evidence on behalf of the builder. 39The owner submitted on the other hand that these were findings of fact on the part of the Tribunal that were open to the Member on the basis of the material before him. The finding that the walls in question were not decorative, as contended by the builder, but were retaining walls, was determinative. These were findings of fact and as a result there was no decision with respect to any matter of law involved. 40In my view, there was no decision amenable to appeal, in that there was no relevant decision with respect to a matter of law concerning the matters raised by these grounds. There was evidence on these matters to which the Member referred in his reasons upon which he was entitled to make the findings he did. He clearly preferred the evidence of Mr Thompson to that of Mr Welham, and gave clear reasons for doing so. 41In any event, I am not persuaded that the Member made any erroneous decision concerning the cause of the land slump. 42Grounds 6, 7, 8 and 9 of the appeal therefore fail.

Ground 10 - The reasons 43Ground 10 of the appeal complains that: "The Tribunal erred in failing to disclose a logical reasoning process." 44The builder submitted that the reasons provided by the Tribunal failed to disclose a logical reasoning process in the following respects: (a) No consideration was given to the terms of the contract and the variation to it which determined what the builder was and was not required to build. (b) There were no factual findings as to the extent of excavations and fill carried out by the builder. (c) There were no findings as to the amount of fill, if any, on site and above the site when the builder agreed to carry out construction of the retaining walls. (d) There were no findings as to the role played by the "H" classification, if any, in the land slump. (e) There were no findings as to what caused the land slump and whether they are causes or conditions for which the builder was in any way responsible for or aware of. (f) There were inadequate reasons as to why and how Australian Standard AS 4678-2002 applied to the walls constructed. (g) There was no determination of what AS4678-2002 would have required the builder to do in the circumstances which existed or which were foreseeable at the time of the contract variation. (h) There were no findings as to what was imported onto the site and what work was carried out by others prior to the owner purchasing the property. (j) There was no consideration of the role played by others such as the developer, the council and the landscapers in causing the land slump in relation to work done both on the subject property or outside the boundaries. 45The builder's submission is flawed. The extent of the obligation of the Tribunal to give reasons is to place the parties in a position to understand why various matters that were in dispute were decided as they were sufficient to enable them to exercise their right of appeal: Beale v Government Insurance Office of New South Wales [1977] 48NSWLR 430 at 442 - 444: affirmed in Eastside Scaffolding v Kazic [2008] NSWCA 148 at [58] 46In my view, none of the grounds set out in the Summons under Ground 10 qualifies as a decision with respect to a matter of law on the basis of the inadequacy of the reasons provided. In Levy v Bergseng [2008] NSWSC 294, Rothman J discussed the nature of reasons in that appeals such as the present one and at paragraphs [80] - [81] of his judgment he said: "The reasons...need not be compelling or even logical. It is sufficient that they disclose the process by which (the Tribunal) arrived at its conclusions. Lack of logic is not an error of law...nor is it required to deal with every argument in minute detail." 47Similarly, in a recent decision in VCT v JM [2011] NSWCA 89, the Court of Appeal said: "The reasons of the Tribunal are not to be construed minutely with a keenly attuned eye to the perception of error." 48In any event, in my view the reasons given by the Tribunal were sufficient to place the builder in a position to understand why it was the Tribunal made the decision that it did sufficient to enable the builder to exercise its right of appeal. 49For these reasons, Ground 10 of the appeal fails.

Ground 11 - The decision of the Tribunal 50Ground 11 of the appeal complains that: "The Tribunal erred in that its decision is so unreasonable that no reasonable decision maker could have come to it." 51The builder submitted that the cost of the walls constructed by the builder was $15,931.00 for the two adjoining properties. That is $7,965.00 per property. The owner is claiming inter alia the cost of an engineered concrete filled wall at a cost of $85,777.00. That is more than ten times the cost of the original work. 52In his original quote the builder offered to construct block walls at a higher cost but that offer was rejected and the builder was instructed only to build timber sleeper walls. 53Thus it was submitted, it cannot be supposed that the builder would have entered into a contract that required him to carry out work contrary directions of the developer and at a cost of more than ten times the quoted price. In these circumstances the Tribunals decision is effected with irrationality or alternatively the Tribunal failed to take into account all the matters to which the builder has referred in his submissions. This I take to be a submission that the decision of the Tribunal was not available on the evidence before it. 54The owner on the other hand submitted that the cost of the original construction of the walls was not relevant. The only relevant matters were in fact the builder's failure to build the walls in accordance with appropriate standards and that this was the cause of the loss sustained by the owner. 55In my view, there was no decision amenable to appeal, in that the ground does not involve any decision with respect to a matter of law. 56In any event, for the reasons already articulated, I am not persuaded that the decision of the Member was unreasonable. 57Ground 11 of the appeal therefore fails.

Ground 12 - The Australian Standard AS 4678-2002 58Ground 12 of the appeal complains that: "The Tribunal erred in determining that Australian Standard AS 4678-2002 applied in circumstances where the pre-conditions as to its application were not established." 59The relevant standard AS 4678-2002 provides as follows: "Retaining structures and reinforced soil structures that are commonly constructed for engineering works and infrastructure. Such structures are typically up to 15 metres in hight. Structures of unusual shape, of large retained heights (in excess of 15 m) were founded in unusual ground conditions (such as soft ground, land slips, steep sides of deeply inclined gullies), together with structures subject to sustained cyclic loading, are outside the provisions of this standard." 60The builder submitted that the walls as built by the builder retained only the garden soil back filled into them. At the time they were built the slope was not steep and the walls were placed on top of and at the base of the slope and not cut into it. The walls were built in this manner at the express request of the developer. 61It was submitted, therefore, that having made no findings about the site conditions at the time the builder agreed to construct the walls, including the site levels and contours, and in circumstances were the walls were not intended to retain excavation and fill, there was no basis upon which the Member could be satisfied that the Standard AS4678-2002 applied at the relevant time. 62In response, the owner submitted that the Member found that the site was excavated and filled. The Standard applies for retaining walls that are in excess of 1.8 metres in height. The Member found that the walls were retaining walls, not decorative landscaping walls. It also found that they were in excess of the relevant height. Accordingly it was submitted that the Tribunal had ample evidence to make the findings that it did, namely that the Standard was relevant and applicable in the circumstances. 63In my view, there was no decision amenable to appeal, in that the ground does not involve any decision with respect to a matter of law. The application of the Standard was clearly established by the findings of fact made. There was no error of law in the application of the Standard, nor any assertion that the facts, as found would not justify the application of the Standard. 64In any event, for the reasons already articulated, I am satisfied that the relevant pre-conditions to the application of the Standard were clearly established. 65Ground 12 of the appeal therefore fails.

Grounds 13 and 14 - Part 4 of the Civil Liability Act 2002 66Grounds 13 and 14 of the appeal complain that: "The Tribunal erred in construing Part 4 of the Civil Liability Act 2002 to apply only in circumstances where notice was given by the builder to the owner of concurrent wrongdoers." "The Tribunal erred in failing to apply the provisions of Part 4 of the Civil Liability Act 2002 so as to apportion liability amongst concurrent tort feasors including Wollongong City Council to developer Johnson Property Group Pty Limited and the landscaping contractors for the sub-division and the site." 67The builder submitted that although the Member found that these apportionment provisions applied to the present circumstances he did not in fact apply them and referred to the failure of the builder to notify the owner of concurrent wrongdoers. 68The Member noted in his Reasons for Decision that the builder had made submissions pursuant to s 35 of the Civil Liability Act 2002 about concurrent wrongdoers, such that any responsibility for the slump attributed to the builder would be significantly less than that of the concurrent wrongdoers, thus reducing his liability for damages. But the Member declined to consider and, if appropriate, apply the effect of s 35 in the present case. He gave the following reasons: "I do not agree with the owner's submission that the provisions of the Civil Liability Act 2002 do not apply in matters determined by the CTTT, where the Tribunal has jurisdiction. However, I agree that, in this case, there is no notification of a concurrent wrongdoer pursuant to the requirements of the Civil Liability Act 2002 ." 69The Member did not specify which provision of the Civil Liability Act 2002 he relied upon to reject the builder's defence, but as the written submissions suggested, he must have been referring to s 35A. 70Section 35(1) of the Civil Liability Act 2002 provides: " Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a)the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss, and (b)the court may give judgment against the defendant for not more than that amount. 71There was no dispute that the claim was an "apportionable claim". Section 35(1) applies whether or not all concurrent wrongdoers are parties to the proceedings. 72Section 35A of the Civil Liability Act 2002 provides: " Duty of Defendant to inform Plaintiff about concurrent wrongdoers (1) If: (a)a defendant in proceedings involving an apportionable claim has reasonable grounds to believe that a particular person (the 'other person') may be a concurrent wrongdoer in relation to the claim, and (b)the defendant fails to give the plaintiff, as soon as practicable, written notice of that of the information that the defendant has about: (i)The identity of the other person; and (ii)The circumstances that may make the other person a concurrent wrongdoer in relation to the claim; and (c)the plaintiff unnecessarily incurs costs in the proceedings because the plaintiff was not aware that the other person may be a concurrent wrongdoer in relation to the claim, the court hearing the proceedings may order that the defendant pay all or any of those costs of the plaintiff. (2) The Court may order that the costs to be paid by the defendant be assessed on an indemnity basis or otherwise." 73It was submitted for the builder that s 35A does not preclude the application of the apportionment provisions, but only concerns the costs consequences of a failure to give the requisite notice. The applicability of the apportionment provisions was raised in the course of the hearing and in submissions by both parties to the Member. The builder had identified a number of other concurrent wrongdoers such that it was incumbent upon the Tribunal to apply the apportionment provisions. Its failure to do so was an error of law. "The CTTT does not have a system of pleadings where the other party is formally put on notice of the facts and matters relied upon. The defendant in the present case did not suggest there was any element of unfairness or surprise that could not be addressed by him, if necessary by an adjournment or by costs. No adjournment was sought." 74The owner, however, submitted that the builder only sought to rely on the apportionment provisions by way of a defence during the course of the hearing before the Tribunal. This was not permissible because no notice had been given of an intention to do so prior to the hearing. Formal pleadings are not required in the Tribunal, but it is nevertheless incumbent upon a party seeking to rely on the apportionment provisions to give the other party formal notification prior to the hearing. If the Tribunal had applied the apportionment provisions, it would have deprived the owner of the ability to consider its position, in particular whether or not it ought to join other parties: Permanent Custodians Limited v King [2010] NSWSC 509. 75Accordingly, the owner submitted, there was no error of law and the Tribunal correctly declined to deal with or entertain any defence based on the apportionment provisions of the Civil Liability Act 2002 . 76In my view, the decision of the Supreme Court in Permanent Custodians Limited v King was quite different from the present case. In that case the defendant sought to amend the defence to rely upon the apportionment provisions after judgment had been given. In the present case the issue was clearly litigated during the hearing, and the owner did not seek an adjournment. It was not irretrievably late for the defence to be raised. 77I agree with the builder's submission that the failure to give notice in accordance with s 35A in respect of other potential concurrent wrongdoers is not, of itself, fatal to the defence, particularly in a jurisdiction such as the Tribunal, in which formal pleadings are not required. 78The import of s 35A is to make provision for costs in the event that the requisite notice is not given and the other party unnecessarily incurs costs. The effect of the Member's decision was to reject the defence altogether, without considering it, solely because the builder failed to give the requisite notice in advance of the hearing. 79In those circumstances, given the mandatory nature of s 35, it seems to me that the Member was bound to consider whether the builder's liability should be limited having regard to his responsibility for the damage or loss. If necessary, if the owner was prejudiced, an adjournment could have been granted. In my view, it is immaterial that the owner was unrepresented at the Tribunal hearing. 80None of these matters was addressed by the Member. 81The Member's decision was a decision with respect to a matter of law. 82For these reasons, I am satisfied that the Member's peremptory rejection of the builder's defence under the apportionment provisions of the Civil Liability Act 2002 involved a wrong decision on a question with respect to matters of law. 83Grounds 13 and 14 of the appeal therefore succeed.

Disposition 84For these reasons, the appeal is partly allowed. 85The decision of the Tribunal on the question of the defence raised by the builder under the apportionment provisions of the Civil Liability Act 2002 is not affirmed. 86This is not an outcome that should be addressed by this court on appeal. 87The decision of the District Court on the question should be remitted to the Tribunal, and an order is made for a rehearing of the proceedings by the Tribunal consistent with the decision of the District Court.

Costs 88The plaintiff has succeeded. The usual rule is that costs follow the event. 89I therefore order the defendant to pay the plaintiff's costs of the appeal. 90I give the parties leave to apply in regard to the costs order, provided such application is made within 14 days. Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16. I CERTIFY THAT THIS AND THE PRECEDING 24 PAGES CONSTITUTE A TRUE COPY OF THE REASONS FOR JUDGMENT OF HIS HONOUR JUDGE PETER JOHNSTONE DELIVERED IN THESE PROCEEDINGS. Associate 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: 12 August 2011

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