In a decision made on 20 April 2020 the appellant was ordered by the Tribunal to pay the first respondent $99,450.00 within 28 days.
By this appeal, the appellant sought to have that order set aside. It contended that the Tribunal erred in finding it was the other party to a contract with the respondent under which the respondent installed kitchens at a multi-unit development in Sylvania and that, in any event, the Tribunal erred in finding that the respondent had proved its claim in quantum meruit.
For the reasons set out below, we have decided that the appeal should be allowed in part. In our opinion, the respondent failed to prove part of its claim in quantum meruit even though it was established that the works the subject of that claim had been carried out.
[2]
Background
The respondent supplies and installs made to measure kitchens, cupboards, wardrobes, cabinets and shower screens. Mr Simon Douaihy was the person working for this company in the events which gave rise to these proceedings. The appellant is a property developer. It was established by Mr Charles (Charlie) Gittany, who is a licensed builder with considerable experience in the construction and development industry. He was the sole director and secretary of the appellant until April 2016. He has a son, Matthew and a brother, Joe. He is married to Susan Gittany.
The other company concerned with these proceedings was J & G Constructions Pty Ltd (J & G Constructions). Mr Georgio Hazzoury was the sole director and secretary of that company. J & G Constructions was not a licensed builder before October 2016. It was, undoubtedly, involved in the construction of the units at the Sylvania property.
In 2017 the respondent carried out the building work the subject of the proceedings.
In February 2019, the respondent commenced proceedings in the Tribunal claiming payment of $169,450.00 from the appellant for the supply and installation of kitchens and other items at the Sylvania development under a contract with the appellant. The claim was based on an oral contract in respect of which there came to be a written quote accepted by the appellant. It was also claimed that additional works were carried out at the appellant's request. It was claimed that the money owing was the subject of an invoice issued to the appellant in October 2017 from which there was to be deducted an agreed sum of $6,000 in respect of a motor vehicle supplied by the appellant to the respondent.
The case on liability turned on whether the respondent had contracted with the appellant or with J & G Constructions. It was either one or the other. No argument was advanced by the appellant that, even if its version of the events was not accepted, the respondent had, in truth, contracted with a different company associated with Mr Gittany.
The affidavit/signed statement evidence presented to the Tribunal revealed a stark contrast in the version of events concerning the parties to the contract. Mr Douaihy, who died in January 2020 before the hearing in the Tribunal, in his signed statement (dated 19 July 2019), gave evidence of conversations with Mr Gittany about the work the subject of the respondent's claim, including an approach from Mr Gittany to do the work, and conversations about the work required, price, provision of a quote, additional works to complete the job and payment. According to Mr Douaihy, these conversations occurred against a background of previous direct dealings between himself and Mr Gittany on other sites. He said that Mr Hazzoury's role at the Sylvania site was that of a labourer, as it had been at previous sites where Mr Douaihy had worked for Charlie Gittany. He said that Mr Hazzoury was not a licensed builder and that at no time had he ever worked for Mr Hazzoury or any of his related entities.
Mr Gittany, in an affidavit affirmed on 4 March 2020, after Mr Douaihy's death, began his evidence by referring to a written home building contract said to have been signed on 12 June 2015 under which J & G Constructions was appointed the builder of the unit development at Sylvania. He deposed to conversations with Mr Hazzoury in which he said to Mr Hazzoury that they would like him to subcontract all the tradesmen and Mr Hazzoury said that with respect to the kitchen works he would get his friend Mr Douaihy to complete the works. Mr Gittany also referred to a construction certificate approval form lodged by the appellant in around October 2015 which listed J & G Constructions as the principal contractor.
Having set out this contractual structure for building the development, Mr Gittany denied that he had ever had the conversations Mr Douaihy set out in his statement about making a contract, denied that he ever requested a written quote from Mr Douaihy and denied he ever had any previous direct dealings with Mr Douaihy.
Mr Gittany's affidavit was consistent with an earlier affidavit sworn by Mr Hazzoury in June 2019. This affidavit had referred to the signing of the home building contract in June 2015 and to a conversation at that time with Charlie Gittany in which he was asked to subcontract all the tradesmen. Mr Hazzoury deposed that he was a licensed builder, that he had subcontracted with the respondent in early 2017 and that Mr Douaihy had sent him a written quote for the kitchen works in around March 2017.
Both Mr Gittany's affidavit and Mr Hazzoury's affidavit deposed to conversations with each other after the respondent commenced these proceedings in which Mr Hazzoury said to Mr Gittany that the latter had definitely not contracted with the respondent.
As will be examined below, the Tribunal preferred Mr Douaihy 's evidence about these matters. It did so, having taken an adverse view of the truthfulness of Mr Gittany and Mr Hazzoury as witnesses founded upon a very serious conclusion against them that the June 2015 home building contract had been concocted by them for the purpose of attempting to defeat the respondent's claim.
It was uncontroversial that if there was a building contract with the appellant it was unenforceable. Accordingly, if the respondent's claim was to succeed it had to do so as a claim in quantum meruit.
The Tribunal came to base its quantum meruit award on a quote for the works and an invoice issued by the respondent. In doing so, it gave no weight to an expert report about value put forward by the respondent on the basis that it was a theoretical exercise. The expert report gave a quantum of value of the works greatly in excess of the amount of the respondent's claim. The respondent did not seek to recover the amount set out in the expert report. Hence, the case did not raise for consideration the question whether the respondent's claim was limited by the contract price, a subject that was addressed by the High Court in Mann v Patterson Constructions Pty Ltd [2019] HCA 32 in the context of a contract terminated for repudiation.
At this point, it is useful to refer to four significant documents in the evidence presented to the Tribunal.
First, a quote dated 1 March 2017 from the respondent to "Gittany Homes (Sylvania)" setting out "Our Price For" four items, namely semi frameless shower screen, 2 doors sliding mirrors "built in", 3 doors sliding mirrors "built in", and polyurethane kitchen with stone benchtop (no appliances). Mr Douaihy's evidence, accepted by the Tribunal, was that this quote was orally requested by Mr Gittany in a conversation at the Sylvania site on or about 1 March 2017, and it reflected what had been agreed in earlier conversations with Mr Gittany.
Second, an amended version of this quote containing handwritten additions by Mr Douaihy in which he added "AND SUECHA P/L" after Gittany Homes, as well, as a new item, frameless shower screen with a price for that item. Mr Douaihy's evidence, implicitly accepted by the Tribunal, was that these additions were made on two separate occasions. First, the addition of the appellant's name was inserted on a date he could not recall "for my own records, as a reminder of who my debtor was". Second, the addition of the new shower screen item followed a conversation with Mr Gittany, about two or three months after the respondent commenced work at the Sylvania site, in which Mr Gittany said he did not want semi frameless shower screens anymore and it was agreed that frameless screens would be installed at $950, plus GST, for each screen.
Thirdly, a tax invoice from the respondent to the appellant dated 10 October 2017 with reference to the Sylvania site. This totalled $175,450.00, inclusive of GST, for works in relation to the Sylvania site (two items on the invoice concerned work on other projects). Amounts for 14 polyurethane kitchens, 22 frameless shower screens, 24 two door sliding wardrobes and 6 three door sliding wardrobes were specified. These applied the prices set out in the two quotes and totalled $125,840.00, inclusive of GST. Eight other items were specified concerning the Sylvania site, none of which appeared on the quotes. These were items for splash backs, sinks, four door sliding wardrobes, kitchens variations, mirrors, three months hiring scissor lift, white gloss cupboards and polyurethane cupboards.
Mr Douaihy's evidence about this invoice, implicitly accepted by the Tribunal (it was not denied by Mr Gittany), was that he issued it to Mr Gittany on or about 10 October 2017 and that it included charges for the "Additional Works". According to Mr Douaihy, these additional works were the works agreed to be carried out at a site meeting with Mr Gittany on 8 October 2017. Mr Douaihy's evidence (not denied by Mr Gittany) was that he pressed for payment of this invoice by text message to Mr Gittany on 2 November 2017 and by a letter from his solicitors to the appellant dated 28 March 2018.
Fourth, there was the June 2015, Fair Trading form, written home building contract for work over $20,000. Features of this document included:
1. A contract price of $4 million.
2. A signing date of 12 June 2015.
3. A completed checklist on page 3.
4. Signing of the appellant's acknowledgement, as owner, by Susan Gittany, as director, and Charles Gittany, as secretary.
5. A licence number given for J & G Constructions, as Contractor, in the section concerning owner and contractor details (page 5).
6. A stage of work for kitchens for the sum of $450,000.00 (page 14).
[3]
The Tribunal's decision
Turning to the relevant parts of the Tribunal's decision in more detail:
1. The Tribunal noted that it was not disputed that at some time the appellant contracted with J & G Constructions to be the builder in relation to the Sylvania works: at [11].
2. Having referred to aspects of the cross-examination of Mr Gittany and Mr Hazzoury, the Tribunal found it did not accept either of them as truthful witnesses and it was not prepared to accept any evidence provided by them unless it was supported by other evidence: at [78] and [86]. Undermining the credit of each of them was the conclusion that the Fair Trading form home building contract was (at [79]):
… concocted and manufactured by Mr Gittany and Mr Hazzoury at some unknown date but probably after the proceedings were commenced by Mr Douaihy for the purpose of defeating the claim.
1. So far as the credit of Mr Hazzoury was concerned, the Tribunal also relied upon the evidence from him in his affidavit that he was a licensed builder (which he accepted in cross-examination was incorrect) and his failure to support his evidence that he had arranged for others to rectify the respondent's work with any invoices from alternative contractors or bank statements evidencing payment for such work: at [76], [77] and [85].
2. The Tribunal came to its concoction conclusion about the June 2015 written contract on the bases: that particular information contained in the contract, namely the licence number for J & G Constructions did not exist in June 2015; that Mrs Gittany, who had signed as director of the appellant, was not a director at that time; that each of Mr Gittany and Mr Hazzoury had claimed to have completed the checklist in the contract by ticking all the boxes (including the answer "yes" to the question whether you had checked that contractor holds a current contractor licence): the inability of Mr Gittany and Mr Hazzoury to explain the difference between the contract price given in a construction certificate application (dated in October 2015) and the contract price in the written contract; and the manner in which each of these witnesses dealt with the cross examination about these matters. The Tribunal also made reference to a finding against Mr Gittany in earlier litigation (Gittany v Gittany [2014] NSWSC 761) that he had manufactured evidence and to the manner in which Mr Gittany responded to cross-examination about that finding.
3. Having rejected the evidence from Mr Gittany and Mr Hazzoury about the formation of a contract with the respondent, the Tribunal found that an oral contract was made with Mr Gittany as described in Mr Douaihy's statement which oral contract was later reinforced by the provision of the written quote on 1 March 2017: at [88]. It was a contract, partly written and partly oral: at [91]. In so finding, the Tribunal said it had been difficult to be confident in making findings about the formation of a contract and the status of the works because of the informal nature of the working and contractual relationships between the appellant, J & G Constructions and the respondent, as well as the need to disregard evidence found to be manufactured or untrue: at [87].
4. The contract so found did not comply with the provisions of the Home Building Act (NSW) 1989. Accordingly, the respondent could not seek payment on the basis of the contract and must rely upon establishing a reasonable value under their quantum meruit claim: at [91].
5. As to the quantum meruit claim:
1. The Tribunal found that the respondent completed works the value of which fell to be determined, including whether the works were incomplete or defective. It said (at [92]):
It is not necessary to determine the value to Suecha of the completed strata units but it is necessary in a quantum meruit claim to determine the value of the works completed by the applicant company.
1. The Tribunal concluded there was no valuation of the works installed by the respondent because, whilst the respondent's expert, Mr Nakhla, was a frank and truthful witness, he had not based his opinion on the work actually done by the respondent. According to the Tribunal, instead of examining the work actually done, by inspection or photographs or evidence of the actual costs spent, the expert had undertaken a "strictly theoretical exercise" of what it would cost to construct the kitchens based on the plans and specifications provided and relying on the Rawlinson guide: at [93]-[94].
2. In any event, it appeared to the Tribunal that the respondent had no intention, and did not, install kitchens reasonably valued at more than 2.5 times the amount the respondent had actually charged: at [95].
3. In these circumstances, and given that the appellant had not provided its own valuation of the respondent's works as installed, the Tribunal concluded that (at [97]):
The only evidence available to me is that contained in the quotation and the final tax invoice issued by [the respondent]. I find that the tax invoice was intended to be for works being completed and free of defects such that practical completion could be reached and the units being ready for sale, at least so far as [the respondent] would be responsible.
1. The Tribunal did not accept the appellant's assertion that the works done by the respondent were not complete and that rectification works were undertaken by other contractors. The Tribunal reasoned that there were no records of particular works being completed by other contractors. It did not accept the assertions of Mr Gittany and Mr Hazzoury. The evidence of Mr Seng, the project manager on-site, was inconclusive. Mr Douaihy said that following the on-site meeting on 8 October 2017 the respondent returned to the site and completed rectification of defects or incomplete works by about 13 or 14 October 2017, and there was no persuasive evidence before the Tribunal of any further works being carried out before 21 December 2017 when practical completion was reached: at [99].
2. The Tribunal found that two payments totalling $70,000.00 had been made by J & G Constructions to the respondent for the works, leaving a balance due and owing to the respondent of $99,450.00 (after also deducting a "deposit" of $6000.00 in the form of a motor vehicle transferred to the respondent). These payments by J & G Constructions, according to the Tribunal, had been made by J & G Constructions "as agent for [the respondent], who asserts it had paid all amounts claimed into J & B's (sic) account, for payment to subcontractors".
[4]
Grounds of Appeal
Five of the nine grounds of appeal were pressed. These were:
1. The Tribunal erred in finding that the appellant engaged the respondent by way of a partly oral, partly written contract.
2. The Tribunal erred in finding that the appellant did not engage alternative contractors to carry out the rectification works at its own cost and erred in not deducting this price from the amount awarded to the respondent.
3. The Tribunal erred in finding that the appellant unjustly retained the benefits of the alleged performance of the services by the respondent without paying reasonable remuneration for the works.
4. The Tribunal erred in finding that the appellant owes money to the respondent pursuant to a claim in quantum meruit as the elements of quantum meruit were not satisfied.
5. The Tribunal erred in not adhering to the fundamental principle of procedural fairness in the following ways:
1. The Tribunal did not provide adequate reasons for its decision.
2. The Tribunal did not fairly hear the appellant's case because of the language barrier that the appellant's witnesses experienced and the fact that the Tribunal unjustly labelled the appellant's evidence is not credible.
3. The appellant did not have a reasonable opportunity to present its case as it could not cross-examine the respondent's evidence and prove the false details particularised in same.
No argument was presented to the Appeal Panel in support of the points set out in (2), (5) (b) and (c) above and, accordingly, they are rejected.
Mr Weinberger, who appeared for the appellant, expressly abandoned all points on the appeal that sought to rely upon new evidence.
It can be seen that the grounds of appeal concerning formation of a contract between the appellant and the respondent and the claim in quantum meruit were stated in general terms without identification of any specific error.
In his oral submissions, Mr Weinberger referred to a number of alleged errors of law and fact which did not appear in the appellant's written submissions. His oral submissions bore little or no relationship to these written submissions. Mr Hopkins, who appeared for the respondent, objected to the new arguments but addressed them quite comprehensively in his oral submissions and indicated that the respondent did not wish to seek an adjournment in order to have more time to consider them.
Based upon Mr Weinberger's oral submissions, we treat the appellant as having raised the following alleged errors of law and fact:
1. With respect to what Mr Weinberger described as the "contract point":
1. The Tribunal erred in finding that the respondent contracted with the appellant and that was a wrong conclusion of law.
2. The conclusion that the appellant contracted with the respondent was one which no reasonable decision-maker would have made and, accordingly, was an error of law.
3. There were inadequate reasons for the conclusion about the existence of a contract between the appellant and the respondent and, accordingly, the Tribunal erred in law.
4. In arriving at the conclusion about the existence of a contract between the appellant and the respondent, the Tribunal failed to take account of relevant considerations and, accordingly, erred in law.
5. The conclusion about the existence of a contract between the appellant and the respondent was against the weight of the evidence. This raised an error of fact for which leave to appeal was required.
1. With respect to what Mr Weinberger described as the "quantum meruit point":
1. The Tribunal applied the wrong test or asked itself the wrong question, which was an error of law.
2. The Tribunal determined an amount to be owing without evidence to support a finding that any amount was payable, alternatively that part of the amount was payable. This was an error of law.
[5]
The limited appeal right
Under s 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), a party may appeal as of right to the Appeal Panel in an internal appeal on any question of law. In respect of any other grounds, in the case of an appeal from the Consumer and Commercial Division of the Tribunal (as this is), the appellant must, relevantly, satisfy the Appeal Panel that leave to appeal should be granted under cl 12 of Schedule 4 of the NCAT Act on the basis that:
…..the appellant may have suffered a substantial miscarriage of justice because:
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence,….
The principles regarding whether or not leave to appeal should be granted under cl 12 sch 4 of the NCAT Act were set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at [76]-[84].
In this regard, the Appeal Panel in Collins said (at [84]):
The general principles derived from these cases can be summarised as follows:
(1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
(2) 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 factfinding 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,
BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and the authorities cited there, SAB v SEM [2013] NSWSC 253 at [8] and [9] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
(3) In relation to an application for leave to appeal relating to a question of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21] and the authorities cited there.
[6]
The contract points
Underlying each of the contentions of error concerning the conclusion that the appellant contracted with the respondent were the following matters emphasised by Mr Weinberger:
1. The Tribunal had found that the appellant had at some time contracted with J & G Constructions to be the builder for the development. It was apparent that Mr Hazzoury was actively involved in the building work and that he was dealing with Mr Douaihy about his work. Mr Gittany had given evidence that J & G Constructions had invoiced the appellant in respect of the works from 29 July 2016 to 28 March 2019 (affidavit sworn 4 March 2020 at [11]).
2. The Tribunal had found that the respondent sought payment from both the appellant and J & G Constructions and had received payments from J & G Constructions. Mr Weinberger submitted that the payments made by J & G Constructions were a most telling piece of evidence against a contract having been made with the appellant - it had to be explained away to arrive at that conclusion, but there was no basis for the Tribunal's conclusion that they had been paid as agent for the appellant.
3. It was submitted that Mr Seng's evidence, who was a reliable witness, corroborated the evidence from Mr Gittany and Mr Hazzoury. This included some email correspondence involving Mr Seng. No reason had been given for rejecting his corroborating evidence.
4. It was submitted that the concoction conclusion was not open on the evidence and the adverse credit conclusion was challenged. It was said that the credit conclusion was a shorthand way of not grappling with the evidence.
At the outset, we note that Mr Weinberger presented no arguments in support of his contention that the concoction conclusion was not open on the evidence and that the adverse credit conclusion was challenged. For this reason alone, we reject these contentions. In his oral submissions, Mr Hopkins took us through the material that the Tribunal had relied upon in coming to the concoction conclusion, which matters were also set out in his written submissions. Having been taken to that material, we see no reason to disturb the Tribunal's conclusions about concoction and the credit of Mr Gittany and Mr Hazzoury.
With respect to Mr Seng's evidence, Mr Weinberger took as to passages in Mr Seng's affidavit (sworn 18 March 2020) in which Mr Seng asserted in general terms that the appellant did not contract with any of the tradesmen who completed works at the property, that this was the sole responsibility of J & G Constructions (at [11]) and that the respondent had contracted with J & G Constructions (at [7], [13], [15]). Mr Seng was the appellant's project manager.
Mr Weinberger also took us to a number of emails authored by Mr Seng that were exhibited to his affidavit (we were taken to emails at pages 503, 502, 501, 493 and 494 of the Court book for the appeal). The first of these (at page 503) was an email from Mr Seng to Mr Douaihy sent on 29 September 2017 and a reply to that email sent on that same date under the name of Mrs Douaihy, but, apparently, written Mr Douaihy. The email from Mr Seng suggests that, at this point in time, he thought the respondent's contract was with the appellant. This is because, having referred to giving the respondent until the middle of next week to complete all works, it said that from then on "Suecha P/L will be back charging you with delays notice." The reply under the name of Mrs Douaihy complained about a lack of payment despite many promises from Mr Hazzoury and Mr Gittany.
The next email we were taken to, sent on 4 October 2017 (at page 502) was ambiguous. First, it indicated Mr Seng's view that the respondent should be seeking payment from Mr Hazzoury because the "developer has done his drawdown for the works done so its up to the builder." Subsequently, it said that Mr Seng would give the respondent until the following Tuesday to complete the works and that if this did not occur the contract would be terminated and a new contractor awarded with back charges to apply.
The other emails that Mr Weinberger took us to (at pages 501-2, 493- 494), sent on 5 October 2017 and 7 September 2017, revealed Mr Seng's view that the respondent was a sub- contractor and it was J & G Constructions responsibility to pay it.
Mr Hopkins submitted that Mr Seng's statements in his affidavit and emails about the contract party were just his opinions based upon what he had been told by Mr Gittany and Mr Hazzoury. We agree with that analysis.
As to this, in his oral submissions, Mr Hopkins took us to evidence showing that Mr Seng had no direct knowledge of the contractual arrangements with the respondent and he came to act upon what he was told by Mr Gittany and Mr Hazzoury. In this regard, Mr Hopkins took us to an email from Mr Seng to Mr Gittany sent on 5 September 2017 (at page 491 of the Courtbook) in which Mr Seng indicated his frustration in dealing with Mr Douaihy and said: "I don't think he understand liquidated damages, have u got a written contract with him?".
Mr Hopkins also took us to parts of his cross-examination of Mr Seng in which Mr Seng accepted he did not inspect contracts in relation to the project (page 924), his understanding that J & G Constructions contracted with tradesmen developed from conversations with Mr Hazzoury and Mr Gittany (page 924), when he sent the emails he was shown in September 2017 he was proceeding on the assumption that Mr Gittany on behalf of the appellant had contracted with the respondent and that because he was told that wasn't the case his understanding became that it was J & G Constructions who had contracted with the respondent (page 925).
In these circumstances, we see nothing of any value to be obtained from Mr Seng's evidence, including his emails, concerning the contract question.
Furthermore, in these circumstances, we do not accept the contention that the Tribunal made an error of law in failing to consider Mr Seng's evidence in determining the contract question or in failing to address the significance of Mr Seng's evidence in its reasons on this question.
It seems to us that the Tribunal's reasons (at [61]) fairly reflect the significant aspects of Mr Seng's evidence on this subject, namely that Mr Seng agreed he had not seen any contract between the respondent and any other party, he agreed he assumed there was a contract between the appellant and the respondent and that he was then advised the contract was between J & G Constructions and the respondent.
Mr Hopkins submitted that there was no error of law by the Tribunal in arriving at its conclusion on the contract question. He submitted that the only relevant point in issue was who were the parties to the contract and that in the circumstances of this case this raised no legal argument- it was purely a factual issue which turned upon which version of two conflicting accounts of the events was to be accepted. It was submitted that given the general credibility findings it was hardly surprising the Tribunal came to the conclusion that it did. It was a conclusion that was open to the Tribunal to make.
Bearing in mind what we have already said about the nature of the issue between the parties concerning the contract question and the sharp difference between the evidence presented on the subject (see paragraphs 8 to 14 above), we agree with that analysis.
Given the credibility finding concerning Mr Gittany and Mr Hazzoury, it was open to the Tribunal to prefer Mr Douaihy's version of events, particularly his account of oral, contractual conversations with Mr Gittany. Once this step was taken, in a context where the only choice on the cases conducted by the parties was between a contract with the appellant or a contract with J & G Constructions, it became sufficiently clear that the respondent should succeed against the appellant on the contract question.
This was so regardless of the evidence and/or findings concerning the payments made to the respondent by J & G Constructions, Mr Hazzoury's involvement with the building work and the existence of a contract at some time between the appellant and J&G Constructions.
It followed from the conclusion that Mr Douaihy's version of conversations with Mr Gittany was to be accepted, with the consequence that an oral contract was concluded with the appellant, that the payments made by J & G Constructions must have been paid as agent for the appellant. It seems to us that this reasoning was implicit from the reasons of the Tribunal as a whole.
Accordingly, we reject the criticism that there was an absence of reasons from the Tribunal for the agency conclusion. Furthermore, in our opinion, it was unnecessary for the Tribunal, in the circumstances we have referred to, to have given consideration to these payments to any greater extent than it did.
It also follows from this analysis that the appellant's contention that the contract conclusion was against the weight of the evidence must be rejected. Clearly, the material relied upon by the appellant does not rise to the level where, as was pointed out by the Appeal Panel in Collins v Urban (at [77 (2)], the evidence "in its totality preponderates so strongly against the conclusion found by the Tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach".
Furthermore, insofar as the appellant relies upon error of fact concerning the "contract point", we refuse leave to appeal because, in our opinion, none of the circumstances that would warrant the grant of leave, as set out in paragraph 32 above, have been satisfied..
[7]
The quantum meruit points
On the hearing of the appeal, no challenge was pursued by the appellant to the Tribunal's finding to the effect that services and goods identified in the tax invoice were completed by the respondent and were free of defects such that practical completion was achieved. Two grounds of appeal concerning this finding (Grounds 2 and 4) were expressly abandoned and no submissions were made on the related Ground 3, which contended that the Tribunal erred in finding that the appellant did not engage alternative contractors to carry out rectification works.
Accordingly, as Mr Hopkins submitted, the issues on appeal concerned the quantification of an amount to be paid to the respondent in circumstances where there was no issue that the appellant had received the benefit of specific work that had been satisfactorily completed by the respondent.
Mr Weinberger raised two matters in support of the contention that the Tribunal applied the wrong test or asked itself the wrong question in relation to quantification. First, it was said that the Tribunal wrongly rejected that the test was to determine a reasonable value to the appellant of the services supplied. Secondly, the Tribunal wrongly regarded the contract price is relevant to the determination of reasonable value.
We can deal, shortly, with the first point concerning the need to determine a reasonable value to the appellant. We do not regard the Tribunal as having applied anything other than the approach referred to in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 per Deane J at 263, namely:
What the concept of monetary restitution involves is the payment of an amount which constitutes, in all the relevant circumstances, fair and just compensation for the benefit or "enrichment" actually or constructively accepted. Ordinarily, that will correspond to the fair value of the benefit provided (eg remuneration calculated at a reasonable rate for work actually done with the fair market value of material supplied)
The Tribunal did not err when it said (at [92]):
It is not necessary to determine the value to Suecha of the completed strata units…
This was not a reference to the value of the works supplied by the respondent. Rather, it was a reference to the strata units themselves, which included the kitchen another work done by the respondent. It was a remark made by the Tribunal immediately after it had said that the appellant has had the benefit of the value of the works supplied by the respondent "in being able to sell a number of units".
The Tribunal said that it was necessary to determine "the value of the works completed by the applicant company" (at [92]), and that the requirement for the expert was to "assess their [the works actually done by the respondent] reasonable value…" (at [93]). It seems to us that in referring to these matters the Tribunal was directing itself to the right question.
As to the appellant's second argument that the Tribunal wrongly treated contract prices as relevant, the Tribunal's critical conclusion was (at [97]:
The only evidence available to me is that contained in the quotation and the final tax invoice issued by [the respondent]. I find that the tax invoice was intended to be for works been (sic) completed and free of defects such that practical completion could be reached and the units being ready for sale, at least so far as [the respondent] would be responsible.
This conclusion followed the Tribunal's rejection of the evidence from the respondent's expert (Mr Nakhla) because he did not examine the works actually installed, and the Tribunal's acknowledgement that the appellant had presented no evidence about value.
In our opinion, the Tribunal was entitled to have regard to the information in these documents, insofar as they reflected the contract price. Contrary, to the submissions of the appellant, as we understood them, the prices stated in the contract are regarded as relevant in the assessment of reasonable value: see per Nettle, Gordon and Edelman JJ in Mann at [204] and Gageler J at [100]: see also Bradshaw v Complete Coating Commercial Pty Ltd t/as CCC Civil [2017] NSWCATAP 209 at [37].
In the latter case, the Appeal Panel said that the contract price was no more than a piece of evidence that might have been relevant to the finding of value to the recipient services but that it "should not have been the starting point and the conclusion of the Tribunal's consideration of the value…". However, in a case where, according to the Tribunal, it was left with no other evidence, we see no error by the Tribunal in reaching its conclusion of value from such evidence as there was of the contract price.
However, there remain questions as to what evidence there really was as to the contract prices and whether the Tribunal based its decision as to quantum on material that it was not open to rely upon because it was nothing more than the respondent's claim for an amount said to be due. In this regard, as we understood it, the appellant complained that in relying upon the tax invoice, as it did, the Tribunal, to a significant extent, relied upon figures for which there was no evidence that they were the contract prices.
To start with, it is clear that the three entries in the tax invoice for 14 kitchens for a total of $84,700.00, 24 two door sliding wardrobes for a total of $13,200.00 and 6 three door sliding wardrobes for a total of $4,950.00 (each amount being inclusive of GST) were based upon the agreed contract prices. This is apparent from both of the quotes dated 1 March 2017, the amended quote having made no change to the contract prices for these items. These quotes contain the same prices for these items as are set out in the tax invoice.
It is also clear that the entry in the tax invoice for 22 frameless shower screens for a total of $22,990.00 was based upon the agreed contract price given the Tribunal's implicit acceptance of Mr Douaihy's evidence about this oral variation, including price, which was reflected in the amended quote. The tax invoice applied the orally agreed price.
However, there was no evidence of any agreement as to price concerning the following 8 items in the tax invoice (all amounts include GST):
1. 16 splash backs for a total of $17,600.00.
2. 14 sinks for a total of $4,235.00.
3. 2 four door sliding wardrobes for a total of $2,200.00.
4. 6 kitchen variations for a total of $13,200.00.
5. 25 mirrors for a total of $1,375.00.
6. 3 months hiring scissor lift for $6,600.00.
7. 2 white gloss cupboards for a total of $2,200.00.
8. 2 polyurethane cupboards for a total of $2,200.00.
There was also no evidence as to the detail of what was actually installed or the work done concerning each of these items, or the basis of the charges, including, for example, costs incurred by the respondent in carrying out this work.
Such evidence as Mr Douaihy gave in relation to these additional items was vague. He gave evidence about the topic of "Additional Works" and about the tax invoice which he issued for the "Works" and the "Additional Works" (paragraphs 27 to 35, and paragraphs 43 to 45 of his statement). It was clear enough that the "Works" was that set out in the amended quote dated 1 March 2017.He gave evidence that Mr Gittany, in a conversation, asked him to carry out "additional works" ([27]). The balance of his evidence about such works tends to suggest the additional works were done in rectification of defects. If that was the case, it is not apparent why any extra amounts should be paid in respect of such work on a quantum meruit basis.
However, the Tribunal made no reference to these deficiencies in the respondent's evidence about these additional eight items.
In these circumstances, in our opinion, the Tribunal did err in its quantification of the quantum meruit claim by including the above eight amounts in the sum awarded. If the basis for doing so was that the amounts were supported by a combination of the quotes and the tax invoice, then the Tribunal was plainly mistaken because the quotes provided no support for the recovery of these items. If the Tribunal relied upon the tax invoice alone, then it was in error in doing so, because such evidence alone could not establish a reasonable value. Either way, in our opinion, the material relied upon by the Tribunal had no probative force to establish the value of the works the subject of these eight items. It was an error of law to conclude otherwise: Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32 at [16]; 241 CLR 390.
Mr Hopkins relied upon the Appeal Panel's decision in Slotwinski v Nutek Constructions Pty Ltd; Nutek Constructions Pty Ltd v Slotwinski [2019] NSWCATAP 158 at [35] to [36] as support for the proposition that an invoiced amount was, at least, some evidence of value in the quantification of a quantum meruit claim. He submitted that in the absence of contrary evidence (as was the case here) the Tribunal was entitled to regard an invoice issued pursuant to an otherwise unenforceable contract as reflecting the fair and reasonable value of the work.
However, the passages in the Nutek decision relied upon do not support Mr Hopkins submission. In that case the Appeal Panel upheld an award of a sum to a builder, on a quantum meruit basis, which was equal to the amount the builder (Nutek) had paid a sub- contractor (Elite), which had carried out the work. As the Appeal Panel said (at [35] and [36]):
35 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.
36 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.
As we have already indicated, there was no evidence that any of the amounts for the eight items referred to had been calculated by reference to the costs paid or incurred by the respondent in carrying out the works.
Mr Hopkins submitted that if we found error in the quantification of the claim then we should reassess the quantum and do so by taking account of two pieces of additional evidence. First, the sum of $450,000.00 attributed to kitchens in the Fair Trading form written home building contract. Second, Mr Nakhla's opinion of value set out in his expert report dated 5 December 2019. Mr Hopkins submitted that this evidence supported the view that the reasonable value of the works well exceeded the value recognised by the amount awarded ($169,450.00, being the amount ordered to be paid plus $70,000.00 already paid) and thereby supported the judgment amount.
We are prepared to reassess the quantum but we do not agree that this additional evidence supports an award for a greater amount than the value determined by applying the contract prices.
One aspect of the written home building contract that contributed to the concoction conclusion was the disparity between its contract price of $4 million and the lesser amount of $2.8 million given in the construction certificate application, as well as the inability of Mr Gittany to satisfactorily explain this difference. In our view, this deprives the kitchen figure in the document of any evidentiary force.
Mr Nakhla's opinion warrants more extensive consideration. Mr Hopkins submitted, as the Reply to the appeal foreshadowed, that the Tribunal erred in treating his opinion as nothing more than a "theoretical exercise". It was submitted that this was not so because it was based upon the plans that Mr Douaihy had created for the installation of the kitchens and the Tribunal had found that the works had been completed by the respondent and the defects rectified. Also, the Tribunal had found that it was impressed by Mr Nakhla as a witness.
In his report, Mr Nakhla set out an estimated construction cost of all of the Sylvania works set out in the tax invoice, save for a figure concerning "Kitchens Variation" (item (4) referred to above) and the lift (item (6)). Initially, he was instructed to inspect the works. Subsequently, he was instructed that an inspection was not required and he was asked to provide his opinion on the reasonable value of goods and services provided on the basis of the kitchen plans and materials said to have been used by the respondent. Mr Nakhla applied rates from Rawlinson's guide.
The listing of materials was short on detail and Mr Nakhla was not supplied with any photographs of the works. It was not common ground that the kitchen plans provided to Mr Nakhla were those used for the installation. There was evidence from the appellant's witnesses that they had never seen these plans. There was no evidence on behalf of the respondent that the works were installed according to the plans provided to Mr Nakhla or as to the materials that were used. There were unexplained and striking differences between Mr Nakhla's figures and those set out in the tax invoice. For example, Mr Nakhla's figure for the 14 kitchens and 16 splash backs was a total of $354,271.43, whereas the amount in the tax invoice for these items totalled $102,300.00. Mr Nakhla's figure for all the sliding door wardrobes was $72,087.84, whereas the amount in the tax invoice came to $20,350.00.
Given these deficiencies and discrepancies, in our opinion, the Tribunal was correct to disregard Nakhla's opinion of value.
Mr Hopkins drew our attention to the cross-examination of Mr Nakhla in which he was asked to agree, as he did, that the works would or might have a different value if, in fact, they had not been completed or not completed to a good standard. He suggested this indicated that the issues of completion and defects were the only real issues in the case about quantum. We are unable to draw such a conclusion from Mr Nakhla's cross-examination. The respondent bore the onus of proof on the question and there was no concession by the appellant in the proceedings at first instance, or on appeal, that the invoiced amounts determined quantum in the event that findings of completion and rectification of defects went against the appellant.
For these reasons, in our opinion, the Tribunal's assessment of value should be upheld in relation to the four items in the tax invoice that are the subject of the amended quote dated 1 March 2017, but not otherwise. These are the amounts charged in the tax invoice for 14 kitchens, 22 frameless shower screens, 24 two door sliding wardrobes and 6 three door sliding wardrobes. These amounts total $125,840.00 in respect of which the amount of $70,000.00 has already been paid. Accordingly, the amount awarded to the respondent should be the reduced amount of $55,840.00.
[8]
Orders
For the above reasons, we make the following orders:
1. The appeal is allowed in part.
2. The appellant is to pay the respondent, VSD Glass & Timber Pty Ltd, within 14 days, the sum of $55,840.00 instead of the amount of $99,450.00 ordered to be paid by the Tribunal at first instance on 20 April 2020.
3. Leave to appeal on grounds other than a question of law is refused.
4. If there is to be any application for costs by either party then written submissions in support of such application are to be lodged with the Tribunal and served on the other side within 21 days, including submissions as to whether a hearing about costs can be dispensed with and any costs issues determined on the papers. Written submissions in response to any submissions from the other party are to be lodged with the Tribunal and served within 14 days thereafter.
[9]
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: 07 August 2020