Slotwinski v Nutek Constructions Pty Ltd; Nutek Constructions Pty Ltd v Slotwinski

THE APPEAL

1. It became apparent to the Appeal Panel during the hearing that, despite the rather elaborate grounds and arguments set out in their respective notices of appeal and submissions, the real issues on which the appeal turned were properly confined to four key questions.
2. The Tribunal found, in paragraph [95] of the Tribunal's reasons, that Nutek's failure to maintain HOWI of sufficient value in relation to the work performed by it under the Contract (the uninsured work) breached section 92 of the HBA. There is no challenge to this finding on appeal. Consequently, both parties accepted that by operation of section 94(1) of the HBA: 1. Nutek could not to enforce any contractual claim against Mrs Slotwinski, irrespective of whether or not she breached the Contract in circumstances that entitled Nutek to terminate the Contract; 2. Nutek's ability to recover payment for uninsured work depended on Nutek establishing that it was just and equitable to do so, as provided for in section 94(1A) of the HBA; and 3. Nutek otherwise had no entitlement to recover any money under any other right or action.
3. This means that it becomes unnecessary to consider whether or not Nutek's claim depends on having justifiably terminated the Contract for Mrs Slotwinski's breach of the Contract. Rather, the determination of the appeals is best resolved by reference to the following questions: 1. was it just and equitable for Nutek in the circumstances of the case to be able to recover against Mrs Slotwinski on the basis of a quantum meruit claim? 2. was the order that Mrs Slotwinski pay $36,500 to Nutek made on that basis, or some other? 3. was the expert evidence in the reports referred to by Nutek in the course of the hearing in order to determine the value of the work it had performed for purposes of a quantum meruit claim properly excluded from consideration by the Tribunal? 4. was a defence of set-off available to Mrs Slotwinski, in order to allow her to set-off any damages awarded to her by the Supreme Court in the SC Proceedings against any moneys ordered to be paid by her to Nutek in the Tribunal proceedings?
4. The other substantive matters raised by the parties in their respective notices of appeal and submissions all appear to the Appeal Panel's to relate to factual findings made by the Tribunal. Those findings are only open to challenge if the Appeal Panel is of the view that leave to appeal is justified.

Leave to appeal

1. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
2. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
3. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
4. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact-finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
5. Leaving aside the four key questions to which the Appeal Panel has referred, the Appeal Panel is of the view that neither Nutek nor Mrs Slotwinski have established to the Appeal Panel's satisfaction: 1. any question of public importance or matters of administration or policy which might have general application; 2. any injustice which is reasonably clear to the Appeal Panel, which goes beyond what is merely arguable, or any error that is plain and readily apparent which was central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 3. any factual error by the Senior Member which was either unreasonable or clearly mistaken or that the Senior member was misconceived as to the fact finding process required, or that the Senior Member approached the determination of the facts either in an unorthodox manner, or in a way that produced an unfair result, so that it would be in the interests of justice for it to be reviewed.
6. Rather, the Appeal Panel's view is that the Senior Member's reasons demonstrate: 1. a careful and systematic consideration of the evidence that was available concerning the dealings between the parties and their respective representatives; 2. the Senior Member's central findings on which he determined the Nutek Proceedings were the product of the following features of the case: 1. firstly, the Tribunal being singularly unimpressed by the cogency and the reliability of evidence that was critical to Nutek proving the value of its quantum meruit claim (paragraph [97] of the Reasons) and Mrs Slotwinski's defence (at paragraph [85] of the Reasons); 2. the fact that the parties' decision to abandon the Contract and to disregard the operative provisions of the Contract in the manner in which it was performed [at [86], of which specific examples are provided at [91], [92], [105] and [108]). In this regard, the Senior Member made the specific observation in [105] of the Reasons that in attempting to reach any findings concerning failure to make timely payment of progress claims, "…. determining this issue is, like so much in this matter, made difficult by wholesale departures from contractual procedures and the reliance (by both parties but in this case particularly by the builder) on claims of oral undertakings or agreements …"; 3. the uncertainty as to the calculation of key elements under the Contract, such as a discount to the contract price [89]; 4. the failure of the parties to articulate and document the basis on (and the purpose for) which payments were made, as referred to in paragraph [93] and [94] of the Reasons, and 5. the failure of the parties to comply with the provisions of the Contract on which they subsequently based claims of breach, or their apparently informal but continuing acceptance of such non-compliances, as set out in paragraphs [103] and [104] of the Reasons.
7. It is now necessary to consider the four key issues identified earlier.

The first question: Was it just and equitable for Nutek in the circumstances of the case to be able to recover against Mrs Slotwinski on the basis of a quantum meruit claim?

1. The law may impose an obligation, independent of contract, to pay a fair and reasonable sum for the provision of services in a class of case where an applicant proves: 1. actual or constructive acceptance of a benefit of the provider's services by the recipient; 2. the recipient of the services should have realised that the provider expected to be paid; and 3. it would be unjust for the recipient to take the benefit of the services provided without paying a reasonable sum for them. See eg: Vasco Investment Managers Ltd v Morgan Stanley Australia Ltd [2014] VSC 455 at [339].
2. In TSW Analytical Pty Ltd -v- The University of Western Australia [2017] WASCA 67, Mitchell JA conveniently summarised the principles of quantum meruit in these terms (footnotes omitted): Restitutionary claims for quantum meruit 96 A claim for quantum meruit was a plea of a form of action which, prior to abolition of forms of action more than a century ago, had become a form of action within indebitatus assumpsit. The continued practice of pleading a form of action using Latin terms has been described as unhelpful. The term 'quantum meruit' can also be seen as a label, the established use of which identifies for the legally trained reader the nature of the claim. However, the use of the label should not mask the need to identify with precision the elements of the cause of action which must be established to make good a claim. 97 In Pavey & Matthews Pty Ltd v Paul, Deane J noted that the common law action accommodated two distinct categories of claim. The first category of claim involved the recovery of a debt arising under a genuine contract. A contract in the first category may expressly or implicitly provide for the payment of a reasonable sum for work performed or services provided by one party to another. The second category of claim which Deane J identified involved recovery of a debt owed in circumstances where the law itself imposes or imputes an obligation to make compensation for a benefit accepted. 98 In Pavey, the majority of the High Court concluded that an action in the second of Deane J's categories, for reasonable remuneration for work done under an unenforceable contract, did not rest on an implied contract. Rather, it was a claim to restitution based on unjust enrichment, arising from one party's acceptance of benefits accruing from another party's performance of an unenforceable contract. Pavey was a case involving building work undertaken pursuant to an oral contract which was unenforceable because of non-compliance with the Statute of Frauds. 99 The High Court has repeatedly stated that the concept of unjust enrichment is not a definitive legal principle which supplies a sufficient premise for direct application in a particular case. Whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable. Rather, recovery depends on the existence of a qualifying or vitiating factor falling into some particular category. 100 TSW's restitutionary claim, falling in the second category Deane J identified in Pavey, seeks to establish the existence of an established qualifying or vitiating factor in two ways. 101 First, TSW's plea that it provided Benefits to UWA at UWA's request invokes what in Lumbers v W Cook Builders Pty Ltd (In liq)] was seen to be a claim falling within 'long-established principles'. That is a claim for reasonable remuneration for work done by one person for and at the request of another which the recipient accepts and which it would be unconscionable for the recipient to retain without payment. As was made clear in Lumbers, such a request may be made expressly, or its making may be implied from the actions of the parties in the circumstances of the case. 102 In R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd, Beech J described the facts which would establish the cause of action (subject to exceptions) in the following terms. If party A requests party B to provide services in circumstances where, objectively, B expects to be paid for the services, then A will be obliged to pay a reasonable remuneration to B for the services. 103 It has been held that the fact that services have been requested and accepted justifies the conclusion that the provision of requested services is a benefit to A 104 Beech J said that this general rule operated subject to a number of recognised exceptions. One exception arises where the request is made in the context of an enforceable contract between A and B. In such a case, any claim by B must be founded on the contract, not in restitution. As will be seen, UWA relies on that exception in the present case. However, subject to consideration of that defence, it is at least arguable that proof of the facts to which Beech J referred in R J Baker Nominees would establish a restitutionary cause of action in the present case. 105 The second aspect of TSW's restitutionary claim seeks to invoke the concept of 'free acceptance'. The question of whether 'free acceptance' of an unrequested benefit gives rise to a restitutionary obligation in Australian law was discussed by Edelman J in Lampson (Australia) Pty Ltd v Fortescue Metals Group Ltd [No 3]. In that case Edelman J refused to strike out a claim for restitution based on the acceptance of a benefit of goods which the recipient knew the claimant was not providing gratuitously, without taking a reasonable opportunity to reject the goods. He recognised the existence of this category of restitutionary claim as arguable, and UWA does not contend to the contrary in this case.
3. The making of a request may provide evidence of a benefit conferred on a recipient. In the current case, the Contract required the Elite works, and it may be taken that by the terms of the Contract, Mrs Slotwinski must be taken to have requested Nutek to carry out at least that work. Elite was not paid directly by Mrs Slotwinski, and Nutek was liable for the Elite Payment. Mrs Slotwinski received the benefit of Elite's work, and on the evidence as found by the Tribunal, agreed to pay Elite directly for work performed as a subcontractor to Nutek.
4. Accordingly, the Appeal Panel is of the view that the work done by Elite for Nutek, was done in conformity with the Contract, but which Nutek was unable to recover under the Contract by operation of the HBA. There can be no suggestion that Elite carried out that work on the understanding that it would not be paid for the services provided, nor that Nutek was not liable to make payment to its contractor for those works. Elite provided its services in a normal commercial relationship with Nutek, whose business it was to provide those services for reward.
5. In the absence of any contrary evidence as to the value of the work carried out by Elite, the Senior Member was entitled to regard the Elite Payment as reflecting the fair and reasonable value of Elite's work, particularly having regard to Mrs Slotwinski's agreement, through Mr Slotwinski or Juno, to pay Elite directly for the work invoiced.
6. In those circumstances, it was open to the Senior Member and to award Nutek the Elite Payment on the basis of a quantum meruit entitlement.

The second question: Was the order that Mrs Slotwinski pay $36,500 to Nutek made on a quantum meruit basis, or some other?

1. The only sum which the Tribunal awarded was the Elite Payment. The Appeal Panel accepts that the Tribunal's findings do not explicitly state that it allowed Nutek to recover that payment from Mrs Slotwinski on the basis of quantum meruit, but the Appeal Panel considers that is the fair inference of the finding made. In paragraph [96], the Tribunal found that such a quantum meruit claim was "possible" under section 94 of the HBA. In paragraph [99] of the Reasons, the Tribunal found that the expert evidence was insufficient to prove the quantum meruit predicted on based on the value of all of the work carried out by Nutek for which it had not been paid.
2. The amount which Elite had invoiced Nutek for work carried out on the development, which Mr Slotwinski agreed to pay directly to Elite, but which was not paid, was one element of the value of the work carried out by Nutek. The finding in paragraph [99] of the Reasons, is not inconsistent with the Tribunal's determination that the Elite Payment represented a reasonable and fair value of this aspect of Nutek's work for which Nutek had not been paid.
3. On a fair reading of the Tribunal's decision, in the context of the findings and determination made as a whole, particularly having regard to the Senior Member's finding that only a quantum meruit claim could succeed against Mrs Slotwinski, the reasonable inference is that the Tribunal found Mrs Slotwinski's liability to make the Elite Payment to Nutek on a quantum meruit basis.
4. The Appeal Panel would find no error in that approach by the Senior Member.
5. There are findings of fact, both in paragraphs [62] to [65] and [83] that: 1. the amount in question was referrable to services provided to Nutek by Sydney's Elite Concrete Pumping Services Pty Limited in connection with the performance by Nutek of its obligations under the Contract; 2. Mr Slotwinski agreed to pay an amount of $34,650 directly to Sydney's Elite Concrete Pumping Services Pty Limited on account of those services, but failed to do so; and 3. Nutek itself eventually made the relevant payment.
6. In paragraph [99] of the reasons, the Tribunal states that there is insufficient evidence to support quantum meruit claims against Mrs Slotwinski, "... with the exception, as already found, of the payment owed to Elite)".
7. The Appeal Panel is of the view that when the Senior Member's reasons are considered in the context in which the Senior Member made clear that Nutek could only recover payment from Mrs Slotwinski on a quantum meruit basis, that the Senior Member made the Elite Payment Order on the basis permitted by s 94 of the HBA.
8. The conclusion is clear: when the Tribunal made order 2(b), that Mrs Slotwinski pay Nutek $36,500, it did so on the basis that the relevant claim was made on a quantum meruit basis.

The third question: Were the reports referred to by Nutek in the course of the hearing in order to determine the value of the work it had performed for purposes of a quantum meruit claim properly excluded from consideration by the Tribunal?

1. The reports on which Nutek relied on order to demonstrate the value of work performed by reference to which its quantum meruit claim could be assessed were as follows: 1. A report dated by Mr Damon Russell, of MDA Australia Pty Limited, largely in the form of a bill or estimate, without reasoning and essentially providing an itemised list of items of work dated 20 October 2016 (the MDA Report); and 2. A statutory declaration with an attached report dated 16 December 2016 prepared by Mr Thomas Lee, and filed by Mrs Slotwinski (the Lee Report).

THE MDA REPORT

1. The Tribunal did not accept the MDA Report as evidence relevant to the calculation of Nutek's quantum meruit claim for three reasons which are identified in paragraph [97] of the reasons: 1. Nutek sought to rely on the MDA Report, but "… did not do so with any persuasiveness …"; 2. The MDA Report was not ".. in the correct or appropriate form …"; and 3. The MDA Report "… was not presented as the evidence of the writer of the report, but of Mr Kalantzis ...", who is a director of Nutek to whose affidavit the MDA Report was annexed.
2. Nutek filed on 29 June 2018 an affidavit of Mr Kalantzis, which outlined the circumstances in which he filed the MDA Report: 1. He did so on 24 October 2016, in response to direction made by the Tribunal on 4 July 2016 concerning the filing of evidence. 2. At the time he did so Nutek was not legally represented, the Company's previous solicitors' retainer having ended on 22 August 2016; 3. When he did so he was unaware of the requirements, that an expert report be verified under oath by the person who prepared it, or that such a report be supported by confirmation from the expert that he had complied with the Tribunal's Procedural Direction relating to the evidence of experts; and 4. On 31 October 2016 Nutek retained new solicitors.
3. Nutek's solicitor, Mr Hayek, according to his affidavit dated 28 June 2018 to which was exhibited the transcript of a direction hearing in the matter on 5 December 2016 says that: 1. He attended that directions hearing, at which the formal deficiencies of the MDA Report were canvassed; and 2. At that direction hearing, Mrs Slotwinski's solicitor said as follows: "We would be satisfied with an affidavit sworn by the director of the company that he's checked the records and the director can ultimately identify the name of the person that prepared the document, and then one I have the names of those people that prepared the documents, I can then, if the respondent chooses to, and if I'm instructed, summons that person for cross-examination, but we would be satisfied with a statement from the director of the company".
4. On or about 16 December 2017 Nutek filed an affidavit by Mr Kalantzis to that effect, which annexed and identified the documents previously filed, including the MDA report.
5. Mrs Slotwinski's counsel did not dispute this account of events.

THE LEE REPORT

1. The Tribunal rejected the Lee Report as probative of the value of the work performed by Nutek. It did so because of its understanding of Mr Lee's evidence: 1. he was not concerned to actually value the work done; but 2. rather merely provided an estimate of the value of the works to complete.
2. Mr Lee, however, described his methodology as being: 1. To carry out a full measure of the Contract Award Drawings and develop an estimate for the full scope of the building works; 2. To measure the works completed to 1 August 2016; and 3. To deduct the value of the works completed from the whole of the works to determine the cost to complete the works.
3. The Victorian Supreme Court of Appeal decision of Mann v Paterson Constructions Pty Ltd [2018] VSCA 231 provides the leading current authority on the ascertainment of a "reasonable sum" in a quantum meruit context. The Appeal Panel observes that the High Court has granted leave to appeal.
4. The following principles emerge from Mann (at [69]-[87] per Kyrou, McLeish and Hargrave JJA): 1. in cases of a quantum meruit, it is necessary to assess is the fair and reasonable value of the benefit conferred on recipient, here Mrs Slotwinski, by the work performed by the contractor, here Nutek; 2. the court is entitled to consider a wide variety of evidence in determining what is a fair and reasonable value. 3. as a matter of law, in a quantum meruit case, the actual costs incurred are not necessarily determinative, but are a factor to be considered. 4. quantity surveying evidence is relevant evidence as to reasonableness and is to be weighed according to its quality against any competing evidence as to what is a reasonable cost and, in an appropriate case, it is proper to accept the assessment of a quantity surveyor over any evidence of actual costs incurred by a builder. 5. a quantity surveyor may include in his or her assessment of the value of an item of work performed, a sum different from the sums paid by the builder in respect of that item; and 6. evidence of the contract price and actual cost incurred by a builder can be relevant, but the weight to be given to it may vary depending on the circumstances of each case.
5. The MDA Report and the Lee Report constituted relevant evidence that the Senior Member should have considered. It may be that there were issues as to what appropriate weight should have been attached to each "estimate", but both reports contained rationally probative material which the Tribunal should have considered in assessing the fair and reasonable value of the work carried out by the Builder for which it was entitled to be paid on a quantum meruit basis.
6. Section 36(2) of the Civil and Administrative Tribunal Act 2013 requires the Tribunal to: "… seek to give effect to the guiding principle when it … exercises any power given to it by this Act …" and section 36(1) defines the guiding principle as being: "… to facilitate the just, quick and cheap resolution of the real issues in the proceedings …".
7. Section 38(2) of that Act provides that the Tribunal: "… is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice".
8. Moreover, section 38(4) of the Civil and Administrative Tribunal Act 2013 (NSW) requires the Tribunal: "…. to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms".
9. For the Tribunal to dismiss Nutek's quantum meruit claim as unproven, when it had the material that it had before it, and particularly having regard to: 1. the existence and content of both the MDA Report and the Lee Report; and 2. The arrangements apparently agreed to by Ms Slotwinski's solicitor for the verification of the MDA Report, was not in the Appeal Panel's view consistent with the essentially pragmatic approach to probative and procedural matters which sections 36 and 38 of the Civil and Administrative Tribunal Act 2013 require the Tribunal to adopt.
10. Accordingly, the Appeal Panel is of the view that the Senior Member was mistaken in having dismissed Nutek's quantum meruit claim as he did.

The Fourth Question: Was a defence of set-off available to Mrs Slotwinski, in order to allow her to set-off any damages awarded to her by the Supreme Court in the SC Proceedings against any moneys ordered to be paid by her to Nutek in the Tribunal proceedings?

1. In its reasons, the Tribunal observes at paragraph [46] that: "The owner [viz Mrs Slotwinski] does not rely on a set-off defence in the Tribunal".
2. In the Appeal Panel's view, it is apparent from the various iterations of Mrs Slotwinski's points of defence that she sought to set-off against her liability (if any) to Nutek in relation to the proceedings before the Tribunal claims against Nutek for: 1. incomplete and defective works (which form the subject of the SC Proceedings), and 2. economic loss resulting from delay in renting the property.
3. Section 6 of the Law Reform (Law and Equity) Act 1972 provides as follows: Every inferior court shall in every proceeding before it give such and the like effect to every ground of defence, equitable or legal, in as full and ample a manner as might and ought to be done in the like case by the Supreme Court under the Supreme Court Act 1970.
4. That the Tribunal is an inferior court for these purposes is well established: see Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2015] NSWSC 289. Also clear from that case is that a jurisdictional limit on the Tribunal's capacity to grant particular remedies - in that case, equitable remedies - limited its obligation to comply with section 6 by giving effect to equitable defences, As Hammerschlag J observed at [78}: ".. the Tribunal would have jurisdiction to determine the availability of a defence to the landlord's claim for possession that the tenant was entitled to relief against forfeiture even if its power to grant statutory remedies did not extend to granting appropriate relief to give effect to that determination. If an entitlement to relief against forfeiture were established, it should stay the proceeding to allow the tenant to pursue appropriate relief in the Supreme Court".
5. What follows from that statement is that even though: 1. The claims which may ultimately fall to be set off are to be determined in the SC Proceedings, and 2. The value of the claims in the SC Proceedings may exceed the jurisdictional limit of $500,000 imposed on the Tribunal in home building claims, nonetheless the Tribunal should determine whether or not any amounts awarded in favour of Mrs Slotwinski in the SC Proceedings can be set off against amounts payable by her to Nutek under any award against her in the Tribunal proceedings.

Orders

1. In view of these findings, the Appeal Panel: 1. grants leave to Nutek to amend its Notice of Appeal in the form submitted on 16 July 2018; 2. grants leave to Nutek to appeal the Quantum Meruit Order and First Application Dismissal Order of the Tribunal on 2 May 2018 in proceedings HB 16/25001, to the extent that leave is required, and allows the appeal in respect of both of those orders; 3. grants leave to Mrs Slotwinski to appeal against the Elite Payment Order of the Tribunal made on 2 May 2018 in proceedings HB 16/25001, to the extent that leave is required, and allows the appeal in respect of that order; 4. sets aside: 1. the Quantum Meruit Order; 2. the First Application Dismissal Order; and 3. the Elite Payment Order 4. of the Tribunal made on 2 May 2018; 1. remits the proceedings to the Consumer and Commercial Division of the Tribunal for further determination of Nutek's claim in quantum meruit, and Mrs Slotwinski's defence by way of set-off on such further evidence as the Tribunal may consider appropriate; 2. any application in respect of the costs of the appeal to be made by written submissions filed and served within 14 days of the date of publication of this decision. Such submissions should address the question whether the application for costs can be dealt with on the papers and without a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act. 3. if either party files submissions in accordance with order 6 above the other party may file and serve submissions in response within a further 14 days. Such submissions should address the question whether the application for costs can be dealt with on the papers and without a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act. ​

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 June 2019