Project 4301 Pty Ltd v Buildcarp Constructions Pty Ltd

NCAT Appeal Panel|2022-05-30

Solicitors: Tom Howard Legal (Appellant) New South Lawyers (Respondent) File Number(s): 2022/77025 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 17 February 2022 Before: D Goldstein, Senior Member File Number(s): HB 21/02938 and HB 21/10258

Introduction

This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal on 17 February 2022.
The Tribunal's decision concerned applications brought by the appellant (the owner) and the respondent (the builder) under the Home Building Act (NSW) 1989 (the HB Act), in relation to a contract for the construction of a dual occupancy building in regional New South Wales. In the owner's application (HB 22/02938), the owner sought an order for payment of $499,000. In the builder's application (HB 21/10258), the builder sought an order for payment of $188,710.

Relevant provisions of the contract

Relevant to that part of the Tribunal's decision which is under appeal are specific clauses of the contract between the parties, which is a standard form NSW Fair Trading contract, dated 19 November 2018.
Clause 5 of the contract provides for the commencement of work. Clause 6 states that the contractor was to bring the work to completion within 30 weeks from the commencement date. The Tribunal found and it is not in issue in the appeal proceedings that the start date was 3 December 2018 and the works were required to reach completion by 1 July 2019.
Clause 8 of the contract deals with completion. It states: The work will be complete when the contractor has finished the work in accordance with the contract documents and any variations, there are no omissions or defects that prevent the work from being reasonably capable of being used for its intended purpose, any damage of the kind referred to in Clause 19 has been repaired and all rubbish and surplus material has been removed from the site. When the contractor believes the work is complete the contractor must notify the owner in writing certifying that the work has been completed in accordance with this contract. Within 10 business days of receipt of written notice from the contractor, the owner must advise the contractor in writing of any items of work the owner considers to be incomplete or defective. If the owner does not so notify the contractor the work will be taken to be complete. The contractor must complete any outstanding work promptly and again notify the owner in writing. Unless the owner notifies the contractor in writing that any item is still incomplete or defective within a further 10 business days from receipt of notification by the contractor the work will be taken to be complete. Should there be any dispute between the parties as to whether the work has been completed it must be dealt with in accordance with the dispute resolution procedure (Clause 27).
In respect of the damage relevant to the first paragraph of clause 8, clause 19 states: The contractor shall be liable to the owner for any damage to curbs, gutters paving, underground services, drains, structures or other property on the site caused by the negligence or default of the contractor, any employee or subcontractor of the contractor as a consequence of carrying out the work.
Clause 15 of the contract deals with final payment. It states: When the work is complete in accordance with Clause 8 the owner must pay the amount remaining unpaid under the contract. Payment must be made in the manner specified in Clause 14. If the amount is not paid interest in accordance with Clause 14 applies. On receipt of the final payment the contractor must hand over to the owner all keys relating to the work, together with any certification or approval which may have been provided by any public authority relating to the work.
Clause 14 relevantly provides: When the contractor gives the owner a written claim for a progress payment or other amount due under the contract the owner must pay, unless the owner notified the contractor in the manner stated below the amount of the claim within 5 business days of receipt of the claim (which must not be less than 5 business days). However the preceding sentence is subject to any contrary terms or conditions specified in clause 12. If the owner disagrees that the contractor is entitled to be paid a progress claim or other amount due under the contract, the owner must notify the contractor in writing within 5 business days of receiving the claim setting out the reasons for that disagreement. If there is any dispute between the parties relating to a payment under the contract it must be resolved according to the dispute resolution procedure set out in Clause 27. If the owner fails to pay the amount of a claim in part or in full by the due date and fails to give notice disputing the claim to the contractor interest at the current bank rate as defined in Clause 30 will be payable to the contractor only amount outstanding for the period of the due however if the owner gives notice of dispute in accordance with the dispute resolution clause clause 27 interest at the current Bank rate will only be payable if the dispute is resolved in favour of the contractor and shall be calculated from the time when payment would have otherwise been due
Clause 28 of the contract provides: If the contract requires or permits a party to give a notice, consent, or other communication in writing to the other party, it must be given by either - handing it to the other party - leaving it with a person apparently over the age of 16 at the other party's business or residential address or - by registered post to the last known address of the other party
A special condition in the contract deals with the agreement of the parties in respect of liquidated damages, which are not otherwise provided for in the contract. The liquidated damages clause states: Liquidated Damages $103 per calendar day calculated on a daily basis if the building works do not reach practical completion by the end of the building period the owner is entitled to liquidated damages for each calendar day after the end of the building period to and including the earlier of: (a) the date of practical completion; (b) the date this contract is ended or; (c) the date the owner takes possession of site or any part of site.
The Tribunal found and it is not in dispute in the appeal proceedings that there was an agreement to increase the daily rate of liquidated damaged to $309 per day from 5 May 2020.

The Tribunal's reasons for decision

The Tribunal's reasons for decision (the reasons) were published on 17 February 2022. As noted above, the Tribunal's order was amended on 13 April 2022.
In relation to the completion issue, the Tribunal did not accept the builder's contention that a Notice of Practical Completion dated 14 January 2021 (which was an exhibit to an affidavit of Mr Younan dated 6 April 2021) was served on the owner. However, the Tribunal nevertheless found that practical completion was reached on 11 January 2021. The Tribunal stated at [86] of its reasons for decision (the Reasons) that it made that finding based on: 1. The builder's evidence that it completed all work under the contract and the New South Wales Fair Trading rectification report by 11 January 2021; 2. The email evidence that the builder informed the owner on 13 and 18 January 2021 that the job was complete, which the Tribunal found was confirmatory of the matters in (1); 3. The builder's notice of practical completion dated 14 January 2021, although not served on the owners, was also confirmatory of the matters in (1); and 4. The handovers.com inspection report dated 6 April 2021 that stated both units had achieved Practical Completion. The Tribunal inferred that on 6 April 2021 the site and works were in the same state that they were on 11 January 2021, as the contractor had ceased work as it was of the view that practical completion had been reached.
The Tribunal used 11 January 2022 as the completion date to calculate the liquidated damages it found were payable to the owners. The Tribunal found that the builder was liable for liquidated damages from 2 July 2019 to 11 January 2021, a period of 557 days.

Scope and nature of internal appeals

Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) NCAT Act.

Submissions and evidence

In deciding the appeal, we have had regard to the following:

The Notice of Appeal lodged on 17 March 2022;
The Reply to Appeal lodged on 28 March 2022;
The amended grounds of appeal lodged on 5 May 2022;
The appellant's written submissions dated 28 April 2022;
The respondent's written submissions dated 25 May 2022;
The joint bundle (JB) lodged on 26 May 2022;
The Tribunal's reasons for decision;
The procedural directions made at callover;
The applications to the Tribunal;
The oral submissions made on behalf of the parties at the appeal hearing; and
An email from the owner's solicitor received on 14 June 2022 which sets out the correct calculation of damages in the event that the appeal is allowed or allowed in part.

Notice of Appeal

The Notice of Appeal was lodged on 17 March 2022, which is within the 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules). The appeal was therefore lodged in time.

Grounds of Appeal

The amended grounds of appeal are: 1. The Tribunal made a legal error in failing to interpret "practical completion" where appearing in the additional condition of the contract congruently with clause 8 of the contract; 2. In failing to interpret practical completion congruently with clause 8 to the facts as found, the Tribunal made a legal error in determining that the works were practically complete on 11 January 2021 and should instead have found that the works were not complete within the meaning of clause 8 of the contract; (2A) Alternatively to grounds 1 and 2, in concluding that practical completion was achieved as at 11 January 2021, the Tribunal made a legal error in failing to take into account that the respondent had not installed ducted air conditioning through the duplexes and in floor hearing to bathrooms in both duplexes. 3. In failing to find that the works were not complete within the meaning of clause 8 of the contract the Tribunal made a legal error in determining that the respondent was entitled to be paid the balance of the contract price and interest. 4. The Tribunal made a legal error in failing to give adequate reasons whether the respondent's Progress Claim 5 and Final Claim were in fact served. 5. Alternatively to grounds 1 to 4, in calculating interest payable on the respondent's Progress Claim 5 and Final Progress Claim, the Tribunal made a legal error in failing to take into account that the amount payable under the contract was $41,715.67.

Grounds 1, 2 and 2A: Interpretation of clause 8 of the contract / Date of practical completion

The central issue to be determined in the appeal in respect of Grounds 1, 2, and 2A is whether the Tribunal erred in finding that the works had achieved practical completion as at 11 January 2022.
The owner's position is that the Tribunal erred in failing to find that the works had not achieved "practical completion" for the purposes of the liquidated damages clause unless the works were "complete" for the purposes of clause 8 of the contract. The respondent's position is that the Tribunal did not err in construing "practical completion" for the purposes of the liquidated damages clause.
It is not in dispute that the proper construction of a contract raises a question of law.

Owner's submissions

In summary, the owner submits that: 1. The Tribunal should have construed "practical completion" in the liquidated damages clause as "coextensive with the first paragraph of clause 8 because it gives a single, congruent definition of when works under the contract are in a state to be handed over to the owner so that other clauses of the contract (such as the balance of clause 8, clause 15, clause 23 and the liquidated damages clause) can operate coherently and with certainty". 2. The Tribunal's interpretation of practical completion means that it is possible for works to be practically complete for the purposes of the liquidated damages clause but not complete for the purposes of clause 8 of the contract, which "gives rise to operational incoherence and inconsistency". First, the works could be considered practically complete (and the owner would not have an entitlement to liquidated damages) even if the builder has not completed the works in accordance with the contract documents and variations, damage has not been repaired and rubbish and surplus material has not been removed from the site. Second, the works may be considered practically complete for the purposes of the liquidated damages clause without the builder being entitled to a final payment under clause 15 because the works are not complete for the purpose of clause 8. This means that the owner would have neither an entitlement to liquidated damages nor entitlement under clause 15 to be handed over all guarantees, instruction manuals, certificates and the like. Third, if practical completion for the purposes of the liquidated damages clause is interpreted differently from the first paragraph of clause 8, the works may be considered practically complete and liquidated damages cease to accrue, but the defects liability period would not yet have commenced in accordance with clause 23 of the contract. This would be irregular in a construction contract.

Respondent's submissions

In summary, the respondent submits that: 1. The use of the term "complete" in clauses 8 and 15 of the contract must be a separate and distinct concept from the phrase "practical completion". 2. Whether to construe practical completion as including repair of damage of the kind caused by clause 19 and removal of rubbish and surplus material from the site does not result in a more favourable outcome for the owner as there is no evidence to suggest that rubbish or surplus material had not been removed or that there was damage to kerbs, gutters, paving, underground services, drains, structures or other property on the site caused by the negligence or default of the builder as a consequence of carrying out the work.

Conclusion concerning Grounds 1 and 2

The principles relevant to construction of a contract are not controversial. They can be summarised as follows: 1. Determination of the rights and obligations of parties to a contract is undertaken objectively. The key consideration is "what each party by words and conduct would have led a reasonable person in the position of the other party to believe": Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [40]. 2. The primary duty of a Court or Tribunal when construing a written contract is to ascertain the legal meaning of a document "from the words of the instrument in which the contract is embodied": Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36 per Gibbs J. 3. A Court or Tribunal undertaking this task must consider the language used by the parties, the circumstances addressed by the contract and the objects which it is intended to secure. An appreciation of the commercial purpose of the contract requires an understanding of the genesis of the transaction, the background and the market: International Air Transport Association v Ansett Australia Holdings Ltd (2008) 82 ALJR 419 [2008] HCA 3 per Gleeson CJ at 423 [8]. 4. Although context and the surrounding circumstances known to both parties can be taken into account even in cases where there is an absence of apparent ambiguity, a Court or Tribunal is not permitted to depart from the ordinary meaning of the words used by the parties merely because it regards the result as inconvenient or unjust: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 per Gibbs J at 109. 5. The interpretation of a written contract involves ascertaining the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract: Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 per Gleeson CJ, Gummow and Hayne JJ at 188.
We note that the owner's points of claim describe it as a "company primarily concerned with property development": JB page 1. From this we conclude that the contract between the parties was a contract between commercial parties, rather than what might otherwise be described as a consumer contract. In the context of a commercial contract - in this case, a contract to construct a dual occupancy building which from the evidence before the Tribunal the owner intended for rental or sale - the contract is to be construed by asking what a reasonable businessperson would have understood the relevant terms to mean, and requires consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract: Electricity Generation Corporation v Woodside Energy Ltd; (2014) 251 CLR 640 at 656; [2014] HCA 7 at [35].
The Tribunal noted that "practical completion" was not defined in the contract and defined the term as follows: 84 …. I find that the term 'practical completion' meant when the works reached the condition when there were no omissions or defects that prevented the works from being reasonably capable of being used for its intended purpose.
This definition of practical completion is not controversial. On the contrary, it is the definition of that term set out in s 3B(2) of the HB Act. We see no error in the Tribunal defining practical completion in this manner.
Taking into account the decision of these commercial parties to use a term with a specific definition in the HB act, not otherwise defined in the contract, the term "practical completion" in the liquidated damages clause should not be interpreted as having the same meaning as "complete" for the purposes of clauses 8 and 15 of the contract. The standard form Fair Trading residential building contract the parties used does not provide for liquidated damages. The liquidated damages clause was an additional clause the parties agreed to. The use of the term "practical completion" rather than "completion" in the clause indicates that the parties chose to limit their entitlement to and liability for liquidated damages respectively to the stage at which practical completion had been reached and not to completion of the works for the purposes of clauses 8 and 15. That meaning of the term also fits the commercial nature of the contract, as the owner's loss caused by delay could be expected to cease, or at least be significantly ameliorated, once the property was reasonably capable of being used for its intended purpose.
In our view, this interpretation accords with ordinary principles of contractual construction. The parties, having agreed on the wording of the liquidated damages clause can be presumed to have done so on the basis that "practical completion" in the context of building works, does not have the same meaning as "completion". We consider that "practical completion" would convey a different meaning from "completion" to a reasonable business person having the background knowledge reasonably available to the parties in the situation in which they were at the time of the contract.
We conclude that the Tribunal did not err in interpreting "practical completion" in the liquidated damages clause in a manner different from "completion" in clauses 8 and 15.
In the alternative to the owner's position regarding the interpretation of practical completion in the liquidated damages clause, the owner argues that the Tribunal erred in finding that the works achieved practical completion on 11 January 2022.
The amended notice of appeal asserts that the Tribunal erred in making this finding because as at 11 January 2021 the air conditioning and underfloor heating in ensuite bathrooms had not been installed. We reject this argument. Many residences have neither air conditioning nor underfloor heating in ensuite bathrooms. The lack of air conditioning and underfloor heating in ensuite bathrooms would not prevent the building from being reasonably capable of being used for its intended purpose as at 11 January 2021. The fact that the installation of underfloor heating would require the demolition of ensuite bathrooms does not alter our conclusion in this regard.
In oral submissions, the owner claimed that it was not open to the Tribunal to find that practical completion was reached on 11 January 2021 because the water service had not been connected and one of the residences did not have a gas meter connection. The owner argued that the Tribunal's finding that practical completion was reached on 11 January 2021 was unreasonable in the Wednesbury sense; that is that the decision was so unreasonable that no reasonable decision maker would make it.
To find that the Tribunal's decision was unreasonable in the Wednesbury sense would require, as Lord Greene MR stated in Associated Picture Houses Limited v Wednesbury Corporation [1948] 1 KB 223 at 230, 'something overwhelming'. In Marrickville Metro Shopping Centre Pty Limited v Marrickville Council [2010] NSWCA 145, Tobias JA referred to the Wednesbury formulation in the following terms at [104] - [106]: Finally, as her Honour noted at [115], in Murrumbidgee Groundwater Preservation Association Inc v Minister for Natural Resources [2005] NSWCA 10; (2005) 138 LGERA 11 Spigelman CJ, with whom Beazley JA and myself agreed, stated at [129]: "Perhaps the most appropriate formulation [of Wednesbury unreasonableness] is whether the decision is 'illogical, irrational or lacking a basis in findings or inferences of fact supported on logical grounds". This formulation was adopted by myself in Westfield Management Ltd v Perpetual Trustee Co Ltd [2006] NSWCA 245 at [71]. It was also adopted and applied by myself, with the agreement of Mason P and Hodgson JA, in Notaras v Waverley Council [2007] NSWCA 333; (2007) 161 LGERA 230 at [122]. In Notaras I cited (at [124]) [31] of the judgment of Biscoe J in Save Our Streets Inc v Settree [2006] NSWLEC 570; (2006) 149 LGERA 30 where His Honour drew a distinction between a decision which the court considers is unreasonable and a decision which the court considers is so unreasonable that no reasonable body could have come to it. The latter required "something overwhelming": Minister for Immigration and Multicultural Affairs v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at [44]. In Wednesbury itself, Lord Greene MR at [229] referred to the relevant unreasonableness as "something so absurd that no sensible person could ever dream that it lay within the power of the authority". In Bromley London Borough Council v Greater London Council [1983] 1 AC 768 at [821], Lord Diplock defined Wednesbury unreasonable decisions as those which "looked at objectively, are so devoid of any plausible justification that no reasonable body of persons could have reached them". In Puhlhofer v Hillingdon London Borough Council [1986] UKHL 1; [1986] 1 AC 484 at 518, Lord Brightman said that the unreasonableness must be "verging on an absurdity".
We do not accept that the Tribunal's finding that practical completion was reached on 11 January 2022 is unreasonable in the Wednesbury sense. The evidence before the Tribunal indicates that the water meter was connected, albeit paid for by the owner: see JB page 26 at [86.c]. In relation to the gas meter connection, the evidence before the Tribunal was that the gas meter had been connected to one of the residences, but not the other. The owner's post hearing submissions refer to the gas meter connection to one of the residences (JB page 1241 at [77]) in the context of incomplete work, but do not argue that the absence of a gas meter to one of the residences means that the works had not reached practical completion.
In our view, the argument that the Tribunal erred in finding that practical completion occurred on 11 January 2022 because of the lack of installation of one gas meter is an attack on finding of fact for which leave to appeal is required. Leave to appeal has not been sought. If it had been sought, we would have declined to give leave to appeal on this ground, as we are not satisfied that a basis for doing so has been established in accordance with the principles set out in Collins v Urban [2014] NSWCATAP 17 at [84].
Grounds 1, 2 and 2A fail.

Grounds 3, 4 and 5 - Payment claim 5 and final payment claim / adequacy of reasons / interest on final payment

The Tribunal calculated the amount to be paid to the owner in a table at [96] of the reasons, finding that the balance of the contract price was $41,715.67. The Tribunal subtracted that sum from the amount it found was owed by the builder to the owner ($110,542.00) in order to find the amount payable by the builder to the owner ($68,826.33).
In relation to interest, the Tribunal stated: 97 The above amount does not make an allowance for interest which is claimed by the contractor and which is allowed by the contract, clause 14. I find that the contractor's progress claims 5 and its final claim were not paid by the owner in accordance with the contract, enlivening the contractor's right to interest. The amount of $13,153.33 has been calculated by counsel for the contractor. I will deduct that amount from the balance found due to the owner. I will make an order in the owners favour in the sum of $55,673.00.

Owner's submissions

In summary in relation to Ground 3, the owner's position is that the builder was not entitled to the balance of the contract price and interest because the works were not complete. In relation to Ground 4, the owner also submits that the Tribunal did not consider or give adequate reasons in relation to whether the builder served Progress Payment Claim 5 and the Final Claim.
In relation to Ground 5 the owner submits that the Tribunal's calculation of interest was incorrect. The builder agrees that this is the case. The parties are agreed that interest (if payable) should have been calculated on $41,715.67 resulting in a reduction of $2,907.65.

Builder's submissions

In summary, the builder's position in relation to Ground 3 is that the owner has not articulated an error of law and repeats the arguments it made in response to Grounds 1, 2 and 2A. In relation to Ground 4, the builder's position is that in written submissions to the Tribunal, the builder submitted that while the owner had denied the builder's witness Mr Younan's evidence that the relevant tax invoices were served on 3 March 2021, the owner could not deny having received them on 6 April 2021 when Mr Younan's evidence was served. The builder submits that no issue was taken with this submission in the owner's submissions in reply and that the criticism of a failure to give adequate reasons arises substantially if not completely from the owner's failure to contest that the relevant tax invoice was not effectively served on 6 April 2021. The builder submits that to the extent that the Tribunal's reasons are inadequate, this arises from the owner's failure to inform the Tribunal that the issue of service of the invoice remained in contest. The builder further submits that any failure to give adequate reasons is not material.

Conclusion in relation to Grounds 3, 4 and 5

The Tribunal did not give reasons for the builder's entitlement to payment of Payment Claim 5 and the Final Payment Claim or for the builder's interest claim. Further, the Tribunal did not make a finding as to whether the relevant claims were served on the owner.
We reject the builder's submission that the Tribunal did not give reasons because the owner did not take issue with the submission that the owner could not deny having received the pay claim as an attachment to Mr Younan's 6 April 2021. The owner's submissions in reply clearly indicate that the owner did not accept the builder's submission in this regard. In submissions in reply (at JB page 103), the owner states: 28. The Builder has no entitlement to interest because the Builder, for the reasons set out in the Owner's earlier submissions, does not have any entitlement to be paid because it has not completed the works for the purposes of clause 8 of the Contract and the entitlement to be paid has not yet arisen. Further, in response to [13.1(a)] of the Builder's submissions [that is, that the builder served the tax invoices were served on 3 March 2021], the Owner repeats mutatis mutandis the submissions made above in relation to the certificate for practical completion. The fact that the tax invoices have been included in the evidence for this proceedings does not mean that they have been served in accordance with the Contract. In fact, the terms of clause 28 are categorically against such a submission
In New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 the Court of Appeal (per Bell P), set out the principles relevant to adequacy of reasons at [66] - [77]. In Volkswagen Group Australia Pty Ltd v Saad [2022] NSWCATAP 133 at [58] the Appeal Panel helpfully summarised these principles as follows: 1. The function of the appeal court is to determine not the optimal level of detail required in reasons for a decision but rather the minimum acceptable standard. 2. The quantity (or detail) of reasons, necessary for those reasons to be adequate may vary both with the nature of the decision maker, i.e. whether or not it is a court or tribunal, and, if the latter, possibly the type of tribunal, and the nature of the question being decided. 3. As to the quality of reasons, it is generally accepted that the sheer volume of work undertaken by tribunals is such that a perhaps more relaxed standard of review of reasons is appropriate than may be the case when an appellate court is hearing an appeal from another court. 4. Even in the less formal setting of a tribunal there are certain minimum characteristics that a Tribunal's reasons must possess. These are supplied, in relation to the Tribunal, by s 62(3) of the NCAT Act which, requires there to be set out in reasons (when requested by a party): (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, and (c) the reasoning processes that lead the Tribunal to the conclusions it made. 5. At least a basic explanation of the fundamental reasons which led the Tribunal to its conclusion is necessary. 6. It is not necessary for a judge to detail each factor which he or she has found to be relevant or irrelevant. Nor is a judge required to make an explicit finding on each disputed piece of evidence. It will be sufficient if the inference as to what is found is appropriately clear. 7. Reasons need not be elaborate. 8. Expression of conclusions in a certain sequence does not indicate a failure to consider the evidence as a whole. 9. The court should not read passages from the reasons for decision in isolation from others to which they may be related. 10. The reasons must be read fairly and as a whole. 11. The reasons recorded ought not to be inspected with a fine tooth-comb attuned to identifying error. 12. There should be a degree of tolerance for looseness in the language of the Tribunal, unhappy phrasing of the tribunal's thoughts or verbal slips.
In general terms, the Tribunal's reasons for decision are detailed and thorough. However, in respect of the issues concerning the amount payable to the builder and interest, we conclude that the Tribunal failed to give adequate reasons. From the owner's submissions in reply, the builder's entitlement to payment and interest clearly remained in dispute. While the Tribunal found that the owner had not paid the relevant payment claims, it did not find that the payment claims had been given and if so, how this occurred. Further, the Tribunal did not explain why the builder was entitled to payment. The Tribunal therefore failed to make findings on material questions of fact and failed to set out the reasoning processes that lead it to the conclusions it made.
Ground 4 is therefore established. In these circumstances, it is unnecessary for us to make specific findings in respect of Ground 3. Because Ground 4 was successful, it is unnecessary to consider Ground 5.

Reconsideration of builder's claim

We have reconsidered the builder's claim in accordance with s 81(1)(d) of the NCAT Act. In doing so, we have considered relevant material contained in the JB, including the affidavits of Ms How for the owner and of Mr Younan for the builder and the parties' written submissions.
We conclude that the builder has not established an entitlement to payment and therefore has not established an entitlement to interest.
In relation to this, we are not satisfied that the builder served Payment Claim 5 and the Final payment claim. Clause 14 of the contract requires a payment claim to be made in writing. We consider a payment claim to a "communication" for the purposes of clause 28 of the contract. Such a "communication" must be given by handing it other party, leaving it with a person apparently over the age of 16 at the other party's business or residential address or by sending it by registered post to the other party's last known address.
In his affidavit dated 6 April 2021 (JB page 702), Mr Younan states at [42]: 42. On 3 March 2021 I caused progress claims 5 and 6 (final) to be issued to the Owner…
While the invoices are exhibited at page 64 of the affidavit (JB page 777), there is nothing in either Mr Younan's affidavit or in the Exhibit which deposes to how the payment claims were given to the owner and in particular that they were given in accordance with clause 28 of the contract. In those circumstances, we are not satisfied that the payment claims were given to the owner on 3 March 2021 in the manner prescribed by the contract.
As noted previously, the owner denied having received the invoices. In response to this, the builder submitted that the owner could not deny receiving the invoices on 6 April 2021, when Mr Younan's affidavit was served. We reject this submission. In our view, compliance with the method of service specified in clause 28 of the contract was mandatory. The use of the work "must" in the clause makes that clear.
As we are not satisfied that Payment Claim 5 or Payment Claim 6 were given to the owner in accordance with the contract, we are not satisfied that the invoices were payable by the owner in accordance with clause 14. As we are not satisfied that the invoices were payable, it follows that the builder is not entitled to interest.
This does not mean that the builder is precluded from giving Payment Claims to the owner in accordance with clause 28. Further, in the event that the builder does not comply with the Tribunal's work order and the owner successfully seeks damages in renewal proceedings, any amount outstanding under the contract would presumably be credited against any damages awarded to the owner.

Conclusion

At our request, the parties sent us their agreed calculations of the amount to be awarded to the owner, depending on the outcome of the various grounds of appeal. These calculations were set out in an email dated 14 June 2022 from the owner's solicitor. The email relevantly states: 1. If the homeowner loses each Grounds 1, 2 and 2A, then the money order to be made in the homeowner's favour is $110,542.00 less any amounts determined in accordance with points (3) and/or (4) below. 2. If the homeowner wins either of Grounds 2 or 2A, then the money order to be made in the homeowner's favour is $252,167 less any amounts determined in accordance with points (3) and/or (4) below. 3. If the homeowner wins either of Grounds 3 or 4, then no deduction is applied to the amounts in (1) or (2). 4. If the homeowner loses both Grounds 3 and 4, then a deduction of $44,623.32 (comprising the amount held by the member at first instance to constitute the balance of the contract sum ($41,715.67), plus $2,907.65 on account of Ground 5 which has been conceded by the builder) is to be made against the amounts in (1) or (2) above.
As the appeal was unsuccessful in relation to Grounds 1, 2 and 2A, but was successful in relation to Ground 4, it follows that we will make an order for the builder to pay the owner $110,542.00.

Costs

As the amount in dispute in the appeal exceeds $30,000 the operation of rule 38A of the Rules means that rule 38 applies to costs and the ordinary principles as to costs apply without the need for special circumstances to be found: cf. NCAT Act, s 60.
The appeal fails on the grounds which concern liquidated damages and succeeds on a ground which concerns payments to the builder.
In James & Ors v Surf Road Nominees Pty Limited & Ors [No 2] [2005] NSWCA 29 the Court of Appeal stated that: 34 Where a matter involves multiple issues and the question before the court is whether it should make some other order as to costs other than the order that costs follow the event, a distinction is commonly drawn between cases which involve clearly discrete issues for determination, and those in which all issues are inseparable, or at least sufficiently linked, with respect to the overall disposition of a particular matter. In Permanent Trustee Aust Ltd v FAI General Insurance Co Ltd (unreported, NSWSC, 3 June 1998), Hodgson CJ in Eq noted that the obvious examples of a matter involving discrete issues is one where a plaintiff makes separate claims for different relief, or a claim by a plaintiff and a cross-claim by a defendant. Another example is where a respondent is successful in having an appeal against an earlier decision dismissed, but for reasons other than those raised in the respondent's Notice of Contention. This is not to say that so-called "discrete issues", for the purposes of apportioning costs, only exist in cases where there are separate claims made within a single matter. As Toohey J stated in the passage quoted at [33] above, it can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter. 35 In Madden v Connell [2001] NSWSC 1051, Hamilton J referred to there being a "rule" that where there are "discrete issues and the time taken on each issue at the hearing can be identified or realistically estimated", an order for costs may be made against the party which fails on such issues, or alternatively, that party may be deprived of its costs for that portion of the matter. In the Court's opinion it is preferable not to speak in terms of "rules". However, the underlying approach to the "rule" stated by his Honour may be an available approach to the exercise of the court's discretion as to costs in a particular case, depending upon all of the circumstances.
In our view, the two central issues raised by the grounds of appeal were relatively discrete. They took up roughly equal time. The owner was successful in respect of one issue and the builder was successful in respect of the other issue. In these circumstances, we consider the most appropriate exercise of the costs discretion is that the parties pay their own costs of the appeal.
However, as we have not heard from the parties on the issues of costs, we have made orders which apply in the event that either party seeks a different costs order.

Orders 1. The appeal is allowed in part. 2. Order 1 made on 17 February 2022 (as amended on 13 April 2022) in HB 21/02938 and HB 21/10258 is set aside. 3. In substitution for order 1, the following order is made: Buildcarp Constructions Pty Ltd must pay Project 4301 Pty Ltd $110,542.00 immediately. 1. The parties are to pay their own costs of the appeal proceedings. 2. If either party seeks a different costs order, order 4 above ceases to have effect and the following orders apply: 1. The party seeking a different costs order (the costs applicant) is to file and serve evidence and submissions in support of the different costs order within 14 days of the date of publication of these orders. 2. The costs respondent is to file and serve any evidence and submissions in response to the application for a different costs order within 14 days thereafter. 3. The costs applicant is to file and serve any material in reply within 7 days thereafter. 4. The parties are to indicate in their submissions whether they agree that the costs application can be determined on the basis of the written material provided. 5. In the event that both parties seek a different costs order, they are to file an indexed and paginated consolidated bundle of submissions, in hard copy, at the end of the submission period.

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

Amendments 22 December 2022 - Respondent's representation corrected. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 December 2022

(2007) 161 LGERA 230

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