POOL DATA SYSTEMS PTY LIMITED v BAYLISS & ANOR - [2011] NSWSC 224 - NSWSC 2011 case summary — Zoe

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POOL DATA SYSTEMS PTY LIMITED v BAYLISS & ANOR

[2011] NSWSC 224

Supreme Court of NSW|2011-02-02|Before: Hall J

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Source facts

Court

Supreme Court of NSW

Decision date

2011-02-02

Before

Hall J

Source

Original judgment source is linked above.

Judgment (30 paragraphs)

[1]

Judgment 1HALL J: The plaintiff conducts business as a building consultant. Mr K Collins is the director of the plaintiff company. It commenced these proceedings by way of Further Amended Summons dated 9 December 2010 and filed on 10 December 2010 in which relief is sought in respect of a decision and orders made by the Local Court at Forster (proceedings no 85 of 2008).

[2]

(1) Nature of the proceedings 2A party to proceedings who is dissatisfied with the judgment or order of a Local Court may appeal to the Supreme Court, but only on a question of law: s.39(1), Local Court Act 2007. That is an important requirement. 3On an appeal under the Local Court Act , the Supreme Court may determine the appeal:- "(a) by varying the terms of judgment or order; or (b) by setting aside the judgment or order; or (c) by setting aside the judgment or order and remitting the matter to the Local Court for determination in accordance with the Supreme Court's directions; or (d) by dismissing the appeal." 4Any appeal to the Supreme Court is by way of re-hearing. On any such re-hearing, the Court can receive further evidence but only on special grounds: s.75A, Supreme Court Act 1970. No application was made in the present proceedings to receive further evidence in the case. 5In the present proceedings, an order is sought pursuant to s.41(1)(b) of the Local Court Act setting aside the orders made by the Local Court on 31 May 2010. In the alternative, relief is sought by way of an order pursuant to s.69 of the Supreme Court Act granting relief to the plaintiff in the nature of a writ of certiorari quashing the determination of the second defendant sitting as the Local Court. 6A submitting appearance was filed by the New South Wales Crown Solicitor's Office on behalf of the second defendant, Magistrate McCosker.

[3]

(2) Outline of proceedings 7In a Statement of Claim filed in the Local Court on 23 May 2008 (the General Small Claims Division), the plaintiff, Pool Data Systems Pty Limited ( "Pool Data Systems" ), trading as Integral Building Investigations, claimed the sum of $11,346.77 together with interest in respect of professional services including inspections and a report in relation to defects in premises at 1 The Eagles Nest, Tallwoods, New South Wales. The amount of $11,346.77 included the sum of $2,576.80 being the costs of an engineer's report prepared by a Mr Alan Taylor. 8On the evidence, Mr Collins first met Mr Bayliss on or about 27 November 2007. A Fee Schedule & Agreement was provided by the plaintiff. It was signed by Mr Bayliss and Mr Collins and dated 28 November 2007. That Agreement set out fees to be charged for services rendered in respect of work to be performed under the contract. In relation to preliminary advice as to the nature and extent of services required and the estimated total fee range in the Fee Schedule & Agreement , the word "unknown" was written. 9Subsequent to the agreement, on 3 December 2007, Mr Collins wrote to Alan Taylor & Associates in respect of issues that the engineer was required to address. 10The plaintiff carried out investigations into the defects and, in due course, provided a detailed written report to the first defendant, Mr Noel Bayliss. The report was dated 17 January 2008. In it, certain defects were identified, some of which were said to have been of a structural nature. It is noted at this point that Mr Bayliss, following his purchase of the premises, subsequently commenced proceedings in the Consumer Tenancy & Trading Tribunal (CTTT) against the builder of the premises. The report provided by the plaintiff was commissioned for the purposes of the proceedings by Mr Bayliss against the builder in those proceedings, Glinway Pty Limited. 11The report was also to be used in a possible home warranty insurance claim. Mr Bayliss, however, asserted that the insurance claim would only have been made when the outcome of the CTTT claim was known. 12In the report, the plaintiff identified defects and quantified rectification work, the total estimate of which, including and GST, was specified in the report to be $158,320.42. 13On 20 February 2008, the plaintiff issued an invoice in respect of the work undertaken by the plaintiff. There was no response to the invoice and the plaintiff then commenced proceedings against Mr Bayliss in the Local Court in May 2008. 14The application was made to the CTTT on behalf of Mr Bayliss' wife, Mrs Judith Fay Bayliss, who was the registered proprietor of the property. The Tribunal heard the application on 25 and 26 August and on 13 October 2008, and made an order that Glinway Pty Limited pay Mrs Bayliss the amount of $3,000. I will refer below to particular statements and findings recorded in the Reasons for Decision of the CTTT.

[7]

(a) The claim and defence 23The proceedings before the Local Court at Forster were heard on 10 September 2009, 11 November 2009 and 4 April 2010. 24Subsequent to the hearing, written submissions were provided by the first defendant, Mr Bayliss. It will be necessary to refer to certain aspects of the written submissions lodged by the first defendant with the Local Court following completion of the hearing. 25The decision of the Local Court was given on 31 May 2010. 26The learned magistrate recorded the plaintiff's claim and noted that the amount of the claim initially included the sum of $2,516.80 in respect of Mr Alan Taylor's costs for preparing an engineer's report. That report was incorporated into the report provided by the plaintiff. The Magistrate noted that the amount the of the plaintiff's claim, which included the engineer's fees was altered so as to eliminate the balance owing to Mr Taylor. The effect of this was to reduce the plaintiff's claim to an amount of $8,828.97. Accordingly, it was this latter amount which was in issue before the Local Court. 27Mr Bayliss filed an Amended Defence and a Further Amended Defence (20 April 2009). It is necessary to refer to the amended pleading by reason of the issues raised on the hearing of this appeal. 28The Further Amended Defence dated 20 April 2009 contained seven paragraphs which were in the following terms:- "1. The Defendant denies owing the Plaintiff the amount alleged in the Statement of Claim, or any amount at all. 2. The Defendant admits that the Plaintiff and Defendant entered a contract for the Plaintiff to write a building inspection report upon his dwelling ('the report') but denies authorising the Plaintiff to engage any third parties on his behalf. 3. The Defendant alleges that the Plaintiff has already been paid the amount due to him for the work performed for the Defendant and denies that the Plaintiff has reasonably been engaged in preparing the report for the time alleged in his itemised tax invoice dated 20 February 2008. 4. The Defendant alleges that the Plaintiff's Fee Schedule and Agreement dated 28 November 2007 is in breach of section 18K(5) of the Home Building Act 1989 (NSW) ('the Act'). Consequently, pursuant to section 18R of the Act the Plaintiff is not entitled to enforce the contract or to enforce any other remedy against the Defendant. FURTHER AND IN THE ALTERNATIVE 5. The Defendant alleges that the Plaintiff performed work outside the scope of its instructions for which the Plaintiff is not entitled to charge the Defendant. 6. The unauthorised work done by the Plaintiff caused the Defendant's claim in the Consumer, Trader & Tenancy Tribunal to be diminished by the sum of $155,000. 7. The Defendant alleges that the work performed by the Plaintiff at the Defendant's request was unsuitable, inaccurate and deficient in content such that it was rejected as reliable evidence in proceedings numbered HB 07/63020 in the Consumer, Trader & Tenancy Tribunal."

[9]

(c) The issue as to a contract and Exhibit 1 35The Magistrate in his decision stated:- "... Central to this question is the document which was tendered by the plaintiff as annexure 'A' to his statement (Exhibit 1). This document provides the particulars of the plaintiff, including the qualifications not only of the company, but also of Ken Collins who is described as the 'Senior Principal'." 36The document, being Exhibit A, the Fee Schedule & Agreement, then sets out the rates at which the customer is to be charged for various services the plaintiff is able to provide. 37The Magistrate also noted that in Exhibit 1 there was provision for a quotation of the projected costs which were to be identified from "your preliminary advice as to the nature and extent of services required" . His Honour noted that in that document that word "unknown" was inserted. He then observed:- "... This was the subject of considerable dispute during the hearing as it was the contention of the defendant that that particular portion of the document was left blank which is contrary to the plaintiff's recollection on this point. The document then provides for the client (that is, Mr Bayliss) to acknowledge having 'read and understood the fee/cost structure and agree to pay the fees of Integral Buildings Investigations for all work undertaken and our/my behalf ..." 38This portion of the form, it was noted, had been signed by the defendant on 28 November 2007. 39In relation to the first question referred to in [34] above, the Court below determined that there was no doubt that Mr Bayliss had acknowledged the existence of a valid contract. In those circumstances, his Honour then stated that the issue was whether the plaintiff could enforce the contract. This raised the question as to the requirements of the Home Building Act 1989. 40The Court also noted that there was an issue was to "... whether the unauthorised matters published in the schedule relevant to asserted accreditations of the plaintiff impact on an assessment of the credit of the plaintiff when determining which of the competing versions concerning the lodgement of the HWI claim should be accepted" (paragraph 9).

[11]

(e) The defence under s.15K and s.15R fails 43The Magistrate determined that the work fell outside the definition contained in s.3(1). He noted that Regulation 4 of the Home Building Regulation 2004 provided:- "For the purposes of the definition of building consultancy work in subsection (3)(1) of the Act, all work other than pre-purchase visual inspection of a dwelling or any part of a dwelling is declared to the excluded from the definition." 44The Magistrate, accordingly, determined that the contract work between the plaintiff and the defendant did not fall within the definition of building consultancy work. Accordingly, the provisions of s.15K and s.18R were held not to apply. 45In relation to the representations as to the plaintiff's qualifications, the Magistrate referred to the various document setting out the licences that had been held by Mr Collins over the years. A finding was then made (at [18]):- "... The collective effect of these documents is that they fail to provide any authority for either Pool Data Systems Pty Limited or Mr Collins acting in his capacity as senior principal of the company to do the kind of work he purported to contract for with the defendant. I believe, in the light of these licensing restrictions which should have been well-known to Mr Collins as of the date he initially met the defendant, there is ample evidence to support the view that Mr Collins was acting in a knowingly deceptive manner in his negotiations with the defendant." 46The Magistrate also made adverse findings in relation to the quality of the report provided by the plaintiff. In this respect, reference was made to the (at[20]):- "... wildly inaccurate forecast contained in the plaintiff's report cannot and should not be overlooked. Effectively, the report was considered to be in error to the extent of 98%. There can be no doubt that the defendant was entitled to rely on the plaintiff to provide services, which included accurate forecasting, which would assist in his application to the CTTT. The [sic] plainly did not occur. It is reasonably open to find that the plaintiff failed to provide professional services of the legal it represented it was capable of." 47The decision went on to refer to the adverse quality of the report as reflected in comments that had been made by the CTTT in file HB 07/63028. In paragraph [21], it was said:- "... The functionality of the report and the quality of the conclusions reached in the report do not enjoy the same positive comments:- 'It (the plaintiff's report) had the ring of an ambit claim about it and, for example, calculated cost of repairs from Cordell's, which can be unrealistically high for domestic cottage work, particularly in country areas where overheads are significantly lower.'" 48The Magistrate went on to note that the chairperson of the CTTT was openly critical of the report, particularly in relation to the basis of the calculations of costs.

[12]

(7) The plaintiff's report 49The 25 page report dated 17 January 2008 stated (p.1):- "I acknowledge your instructions per telephone on 28 November, 2007 to inspect your dwelling to determine the veracity of your claim that there are defective works which are the responsibility of the builder and to prepare a report upon any defect found with costings for the remedial works." 50The report records that an inspection of the dwelling took place on 28 November 2007 and Mr Bayliss indicated to the author aspects of the dwelling which he considered were defective. The report then details a number of aspects, including the following:- (1) Front entry steps - demolition of the steps and rebuilding was recommended by way of remedial work. (2) Patio (north side) - 10 movement cracks were said to have been identified across a narrow section of varying widths. None exceeded the "fine but noticeable" category as defined in the relevant standard. However, it was said in the long term, expansion/contraction influence upon the slab in at least one section exacerbated appearance. (3) Patio (west side) - no cracking was evident, but it was said that its long-term capacity to perform under intensive live load was a serious question. There was no basis stated to support that proposition. It was also stated that the construction did not comply with the relevant Guide to Residential Floors. Demolition of the existing patios was recommended and relaying the slabs to both patios incorporating joints and reinforcement. (4) Steps from driveway to patio (east end) - there was a statement that "these steps will be damaged" and that they would almost certainly sustain some damage during the replacement of the patio. Application of new finishes was recommended. (5) Steps from pavement up to rear porch landing - it was stated that the precast slab which formed the second step had moved and cracking was evident. There was also some damage to the pavement floor of the steps which required repair. (6) Eaves soffit over patios - Comment was made that the fibrous cement sheeting forming the eaves lining was improperly installed without adequate framing support. All sheets were said to sag downwards to varying degrees. Remedial work was said to involve removal of existing sheeting above the patios and supplying and installing replacement material. (7) Drainage across north elevation - a deep sub-soil drain had been installed. It was recommended that excavation be undertaken at the base of the sub-soil drain and remove any pipe and backfill. (8) Northern patio brick wall support - the brick dwarf wall supporting the outer edge of the northern patio in the section west of the front entry steps was said to require some buttressing. (9) Piers within the sub-floor - erosion was said to have occurred to the surface of a sub-floor area. This had caused the footings of several of the piers situated mid-way up to the slab to be undermined. Remedial work suggested excavation for 12 new concrete support footings and the installation of galvanised steel columns to support the floor frame and to demolish existing brick piers. (10) Driveways - cracking was said to be visible and said to be the result of inadequate movement control jointing. Remedial work involved relaying both driveways to proper standards. (11) Shower floors - there were two shower stalls installed in the main bedroom and en suite. There was said to be no fall towards the drainage outlet. Remedial work was said to involve removal of the floors, reproofing the membrane and laying new tiles. (12) Window and sliding door captures - adjustment, modification or replacement of some faulty latches was recommended. 51The estimated rectification costs were stated in the report (p.24) in the amount of $158,320.42. 52The report contained a number of annexures, details of which need not here be specified.

[15]

(b) The issue of the quality of the report 61In the written submissions for the plaintiff, it was observed that the Further Amended Defence had been relied upon in which it had been pleaded that responsibility for payment of the plaintiff's fees was challenged on the basis "... that the report was unsuitable because it was not accepted by the CTTT" : Plaintiff's Outline of Submissions at [34]. 62In support of this ground, the following matters were relied upon:- (1)The Magistrate's reasons did not contain an analysis of what terms comprised the contract other than the reference that the report was to identify faults of the premises and provide a fully costed scope of works for rectification. (2)There was no evidence that it was an express term of the contract that the plaintiff was only entitled to be paid if the report was accepted by the CTTT. (3)Accordingly, the only basis for a finding that the contract contained such a term was if the term was an implied one. 63The outline of submissions for the plaintiff then referred to relevant authorities on the question of the implication of terms into a contract. It was submitted that it could hardly be said that, where an expert was required to prepare a report for use in litigation, it would be necessary for the effective operation of the contract of retainer to imply that the plaintiff was only entitled to payment if the report was accepted by the CTTT. 64Accordingly, the submission was that the Magistrate had made an error of law in (impliedly) finding that there had been an implied term of the contract that the plaintiff was only entitled to be paid if the CTTT accepted the report: Plaintiff's Outline of Submissions at [39]. 65In further support of the contention that the decision under appeal involved a question of law, it was argued that the statement of the Magistrate at [22] that there was "total absence of appropriate and claimed expertise utilised in the analytical portion of the judgment" was so against the evidence that no person acting judicially and properly instructed could have made such a finding: Plaintiff's Outline of Submissions at [42]. 66In relation to the finding that the report was "wildly inaccurate" this was said to involve an implied assertion (at [21] of the Magistrate's reasons) that the plaintiff had not acted in accordance with his instructions. The bases for the Magistrate's criticism in this respect was said to be the statement that the plaintiff had gone further than Mr Bayliss had claimed in seeking to cost the repairs. Reference was made to the Magistrate's statement that there was no basis that Mr Bayliss had been extreme in any of his demands or dealings with the plaintiff. 67Further, there was criticism by the Magistrate that the plaintiff had utilised a calculation table in Cordell's which was inappropriate for a residential dwelling. 68It was argued for the plaintiff that these matters amounted to an adverse finding against the plaintiff that was not open on the evidence. Furthermore it was submitted that the finding was directly inconsistent with the only express finding as to the term of the contract between the plaintiff and the defendant in [16] of the Magistrate's decision. 69In summary, the Magistrate's finding as to deliberate misrepresentation criticised upon the basis that it was founded on an incorrect understanding that the plaintiff was required to hold a licence to undertake the work. That was said to be without foundation and constituted an error of law. The finding was also challenged on the ground that there was no evidence to support a finding of deliberate misrepresentation concerning the plaintiff's qualifications to prepare the type of report required. 70It was further contended that the Magistrate erred in finding, in effect, that there was a term of the agreement that the plaintiff was only entitled to be paid if the report was accepted by the CTTT. That asserted to amount to an error of law. The finding that the report was "wildly inaccurate" was also criticised on the ground that it was erroneously based on a reading of the decision of the CTTT being one that no person acting judicially and properly instructed could have made: Plaintiff's Outline of Submissions at [49]. 71In addition, it was said that there was no evidence to support the finding that there was a total absence of appropriate and claimed expertise concerning the analytical portion of the report and no evidence to support the finding that the plaintiff had acted beyond the scope of his instructions.

[17]

(11) The defendants' submissions 74Mr Bayliss relied upon undated written submissions entitled Defendant's Outline of Submissions which were supplemented by his oral submissions. 75His submission was that the plaintiff had conducted business as a building consultant which was well beyond the scope of the authority of his licence. He contended that the plaintiff was classified only as a swimming pool builder and not as a licensed home builder. 76Mr Bayliss submitted that, when he first telephoned Mr Collins, he asked if he was a licensed home building inspector to which Mr Collins answered in the affirmative. 77According to Mr Bayliss, on 28 November 2007, he provided Mr Collins with a spreadsheet which had 12 items listed on it which he described as "really bad faults to be looked at ..." . He said he then conducted an inspection of the premises with Mr Collins pointing out each of the "faults" maintaining that they had occurred through bad construction by the builder. 78Mr Bayliss stated that he had himself worked as a construction carpenter in heavy industry at a cement works. He, accordingly, relied on his knowledge from the building/construction industry. 79Mr Bayliss relied upon correspondence with the builder, Glinway Pty Limited, in which he set out 11 items which he claimed were the result of defective building work. The letter was dated 11 July 2007. It is clear from the correspondence that Mr Bayliss was strongly pressing allegations of defective workmanship and asserting an obligation in the builder to rectify the particular faults listed in his letter. 80Allegations were also made as to overcharging. Specific matters were set forth in support of the contention including the assertion that no material had been produced to support the actual hours asserted for the purposes of the preparation of the tax invoice. In the latter submissions, it was contended (pp.2 to 3):- "... That the evidence by the plaintiff [sic] witnesses is contradictory and unconvincing in relation to the key question as to whether the Plaintiff is entitled to be paid such a large sum for the preparation of an expert report on building defects at the Defendant's home." 81The submissions also addressed the issue as to what is termed the "scope of work" . It was said that this was an issue that took up a large amount of time at the hearing in the Local Court. This section of the submissions included the contention that the defendant never agreed to pay the plaintiff at a rate for what is described as "ancillary or additional work" . 82The submissions contain additional contentions in respect of Mr Grieve's report and the evidence in respect of "insurance work" , the reasons of the CTTT, the home owners warranty claim and the issue concerning the engineer's fees. 83In respect of the CTTT's findings, it was contended (p.5):- "These findings are very clear in their reasoning and are not findings that the defects did not exist but rather that are findings that the Report that the Plaintiff prepared for the Defendant was unconvincing due to the form it took and the scale of costing used. This outcome only serves to further support the defence assertion that the Plaintiff has no right to claim such exorbitant fees for work which was rejected as accurate and reliable expert opinion in any event."

[23]

(f) The issue as to the quality of the plaintiff's report 96The report of the plaintiff dated 17 January 2008 attached estimated costs of rectification based on the Cordell Housing Building Cost Guide (March 2006) together with plant materials and plant hire and GST totalling $158,320.42. 97The CTTT rejected the claim as assessed by the plaintiff and awarded Mrs Bayliss compensation on a limited basis in the amount of $3,000. In addition, it also made an order that the builder was to complete the certain work specified, namely, rectification on the en suite shower and the eaves lining. 98On the basis that the CTTT allowed only approximately 98% of the total amount as assessed in the plaintiff's report. The Magistrate in his decision referred to the report as having contained what was termed "... the wildly inaccurate forecast contained in the plaintiff's report" . He stated that that inaccuracy could not and should not be overlooked. He said "... effectively, the report was considered to be in error to the extent of 98%" and a little later, "... it is reasonably open to find that the plaintiff failed to provide professional services of the level it represented it was capable of" (at [20]). 99The Magistrate also considered that use of the Cordell reference work was inappropriate as it did not apply to a residential property in a regional area. In paragraph [22], the final conclusions were expressed in the following terms:- "On this basis, I come to the conclusion that the plaintiff has induced the defendant to enter into a contract by a deliberately false and unauthorised representation of its qualifications. I also find that the quality of the report is, at best, questionable, in that it has been demonstrated to be wildly inaccurate in its final analysis of costings and there has been a total absence of appropriate and claimed expertise utilised in the analytical portion of the report." 100In relation to this paragraph, I make the following observations:- (1)The question of the inducement of a contract by deliberately false etc representation as to qualifications was a finding outside the pleadings as discussed above. The plaintiff was not given the opportunity of dealing with an allegation of that nature. (2)As earlier discussed, the finding was made in breach of procedural fairness requirements. However, the finding having been made, the Magistrate did not express any conclusion as to the significance of it in determining whether the contract was vitiated or whether it went to enforceability or went to some other matter. (3)The second point is that, as argued on behalf of the plaintiff in the present proceedings, the finding of "a wildly inaccurate" report insofar as the costings were concerned, did not accurately reflect certain of the matters which led the CTTT to the conclusion that underpinned the orders made by the Tribunal in favour of Mrs Bayliss. 101The CTTT report referred to the assessment as having the ring of "an ambit claim about it" and provided as an example the cost of repairs based on the Cordells reference work which was unrealistically high for domestic cottage work, especially in country areas. 102That, however, by itself would not warrant the description of the report's assessment as being "an ambit claim" . That said, there was in the evidence a basis for criticism of the actual cost estimates. I will return to this aspect below. No greater significance could be attached to it in terms of the "ambit claim" matter. 103On the costings in the report, in the part of the CTTT's decision entitled "Adjudication" , the Tribunal indicated that it took the following approach:- "I do not think that the home owner can insist that the home should be in all respects as shipshape as it should have been at the date of the final inspection." 104The claim for sub-floor piers, a substantial part of the cost rectification estimate, was held not to be recoverable. However, this was not based upon any inadequacy in the plaintiff's report. Underpinning the rejection of the claim was the premise that the condition of the property, at the date of purchase by Mrs Bayliss, would have reflected the then condition of the dwelling including any defects. The claim for compensation was not to proceed upon the basis that the homeowner was entitled to have the house restored to the condition that it was in when it was completely new. 105The Tribunal in this respect noted that the assessment made by Mr Collins that there were in fact defects present in the piers had support from the engineer, Mr Alan Taylor. In addition, there was also support from Mr Simpson who had been retained by the home owners warranty insurer. 106Finally, there was no criticism of Mr Collins' identification of problems or defects with the pier and the need for rectification. The question was whether it was a compensable fault. 107The Tribunal said, "This is one of the most difficult aspects of the claim" . A little later and in conclusion, the Tribunal said:- "It is a close run thing and the burden of proof lies on the applicant, but even giving due relative weight to the expert reports, I do not find, that, this is a compensable fault." 108That component of the assessment made of rectification costs, namely, sub-floor, was in the amount of $24,838.11. 109The claim for the verandah slabs was dismissed on the basis that there was no significant cracking evident and that the plaintiff's estimate of rectification was made upon the basis that both slabs might deteriorate in the future. The amount claimed for verandah concrete slab rectification was substantial, namely, an amount of $29,207. 110The plaintiff had assessed that item, driveway cracking, in the amount of $32,681. The amount of $2,000 only was allowed by the Tribunal. This was said to be upon the basis of a finding that the defects were chiefly cosmetic. I note that Mr Collins' assessment of cracking had some support from Mr Simpson who agreed that there was cracking but that it was due to "normal shrinkage" and was not defective. Mr Taylor, however, said that the cracking was due to excessive joint spacing. 111The Tribunal's conclusion on this item, therefore, was that the extent of cracking did not justify complete removal and replacement of the driveway. 112The remaining items detailed by the Tribunal in its decision do not need here to be detailed. I have referred earlier to one of these items, namely, defects in the showers, was partly successful and an allowance made.

[24]

(13) Errors of law 113The issue in the present proceedings is whether or not the findings made by the Magistrate demonstrate an error or errors of law. 114The Magistrate's findings in paragraph [22], are, in my opinion, erroneous in the following respects:- (1)The finding to the effect that Mr Bayliss was induced to engage the plaintiff by deliberately false and unauthorised representation as to the plaintiff's qualifications. This finding was a finding made in breach of the principles of procedural fairness in that that had not been raised as an issue in the Further Amended Defence and the plaintiff had no opportunity to deal with it. The finding was, accordingly, erroneous in law. (2)The adverse findings in relation to the quality of the plaintiff's report. 115Even accepting that, for the various reasons referred to above, the CTTT awarded only $3,000 as against the total of the estimated costings ($158,320) that does not mean that there was a total failure of consideration or that the report was without utility or benefit to Mr Bayliss. 116Although Mrs Bayliss recovered only a small amount of her claim in the Tribunal, there was no basis for a finding, in effect, of a total failure of consideration by the plaintiff or that the report was valueless. In the Reasons for Decision of the CTTT, it is clear that:- (1)The report was accepted as having identified various defects in the premises. (2)The Tribunal stated that some of the alleged defects were matters which must have been present "from the outset" , although there was no specification as to what defects were referred to. This did not, however, reflect adversely on the fact that such defects existed and were properly identified. (3)The plaintiff's report was described by the Tribunal as "comprehensive, well presented ..." . (4)In relation to one of the major items, sub-floor piers, the plaintiff's report had support from the engineer, Mr Taylor. (5)As to whether or not the claim in respect of "sub-floor piers" should be accepted, the Tribunal said it was "a close run thing" , thereby acknowledging that the plaintiff's report did identify a real issue for consideration. (6)In respect of several other items, whilst the report was accepted as having correctly identified defects, the Tribunal did not agree that complete removal and replacement with new structures was a reasonable basis for assessing compensation. 117Accordingly, insofar as the report proposed rectification in respect of certain items, the Tribunal was not convinced that it was reasonable to award compensation on the basis of total replacement. Issues as to reasonableness as to remedial or rectification work is commonly a matter which the Tribunal must assess. A rejection of cost estimates does not render the whole report and services in producing it of no value. 118The criticism made as to the costings, however, falls into a different category. The use of the Cordell Housing Building Cost Guide was, at least on the material before the Tribunal, inappropriate and at least in that respect represented a valid criticism of the report. 119In summary, it was not established in the Local Court that the plaintiff's report was valueless or that the services rendered in investigating and assessing defects were of no benefit to Mr Bayliss. 120The learned Magistrate's finding as to the quality of the report was clearly related to the opinion expressed that the amount of $2,000 paid by the defendant to the plaintiff "... to be adequate to compensate the plaintiff for its costs in attending to the preparation and lodgement of the claim" (at [23]). 121There was no express explanation in the Magistrate's judgment as to the basis for determining that the plaintiff was only entitled to an amount of $2,000. There was no basis for the conclusion, which was implied in the judgment of the Local Court, that the plaintiff was not entitled to any remuneration for services rendered in inspecting, investigating and assessing defects in the dwelling. The implicit finding and conclusion of the Local Court to the effect that the plaintiff's services, apart from those associated with attending to the preparation and lodgement of the claim, were valueless was one which, in my opinion, constitute an error of law in that it was one that no person acting judicially and properly instructed as to the relevant law and facts could have made. For reasons which I have elsewhere stated, the evidence did establish the provision of investigating and reporting services of value by the plaintiff to the defendant for which it was entitled to remuneration upon the charges or rates agreed.

[25]

(14) The alternative bases for the plaintiff's claim in the Local Court 122A close examination of the evidence establishes that there was no formal or written contract which embraced all the terms of a contractual arrangement between Pool Data Systems and Mr Bayliss. 123In relation to the claim pursued in the Local Court, the following matters are noted:- (1)In the Statement of Claim which was filed in the General Small Claims Division of the Local Court, the claim was styled as "Professional services rendered to the Defendant by the Plaintiff at the Defendant's request between November 2007 and January 2008 at Tallwoods Village". The claim then included particulars, inter alia, in respect of "... to prepare a written building defects reports upon his dwelling". (2)The formal particulars to the Statement of Claim stated that the plaintiff relied upon:- (a)A Fee Schedule & Agreement dated 28 November 2007 entered into between the parties "... and verbal instruction thereafter " (emphasis added) (a copy of the Fee Schedule & Agreement was appended and marked "A"). (b)The claim in accordance with or under the Fee Schedule & Agreement was particularised as being the amount of ($10,829.97 less an amount of $2,000 paid leaving a balance of $8,829.97). (3)The claim pleaded in the Statement of Claim, accordingly, proceeded upon two bases. First, the Fee Schedule & Agreement dated 28 November 2007. Second, verbal instructions made thereafter. (4)The Fee Schedule and Agreement specified various fees to be charged in respect of various items of work and related matters. It did not, however, specify either the nature, scope or the extent of the services to be provided nor did it provide any estimate of a fee range. As noted above, the word "unknown" was written in to the agreement. (5)Mr Collins made a statement dated 4 July 2008 which was relied upon for the purposes of the Local Court proceedings. Paragraph 5 of that statement made clear that, subsequent to the "agreement" , he then set about investigating aspects of the dwelling which Mr Bayliss had nominated as possibly being defective. On 3 December 2007, Mr Collins recommended the engagement of the engineer (Alan Taylor & Associates). That firm provided an engineering report on 14 January 2008. (6)Mr Collins continued his investigations, without there being evidence of an express oral or written agreement between the parties prior to him producing his report on 17 January 2008. Accordingly, the parties essentially proceeded upon an informal arrangement in relation to which there had been no discussion or agreement upon the terms and conditions relating to the nature and scope of work or the total cost. 124A letter written by Mr Collins to Alan Taylor & Associates dated 3 December 2007 indicates that initially Mr Bayliss wished to have the matter taken up by the Office of Fair Trading and, subsequently, there was a change of decision and direction to make an application to the CTTT. In the last-mentioned letter, Mr Bayliss wrote to Alan Taylor & Associates (Annexure C to the statement of Mr Collins dated 4 July 2008, being Exhibit C to the affidavit of Mr Morris sworn in the present proceedings on 21 September 2010):- "He [referring to Mr Bayliss] made a complaint to OFT HBS regarding the builders (who had failed to do anything) but they were unable to assist as their licence had lapsed about mid-2006. He was told he needed an expert's report and to make an application to CTTT. They also said he should act with some urgency as the builders were about to wind up and deregister the company. Hence, this is where we came in." 125Accordingly, the evidence established that Mr Collins and Mr Bayliss proceeded upon an unspecified basis. The evidence indicates that they both proceeded upon the basis that Mr Collins would continue to make investigations into the nature of the defects with the benefit of engineering advice without any agreement as to the nature or scope of the work to be undertaken. 126The evidence therefore indicates that the informal arrangement under which the plaintiff rendered services to Mr Bayliss involved either an implied agreement between the parties or that the work was performed in response to the verbal request of Mr Bayliss thereby providing a claim on a quantum meruit basis. 127In the Plaintiff's Outline of Submissions filed in these proceedings on 10 December 2010, Mr Price set out the basis of the claim in the following terms:- "20. The statement of claim sought the recovery of outstanding fees for work performed by the Plaintiff at the request of the Defendant. That claim raises the legal issue as to whether there was an agreement between the parties, or alternatively, whether the Plaintiff was entitled to compensation for work performed for the benefit of the Defendant, namely a quantum meruit." 128On the evidence, I am of the opinion that the proper construction of the arrangement between the plaintiff and the defendant, Mr Bayliss, was that, after the Fee Schedule & Agreement was signed on 27 November 2007, the plaintiff provided its services at the oral request of Mr Bayliss without any express agreement upon the terms as to the scope of work to be undertaken by the plaintiff including the preparation of the "Estimates of cost for reconstruction" . In those circumstances, the plaintiff's claim was one which, in my opinion, was to be properly assessed on a quantum meruit basis but upon the rates and charges agreed on 27 November 2007. 129The conclusion expressed in the preceding paragraph is relevant in determining whether the plaintiff had made out a case before the Local Court for payment of fees in respect of services rendered in the amount of $8,829.97 in accordance with paragraph [52] of the Plaintiff's Outline of Submissions or whether the plaintiff was entitled to judgment but only in respect of a lesser amount. 130A quantum meruit claim is only sustainable in the absence of a contract between the parties in respect of the relevant services: Lumbers v W Cook Builders Pty Limited (in liq) [2008] HCA 27; (2008) 232 CLR 635 at [79] and Darkinjung Local Aboriginal Land Council v Darkinjung Pty Limited (in liq) [2010] NSWCA 351 at [32] per Tobias JA. As I have earlier stated, beyond agreement of rates, the work was performed on an informal basis. 131It is clear from the decision and orders of the CTTT that the Tribunal concluded that the costings advanced by the plaintiff in its report were well outside any reasonable range, in particular, by reason of the matters to which I have earlier referred (in particular, the use of the Cordells Cost Guide, the cost estimates of the sub-floor ($24,883.11) and cost estimate for driveways ($32,681.02) and the verandah concrete slab ($29,207)). 132The evidence confirms that Mr Collins undertook a detailed inspection of the relevant parts of the dwelling and prepared a detailed account of the defects in his report. It is clear that the plaintiff's report, as earlier discussed, properly identified defective workmanship. Certain of the conclusions in the report had some support from both Mr Alan Taylor and Mr Simpson. 133Mr Bayliss' payment of the amount of $2,000 towards the plaintiff's costs is itself some evidence pointing towards the fact that the report was perceived by him to have had some value. 134Finally, by the plaintiff agreeing to undertake the investigations and provide an assessment of the defects, there is no basis for concluding that those services were subject to a condition that payment of fees were dependent upon the plaintiff's assessment ultimately being accepted by the CTTT.

[26]

(15) What entitlement does the plaintiff have for services rendered? 135The report of Mr Grieve dated 19 September 2008 which was in evidence before the Local Court (Exhibit 13), reviewed the charges made by the plaintiff. It is to be noted that the report considered the plaintiff's claim in terms of services provided in two respects. The first related to the investigation and assessment of defects. The second related to the making of cost estimates. The following matters are noted:- (1)The hourly fees, in accordance with the Fee Schedule & Agreement of $195 per hour plus GST was accepted as reasonable. (2)In relation to services rendered in investigating the defects and the provision of a building report which, Mr Grieve observed, "... I am instructed did not include costing" . Mr Grieve's assessment as to the costs for the building report on the basis of 17.55 hours at $195 per hour together with disbursements and GST. Mr Grieve assessed the amount for these services at $4,205.50 (p.4). 136Mr Grieve's assessment was based upon the plaintiff's activity statements and other documents identified in his report. 137The second aspect examined by Mr Grieve related to costing estimates for rectification work. This was said to be in relation to "... the making of claims and the instructing and interaction with the engineer ..." (Mr Grieve's report, p.4). Mr Grieve, on the basis of material supplied to him, assessed the fees for the latter services at $6,624.47. 138In relation to the services for investigating and assessing defects, it is clear, for reasons stated above, that the plaintiff was entitled to fees for such services and that Mr Grieve's assessment established that $4,205.50 was an appropriate amount. That amount ought to have been awarded by the Local Court to the plaintiff as fees to which it was entitled in respect of the last-mentioned services rendered at the request of Mr Bayliss. 139The second area (services in undertaking the costings for rectification work) is more controversial (that is to say, fees in respect of the additional items involving services in respect of costings amounting to $6,624.47). It was the costings analysis which was based on a number of doubtful premises, as exposed by the Tribunal's report. Certain of the defects which, it was stated to be surface defects, did not warrant complete replacement of existing structures (including the driveway area). The costings included in the plaintiff's report, on the evidence, appeared to be excessive and which explain the low level of compensation awarded by the Tribunal in the sum of $3,000 (together with the work rectification order). 140In these proceedings, the question is whether or not, on an appeal such as the present, it is for this Court to determine the quantum of compensation in respect of the claim for costings in the amount of $6,624 either on a quantum meruit basis or otherwise or whether the proceedings must be referred back to the Local Court for an assessment of that aspect of the claim. 141Referral back to the Local Court would be an undesirable course. The matter, as earlier indicated, have had a long and chequered history. The claims for defective work against the builder went to the CTTT. The claim instituted by the plaintiff in the Local Court against Mr Bayliss was submitted to arbitration followed by a full three day hearing in the Local Court and then followed the hearing in this Court, all in respect of a claim involving a comparatively modest amount. The costs associated with all proceedings must, by now, overshadow the claim itself. 142On the cost estimates made by the plaintiff, the evidence tendered before the Local Court included the reasons for decision of the CTTT. Those reasons, as earlier discussed, contained critical comments in relation to the plaintiff's assessment in respect of the claim based on the estimated costs of rectification. Some, but not all, of those criticisms have merit. Whilst Mr Grieve's report stated, as a matter of calculation, the claim for the services rendered in respect of the costings was estimated at $6,624, that opinion was expressed upon the underlying assumption that the costings had been properly and competently made. That underlying assumption, however, on the evidence before the Local Court, was not made out. 143This raises the question as to how this Court, on an appeal pursuant to the Local Court Act can determine the proceedings in terms of the power vested in it to make the orders as specified in s.41(1) of the Local Court Act to which I have earlier referred. 144In Pacific Asia Express Pty Limited v Renegade Gas Pty Limited [2010] NSWSC 1188, the Court (Rein J) discussed the powers of this Court in relation to appeals brought under the Local Court Act including, in particular, the power under s.41(1) of that Act. There, his Honour referred to the decision of the New South Wales Court of Appeal in Thaina Town (On Goulburn) Pty Limited v City of Sydney Council (2007) 71 NSWLR 230 in which Spigelman CJ observed:- "This Court must be concerned that the course of administration of justice in this State does not impose unnecessary cost burdens on parties by adopting a narrow interpretation of statutory powers conferred upon the Court to ensure the just and efficient administration of justice. Where no new findings of primary fact are required to be made, this Court should exercise a power conferred upon it in wide terms so as to ensure that the cost of legal disputation is minimised and thereby apply the guiding principle in s.56 of the Civil Procedure Act 2005 to the exercise of powers conferred by an Act other than that Act or by Rules of Court, so as to facilitate the just, quick and cheap resolution of the issues in dispute in civil proceedings. 145In Pacific Asia Express (supra), Rein J referred to the powers that this Court has pursuant to s.75A of the Supreme Court Act . That section confers wide powers in an appeal to the Court including power in respect of "the assessment of damages and other money sums" : s.75A(6)(c). See also s.75A(1). 146For this Court to determine the quantum of fees to which the plaintiff is entitled does not require it to make primary findings of fact. The evidence before the Local Court (which included the reasons for decision of the CTTT) provides a basis upon which an evaluation of fees payable can be made. The evidence before the Local Court established:- (1)That the plaintiff's cost estimates for rectification totalling $158,320 was unreasonably having retard to the matters discussed above. (2)That the cost estimates in respect of substantial items did not identify the bases upon which the defects would justify the complete removal of existing structures and replacement on a "new for old" basis. (3)The services rendered by the plaintiff in respect of making cost estimates can be seen to have been deficient in producing an excessive valuation. 147The principles for assessing what is a fair and reasonable amount by way of payment for work performed are well established. The assessment of value of work performed is a question of fact to be determined with regard to all the relevant circumstances. In the normal case this will involve an assessment of the reasonable cost of the benefit provided. This value will include, in the case of the provision of services, the appropriate charges, hours of work and whether or not the evidence (in this case before the CTTT and the Local Court) indicate "... Any deficiencies in the work, whether by omission or by defective workmanship" : Halsbury's Laws of Australia at [65-1270], Assessment of Quantum ; Riverside Motors Pty Limited v Abrahams [1945] VLR 45. 148In relation to the measure of recovery on a quantum meruit claim, the usual or normal basis for measuring such a claim is the objectively reasonable value of the services: Halsbury's Laws of Australia at [29.1.166]. 149Based on the evidence before the Local Court, I consider that fees in the amount of $2,500 should be allowed for the cost estimates in lieu of the claim of $6,624. 150I, accordingly, assess the plaintiff's entitlement in respect of services rendered by it to the defendant upon the following bases:- (1) Services for investigating, assessing and reporting on building defects $4,205.50

POOL DATA SYSTEMS PTY LIMITED v BAYLISS & ANOR

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Judgment (30 paragraphs)

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