Stevens v Gary Lewin trading as Gary Lewin Architecture

Stevens v Gary Lewin trading as Gary Lewin Architecture - [2006] NSWSC 1232 - NSWSC 2006 case summary — Zoe

[16]

The Stevens were not legally represented at the date of the filing of their defence. The attachment to the defence comprised copies of email correspondence sent by David Stevens to the architect. It may be inferred from this material that the Stevens were seeking to defend the architect's claim by relying on a variation to the agreement, which placed a cap on the amount of the architect's fees. The Stevens joined issue on whether any monies were owing under the agreement as varied. 5 The proceedings were arbitrated on 15 June 2004. Thereafter, the Stevens filed an application for re-hearing. The hearing was listed before the Local Court on 10 and 11 March 2005. 6 On 9 November 2004 the Stevens filed a cross-claim against the architect. The cross-claim included an assertion that the architect had been negligent in approving the payment of certain progress payments for work done by the builder, Woodfast Joinery Pty Ltd (Woodfast), which had not been carried out to the appropriate professional standard. 7 On 16 December 2004 the architect filed a defence to the cross-claim. The proceedings were listed for Review before the Court on 8 February 2005. On the application of the Stevens, the hearing dates in March 2005 were vacated and the proceedings were refixed for hearing on 11 and 12 May 2005. 8 On 29 April 2005 the Stevens advised the architect that they proposed applying to have the proceedings transferred to the Tribunal. A notice of motion claiming an order for transfer was filed in the Local Court. The architect opposed the transfer of the proceedings. 9 On 5 May 2005 the Local Court ordered that the proceedings be transferred to the Tribunal. 10 On 31 May 2005 the proceedings came before the Tribunal for directions. Thereafter the architect filed points of claim in the Tribunal in substitution for the pleading that had been filed in the Local Court. On 23 July 2005 amended points of claim were filed on the architect's behalf. The architect's application is proceeding HB05/24312 in the Tribunal. 11 The Stevens' cross-claim was treated by the Tribunal as a separate application, HB05/26179. This claim was proceeding before the Tribunal on the pleadings filed in the Local Court. The architect's solicitors sought further and better particulars of the cross-claim. On 19 July 2005 they wrote to the Registrar of the Tribunal advising that they were awaiting receipt of the particulars requested and reserving their right to file an amended defence on receipt of the same. On 31 October 2005 the architect was supplied with the further and better particulars. By this date the Tribunal, of its own motion, had directed the parties to file submissions on the question of its jurisdiction to determine each of these claims. The architect had not applied for leave to file an amended defence to the Stevens' claim at the date the jurisdictional position was raised.

[21]

(2) If a defendant in proceedings to which this section applies makes an application for the proceedings to be transferred, the proceedings must be transferred to the Tribunal in accordance with the regulations and are to continue before the Tribunal as if they had been instituted there. 18 The Tribunal is given a number of powers in determining building claims under Pt 3A of the HBA. These include, that it may have regard to the reports of any inspector who may have investigated any matter that has given rise to a building dispute. An inspector may only be called to give evidence by the Tribunal and not by either party to the building claim. The Tribunal may appoint an independent expert to advise it as to any matter that it refers to the expert for advice. In any proceedings for which an independent expert has been appointed, no party may call any other expert to give evidence in the proceedings or tender any report prepared by any other expert, save by leave of the Tribunal (s48N). 19 A building claim is defined for the purposes of Pt 3A of the HBA in s 48A, relevantly, as follows: building claim means a claim for: (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. 20 The Regulations do not declare any claim not to be a building claim for the purposes of Pt 3A of the HBA. 21 The expression building goods or services is defined in s 48A(1): building goods or services means goods or services supplied for or in connection with the carrying out of residential building work, specialist work or building consultancy work, being goods or services: (a) supplied by the person who contracts to do, or otherwise does, that work, or (b) supplied in any circumstances prescribed by the regulations to the person who contracts to do that work. 22 It will be noted that building goods or services are those supplied for or in connection with the carrying out of certain work, including residential building work. Residential building work is defined in s 3 of the Act: residential building work means any work involved in, or involved in co-ordinating or supervising any work involved in: (a) the construction of a dwelling, or (b) the making of alterations or additions to a dwelling, or (c) the repairing, renovation, decoration or protective treatment of a dwelling. It includes work declared by the regulations to be roof plumbing work or specialist work done in connection with a dwelling and work concerned in installing a prescribed fixture or apparatus in a dwelling (or in adding to, altering or repairing any such installation). It does not include work that is declared by the regulations to be excluded from this definition. 23 Clause 9 of the Regulation makes provision for certain work to be excluded from the definition of residential building work: 9 Definition of "residential building work" - certain work excluded (1) For the purposes of the definition of residential building work in section 3(1) of the Act, the following is declared to be excluded from that definition: … (g) the supervision only of residential building work: (i) by a person registered as an architect under the Architects Act 1921 or the Architects Act 2003, 24 The architect is a registered architect under s 27 of the Architects Act 2003. A copy of his Certificate of Registration was annexed to the submissions filed on his behalf in the Tribunal, and the fact of his registration is not in issue.

[24]

28 A question arose in the course of the hearing as to what material had been before the Tribunal. The parties were not able to say. They were agreed that the appeal should be determined on the assumption that the Tribunal had before it the pleadings, the parties' written submissions and the agreement. I approach the determination of the appeal by reference to this material. 29 It was the Stevens' case before the Tribunal that each of the claims was a building claim, for the purposes of Pt 3A of the HBA, in one or more of three ways: (a) The services provided by the Architect to the Stevens fall within the definition of "building goods and services". Accordingly a claim in respect of the provision of those services falls within the definition of "building claim". (b) Even if the services provided by the Architect to the Stevens do not fall within the definition of "building goods and services", the services provided by Woodfast to the Stevens clearly do so fall. The claims relate to the provision of building services by Woodfast. Accordingly, picking up the wording of the definition of "building claim", the claims arise from the provision of those services by Woodfast. (c) Again, even if the services provided by the Architect to the Stevens do not fall within the definition of "building goods and services", the claims arise under the architectural contract, which is a contract that is collateral to the Woodfast contract. The Woodfast contract, as noted previously, is clearly a contract for the supply of "building goods and services" (submissions as to jurisdiction filed on behalf of the Stevens, exhibit A Tab 11, at 4-5 [16]). 30 Counsel for the Stevens acknowledged that the Tribunal had been correct to reject the first of the above contentions. 31 The submissions in support of contentions (b) and (c) made on behalf of the Stevens drew on the decision of the Court of Appeal in Grygiel v Baine [2005] NSWCA 218. That was a case which involved a building dispute between a builder and a homeowner that was commenced in the Tribunal under Part 3A of the HBA. The homeowner had terminated the contract with the builder prior to completion, contending that the work carried out by the builder was defective. The proceedings were commenced by the builder. The homeowner raised, by way of defence to the claim that the builder had not obtained home owners' warranty insurance, which the HBA requires a person carrying out residential building work to obtain. The homeowner was a solicitor. In response to his defence the builder sought to join a fresh claim against him alleging the negligent provision of legal advice, namely, that he was not required to take out insurance under the Act. The Tribunal refused to allow the claim for negligent legal advice, holding that it was not a building claim for the purposes of Pt 3A of the HBA. Basten JA (with whose judgment Mason P concurred) held that the Tribunal had been wrong to so hold. His Honour favoured an approach which, to the extent that the statutory terminology permits, did not result in an unduly restrictive construction being given to the provisions of Pt 3A of the HBA (at [58]).

[27]

34 The architect submitted that the Tribunal had been correct to hold that it did not have jurisdiction to determine his claim or the Stevens' claim. His was a claim for monies due under the agreement for the provision of architectural services. The agreement was made on 18 October 2000 and his claim did not arise out of the supply of building goods or services by Woodfast, nor was the agreement collateral to the Stevens' contract with Woodfast. 35 I turn to the first ground of challenge to the Tribunal's determination. In counsel's submission, the Tribunal having, rightly, rejected its first contention turned to a consideration of whether the agreement was collateral to the Woodfast contract (the second limb) without determining whether it was a claim arising from a supply of building goods or services (the first limb). 36 The Tribunal noted that the decision in Grygiel favoured a more expansive interpretation of the scope of residential building work than had previously been understood in order to avoid artificial and arbitrary distinctions (at p 4). It gave consideration to the scope and purpose of cl 9(1)(g)(i) of the Regulation, holding that, at the least, the architect's construction services came within the meaning of supervision for the purposes of (g). Next, the Tribunal considered the purpose of the exclusion of the supervision only of residential building work by registered architects. It noted that architects registered under the Architects Act are subject to the disciplinary regime provided by the Act and that to require an architect to be licensed under the HBA would involve duplication. The Tribunal accepted the Stevens' submission that in excluding a registered architect who is supervising residential building work from the definition, the Regulation operates to exclude the architect from the licensing (including the requirement for a written contract, insurance and other regulatory) requirements of the HBA (at p 7). The Tribunal moved to consider the first of the three contentions that I have set out at paragraph [29] above. After determining that the architect's services were not building services supplied for or in connection with the carrying out of residential building work, the Tribunal turned to consider of the second limb of the definition of building claim under s 48A(1), namely, whether the agreement is a contract that is collateral to a contract for the supply of building goods and services (at p 9). 37 It is not clear that the Tribunal did consider the Stevens' submission that each claim is a building claim as defined in s 48A(1) because it arises from a supply of building goods or services (the first limb). In deciding whether it erred in its ultimate conclusion, that it does not have jurisdiction to determine these claims by reason that each is a building claim under the first limb of the definition, it is necessary to examine the way each of the claims is formulated. 38 The architect's claim, pleaded in his amended points of claim, recites that on or about 18 October 2000 he and the Stevens entered into the agreement pursuant to which he agreed to provide architectural services to the Stevens. He pleads that it was a term of the agreement that the Stevens would pay him a fee calculated as a sliding scale of percentages of the actual market value of construction at the time of completion (the fee), based on a reasonably high standard of finish and fit out (not including specialist items commissioned by the Stevens). It was a term of the agreement that the fee would be apportioned between the various stages of the architectural services as follows: (a) Schematic design: 5% (b) Design development: 5% (c) Contract documentation: 40% (d) Tendering and negotiating: 5% (e) Contract administration: 25%.

[28]

The agreement provided for the architect's fee to be adjusted to suit the actual market value of construction at the time of completion in the event that the actual market value of the construction exceeded $250,000.00. Provision was made for the payment of additional fees at an hourly rate in the event that the architectural services were increased or protracted due to causes beyond the architect's control. 39 The architect's claim, for the payment of the monies on invoices issued in accordance with the agreement, comprises the following components: Fees of $11,880.00 claimed in an invoice dated 9 September 2000 - based on a revised construction cost, being fees for the sketch design, design development, contract documentation, tender and negotiation and contract administration services under the agreement; Fees of $5,000.00 claimed in an invoice dated 29 July 2003 - being for 95 hours of professional services at $60.00 per hour (minus $200.00 being surplus on an amount paid by the Stevens) being fees payable for protracted or increased services by reason of the builder's non-performance; Fees of $8,250.00 claimed in an invoice dated 8 December 2003 - payable for the protraction of services attributable to Woodfast's insolvency. These fees are particularised as the architect's attendance at meetings and discussions with the builder in the absence of the Stevens, attending to issues regarding termination of the building contract, sourcing alternate contractors, subcontractors and trades to complete the building works, obtaining prices from alternate contractors, subcontractors and trades to complete the building works, negotiating contracts with alternate contractors, subcontractors and trades to complete the building works, reissuing contract documentation and briefing alternate contractors, subcontractors and trades to complete the building works, calling tenders and meeting alternate contractors on the site to instruct and discuss works with alternate contractors, subcontractors and trades to complete the building works, discussions and correspondence with Woodfast's liquidator and the Stevens.

[44]

54 The Tribunal discussed the Stevens' submissions with respect to the second limb in the context of the principles governing collateral contracts at common law (at pp 9-10). At the conclusion of this discussion, the Tribunal noted that the issue would be revisited in the context of a consideration of Grygiel. The Tribunal returned to a consideration of the Stevens' submission on the second limb (at p 12): His Honour also considered the concept of a collateral contract as referred to under s 48A of the HB Act stating that this concept " would be satisfied where there is an appropriate connection with the supply of 'building service' ". He states " in my view that connection will exist as a matter of law where by (sic) a representation is made or legal advice provided in relation to the terms or conditions upon which building services are, or are to be supplied ". (sic) (paragraph 69). As I have stated it has not been put to me, nor is it apparent from the material before me, that the Architect made " a representation ". (Or). Provided (advice) in relation to the terms or conditions upon which building services are, or are to supplied" (sic) as his Honour has stipulated. There is nothing in his Honour's decision that leads me to conclude (as the homeowners submit) that the Architect's general contractual obligation to supervise the builder's work amounts to such a " representation " or " advice ". Nor, for reasons I have already stated, am I satisfied that there was any link between the builder's performance and payment to the Architect to constitute such a " connection ". 55 On the Stevens' behalf, it is submitted that the Tribunal, wrongly, fastened on the penultimate sentence in paragraph [69] of Basten JA's judgment in Grygiel (set out at [33] above), treating it as qualifying the statement of principle in the preceding sentence, whereas it involved the application of the principle to the facts of that case. It is not clear that the Tribunal erred in this respect taking into account the concluding sentence of the extract of its reasons set out above. However, upon an acceptance that the Tribunal did misapprehend the reasoning of the majority in Grygiel, it remains to consider whether it erred in law in concluding that neither the architect's nor the Stevens' claim was one that arose under a contract that was collateral to the Woodfast contract. In deciding this question it is clear from Grygiel that in this statutory context the reference to a contract that is collateral to another does not import the general law with respect to collateral contracts.

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