The Craftsmen Restoration & Renovations v Thomas Boland, Thomas Boland v The Craftsmen Restoration & Renovations - [2008] NSWSC 660 - NSWSC 2008 case summary — Zoe

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The Craftsmen Restoration & Renovations v Thomas Boland, Thomas Boland v The Craftsmen Restoration & Renovations

[2008] NSWSC 660

Supreme Court of NSW|2008-07-01|Before: Howie J

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Court

Supreme Court of NSW

Decision date

2008-07-01

Before

Howie J

Source

Original judgment source is linked above.

Judgment (129 paragraphs)

[1]

Introduction 1 HIS HONOUR: On 5 September 2001 the parties entered into a building contract for alterations to domestic premises in Riverview. The plaintiff was the builder and the first and second defendants were the owners of the premises. Problems arose between the parties in June 2002 and on 5 August 2003 the owners purported to terminate the contract on the basis of default by the builder in the manner in which the work was carried out. On 6 August 2003 the owners commenced proceedings in the District Court. On 12 August 2003 the builder commenced proceedings before the Consumer, Trader and Tenancy Tribunal ("the Tribunal"), the third defendant. 2 Eventually the two matters came on for hearing before Senior Member Paull. The parties were represented by counsel, Senior Counsel in the case of the owners. There was a conclave of expert witnesses, eight hearing days from 22 August 2005 through to March 2006 and submissions ran over four days from May to June 2006. The Tribunal delivered its decision on 28 August 2006. The judgment of the Senior Member runs for 93 pages. The judgment was substantially in favour of the owners. 3 Almost immediately the builder commenced proceedings by summons in this Court seeking declaratory relief as to the rights of the parties and orders in effect overturning the Tribunal's findings and replacing them with those in favour of the builder. The owners in effect cross-claimed by a summons seeking to quash some of the orders made by the Tribunal on the basis of errors of law. 4 Consistent with the manner in which the dispute has so far proceeded, there has been voluminous material placed before this Court. The matter was listed for hearing with a two-day estimate although I had only one day then available. However, during the hearing it became obvious that the matter could not be completed largely because of the tender by the builder of a 46-page document setting out the alleged errors made by the Tribunal, relevant sections of the transcript, and submissions by the builder. It was referred to as an "aide memoir". The owners' legal representatives had not previously seen the document and they wished to have time to consider it. It should be noted that in April 2008 the owners responded to this document with a critical analysis of it extending over 48 pages. 5 The matter was stood over to the last two days of the 2007 term and further submissions were filed. At the completion of the hearing the parties sought to make further submissions in writing. Written submissions on behalf of the owners were not filed until April 2008. The builder raised certain objections to these submissions and there has been further correspondence between the solicitors for the parties and the Court. The incessant bickering between the parties and their legal representatives has continued even after this Court reserved its decision. 6 It is appropriate here to note that the matter was not conducted in a way that was appropriate for the resolution of a dispute before the Tribunal. One of the objects of the Consumer, Trader and Tenancy Tribunal Act 2001 (the Act) in establishing the Tribunal is:

[33]

(1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the Supreme Court against the decision. (2) An appeal is to be made in accordance with the rules of the Supreme Court. The rules of the Supreme Court may provide that an appeal (or such classes of appeal as may be specified in the rules) may be made only with the leave of the Court. (3) After deciding the question the subject of such an appeal, the Supreme Court may, unless it affirms the decision of the Tribunal on the question: (a) make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or (b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal. (4)…………… (5)…………… (6)…………… (7)…………… (8) A reference in this section to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal. (9) The regulations may exclude the making of an appeal under this section in such classes or description of cases as may be prescribed. 17 The parties wished to tender the whole of the transcript of the proceedings before the Tribunal and the exhibits. I made it clear that I did not intend to read any documents unless they were specifically referred to in submissions. As a consequence a "joint bundle of documents" was tendered. That contains the transcript of four days of the hearing including the seventh day, 22 November 2005, when the two experts, Mr Ogden for the owners and Mr Austin for the builder, gave concurrent evidence. It also includes the transcript for 27 March 2006, the last day of the hearing before submissions and when Mr Boland, one of the owners, gave further evidence. Other than that the parties annexed portions of the material before the Tribunal, upon which they wished to rely, to their submissions. There are six volumes of documents.

[48]

Giles JA stressed (at [2]) the necessity on an appeal under s 67(1) of identifying the Tribunal's decision(s) of a question with respect to a matter of law and confining the appeal to the question or questions of law so decided. Determination (a) Termination of the contract 30 The first two grounds of appeal relied upon by the builder are that the Senior Member erred in law in finding that the owners were entitled to terminate the contract in accordance with clause 12.3 of the contract on 3 August 2003. It is alleged that there were subsidiary errors of law made by the Tribunal in reaching this decision. The particular findings of the Senior Member that are challenged are numbers 12, 17, 18 and 19 as set out in the Tribunal's reasons quoted above. 31 There is no issue that the owners were in breach of the contract by the failure to pay the eighth progress payment following certification by the architect. Nor is it in dispute that the builder was entitled to issue the notice suspending works on 8 July 2002 in accordance with cl 12.7.1 of the contact. 32 What the builder does dispute is the finding that in December 2003 the builder "must be taken to have waived his rights under the suspension notice" (finding 12). The builder also disputes that the owners were not in breach of the contract when they issued the notice terminating the contract, (finding 18) because the failure to pay the eighth progress payment was not a "breach" under cl 12.3 so as to preclude the owners from exercising their rights under that clause (finding 19). The builder contends that these decisions are erroneous "in respect of a question of law". (i) the builder's abandonment of the right to terminate 33 The factual bases for the Senior Member's findings are set out in her reasons commencing at page 50. It is unnecessary to detail them given the issues raised on the appeal. In brief they are as follows. 34 On 19 June 2002 the builder submitted the claim for the eighth progress payment. The architect certified the claim on 24 June 2002. By 4 July 2002 the builder was aware that there was a problem with the payment and sought a written explanation from the architect for the delay and enquired when it would be paid. The architect replied that it was a matter between the builder and the owner. The Senior Member held that the owners had withheld progress payment 8 on the architect's advice. 35 On 8 July the builder purported to suspend the works. The Senior Member found that the builder was entitled to take that step and to commence action to end the contract under cl 12.7. 36 On 5 August the builder sent a notice of dispute pursuant to cl 13.1 of the contract. On 9 August the architect advised the builder that the certificate was to be "withdrawn" by reason of defective work. The Senior Member held that the architect was not entitled to withdraw the certificate. 37 The Senior Member concluded that the owners were in breach of the contract by failing to pay the progress payment. 38 The Senior Member found that from 8 July both parties made "genuine and constant" attempts to settle the dispute (finding 10) and that they met in an attempt to reach a resolution from 21 August 2002 to 4 December 2002 (finding 11). 39 However, the Senior Member found that "by early December after the third dispute resolution conference and some 5 months after the builder had issued the suspension notice, he had abandoned his rights in respect of that notice". The Senior Member reached this conclusion principally from a consideration of cl 12.7 of the contract. This clause is relevantly as follows (the emphasis to the word "immediately" is that given to it by the Senior Member when quoting the clause):

[57]

(e) the finding was in the face of the evidence that the owner was in breach of the contract. 43 The owners argue there was no error of law made by the Senior Member in determining that the builder had waived its right to terminate the contract. It is submitted that it was a finding of fact made in accordance with the evidence. 44 It seems to me that the Senior Member was correct to read into the contract a term that the builder had to exercise its right to terminate the contract within a reasonable time following the giving of the notice suspending works. The builder could not refuse to continue to carry out the work and yet keep the contract on foot indefinitely. True it is that while negotiations were underway under the dispute resolution procedures, the builder could not be expected to terminate the contract as it was taking action in order to keep the contract alive. It could not be said that the builder waived or abandoned any rights by making a genuine effort to resolve the dispute with the owners, especially as the owners were themselves in breach and could have at any time resolved the dispute by making the payment that was due under the contract. Clause 13.6 of the contract preserved rights accrued to the builder in the event of no agreement being reached between the parties after efforts to resolve the dispute. 45 But it was open to the Senior Member to find as a fact that the dispute resolution progress had effectively reached an end by December 2002 and that the builder should then have made a decision what to do about the breach by the owners: either to terminate the contract or to carry on with the works notwithstanding the breach. It was further open to the Senior Member to decide that at least by July 2003 the builder had in effect decided to take no further action under the contract and certainly not to exercise the right of termination immediately or in the near future. 46 Both parties have referred me to the conduct of the builder and the owners after December 2002. The submission is made by the builder that in light of that material the builder could not be taken to have abandoned its right to terminate and was still negotiating. The builder submits that the Senior Member could not have taken this material into account in finding as she did. There is no direct reference to it in her judgment. 47 There were offers of settlement made by the builder through to April 2003 but none of them refers to any intention to terminate the contract if the offer were refused. There was thereafter an attempt at mediation but that broke down when the builder took umbrage at the owners' approaching the mediator. The builder made no attempt to attend to defective work even where it was not in dispute and had occurred before the issue of the notice suspending the works. There is little doubt that the builder was using the suspension notice as a tactical advantage in the negotiations without bringing the dispute to a head. 48 The finding by the Senior Member is one of fact, or at least mixed fact and law. It does not matter that this Court may have come to a different conclusion. The builder never did exercise the right to terminate the contract between the offer in April 2003 and the purported termination by the owners in August 2003 even though all attempts at resolution of the dispute had virtually come to an end in July. 49 I am not persuaded that the Senior Member's decision as to the abandonment of the builder's right to terminate the contract was an error "with respect to a matter of law". In any event it does not seem to me that this finding has any particular relevance in light of my finding in relation to the termination of the contract by the owners. (ii) the owners' termination of the contract 50 On 16 July 2003 the owners issued a notice under cl 12.2 of the contract calling upon the builder to complete the works or the owners would terminate the contract. That clause is as follows:

[74]

"It appears to be generally accepted that contractual rights to determine [a contact] are included into (sic) expand the common law rights to determine contracts ( Brooking on Building Contracts , 4th edition, DJ Cremean, BA Shnookel, M & H Whitton, p2091)." [I note the correct page reference is 209] 60 This statement refers to a comment made by the authors of the text to which the Senior Member referred in a chapter entitled "Express Powers of Determination" and under the heading "Proprietor's powers". However, the comment should be seen in the context in which it was made in the text. It comes at the end of a paragraph dealing with a decision concerned with a provision of a contract that used the term "substantial breach of contract" in respect of the power of a proprietor to terminate the contract. That decision held that the breach by the builder had to be a substantial one but not one that was so serious as to justify termination at common law. This decision was one, according to the authors, that was consistent with "a general perception that contractual rights to determine are included into contracts to expand the common law right to determine". 61 In effect the Senior Member has considered the word "breach" in cl 12.3 to mean "a breach that would have amounted to a repudiation of the contract under the common law". That is apparently why she quoted the earlier passage giving emphasis to the words "assuming that both the breaches are repudiatory". I note in passing that a failure to pay a progress payment would not necessarily amount to a repudiation of the contract. It would depend upon all the circumstances including how many progress payments had been made. But this particular contract had to be read according to its terms and not by comparing or contrasting it with what might have been the situation under the common law. In any event the statement from Brooking quoted above refers to what is "generally accepted", and does not purport to state a definitive principle of construction of provisions for the determination of a contract. 62 There is nothing in the contract between the parties that suggests that there are breaches under the contract having different degrees of seriousness. Nor is the word "breach" in cl 12.3 modified in any way, for example by the use of the phrase "in substantial breach of the contract". I do not understand why the word should not be given its normal meaning, even if such a meaning might appear to be unjust in a particular factual situation. But I see no injustice in the present case when the owners could so easily have remedied the breach at any time. In any case a refusal to pay the progress payment for 13 months might amount to repudiatory conduct. 63 The learned authors of Brooking refer to the type of provision contained in cl 12.3 as one being found in "some older standard form building contracts"; see [12.14] at pg 226. Although they comment on the drafting of the clause and a problem as to whether it is the notice specifying the default or the notice terminating the builder's employment that should not be "unreasonable or vexatious", they make no comment on the proviso concerning the proprietor not being in breach. There is no suggestion in the text that the proviso should be read down in the way that the Senior Member did. 64 In my opinion the Senior Member erred in law in her construction of cl 12.3 by not giving the term "breach" its ordinary meaning as "having failed to comply with a term of the contract". The Senior Member accepted that the owners were in breach of the contract from the time they refused to make progress payment 8. As I have noted, that was a breach that could easily have been remedied. The owner should have made the payment and then pursued other rights under the contract to address the defective work. In my opinion the owners' position at common law was irrelevant when considering whether they were entitled to proceed under cl 12.3. In effect the parties had abandoned the contract by August 2003. 65 Whether this error makes any substantial difference to the orders that should have been made by the Tribunal will be considered later. (b) building defects 66 A substantial dispute between the parties before the Tribunal and before this Court concern various alleged defects in the work carried out by the builder and in particular the installation of the Trend windows. The latter dispute was a major source of the evidence before the Tribunal and the submissions before this Court. As I have noted, there was a conclave of experts formed at the Tribunal to consider these issues and a number of experts gave evidence on this aspect of this dispute including the architect. (i) the architect 67 It was argued by the builder that, because of the position of the architect under the contract, his evidence should have been given primacy to the views of other experts called at the conclave and who gave evidence before the Tribunal. It was submitted that the Senior Member erred in law in not treating the evidence of the architect in this way. 68 Much was made on behalf of the builder of the architect's role under the contract as the "assessor, valuer and certifier" under cl 5.2.3. He performs this role on behalf of the owner, as his agent. His involvement in the building may make him an important witness when it comes to his opinion on various aspects of the work when there is a dispute. His on-site experience may mean that his evidence might be preferred to another expert who was not in so advantaged a position. But it does not seem to me that the Tribunal or any other court must of necessity gave pre-eminence to his opinions over those of other experts regardless of the qualifications of the other experts. 69 The Senior Member referred to this argument as follows (at 34):

[77]

(ii) The builder's expert, Mr Austin 71 A major complaint raised by the builder in this Court was the attitude of the Senior Member to the evidence of the expert for the builder at the Tribunal, Mr Austin. It was claimed in effect that the Senior Member treated his evidence unfairly and as a result denied the builder procedural fairness. Further it was submitted that the Senior Member was unfair to the builder because of criticism she made of the conduct of his solicitors during the conclave of experts at which she was not present. 72 There is a lengthy affidavit by the solicitor for the builder in relation to this issue. The background is that the owners employed a company to rectify the works once they had purported to terminate the builder's employment. For the proceedings in the Tribunal they produced an expert report prepared by Mr Ogden as to the rectification of defects. The solicitor for the builder took objection to the report on the basis that many of the matters had not been specified in the owners' amended points of claim. The solicitor instructed Mr Austin not to consider these matters when he was inspecting the site in order to comment upon Mr Ogden's report. 73 At the conclave of experts the owners were directed to prepare a Scott's Schedule in relation to defective work. Some of the items on this schedule were those appearing in Mr Ogden's report and disputed by the builder as not being originally claimed by the owner. It was agreed to mark these items as "not claimed". All items claimed were considered by the conclave and a document, T1, was prepared that listed the items and the experts' views as to the rectification costs of each item. Mr Austin had marked some items on T1 as "not inspected" or "not claimed". 74 After the conclave concluded there was correspondence between the legal representatives of the parties as to the "unclaimed" matters; the owner insisting on the claim and seeking that the experts jointly review these items, and the builder insisting that the items were not to be considered by the Tribunal. 75 At the hearing the Senior Member dismissed the objection by the builder to the "unclaimed" items on the basis that the Tribunal was not bound by strict pleadings and that the builder had ample notice of all the items claimed and had been able to address them (at 15 and 720 of the transcript). They were set out in a document that became T3. Mr Austin gave evidence about these matters without having inspected them. 76 The Senior Member commented upon the course of conduct of Mr Austin as follows (at 38):

[79]

This, in addition to the other matters I have raised above in relation to the windows, lessens the weight of Mr Austin's evidence. Thus where there is a conflict between Mr Austin and Mr Ogburn's evidence, I have generally preferred the latter." 77 The builder complains that the Senior Member did not raise her criticism of Mr Austin's conduct during the hearing so that it might have been addressed by submissions or further evidence and hence there was a breach of procedural fairness against the builder. There is also complaint about the criticism of the builder's lawyers contained in the above quote, but that was a comment made in passing that could not possibly give rise to any defect in the hearing or the Senior Member's reasons whether or not the criticism was justified. 78 It is unwise for any court or tribunal to use criticism of a witness's conduct to reflect adversely upon the witness's evidence without raising that matter with the party calling the witness. Of course some matters that might affect an assessment of the evidence of a witness may not be apparent or sufficiently apparent at the time of the hearing to permit the tribunal to raise the issue. Some matters are impressionistic or come to light when a detailed examination is made of the evidence of the witness when compared with other evidence. It is not every matter affecting the witness's reliability that needs to be raised at the hearing by the tribunal. 79 It seems to me, with respect, that the criticism of Mr Austin was unduly harsh, even if it were justified, which I doubt. Clearly the builder's lawyers made a strategic decision as to what instructions to give Mr Austin in relation to the material contained in Mr Ogburn's report upon which Mr Austin was to comment. The criticism, if any, should have been made of the builder's lawyers and, if their conduct meant that less weight could be given to the evidence of Mr Austin in relation to those matters that he had not inspected, so be it. This would have been as a result of the attitude taken by the legal representatives of the builder to the proceedings in the Tribunal, proceedings that their client had commenced. In the end the decision to treat the proceedings as having a degree of formality more appropriate to the District Court and to take pleading points resulted in Mr Austin being less able to assist the Tribunal on deciding the matters contained in Mr Ogden's report. 80 In any event, whether the criticism of Mr Austin was justified or not, it does not seem to me that the result has been a breach of procedural fairness. It was not this criticism alone that caused the Senior Member to diminish the value of the evidence of Mr Austin. The Senior Member was critical of Mr Austin for his failure to conduct water tests on the windows and she did not accept his explanation that he did not have sufficient time to do so (at 31). She was also critical of his evidence in relation to window fins and the installation of flashings (at 32). The builder raises no criticism of these findings. It is clear that the Senior Member would have preferred the evidence of Mr Ogden to that of Mr Austin regardless of the particular criticism about which complaint is now made. In my opinion the Senior Member was entitled to come to the finding of fact that she did when choosing between expert witnesses. (iii) Denial of access to builder 81 By 5 December 2003 the owners had commenced rectification work on the premises using new builders. The builder sought access to the site on 13 December but the owners refused this request on 19 December. Despite a letter from the builder's lawyers advising that they would consider the denial of access as a defence to any claim by the owners for rectification work, the owners made no offer of access. On 11 February 2004 the Senior Member gave an indication that the denial of access might lead to inferences being drawn adverse to the owners. Access was granted on 16 February after the rectification work had been completed. 82 This was a matter ventilated at the Tribunal with all the vigour that attended every issue raised between the parties. It was dealt with fully by the Senior Member in her reasons (at 10ff). She determined that the explanation given by the owners for refusing access in December was both plausible and reasonable. Ultimately the Senior Member made the following decision (at 12):

[93]

I will return to this comment later. 88 I am quite unable to see how the decision of the Senior Member in any way involved an error of law. The submissions of the builder simply seek to relitigate at length the issue determined by the Senior Member, an issue of pure fact. 89 There was ample evidence to support the findings of the Senior Member and the submissions of the builder before this Court, with respect, take a very narrow view of the evidence much of which is quoted out of context, isolating single answers to particular questions and then seeking to argue the generality. The simple fact is that, apart from the evidence of the builder's expert, the predominant evidence was that the leaking was due to poor installation, because the windows were out of alignment, and/or because of the absence of flashings. As has already been indicated, the Senior Member did not accept the evidence generally of the builder's expert and she was entitled to come to this view. 90 There was a dispute between the builder and the architect as to the use of flashings; the builder insisting that his instructions were that the flashings not be visible. But the Senior Member determined that dispute for reasons that she gave adverse to the builder (at 29-30). Mr Ogburn was of the opinion that the use of flashings would not have made any difference because the windows had not been installed correctly. Mr Romeika was critical of the windows as not being compliant with the applicable standard but was of the opinion that this was not the cause of the leaking. His view was that there was no, or insufficient, flashings. He was critical generally of the installation of the windows. Trend offered to replace the windows but this was not an admission of any defect in the windows, as it insisted that they had been incorrectly installed. 91 Of course, if the windows were installed incorrectly, it did not matter that the owners chose the brand of windows. Nor was it matter for the architect to determine and instruct the builder in detail how to install the windows or whether or not to use flashings. As I have already indicated, there was a dispute between the architect and the builder about the instructions given by the architect and this was determined adversely to the builder. (v) Statutory warranties 92 It is clear that the builder purchased the windows from Trend and supplied them to the owner by installing them into the building. It was common ground that the builder purchased the Trend windows upon the instructions of the owners. The question of warranties by the builder under the Building Act arises. Section 18B of the Act relevantly provides:

[95]

"In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from instructions given by the person for whom the work was done contrary to the advice in writing of the defendant or person who did the work." 94 It seems clear that it was to this issue that the Senior Member was referring in the second quote from her judgment above when she commented upon the fact that it did not matter whether the leaking was due to defective windows or defective installation. The result would be the same because the builder had breached the warranty under s 18B(b) in relation to his supply of those windows. The builder does not come within the statutory defence because he did not give "advice in writing" to the owners that the windows were defective. 95 Although it is unnecessary for this Court to decide the issue, it seems to me that there is a legislative intention that the warranties and defences available are to be only those set out in the Act. The builder argued that the defence in s 18F was only one defence available. But I find it impossible to accept that, if the defence provided to a statutory warranty does not apply because the builder has not done what was required to engage the defence, the builder can look to some other non-statutory defence that does not have such a precondition. 96 The builder argued that he installed the windows at the express instruction of the architect and that it was obliged to comply with that instruction under the contract notwithstanding the builder's view, orally expressed to the architect, that the windows were defective. It was submitted that "contractual compliance with an Architect's instructions in the face of reasonable objection by a Builder is within the contemplation of section 18F". I do not accept that submission. The builder could, and should, have raised those concerns in writing with the architect. The defence would then have applied. It seems clear to me that the defence is limited in order to avoid the very contest that arose in this case: a dispute as to whether the builder gave advice against the work it was required to carry out. By not giving advice in writing the statutory defence did not apply. There is no justification to read the defence wider than it is stated or to read some other defence into the Act. 97 In my opinion, if the windows were defective, the builder was in breach of the statutory warranty in respect of them so far as the owners were concerned. The builder would have to look to Trend for any compensation for the breach of any warranty that it gave in selling the windows to the builder. (c) Bias 98 It was submitted by the builder that, given the breach of procedural fairness in relation to the evidence of Mr Austin, its expert, and the mistakes of law that allegedly infest the reasons of the Senior Member, there is a reasonable apprehension of bias on the part of the Senior Member to the builder. 99 This ground of appeal does little to commend its drafter. For my part, allegations of bias, either actual or imputed, against a tribunal should not be made without good justification. If there were errors in the judgment sufficient to warrant the findings of the Tribunal being overturned, it would not matter whether there was apprehended bias or not. If there were a breach of procedural fairness sufficient to find that the proceedings before the trial miscarried, similarly the allegation of bias is superfluous. 100 But in any event, there was, in my opinion, only one significant error of law in the reasons by the Senior Member and that merely discloses that she is human. There was no breach of procedural fairness. From that part of the transcript I have seen, it is evidence that the Senior Member strove to deal with the matter fairly and expeditiously against sometimes taxing conduct by the parties or their representatives because of the antagonism of the parties toward each other.

[96]

(v) Damages 101 Senior Counsel appearing for the builder eschewed during the hearing before this Court any reliance upon a claim for quantum meruit. There is no claim by the builder for compensation by reason of the termination of the contract other than for monies owed. Although the owners repudiated the contract by giving notice terminating the builder's employment in breach of the contract, it simply meant that the contract was then at an end. If the builder had not already abandoned its contractual rights and obligations by the time of the owners' repudiation, as the Senior Member found, the builder certainly accepted the repudiation. But, of course, it does not follow that rights and obligations accrued under the contract that had not been abandoned thereupon ceased to exist. The owners were entitled to rely upon statutory warranties and the terms of the contract up until the time it was terminated. 102 Clearly the builder was entitled to the eighth progress payment and interest on that amount from the date it was due. In accordance with the Senior Member's findings as to defective work carried out by the builder, the owners were entitled to reasonable costs for rectification of those defects. None of this is in dispute. The issue litigated before the Tribunal and again before this Court is the amount of work that needed to be rectified and the costs of the rectification. These are clearly matters of fact. (i) The Tribunal's assessment. 103 The Senior Member held that the owners should be reimbursed for the cost of replacement windows together with the costs associated with the removal of the Trend windows and the installation of the new windows. She awarded the owners the amount of $22,210.33, being the costs of the Trend windows even though the owners had installed more expensive windows. The Senior Member accepted Mr Ogburn's assessment of the costs for the removal and replacement of the windows. This determined on a total sum as damages in respect of the windows of $60,024.33. 104 The Senior Member considered the other claims made by the owners and made ruling to which I will refer shortly 105 The builder was to receive the eighth progress payment of $21,662.39 and $11,705.90 retention money plus interest on those amounts. (ii) The builder's submissions 106 The builder submitted that the owners were not entitled to damages in respect of any item "where the Builder was unreasonably denied access by the Owners to inspect (and where such access was denied)". But the Senior Member decided that the owners did not act unreasonably in denying the builder access. This was clearly a finding of fact and is not to be reviewed by this Court. 107 The builder also submitted that the owners were not entitled to recover any damages "for any item of alleged defective work not claimed or pleaded by the owners". This was a matter dealt with by the Senior Member. It was open to her to reject a similar submission made before her and there is no error of law arising. This submission should be rejected. 108 The builder next submits that "any damages for defective or incomplete work should be limited to the costs the Builder would have incurred if he had been given the opportunity to complete that work". I do not understand why the damages should be so limited or how the Senior Member erred in law in the manner in which she calculated the damages. 109 In relation to the Trend windows the builder submitted that the owners were entitled to the refund of the costs of the windows and the $3000 towards removal and reinstallation. This is the amount of the ex gratia payment made by Trend to the builder. Again I do not understand why this Court should not adopt the damages awarded by the Tribunal unless it can be shown that in someway the assessment of the damages was erroneous in respect to a question of law. In my opinion no such error has been shown. The owners' submissions (i) rectification costs 110 After the contract was at an end by reason of the owners' notice purportedly terminating the builder's employment, the owners had the work completed by a company, BRM. The owners paid BRM $78,364.00 for rectification of the works and claimed this amount. However, at the conclave there was a document drawn up, T1, containing the items of work claimed by the owners against which the two experts gave opinions as to the reasonable costs of rectification. The Senior Member described this document in her reasons (at 12) as "persuasive evidence". 111 The Senior Member notes that the owners' principal argument was that they should recover the actual cost of rectification work done by BRM and stated (at 130);

[103]

[99] This does not mean that a theoretical reasonable cost is to be preferred over the actual cost where the actual cost is known and can be taken as the reasonable cost. If the rectification work has not been carried out, then a theoretical reasonable cost must be found and, because damages must be assessed once and for all, must be awarded even though the rectification work might not be carried out. (I have held that, if it is found that the rectification work will never be carried out, no damages should be awarded: see Central Coast Leagues Club Ltd v Gosford City Council, 9 June 1998, unreported). But if the rectification work has been carried out and the actual cost is known, that provides sound evidence of the reasonable cost and should ordinarily provide the basis for damages. 115 Complaint is made by the owners that the Senior Member did not give reasons why she preferred the costs calculated on T1 over the actual costs of rectification paid to BRM, particularly where there was no issue taken with the reasonableness of the actual cost of the rectification of works. 116 As I have already indicated the assessment of damages is primarily a question of fact and provided it was open to the Tribunal to assess damages in the way that it did, it cannot be a ground of appeal to this Court under s 67(1) that some other way of assessing the damages may have been fairer or more appropriate. 117 This ground seems to me to give rise to a question of fact within the passage I have quoted above from Azzopardi. There was evidence before the Senior Member as to the reasonable costs of rectification contained in T1. The actual costs may be "powerful evidence" as to the reasonable costs of rectification but it is not the only evidence. One of the significant purposes of the expert evidence was to provide the Tribunal with the evidence in order to assess damages. The Senior Member was entitled to find it persuasive on the basis that it was the joint evidence of experts from both sides. Although there was no evidence to the effect that the actual payment to BRM was unreasonable, in my opinion it was open to the Senior Member to assess the damages according to the evidence from the experts who had given evidence before her. 118 The reasons of the Senior Member acknowledge the competing submission made on behalf of the owners but she determined that the evidence of the experts was "more neutral", by which I presume she meant that it was an assessment made for the purposes of the Tribunal by the owners' own expert. I accept that there can be different estimates as to the costs of rectification and yet both be reasonable. I acknowledge that it might have been fairer to the owners to use the actual costs paid when there was no challenge that the amount for rectification by BRM was unreasonable. However, I do not believe there was an error of law. The reasons for the decision to use the T1 estimate rather than the actual cost of rectification could have been more fulsome but they seem to me to be adequate. It may be that the reasons show that the decision was unreasonable but this is not a valid ground of appeal. (ii) Trend windows 119 It is submitted on behalf of the owners that the Senior Member erred in law in relation to her treatment of the evidence as to the replacement of the Trend windows. 120 The builder received the sum of $22,210.30 from the manufacturer of the windows made up of the cost of the windows and a contribution to removal costs. By that payment Trend become the owners of the windows. 121 The Senior Member found that the only way of rectifying the problem with the windows was for their replacement. The owners had replaced the windows with those of better quality that were more expensive. Although the owners were seeking repayment of the cost of Trend windows, and not the more expensive brand, the Senior Member found that there was no evidence of the cost of new Trend windows (at 35.8 and at 82.8) and, therefore, awarded the owners the refund that Trend had allowed to the builder. 122 However item 72 of T1 was the cost of the replacement Trend windows according to the evidence of Mr Ogden given at the conclave and recorded on T1. As has been noted above, the Senior Member had indicated her preference for the evidence of Mr Ogden over the evidence of Mr Austin. There was no basis upon which the Senior Member would have rejected the evidence of Mr Ogden on this matter. It appears that the Senior Member simply overlooked this evidence. 123 The Senior Member recognised that the appropriate measure of damages was an amount that put the owners in the position as if the breach had not occurred (at 35). That was in this case the actual cost of replacement of the windows. However, in effect the Senior Member allowed an amount being the reimbursement of the amount paid for the windows and not the cost of their replacement. 124 The builder answers that the claim by the owners was for the more expensive windows as was clear from the Amended Statement of Claim that mentions the "Fantasy Windows". However, this matter was fully argued before the Tribunal and evidence given about the matter. It was not a case of the Senior Member refusing to allow the claim because of the erroneous pleading but rather that she had simply overlooked evidence on the matter when she came to determine the issues and deliver her reasons. 125 In my opinion the Senior Member erred in law in finding that there was no evidence as to the cost of the replacement of the Trend windows. This was not a case where she had to assess the evidence and determine whether to accept it or reject it. The result of the error was in adopting the costs reimbursed to the builder for the windows, being $22,210.00, rather than the costs for the replacement of the Trend windows, being $26,710.00. Ultimately the cost of replacement of the Trend windows should have been allowed at $65,255.50, a difference of a $5,231.17 over that allowed by the Senior Member. The builder accepts that there was also a slip in the figures used by the Senior Member in relation to this claim. 126 The Senior Member also should have ordered that the windows in the possession of the owners be made available to Trend, who obtained ownership under the Deed of Release, and not to the builder which had no longer any rights in the Trend windows removed from the owners' premises. (iii) Costs of experts and consultants 127 The owners claim that the Senior Member made an error of law in failing to award damages for professional costs in respect of experts retained by the owners to identify defects in the work and to provide advice in carrying out the rectification work. 128 The Senior Member stated the following in her reasons with respect to this claim:

[109]

What is more, if, as is claimed, Mr Ogburn endorsed and adopted the National Building Solutions' report, it may be that there is some overlap in the fees claimed for this report and Mr Ogburn's fees. In the event of a costs order, a cost assessor is best placed to assess the disbursements necessarily incurred in the owners' case 129 The owners complain that there was a "significant" claim for damages arising from the cost of the provision of advice by experts in the rectification of the works and that the invoices in evidence before the Tribunal make it clear, at least so far as some of the experts are concerned, what amount of the fees paid was due to advice in respect of the rectification work and that advice given in respect of the litigation. 130 It is submitted that the failure to award damages under this claim amounted to an error of law because the Senior Member failed to apply "the correct principle" to her finding of facts. The principle that she failed to apply is not identified and yet it is clear that the Senior Member understood that the owner could claim damages for fees paid to experts in the course of rectifying the work of the builder. She clearly knew that there was a distinction to be drawn between costs incurred in rectification and costs incurred in litigation. 131 The owners rely upon the judgment of Samuels JA in Mifsud v Campbell (1991) 21 NSWLR 725. That was a decision concerned with the absence of sufficient reasons in a judgment of the District Court. The complaint was that the judge ignored evidence critical to an issue in the case, there the issue was negligence, and as a result there was a mistrial. Samuels JA thought the error was one of law, Clarke JA doubted that it was an error of law and Hope AJA did not determine the question. That of course was an appeal by way of rehearing and it was unnecessary for the Court to find whether there had been an error of law or not. 132 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 281, McHugh JA said:

[110]

In a case where a right of appeal is given only in respect of a question of law, different considerations apply from the case where there is a full appeal. An ultimate finding of fact, which is not subject to appeal and which is no way dependent upon the application of a legal standard, can be treated less elaborately than an issue involving a question of law or mixed fact and law. If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done. If, for example, the only issue before a court is whether the plaintiff sustained injury by falling over, a simple finding that he fell or sustained injury would be enough, if the decision turned simply on the plaintiff's credibility. But, if, in addition to the issue of credibility, other matters were relied on as going to the probability or improbability of the plaintiff's case, such a simple finding would not be enough. 133 In Beale v Government Insurance Office (1997) 48 NSWLR 430 Meagher JA noted that, although it was unnecessary to decide in that case whether a failure to give adequate reasons was an error of law, most cases "have assumed the error is one of law". 134 It seems to me with respect that the Senior Member failed to address the evidence before her as to each of the experts. It is clear that some of the accounts for fees that were in evidence before the Tribunal were rendered before any proceedings were commenced. Mr Romeika was engaged initially to give advice as to the leaking windows. As this was ultimately held by the Senior Member to be a result of the builder's defective installation, those fees should have been awarded as part of the damages claimed by the owners. The fees sought were $1,760. Mr Reed gave advice in relation to the faulty air conditioning and the owners paid him fees amounting to $940. Accounts rendered by Partridge Partners totalling $3,547.50 were clearly referrable to pre-litigation advice. 135 There are fees payable to the architect, Mr Oliver, amounting to $21,494.00 that may have been incurred in attempts to resolve the dispute with the builder and rectification work. However the Senior Member dealt with this evidence at point 4 of her reasons set out above. Whether or not she was correct in her findings about that material is beside the point as this was a finding of fact. It is not reviewable in this Court. Similarly the Senior Member dealt with the fess incurred in respect of Mr Ogburn at point 6. 136 In my opinion the Senior Member ought to have allowed the sum of $6247.50 by way of damages for the cost of expert advice to the owners as part of the rectification costs. (iv) Interest 137 The owners complain that the Senior Member erred in failing to make any order for interest. The Senior Magistrate held (at 88):

[123]

[154] In my opinion, as a matter of law, the appellants are entitled to interest by way of compensation for the loss of the use of the money that ought to have been paid to them by way of salary but for the discriminatory condition. This is not a matter where I would reject any claim under the guise of refusing an amendment to their claim. As the appellants point out, the Department did not claim that it was in any way prejudiced by the late amendment. Accordingly, I am of the opinion that an award of interest should have been made in those cases where the award of damages was less than $40,000.00. However, there has been no argument before this Court as to the rate of interest and therefore the additional quantum of damages that ought to have been awarded. I would propose to give the parties liberty to apply in case they cannot reach agreement on that matter. 141 The owners submit that the situation is similar in this case. The Tribunal ruled that interest was not payable under the Uniform Civil Procedure Act but not otherwise. The Tribunal may be forgiven for making this error as the owners nominated the authority for their claim as the provisions of that Act. However interest was payable on the common law principle stated in the passage quoted above from Amery and it seems to follow from that decision that there was an error of law on the part of the Senior Member in limiting the consideration of interest to a specific Act. 142 The builder made no submission in answer to this ground of appeal. 143 There is no apparent reason why the Senior Member would not have awarded interest on the monies paid for rectification work had she believed that she could do so. In my opinion interest should be awarded as part of the damages and calculated at the rate in the Uniform Civil Procedure Act. (v) Slip Errors in rectification costs 144 It is submitted by the owners that the Senior Member made errors in calculating the costs of rectification. The owner's calculated the total amount of these slips as $5,198.00. The builder accepts some of these alleged errors but others are disputed. There is also the sum of $300 by reason of damage to the owners' fax machine caused by the builder. That sum is conceded. 145 In relation to these matters I accept that the Senior Member was prepared to act upon T1 as a persuasive document and preferred generally the evidence of Mr Ogburn. I am only prepared to deal with obvious errors. On that basis it seems to me that I should allow the following matters: