This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 against a decision a home building dispute which was made in the Consumer and Commercial Division of the Tribunal on 27 April 2020.
For the reasons set out below, we have decided to dismiss the appeal.
[2]
Background and procedural history
By a contract dated 15 August 2018 (the "Contract") the respondent agreed to construct a granny flat for the appellants at premises at Blacktown for the sum of $129,000. The Contract was in the form issued by Fair Trading NSW, revised 2018, and headed "Home building contract for work over $20,000".
Work under the Contract commenced on or around 19 September 2018.
Disputes between the parties arose almost immediately. Some were resolved by agreement between the parties, but many were not. A substantial degree of acrimony developed between the parties which was reflected in emails and other material tendered in evidence to the Tribunal at first instance.
On 17 November 2018 the respondent commenced proceedings in the Tribunal against the appellants (HB 18/49235). In those proceedings the respondent alleged that the appellants had repudiated the Contract, it had accepted that repudiation and terminated the Contract. The respondent claimed damages for the repudiation of the Contract, or alternatively, damages for breach of cl 19 of the Contract (a clause dealing with access to the site and materials handling).
Six days later, and by email dated 23 November 2018, the first appellant purported to terminate the Contract (on behalf of both appellants) based on the 32 grounds set out in that email.
By email dated the same day, but subsequent to the first appellant's email, the respondent replied and said that the appellants had repudiated the Contact and the respondent accepted that repudiation.
On 30 July 2019 the appellants commenced proceedings in the Tribunal against the respondent (HB 19/34826). In those proceedings the appellants alleged that the respondent had wrongfully terminated the Contract. The appellants claimed damages for that alleged wrongful termination.
The two proceedings were heard together in October and December 2019.
Both parties were legally represented at the hearing.
The Tribunal delivered its reasons on 27 April 2020. The reasons are 63 pages long and consist of 136 paragraphs. It is clear that the Tribunal gave detailed consideration to the matters for decision.
As is usual in the Tribunal, there had been directions made for the preparation for the hearing of the two proceedings, those directions including orders for the filing and exchange of Points of Claim, Points of Defence and the evidence upon which the parties relied.
As is usual in appeals before the Appeal Panel, directions were made for the filing and exchange of the evidence provided to the Tribunal at first instance on which each party intended to rely and, if what was said at the hearing was being relied on, the sound recording of the hearing together with a typed copy of those parts of the sound recording on which each party relied.
For this appeal the appellants did not file the Points of Claim, Points of Defence, the sound recording or a typed copy of relevant parts of the sound recording nor their written submissions given to the Tribunal at first instance. The relevance of those items not being filed on this appeal is dealt with below.
At [22] of its reasons for decision the Tribunal said:
"During the course of the hearing, the Shankars considered whether they would seek leave to amend their (application) to rely upon any of the statutory warranties in section 18B of the HB Act [Home Building Act 1989 (NSW)]. (The respondent) submitted that it would seek leave to amend its Application to rely upon the defences in section 18F (of the HB Act) should the Shankars seek such leave to rely upon section 18B. Ultimately, during the hearing, the Shankars stated that they did not rely upon the statutory warranties under section 18B."
Section 18B of the Home Building Act 1989 (NSW) ("HBA") sets out the terms of the statutory warranties which are implied in every contract to do residential building work. Section 18F of the HBA sets out defences to claims made under s 18B.
At [23] of its reasons the Tribunal summarised the issues which the respondent said required determination. Those all related to allegations of repudiation by the appellants, termination of the Contract, breach of cl 19 of the Contract and damages.
At [24] of its reasons the Tribunal summarised what the appellants said were the issues
"… as set out in pages 2-9 of their material in Ex R8 at p.6-9, as well as put in their oral submissions at the hearing …"
Ex R8 was the written submissions filed by the appellants on 18 October 2019 (and which was not filed on this appeal).
The issues listed by the Tribunal as identified by the appellants consisted of a number of alleged breaches of the Contract by the respondent, that the respondent had terminated the Contract on 7 November 2018 and then "confirmed" that the Contract was "cancelled" at the time the respondent commenced proceedings in the Tribunal (the quoted words are those of the appellant as quoted by the Tribunal), and, in the alternative, that the appellants had validly terminated the Contract pursuant to cl 25 of the Contract because the respondent was unwilling and unable to complete the work, had abandoned the work, had failed to proceed diligently, had sought a second progress payment or had sought 20% of the Contract price.
Cl 25 of the Contract concerns the right of the appellants to terminate the Contract.
Of note is that nowhere in those summaries of issues, and particularly the appellant's summary of issues, was there any mention of any issues relating to alleged defective work or the alleged failure of the respondent to provide certain certificates that the appellant said the respondent was obliged to provide.
The Tribunal proceeded to consider the issues it had summarised.
[3]
The Tribunal's reasons for decision
The Tribunal outlined the evidence, considered the issues and made findings in its reasons under the following headings:
1. Did the letter dated 9 November 2018 terminate the Contract?
2. Did the commencement of the proceedings in the Tribunal terminate the Contract?
3. Did one of the two emails dated 23 November 2018 terminate the Contract?
4. Did the (appellants') 23 November email constitute a valid termination under clause 25 of the Contract?
5. Did the (appellants') 23 November email constitute a valid termination under the general law?
6. Did the (appellants') 23 November email constitute a repudiation of the Contract and did (the respondent) accept it if so?
A summary of the Tribunal's findings in relation to each of those questions is as follows:
1. The letter did not terminate the Contract and did not constitute a repudiation of the Contract capable of acceptance by the appellants.
2. No.
3. The email from the appellants constituted a repudiation of the Contract, the respondent's subsequent email accepted that repudiation, and the Contract was terminated on 23 November 2018.
4. No.
5. None of the 32 grounds relied on by the appellants involved breaches of essential terms of the Contract, and so the email did not constitute a valid termination under the general law.
6. Yes.
The Tribunal then turned to the question of relief, it having found in favour of the respondent in relation to the issues listed above.
Applying the principles set out by the High Court in Mann v Paterson Constructions Pty Ltd [2019] HCA 32, the Tribunal held that the respondent was entitled to the sum of $11,387 incl GST for damages for work and materials supplied under the Contract, held that the respondent was not entitled to loss of bargain damages, and deducted from the $11,387 the sum of $12,900 being the deposit paid by the appellants under the Contract. The respondent accepted at the hearing that the deposit needed to be set off against anything the appellants were ordered to pay the respondent.
The end result was an amount owing by the respondent to the appellants in the sum of $1,513, and the Tribunal ordered the respondent to pay that sum to the appellants.
The appellants appealed.
[4]
The Appeal
The appellants appealed in relation to three matters.
First, they said that the work done by the respondent was defective, they were entitled to damages and the Tribunal erred in failing to award them damages for that defective work.
Second, the respondent had failed to provide certain certificates and the Tribunal erred in failing to grant them any relief in relation to that failure.
Third, they submitted the Tribunal erred in finding that they had repudiated the Contract.
[5]
First Ground
The short answer to this ground is that the issue of defective work was not litigated in the Tribunal at first instance.
We have set out above the issues the Tribunal said the parties had identified as requiring determination, and in particular we have quoted the Tribunal's observation (at [16] above) to the effect that the appellants' application had not included a claim for defective work, that the appellants considered seeking leave at the hearing to amend their application to include such a claim, the respondent said that if such leave were granted it would plead matters arising from s 18F of the HBA in response, and that the appellants had then stated that they did not rely upon the statutory warranties under section 18B of the HBA. Thus, the issue of defective work was not in issue at the hearing.
In submissions on this appeal the appellants repeatedly submitted that they had given to the Tribunal much documentation concerning the defective work. But that is not to the point. In basic terms, there are two parts to proceedings in the Tribunal. The first part is that parties are required to identify which issues they wish to argue about, and the second part is to tender evidence in relation to those issues. The Tribunal then decides the issues identified on the evidence tendered.
In this case the issues identified by the appellants did not include any allegation of defective work (being a claim for breach of the statutory warranties set out in s 18B of the HBA). The only issues the appellants identified to the Tribunal that they wished to argue about were those set out at [19]-[21] above.
At times the appellants submitted that defective work had been an issue at the hearing, but they did not provide us with a copy of the sound recording, the Points of Claim and Points of Defence, a copy of their written submissions (Ex R8 in the Tribunal at first instance) or any other document or thing which might establish that the Tribunal erred in stating that defective work was not in issue.
Therefore, in light of the Tribunal's observation which we have quoted at [16] above, we do not accept the submission that defective work had been an issue litigated at the hearing before the Tribunal.
As the defective work issue was not argued by the appellants before the Tribunal, and as the outcome of that issue would involve contested factual issues, the appellant should not be permitted to raise that issue for the first time on appeal.
Therefore, we do not uphold the appellants' first ground.
[6]
Second Ground
The second ground was also not in issue before the Tribunal as its reasons demonstrate. Again, the appellants have not provided us with any material to suggest otherwise, and therefore should not be permitted to raise this issue for the first time on appeal.
Therefore, we do not uphold the appellants' second ground.
[7]
Third Ground
The appellants' third ground (which was, subject to what we say at [50] below, contained in their Notice of Appeal filed 26 May 2020) concerned termination of the Contract and had been an issue argued in the Tribunal at the hearing.
However, in their written submissions dated 3 July 2020 the appellants said that:
"It should be noted that our appeal is not to determine the cancellation or repudiation of contract (sic), but the defective work done by (the respondent)."
That sentence above was underlined for emphasis in the appellants' submissions.
Therefore, this third ground should be dismissed because it had been expressly abandoned.
However, the appellants submitted that they wished to argue (on the appeal) that they were entitled to loss of rent as damages. It was pointed out to the appellants during their submissions that that claim could not be argued because it necessarily involved disturbing (if there were grounds to do so) the Tribunal's finding that the appellants, and not the respondent, had repudiated the Contract. It was only if the respondent had repudiated the Contract that the appellants might be able to claim loss of rent as damages.
There was a further difficulty with the submission in that what the appellants had challenged in their Notice of Appeal was the Tribunal's finding that the commencement of proceedings by the respondent had not terminated the Contract (at [55]-[57] of its reasons).
The appellants had not challenged in their Notice of Appeal the Tribunal's finding that the appellants had repudiated the Contract (at [109] of its reasons) and that was the finding that needed to be challenged to at least make it possible they might claim damages for loss of rent.
When this fact was pointed out to the appellants they then applied for an adjournment of the appeal, an application which was opposed by the respondent.
We refused that application for the following five reasons.
First, the application was first made during the appeal which had been specially fixed for hearing for some time.
Second, there was an irreparable element of unfair prejudice to the respondent in delaying the proceedings further (per French CJ in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 at [5]).
Third, in our view the appellants had been afforded a reasonable and sufficient opportunity to prepare their appeal and no explanation was given why the point was not raised earlier.
Fourth, if an adjournment was granted the respondent could not be adequately compensated for the lost time and effort in preparing the appeal for the allocated date (as the Tribunal is ordinarily a no-cost jurisdiction and the respondent was represented by its officers rather than a legal practitioner).
Fifth, we were not persuaded that the point had any realistic prospects of success.
It follows that we do not uphold the third ground and accordingly the appeal must be dismissed.
[8]
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
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Decision last updated: 22 October 2020