In March 2015, Mr Pettigrew, the Appellant, ordered a black aluminium fence, with spears, to be manufactured and then installed at the front of the home where he and his wife live in Sydney.
The agreed price for the fence was $7,953.00. That was the amount that the Tribunal at first instance ordered Mr Pettigrew to pay in the proceedings commenced against Mr Pettigrew by the Respondent (Gateway).
The fence was never fully installed at Mr Pettigrew's home. The fence was manufactured and an attempt was made to install it in August 2015. It is common ground that on that occasion problems with installation occurred. Mr Pettigrew and his wife were displeased with the fence as delivered. They claimed that the fence could not be fitted properly because it was too high. They say that this meant the fence could not be fitted into the centre of the retaining wall and had to fitted near the back of that wall. Part of the fence was taken away by Gateway for alteration. Later, Mr Pettigrew returned the balance of the fence to Gateway.
The Tribunal at first instance agreed with Gateway that the fence as delivered complied with the contract. Accordingly, it ordered Mr Pettigrew to pay the contract price.
Mr Pettigrew now appeals from that decision. He contends that the Tribunal was misled by false evidence, misapprehended the issues, and failed to address material evidence. He also contends that the Tribunal did not adequately explain the reasons for preferring Gateway's evidence to that given by himself and his wife. To the extent that it is necessary, he seeks leave to appeal.
At the bottom of this bitter dispute is the absence of a written contract, signed by the parties, setting out a clear description of what was to be supplied. This has led to an assertion and counter assertion as to what was agreed.
Such a contract was required by s 7AAA of the Home Building Act 1989 (NSW) (the HBA). A question arose whether a failure to comply with s 7AAA rendered the contract unenforceable by the builder. The point was raised by the Appeal Panel at the hearing of the appeal. The Appellant adopted unenforceability as a ground of appeal.
Gateway did not present any argument that the contract was enforceable, even if there was a failure to comply with s 7AAA. On the basis that the contract may have been unenforceable, Gateway advanced a claim for quantum meruit.
For the reasons set out below, our conclusions are :
1. there was a the failure to comply with s 7AAA of the HBA. However, that did not result in the contract being unenforceable by the builder.
2. because of its misunderstanding of the facts, the Tribunal asked itself the wrong question. This was an error of law.
3. in any event, the Appellant may have suffered a substantial injustice because the decision was not fair and equitable.
4. as a result of (2) or (3), the appeal should be allowed, the decision of the Tribunal should be set aside and the case should be reconsidered by a differently constituted Tribunal, but on the basis that the failure to comply with s 7AAA did not result in the contract for the fence being unenforceable. Directions should be made for the provision of any additional evidence and written submissions by each of the parties.
[2]
Reasons of the Tribunal at first instance
The following emerges from the reasons of the Tribunal at first instance:
1. A contract for the manufacture and installation of the fence was found to have been made by an acceptance of a third written quote provided by Gateway. This quote was said by the Tribunal to have been provided by Gateway to Mr Pettigrew on 16 March 2015: at [14]. It is common ground that the third quote was accepted shortly after it was provided. However, it is also common ground that the third quote was, in fact, a quote dated 31 March 2015, which was produced by someone on behalf of Gateway writing upon and thereby amending an earlier quote dated 16 March 2015.
2. Whilst the quote recorded the height as approximately 1200mm, the Tribunal concluded that, as at the time of the acceptance of the quote, there was a proper basis for a height measurement of 1,280mm to be adopted as the height of the fence, [49]. This conclusion followed from measurements taken at the site by the fabricator used by Gateway and a consultation between the parties, at which time the correct height was found to have been established: at [47]-[49].
3. The Tribunal referred to a later visit to the site by a representative of Gateway on 10 July 2015 to check measurements, during which the representative took instructions from the Appellant. The Tribunal said that the issue was whether the final height and relationship of the fence to the existing structure was in accordance with the instructions given: at [17]-[18].
4. The Tribunal referred to evidence given by the director of Gateway that the delivered fence was 80mm higher than the 1200mm figure in the quote [45]. It is apparent that the Tribunal then proceeded on the basis that it accepted this evidence: at [47]-[49]. This was an error because, in truth, the height of the fence as delivered was around 1450 mm.
5. The Tribunal found that Gateway had made out its case that the work was performed in accordance with the contract specifications: at [26] and [75]-[76]. Earlier, the Tribunal had referred to evidence from Gateway's director about an issue with installation (at [24]), but it is apparent that the Tribunal did not appreciate that the true height of the fence as delivered of around 1450mm caused an issue with the installation.
6. In so concluding, the Tribunal did not accept the evidence from Mr Pettigrew and his wife to the effect that there was a clear instruction for the height of the fence to align with the top of the corbels on the stone pillars [27], and [63]. The height of the fence as delivered aligned with the top of the stone pillars. This was substantially higher than a height to the top of the corbels.
7. The Tribunal referred to Gateway having advanced its evidence that the height of the fence was to be to the top of the existing stone pillars and Mr Pettigrew contending that this was to be to the height of the top of the corbels. As to this, the Tribunal concluded that upon the whole of the evidence it found that Gateway made out its case and that, if there was an error as to height, the Appellant did not take sufficient or reasonable steps to correct the error [72]-[75]. The Tribunal concluded that all that could be done was done to fabricate the fence consistently with what it referred to as the vague basis attending the instructions provided [75].
8. The Tribunal rejected contentions as to defective work [65]-[70]. The Tribunal was not satisfied that Mr Pettigrew had demonstrated any basis why he was not properly bound by the contractual arrangement [70].
It is apparent that the Tribunal proceeded on the basis there was an agreement that the fence would be built to a height of 1280mm, this accorded with Gateway's evidence that the fence was to be built to the height of pillars, there was never any subsequent agreement to build the fence to the height of the top of the corbels, as claimed by Mr Pettigrew, and the fence as delivered was 1280mm high.
[3]
The correct facts
On appeal, it became clear that it was common ground between the parties that the correct facts were significantly at odds with the findings of the Tribunal at first instance.
It was common ground on the appeal that:
1. At around the time of the quote of 31 March 2015, it was orally agreed that the fence was to be built to a height that aligned with the top of the corbels on the stone pillars. As we understood it, the relevant discussion between the parties about height was by reference to physical features of the pillars on the existing retaining wall, not by reference to a unit of length.
2. Initially, fabrication of the fence proceeded in accordance with the agreed height to build to align with the top of the corbels.
3. The fence which was delivered was substantially higher than to the top of the corbels. It aligned with the top of the pillars. This meant it was around 1450 mm high.
4. How the change in height had come about was at the core of the dispute between the parties.
At the hearing of the appeal, it emerged that it was Gateway, not Mr Pettigrew, which was contending there was a change in the original agreement as to height. It was Gateway's case that the agreed height was changed to become the height of the stone pillars. Gateway's case was that this change was agreed in a discussion between Jamie Ross for Gateway and Mr and Mrs Pettigrew at their home in late June 2015. Mr Pettigrew said there was no meeting on that date, but a meeting did occur with Jamie Ross at the property on 10 July 2015. According to Gateway, it was also agreed in those discussions (whether in late June or on 10 July) that the fence would be fixed to the centre of the stone pillars, rather than to the centre of the retaining wall. Mr and Mrs Pettigrew denied that these changes to the order had been made.
The Tribunal at first instance addressed a different case than the real case between Gateway and Mr Pettigrew.
In the circumstances, in our opinion, the appeal should be allowed and the matter remitted for reconsideration by a differently constituted Tribunal.
In our opinion, the factual errors to which we have referred led to an error of law because it meant that the Tribunal asked itself the wrong question about the case before it. The Tribunal focused on a question whether there had been an agreed variation as to the height of the fence, following a claimed instruction from Mr Pettigrew to build to a lower height, namely to the height of the corbels. However, the question it should have asked was whether there had been an agreed variation to build to a higher height, namely to the height of the stone pillars, in circumstances where there was an original agreement to build to the height of the corbels.
Asking the wrong question is an error of law. With respect to an appeal on a question of law, there is a right of appeal: s80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW).
In any event, if necessary, we would grant leave to appeal pursuant to cl 12(1) of Schedule 4 of the Civil and Administrative Tribunal Act 2013 (NSW). We are satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision of the Tribunal was not fair and equitable. It did not address the real dispute between the parties. Incorrect evidence from Gateway as to the height of the delivered fence contributed to this mistake.
[4]
Non-compliance with s 7AAA and the consequences
We have already mentioned that the issue arose whether the contract was unenforceable because of non-compliance with s 7AAA. If it was unenforceable, Gateway's case in contract should be dismissed, leaving for consideration whether it could succeed in a claim in quantum meruit.
It is uncontroversial that the parties did not sign a contract and that no written contract was prepared for signature.
In addition, according to each party, important terms were agreed orally and not recorded or evidenced in writing.
The accepted quote fell short of a clear description of the fence to be supplied. There was a lack of detail as to the dimensions, including the height, without any identification of the relationship of the height of the fence to the existing wall pillars. Some drawings were made on the quote, but these did not assist to identify the height by reference to the pillars. There was no identification of the material to be used in constructing the fence.
Section 7AAA applied to the contract for the fence because the subject matter of the contract was a "small job". This is because the contract was entered into after 1 March 2015 and the contract price exceeded $5,000, but was less than $20,000: cl 5(2)(b) of the Home Building Act Regulation 2014 (NSW).
For the reasons we have just referred to, we conclude that the contract did not comply with s 7AAA. That section provides:
7AAA Form of contracts (small jobs)
(1) This section applies to a contract only if the contract is not one to which section 7 applies and the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The "prescribed amount" is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST.
(2) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it.
(3) A contract must contain:
(a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and
(b) the number of the contractor licence, and
(c) a description of the work to which the contract relates, and
(d) any plans and specifications for the work, and
(e) the contract price if known.
(4) The contract must comply with any requirements prescribed by the regulations for the purposes of a contract to which this section applies.
(5) This section does not apply to:
(a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or
(b) a contract to do specialist work that is not also residential building work.
The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns.
The question then arises whether the contract was unenforceable by the builder, as would have been the case had the contract been governed by s 7 of the HBA (see s 10(1)(b) below). We note that had the contract been made before 1 March 2015 (at which time the prescribed regulatory upper limit for a small job was increased from $5,000 to $20,000), it would have been categorised as a large job and the contract would have been unenforceable because of the effect of s 7 and s 10(1)(b) of the HBA.
The answer to the question depends upon whether the contravention of s 7AAA falls within the terms of s 10(1)(c) of the HBA.
Section 10 of the HBA, relevantly, provides:
10 Enforceability of contracts and other rights
(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts:
(a) in contravention of section 4 (Unlicensed contracting), or
(b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6 (2)), or
(c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph,
is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.
(2), (3) (Repealed)
(4) This section does not affect the liability of the person for an offence against a provision of or made under this or any other Act.
In our opinion, s 10(1)(c) does not apply to render the contract unenforceable by Gateway.
We note that in Bambagiotti, Building Disputes and the Home Building Act 1989 (NSW) (Lawbook, Thomson Reuters, 2012) at page 67 there appears the following:
Neither the HBA nor the HBR have any prescription for the purposes of s 10(1)(c). It is not clear whether the prescription referred to in subs 10(1)(c) is meant to apply to the regulations alone (ie leaving the section to apply to any breach of the Act and only those parts of the regulations that are prescribed) or whether the prescription is to apply to the Act and the Regulations (meaning that nothing is addressed unless prescribed). Whilst the latter view is more consistent with fairness and certainty to builders, it does mean that provisions of the Act can be breached with no apparent impact upon the enforceability of the contract.
However, in our opinion, it is sufficiently clear that the reference to matters that may be prescribed applies to both provisions of the Act and to provisions of the regulations. In effect, s 10(1)(c) is to be read as if there was a comma after "Act" and another comma after "regulations".
Such a construction is harmonious with the text of the whole of s 10, which is not the case if s 10(1)(c) is construed as if references to matters to be prescribed applied only to the regulations. This is because there would no point to the separate identification of the matters in ss 10(1)(a)-(b) if the intention was that a contravention of all of the provisions of the Act resulted in contracts being unenforceable. If that had been the intention, one would have expected to see s 10 stating just that and also stating that a contravention of prescribed provisions of the regulations would result in contracts being unenforceable.
As the following passage shows, the second reading speech for the Bill which introduced s 10 in its current form (as well as other amendments), made on 11 December 2001, discloses an intention that not all contraventions of the Act would result in unenforceability:
Schedule 1 also makes a number of amendments to the Home Building Act 1989. Three of those amendments clarify the operation of sections relating to building contracts. The amendments ensure that those sections do not have the unintended effect of rendering a building contract wholly unenforceable at the suit of the builder merely because of the builder's very minor contravention of certain provisions of the Act....
It is questionable whether it is apt to describe a contravention of s 7AAA as a very minor contravention. However, the Act did not contain s 7AAA at the time of the amendment to introduce s 10 in its current form. s 7AAA was not introduced until December 2011, as part of the amendments made to the HBA by the Home Building Amendment Act 2011 (NSW). If the intention had been that a contravention of s 7AAA would result in a contract being unenforceable, the obvious way to achieve this would have been to add a reference to the new section into the existing s 10(1)(b). That this was not done provides further support for our conclusion.
The construction of s 10(1)(c) we have adopted does not mean that a contravention of s 7AAA has no consequence. It results in an offence under s 7A of the HBA.
For these reasons, Gateway can maintain its claim in contract despite the failure to comply with s 7AAA. We reject the ground of appeal that contended otherwise.
[5]
Orders on the appeal
For these reasons, we make the following orders:
1. The appeal is allowed.
2. Set aside the orders made by the Tribunal at first instance.
3. Remit the whole of the case for reconsideration by a differently constituted Tribunal on the basis that the failure to comply with s7AAA of the Home Building Act 1989 (NSW) did not result in the contract for the fence being unenforceable.
4. Directions are to be made by the Tribunal for the service of evidence and submissions by the parties.
[6]
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: 29 May 2018