Reeves v Bennett [2007] NSWSC 1265 | Case summary

JUDGMENT 1 HIS HONOUR: The plaintiffs carry on business in partnership. Mr William Reeves ("Mr Reeves") is a licensed builder and a family friend of the first and second defendants (the defendants). The defendants are mother and son. 2 The defendants had contemplated the purchase of a property at Picton ("the property"). There was also a contemplation that, if the property was purchased, a part of it (which has been described as "an outdoor area") would be converted into a sitting room for the son (which has also been described as Daniel's TV room). It was further contemplated that other work would be done on the property. 3 Prior to the purchase, Mr Reeves made an inspection of the property. A building report was obtained (from Mr Benad). A copy of it was given to Mr Reeves. The building report recommended that the structure on the property be checked with Council to ensure that there had been Council approval. 4 The defendants entered into a contract to purchase the property. MLG Conveyancing were engaged to handle the transaction on their behalf. An inquiry was made by them of the vendor concerning the matter of Council approval. Inquiries were then made of the Council. Council advised that there had been, inter alia, approval for an awning. The purchase was completed on 21 August 2003. 5 At the time of the completion of the purchase, the outdoor area comprised more than just an awning. Other work had been done subsequent to the approval for the awning. 6 An agreement was reached between the plaintiffs and the defendants for the doing of work on the property (including work to be done in respect of the outdoor area). There was no written agreement. Work was done on what has been referred to as a "do and charge" basis. Mr Duncombe was engaged as the certifying authority. 7 Work on what has been referred to as the structure was completed. On 6 April 2004, Mr Duncombe attended the property and made an inspection. There had been a problem of leaking water in respect of the gyprock roofing. Following the inspection, it became known that the awning only had been erected with Council approval and that there was no prospect of approval of the structure for habitable purposes. The defendants were then facing a demolition order. 8 The other work done by Mr Reeves was also completed. Part payment of the amount claimed by Mr Reeves had been made and there was an issue concerning the arrears of his claim. All of these matters were resolved. The only matter left in dispute was the work done in respect of the outdoor area. 9 Proceedings were brought by the defendants in the Consumer, Trader and Tenancy Tribunal ("the Tribunal"). In essence, the defendants brought a claim for damages founded on breach of contract. The matter proceeded to a hearing. The parties were legally represented. The hearing extended over about one and a half days. The defendants and Mr Reeves gave evidence. The defendants called two experts (Messrs Adams and Salerni). The plaintiffs relied on the evidence of Mr Duncombe. 10 The Tribunal member (Mr Bordon) found in favour of the defendants. The plaintiffs were ordered to pay the sum of $55,500. 11 The Tribunal delivered written reasons for the decision ("the reasons"). I shall now refer to certain of the contents thereof. 12 After a presentation of the respective cases of the parties and an analysis of the evidence, two findings were made. The Tribunal Member rejected "the submission that it was for the applicants to obtain Council approval rather than the builder" and a finding was made that the agreement was subject to the warranties in s18B of the Home Building Act 1989 (NSW) (the HBA). The warranties (a) to (f) thereof were then set forth. 13 The reasons continued, inter alia, with the following:- "The building works have been performed in a defective manner. In particular, the result has been a structure which does not conform to the Building Code of Australia for a habitable room. The applicants are entitled to rely on the builder to ensure that the works conform and have the requisite council approval. The present works cannot be said to have been performed in a proper and workmanlike manner nor can it be said that the works were done in accordance with and will comply with the Home Building Act 1989 or any other law. As indicated, I have accepted the evidence of Mr Adams and Mr Salerni where such evidence is in conflict with the evidence adduced by the respondents. … In the present case it may be that the builder's motivation was to attempt to achieve a certain result, 'Daniel's TV room', at a budget which was acceptable to the Bennetts. It is quite probable that what was required for a habitable room to be constructed could never be achieved for the amount paid by the Bennetts. The fact remains that this is what the contract between the parties, determined objectively, was, when one examines the works which were agreed upon and the discussions between the parties. On balance I accept the evidence of Judith Ann Bennett in this regard as corroborated by Daniel James Bennett. In short, Daniel's TV room was to be part of the house not a Class 10(a) awning or some other exempt structure. It was to be a habitable room which conformed with Council requirements and the Building Code of Australia. What has been achieved does not amount to this. To achieve conformity with the contract would require the respondents to pay the costs of demolition and rebuilding. I note that the applicants claim a total sum of $67,159.00. This appears to include the costs of the original amount paid and attributed to the work done to achieve 'Daniel's TV room'. I cannot see the basis for this. The costs of demolition and reinstatement will put the Bennetts in the position which the contract requires. I note that the costs of demolition and rebuilding are not in dispute. A question which had been raised in submissions (by implication at least) is whether in all the circumstances the costs of making the works conform to the contract while necessary are also reasonable." 14 There seems to be a consensus between the parties that the Tribunal Member came to a decision which saw the importing into the agreement of a contractual term (that the plaintiffs were obliged to ensure that the outdoor area conformed to the Building Code of Australia for a "habitable room" and that there was the requisite Council approval). There seems to be no dispute that a clear finding was made that the structure did not so conform and accordingly there was breach of the term. 15 However, when it came to addressing the question of breach the Tribunal Member seems to have dealt with it ostensibly in terms of breach of the warranties implied by s18 B of the HBA (rather than as expressly a breach of the contractual term). He appears to have so treated the breach as being in the nature of defective performance of building works and as a transgression of warranties (a) and (c).

16 The Tribunal Member then assessed damages in a quantum that flowed from an agreement that had been reached between the parties. He accepted the evidence given by the experts for the defendants that the most cost effective approach was to demolish the awning and all additions and then rebuild a new structure. 17 The plaintiffs have brought an appeal against the decision of the Tribunal. The appeal was heard on 7 November 2007 and the parties were legally represented. The legal representatives relied on written submissions, supplemented by oral argument. 18 The plaintiffs contend that they are entitled to relief pursuant to s67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) ("the Act"). This provision enables a challenge where the Tribunal decides a question with respect to a matter of law. 19 It might be thought that attempts to identify the ambit of the challenge enabled by this provision have been less than satisfactory. The ambit does not equate to the avenue of challenge provided by error in point of law. There has to be a decision of a question and the question has to be with respect to a matter of law. There is authority for the view that the reference to "a matter of law" contemplates what is described as "a pure question of law". It does not embrace matters such as erroneous findings of fact, lack of supporting evidence for a finding or complaints as to the sufficiency of reasoning process. 20 The plaintiffs rely on what was said in Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456. The judgment of Hodgson JA contains the following:- "[33] Accordingly, in my opinion, to establish an error of law by the Senior Member, it was necessary to show that he applied a wrong principle of law. That could be shown either from what he said, or because the ultimate result, associated with the facts that he expressly or impliedly found, indicates that he must have applied the wrong principle of law." 21 Broadly speaking, by the time of the making of the oral submissions, three areas of challenge to the decision of the Tribunal remained alive. Much that was said in the written submissions fell outside the ambit of the appeal. 22 Firstly, it is said that there was error in the importing of the contractual term. The thrust of this attack in the written material seems to be that this finding was either against the evidence or that it lacked supporting evidence or was made without giving sufficient reasons. Even if it be assumed that such an error had been made (and I am not persuaded that this is the case), I do not consider that any such error would assist the plaintiffs in this case. The challenge brought by them does not fall within the ambit of s67. 23 I do not accept the oral submission that the contractual term was imported erroneously by reason of statute or other law. It seems to me, that the reasons make it clear that what the Tribunal Member regarded as being the agreement was reached having regard to the nature of the works and the discussions that took place between the parties. 24 The second area of challenge is related to the finding that the building works had been performed in a defective manner. 25 The plaintiffs emphasise that there was no allegation that any item of the work was said to be performed in a defective manner and that what was found was breach of the imported term. There was a question of whether or not that finding would fall within the scope of either warranty. 26 Whilst the observation of the Tribunal Member may have been better expressed, the substance of the breach he had in mind was one of breach of the imported term. Whether or not such a breach falls within the scope of warranties (a) or (c) may be debateable. Be that as it may, I do not consider that what has been said on their behalf assists the plaintiffs in this case. 27 The onus borne by the plaintiffs is to demonstrate an error that falls within the ambit of the appeal and which justifies the disturbing of the decision. In respect of this area of challenge, I am not satisfied that any error would justify the taking of that course. 28 The defendants say that what was found by way of breach would fall within the warranty implied by (f) of s18B. That may well be so. Be that as it may, as earlier observed, the substance of what was done was to find a breach of the contractual term and this entitled the defendants to damages that flowed from such breach. 29 The final area of challenge concerns the quantification of the damages. It was said that it conferred a "betterment". Whilst what is put on behalf of the plaintiffs may have some initial appeal, it does not bear close analysis. I am not satisfied that there was error and/or that there was application of wrong legal principle. 30 What was done to bring about the sitting room involved substantial demolition work. It had brought about a situation in which the claimed costs of demolition and rebuilding involved the most cost effective measure to address the problem. 31 The measure of damages adopted was supported by the evidence of the experts (save for that of Mr Duncombe, whose evidence on the matter was not accepted). The assessment itself was founded on an agreement made between the parties, which formed part of a statement of admitted facts. It had in mind the agreement as found by the Tribunal Member. 32 In my view, the onus borne by the plaintiffs has not been discharged. Accordingly, the appeal should fail. 33 The summons is dismissed. The plaintiffs are to pay the costs of the summons. **********

Reeves v Bennett

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