Vero Insurance Limited v Walker & Ors

Christopher Walker (First Defendant)

PARTIES : Richard Pitt (Second Defendant)

Bliss Constructions Pty Limited (Third Defendant)

CTTT (Fourth Defendant) FILE NUMBER(S) : SC 30041/2004 Mr G McVay (Plaintiff) COUNSEL : Mr J B Whittle SC with Mr J V Gooley (First Defendant) Mr D Curry, McLachlan Chilton (Plaintiff) SOLICITORS : Mr D Maccallum, Maccallum Lawyers (First Defendant)

LOWER COURT Consumer Trader and Tenancy Tribunal of NSW JURISDICTION : LOWER COURT HB 03/24969 FILE NUMBER(S) : LOWER COURT Tribunal Member Ms K Thane JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30041/2004 - VERO INSURANCE LIMITED (FORMERLY ROYAL & SUN ALLIANCE INSURANCE AUSTRALIA LIMITED) v CHRISTOPHER WALKER & Ors

JUDGMENT (Appeal decision of CTTT - s 67 of the Consumer, Trader & Tenancy Act 2001 (NSW) - what is a question with respect to a matter of law) 1 MASTER: By summons filed 11 June 2004 the plaintiff, pursuant to s 67(1) of the Consumer, Trader & Tenancy Act 2001 (NSW) (the Act) claims: firstly, that the appeal be allowed; secondly, an order that the decision of the Consumer Trader and Tenancy Tribunal (CTTT) given by Tribunal Member Ms K Thane on 27 May 2004 in matter number HB 03/24969 be set aside; thirdly, an order staying the decision pending the determination of these proceedings or until further order; and fourthly, a declaration on a proper construction of an agreement dated 16 March 1999 that the second defendant signed the agreement as a director of the third defendant. 2 The plaintiff is Vero Insurance Limited (Formerly Royal and Sun Alliance Insurance Australia Limited). The first defendant is Christopher Walker. The second defendant is Richard Pitt, a licensed builder and director of the third defendant. The third defendant is Bliss Constructions Pty Limited. The fourth defendant is the CTTT. The CTTT filed a submitting appearance. The plaintiff relied on the affidavit of Daren Curry sworn 11 June 2004. Mr Pitt, Bliss Constructions and the CTTT have filed submitting appearances. For convenience, in this judgment I shall refer to the parties by name. 3 On 16 March 1999 Mr Walker entered into a building contract to build a new home at a property he co-owns at Terry Hills for the contract price of $802,781.00. There are currently four proceedings on foot in the Tribunal. They are: 1. HB 03/24969 Walker v Vero Insurance Ltd - an appeal by a homeowner from an insurer's decision.

2. HB 04/05122 Bliss Constructions Pty Ltd and Richard Pitt v Vero Insurance Ltd - an appeal by a builder from an insurer's decision. 3. HB 03/12535 Christopher Walker v Richard Pitt and Bliss Constructions Pty Ltd - a claim for a specified sum of money (in relation to defective work). 4. HB 02/43557 Bliss Constructions Pty Ltd and Richard Pitt v Christopher Walker and Julie Walker - a claim for a specified sum of money (debt collection under contract and/or quantum meruit). 4 The parties requested that five preliminary points be determined. However, in the proceedings between Vero Insurance and Christopher Walker, the Tribunal Member decided one of the preliminary questions, which is now the subject of this appeal.

5 Vero submitted that the appeal fell within the parameters of s 67 of the Act. Walker submitted that the appeal referred only to factual matters so it fell outside the parameters of s 67. Section 67 of the Act allows for an appeal to be made to this court in relation to "a question with respect to a matter of law" [emphasis added]. Section 67(3) of the Act provides that after deciding the question of the subject of an appeal the court may, unless it affirms the decision of the Tribunal on the question that should have been made by the Tribunal, remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal. 6 Vero submitted that the words "with respect to" are broad and mean, in this context, a question having a connection with a matter of law. According to Vero the right of appeal under s 67 does not depend upon the narrower test being "a question of law" but rather a question with respect to a matter of law. Walker submitted that the phrase "a question with respect to a matter of law" is to be interpreted as having a narrower meaning than an "error of law". According to Walker, one first has to look at the alleged error of law and then subsequently identify the "question" raised by the error of law. 7 The predecessor to s 67 of the Act was s 20(5) of the Commercial Tribunal Act 1984 (NSW). That section read: "Where, in proceedings before the Tribunal, the Chairman or a Deputy Chairman decides a question with respect to a matter of law, a party to the proceedings who is dissatisfied with the decision may appeal to the Supreme Court against the decision of the Chairman or Deputy Chairman." 8 Thus s 67 of the Act's predecessor (s 20(5)) also referred to "a question with respect to a matter of law". Section 20(5) of the old Act was analysed in some detail in Custom Credit Corporation Limited (In Liquidation) v Commercial Tribunal of New South Wales & Ors [2000] ASC 155-1041; [1999] NSWSC 1021. In Custom Credit His Honour Greg James J also referred with approval to the decision of Canham & Ors v Australian Guarantee Corporation Limited & Ors (1990) ASC 55-984 where Carruthers J stated: "It is, I think, appropriate that I express my views upon the meaning of the phrase 'a question with respect to a matter of law'. Despite arguments both by the plaintiffs and the AGC to the contrary, it is my view the draftsman intended this phrase to encompass nothing more than a pure question of law. I think it was the Legislature's intention that apart from vesting the Chairman or Deputy Chairman with the right and obligation either to decide a question of law himself or to refer it to the Supreme Court, no distinction was to be drawn between the powers and functions of the respective members of the Tribunal. Thus it could not have been the intention of the legislature that the Chairman or Deputy Chairman solely decide other than pure questions of law. Further, I am confident that the legislature would not have intended that the Chairman or Deputy Chairman have the right to refer anything other than a pure question of law to the Supreme Court for decision. It would be quite inconsistent with well established practice, as well as the function of this Court, for a mixed question of fact and law to be referred to it for decision." 9 In Custom Credit Greg James J went on to consider the difference between s 20(5) and other more common rights of appeal on questions of law and concluded at para [94]:

"The language employed in s 20(5) is in marked contrast to familiar provisions conferring a right of appeal on law and particularly having regard to that contrast, I am not satisfied that there is provided some form of generalised administrative review by this court of the ultimate decision in some general context of examining the legal principles applied expressly or implicitly. I consider it will at least be necessary for a party to avail itself of the appeal right afforded by s 20(5) to articulate a precise question relating to a matter of law, to show how the decision of it, whether express or implicit, was integral to the conclusion and why that decision was wrong. Usually, one would expect such a question to be raised and argued before the Tribunal." 10 Vero submitted that that although Newman J in FAI General Insurance Company Limited v Brookman & Anor [2000] NSWSC 6, (referred to later in this judgment) which has similar factual circumstances, decided that the appeal did not involve a question with respect to a matter of law. Newman J cited Australian Gas Light Company v the Valuer-General 57 WN 53. Australian Gas Light Company analyses what constitutes a question of law. The decision of Newman J was based on an incorrect premise and should not be followed. But Newman J was not alone in adopting the approach he did in relation to the interpretation of s 67 of the Act. His Honour adopted the same approach as in Custom Credit v Commercial Tribunal. In Fair Trading v Owners Corporation Strata Plan 46789 [2004] NSWSC 443 Master Macready adopted the Custom Credit test. I agree with the narrower interpretation of an appeal in accordance with s 67 of the Act. Thus, in my view an appeal under s 67 of the Act must articulate the precise question relating to a matter of law to show how the decision of it was integral to the conclusion and why the decision was wrong.

The grounds of appeal 11 The plaintiff's grounds of appeal are that firstly, the effect of the words used is a matter of construction and is a question of law; secondly, the appeal is from the decision of the Tribunal contained in paragraph 34 of its determination; thirdly, the Tribunal should have found that on a proper construction of the agreement, the Second Defendant signed the agreement as a Director of the Third Defendant and not personally; fourthly, there was no evidence to support the finding in paragraph 33.4; fifthly, the Tribunal mistakenly relied on pre-contractual beliefs and intentions of the first defendant in construing the agreement; and sixthly, the Tribunal mistakenly relied on post-contractual events in construing the agreement. For this appeal, I shall take it that these are the matters posed as the questions referred to in s 67 of the Act. 12 The preliminary question was "Who was the builder under the Building Contract dated 16 March 1999?" On 27 May 2004 the Tribunal Member made a determination that "The Tribunal finds that the 'Builder' under the building contract dated 15 March 1999 is Richard Pitt". 13 In her reasons dated 27 May 2004 the Tribunal Member stated at paragraph 22: "It is difficult to see how the Tribunal could not conclude in the circumstances that the building contract was ambiguous. On its face there are three possible interpretations of who of the parties are to be bound to its terms; Walker and Pitt; Walker and Pitt and Bliss Constructions Pty Ltd and Walker and Bliss Constructions." 14 A similar situation arose in Brookman where the issue on appeal from the CTTT was whether Gary Cohen personally was the contractor and not Action United Pty Ltd who entered into a contract with Mrs Brookman. 15 Newman J (and both parties in this appeal) referred to Scottish Amicable Life Assurance Society v Reg Austin Insurances Pty Ltd (1985) 9 ACLR 909 where McHugh JA (as he then was) in construing in what capacities the parties signed a document said: "The present case, therefore, depends on what the parties did and not on what they intended to do when they signed the Indemnity and the Agency Agreement. And what they did depends on the construction to be placed on the documents which they signed. A commercial document, however, must be construed in its commercial setting - in accordance with the surrounding circumstances known to the parties: Codelfa Construction Pty Ltd v SRA of NSW (1982) 149 CLR 337at 352-353. This is so whether the issue concerns construction in the strict sense or whether, as here, the issue concerns the capacity in which a person signs a document. There is, however, a dictum of Atkin LJ in Ariadne Steamship Co Ltd v James McKelvie & Co [1922] 1 KB 518at 536 to the effect that, if a person signs a document '"B by C his attorney", or "C on behalf of B", it would seem irrelevant that the body of the contract expressed the contract to be made "between A and C"'. The respondents rely on this dictum to circumscribe the inquiry before the court. You cannot go, they say, beyond the words 'on behalf of' of Reg Austin Insurances Pty Ltd. When the Ariadne case went to the House of Lords, Lord Sumner and the Earl of Birkenhead had reservations about the accuracy of Atkin LJ's dictum: Universal Steam Navigation Co v James McKelvie & Co [1923] AC 492 at 497 and 499.But if that dictum is correct I think that it should be confined to the special case of the agent who signs for an undisclosed principal. It cannot be accepted as applicable in all cases. In some cases the contents of a document may indicate that the signatory is bound even though a qualification attaches to his signature. Expressly or by implication the body of the document may make it plain that the signatory is a party to the contract. In the examples given by Atkin LJ, it would usually follow that there was no liability on the part of the person signing. But this is because the express disavowal of responsibility in those examples is so strong that no other consideration, based on the terms of the document, can overcome it. In other cases, however, the qualification to the signature may be overcome by the terms of the document and the surrounding circumstances. In the end the decision must depend upon the terms of the document including the qualification attaching to the signature together with the surrounding circumstances. This is a question of fact, not of law." 16 In Brookman Newman J concluded that the Tribunal had evidence before it which could support its findings of fact. Additionally it was held that it cannot be said that the facts found and the supporting evidence are incapable of justifying the findings of fact made. 17 Newman J held that the matter involved a matter of fact and not a matter of law. The appeal failed and judgment was entered in favour of the defendant. 18 Both parties also referred to B & B Constructions (Aust) Pty Ltd v Brian A Cheeseman & Associates Pty Ltd (1994) 35 NSWLR 227 at 244 where Mahoney JA in considering whether the interpretation of a contract is an error of law or a factual matter stated: "In the Life Insurance Co case, Isaacs J sought to distinguish, for this purpose, between interpretation and construction. His Honour (at 78-79) said: "A document purporting to be a contract may be ambiguous. But the term 'ambiguity' is itself not inflexible. It may arise from doubt as to the construction in their totality of the ordinary and in themselves well-understood English words the parties have employed. That is true construction. Or it may arise from the diversity of subjects to which those words may in the circumstances be applied. That is rather interpretation of terms. Or again, it may arise from obscurity as to the full expression in ordinary language of some abbreviated term or arbitrary form that has been adopted. That again is interpretation of terms. Very different consequences attach according as the ambiguity rests in construction or in interpretation. Lindley LJ in Chatenay v Brazilian Submarine Telegraph Co (1891) 1 QB 79 at 85 employs the same word 'construction' for both ideas, but keeps the ideas distinct. He says: 'The expression "construction", as applied to a document, at all events as used by English lawyers, includes two things: first, the meaning of the words; and, secondly, their legal effect, or the effect which is to be given to them. The meaning of the words I take to be a question of fact in all cases, whether we are dealing with a poem or a legal document. The effect of the words is a question of law.' The 'meaning of the words' is what I call interpretation, whether the words to be interpreted into ordinary English are foreign words or code words or trade words or mere signs or even ordinary English words which on examination of surrounding circumstances turn out to be incomplete. Their effect when translated into complete English is construction. If that distinction be borne in mind very little difficulty remains.

As to construction, there is always one and only one true meaning to be given to fully expressed words. Sir Montague Smith, speaking for the Judicial Committee in McConnel v Murphy (1873) LR 5 PC 203 at 219, said: 'In questions of difficult interpretation, not only two, but frequently many constructions may be suggested. And, after all, there must be one true construction; and if that true construction can be arrived at with reasonable certainty, although with difficulty, then it cannot properly be said that there are two meanings to the contract.' Once there is established the full mutual expression of the agreement in English words, the construction of the document is, as Lindley LJ says, a pure matter of law. Lord Chelmsford in Di Sora v Phillips (1863) 10 HLC 624 at 638-639 makes this clear to demonstration, and there separates the interpretative function from that of true construction (see also per Lord Atkinson in Williams Brothers v Ed T Agius Ltd (1914) AC 510 at 527. For this purpose no external evidence is admissible. All preliminary operations of interpretation are assumed to have been performed and, if necessary, by appropriate evidence, as explained by Lord Chelmsford in Di Sora v Phillips, and, the Judge's mind being sufficiently informed, he must be left to his own office of construing the language of the instrument in question."

The Tribunal Member's reasons 19 Critically, at para 33 of the Tribunal Member's determination, the Tribunal Member reviewed the matters held to be significant to the issue of determining the identity of the builder: "The unchallenged evidence of Walker that he carried out negotiations with 'Pitt the Builder', intended that Pitt the individual be the builder under the contract, but had no objection to Bliss Constructions Pty Ltd also being a party to that contract as a vehicle for Pitt but not to transfer his rights and obligations as builder under the contract; The word 'Builder' appears on page 1 of the contract next to the name Richard Pitt; The licence number which appears on page 1 is that of Richard Pitt and Bliss Constructions Pty Ltd is not and never was the holder of a builders' licence; No insurance certificate was in fact attached to the contract (as it was in Brookman ) but at all relevant times it was Pitt, the licensed builder and not Bliss Constructions Pty Ltd who was the entity capable of being insured; It was Pitt and not Bliss who in fact 8 months later sought and obtained the relevant insurance policy for the works." 20 At para 34 the Tribunal Member then held: "After due regard to these significant matters including an objective analysis of the parties' conduct at the time the contract was executed the Tribunal concludes that the builder under the contract is Richard Pitt. Whilst the contract is signed once by Pitt on page 18, the Tribunal finds that in the circumstances this can only have been done in his dual capacity as 'builder' (hence the word appearing directly under his name) and as director of Bliss (in response to the words 'for an[d] on behalf of')." 21 It is the contention of Vero Insurance that the question the Tribunal had to decide was the proper construction of a written contract and that in its determination the Tribunal Member made errors in four broad areas. These included: (i) an error in determining the legal effect of words used in the written agreement; (ii) an error in making a finding of fact unsupported by any relevant evidence; (iii) an error in relying upon pre-contractual beliefs and intentions of one of the parties to the agreement in construing the agreement; and (iv) an error in relying on post-contractual events in construing the agreement. 22 Adopting the approach laid out by McHugh J in Scottish Amicable Life the decision as to who is the "builder" in the case before me must depend upon the terms of the contract including the qualification attaching to the signature together with the surrounding circumstances. It is my view that deciding who was the builder is a question of fact. This is in accordance with the approach of Newman J in Brookman. The Tribunal had evidence before it which could support its findings of fact and it cannot be said that the facts found and the supporting evidence are incapable of justifying the findings of fact made. However, if I am wrong and the identity of the builder is considered a question with respect to a matter of law, it is necessary to consider the Tribunal Member's approach to pre and post contractual dealings. 23 In relation to pre-contractual and post-contractual dealings, both parties referred to the first three principles outlined by Heydon JA in Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at 164 paras 24, 25 & 26 where his Honour stated: "The first relevant principle of law is that pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and if the pre-contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 347-352.

The second relevant principle is that post-contractual conduct is admissible on the question of whether a contract was formed: Howard Smith & Co Ltd v Varawa (1907) 5 CLR 68 at 77; Barrier Wharfs Ltd v W Scott Fell & Co Ltd (1908) 5 CLR 647 at 668, 669 and 672; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR [97011] at 9149 and 9154-9156; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR [97023] at 9255.

The third relevant principle is that post-contractual conduct is not admissible on the question of what a contract means as distinct from the question of whether it was formed. As explained by Priestley JA (Meagher JA agreeing) in Hide & Skin Trading Pty Ltd v Oceanic Meat Traders Ltd (1990) 20 NSWLR 310 at 326-330, the status of the relevant High Court authorities is unclear: hence unless it is demonstrated that the later decisions of the Victorian Full Court and Court of Appeal against admissibility, Ryan v Textile Clothing & Footwear Union of Australia [1996] 2 VR 235 and FAI Traders Insurance Co Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, are clearly wrong or they are overruled, they should be followed in New South Wales. No attempt was made to demonstrate that they are clearly wrong." 24 The Tribunal Member is entitled to take into account surrounding circumstances provided it is objective evidence known to both parties as the contract is ambiguous as to the identity of the builder. In the first subparagraph [33] the Tribunal Member spoke of P Walker's subjective intention, which is inadmissible. In relation to post-contractual dealing, the Tribunal Member considered the reference to insurance eight months after the contract was formed. The situation is less clear where the identity of one the contracting party is in issue. However, if there are factors, particularly the reference to Pitt as being "the builder" on page one of the contract (dated 16 March 1999) and it is "the builder" who is the one who bears most responsibility under the terms of the contract not Bliss. 25 It is my view that the Tribunal Member did provide sufficient reasons so as to enable there to be a proper understanding of her decision. There is no error of law. Accordingly, the appeal is dismissed. The decision of Tribunal Member Ms K Thane made on 27 May 2004 is affirmed. Costs are discretionary and usually follow the event. The plaintiff is to pay the defendants' costs as agreed or assessed.

(2) The decision of Tribunal Member Ms K Thane made on 27 May 2004 is affirmed.

(4) The plaintiff is to pay the defendants' costs as agreed or assessed. **********

Last Modified: 11/18/2004 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.