[2012] HCA 55
Forster v Hunter New England Area Health Service (2010) 77 NSWLR 495
[2001] NSWCA 305
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
[1987] HCA 5
Pownall v Conlon Management Pty Ltd (1995) 12 WAR 370
(1995) 16 ACSR 227
Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 35
Source
Original judgment source is linked above.
Catchwords
[2012] HCA 55
Forster v Hunter New England Area Health Service (2010) 77 NSWLR 495[2001] NSWCA 305
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221[1987] HCA 5
Pownall v Conlon Management Pty Ltd (1995) 12 WAR 370(1995) 16 ACSR 227
Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 35HB 21/49598
Judgment (11 paragraphs)
[1]
REASONS FOR DECISION
These proceedings relate to two applications concerning residential building work carried out on the property of the appellants (homeowners).
The first application, HB 21/49598, was commenced by TNM Roofing Pty Ltd (builder), the respondent in this appeal. In that application, the builder sought payment of $28,800.00 being an amount representing the unpaid contract sum (including variations of $8,800.00) said to be payable to it. This building work, in part, involved repairs and alterations to the roof of residential premises.
The second application, HB 21/52061, was commenced by the homeowners. The homeowners claimed the work carried out by the builder was defective or incomplete. In the application, the homeowners sought an order that they do not have to pay the sum of $28,800.00. They said they did not agree to the variations of $8,800.00 and, by reason of the defective work, the "$20,000 will go towards the cost of repairing the [defective] work and damages caused by TNM Roofing".
On 19 May 2022, the Tribunal determined to building applications and made the following orders (Orders):
1. By 17/6/22 the Builder is to rectify the following Work at the Owners' premises in a proper and workmanlike manner:
(1) Nail down protruding nails on the eaves;
(2) Make good the down pipes out of plumb;
(3) Replace the whole section of guttering with impact damage;
(4) Replace the light fitting (or alternatively allow the Owners $52);
(5) Remove all debris from this rectification work from site (this does not include the asbestos pieces)
2. STIPO BLAZENKA VUJICA … and BLAZENKA VUJICA is to pay TNM ROOFING PTY LTD … the sum of $12872.00 on or before 17-Jun-2022.
Note: As explained in the Reasons later, this is the balance of the sum of $20,000 allowed to the Builder less $7,128.00 for the ceiling repair allowed to the Owners for repair of the impact damage and repainting at $8,910 less 20% depreciation over 2 years (rounded).
3. The Tribunal declares that the sum of $8,800.00 is not due and owing by STIPO BLAZENKA VUJICA … and BLAZENKA VUJICA to TNM ROOFING PTY LTD C/- Tony Marshall … in respect of the Variations.
The Tribunal provided written reasons for its decision (Reasons).
For the reasons that follow, we have decided to set aside orders 2 and 3 of the Orders and remit the proceedings for rehearing.
[2]
The Tribunal's decision
As stated above:
1. the homeowners were required to pay the builder the sum of $12,872.00 (order 2 of the Orders). This was calculated as the amount of $20,000.00 (being the difference between the agreed price of $40,000.00 and $20,000.00 paid by the homeowners) less an amount of $7,128.00 which the Tribunal determined was the cost to repair impact damage and water damage caused by the builder to the ceiling of the homeowners' premises while carrying out the work: Reasons at [42] and [43]; and
2. a work order (order 1 of the Orders) was also made requiring the builder to carry out various rectification work: Reasons at [44]-[47].
In making these orders the Tribunal said at [48] of its Reasons:
The Orders are made in the interests of justice as between the parties to determine their dispute.
The Tribunal made the following critical findings.
[3]
In respect of the contract between the parties and the builder's claim for unpaid monies, including variations
As to the original contract, there was a quotation dated 6 August 2021 to carry out certain works for an amount of $46,000.00 (Quotation) and a negotiated price finally agreed of $40,000.00. However, there was "no written building contract made in the usual form": Reasons at [5(5)-(6)].
As to variations, there was evidence from the builder concerning oral variations, such variations totalling $8,800.00. The homeowners denied there was any agreement to carry out the work. Such variations were not in writing and no tax invoices for those variations delivered to the homeowners: Reasons at [11] and [17].
The Tribunal had said at [23] of its Reasons:
Written agreement
23 The HBA is clear, after 1/3/2015 the Builder must provide a written contract for work exceeding $20,000: HBA s7(1)(a) and HBR r5(1)(b). He did not. The utility of a written contract, amongst other things, is to make the obligations of the parties clear and unambiguous.
The Quote evidences the agreement between the parties and sets out the Work. Relevantly, it does not provide for Variations.
In relation to the claim for variations the Tribunal found at [24]:
The Quote does not provide for any variations. There is no document evidencing any variations were agreed. In the absence of an agreement for variations, the Builder would be entitled to claim for the Variations on a quantum meruit …
Then at [28] the Tribunal said:
I find that the Builder has not proved any value for the Variations, and that the Owners have been unjustly enriched. The Builder cannot succeed, even if an invoice or GST tax invoice had been delivered to the Owners. The Builder's Variation claim of $8,800 fails.
As to the builder's claims for the unpaid contract sum of $20,000.00 the Tribunal said at [30]-[32]:
Determination of the Builder's claims
30 The claim for Variations $8,800 fails for the reasons above.
31 The Builder's claim for the unpaid contract price of $20,000 cannot succeed today as the Builder has not delivered an invoice or GST tax invoice. This failure would not prevent the Builder later issuing an invoice or GST tax invoice. This issue requires determination.
32 I find that the Builder would be entitled to the balance of the Quote of $20,000 on delivery of an invoice or GST tax invoice (if GST is claimed). However, the Owners have an offset claim.
[4]
In respect of the homeowners' claim for defective or incomplete work
As stated above, the homeowners initially sought orders to be relieved from any obligation to pay the builder further monies and that the $20,000.00 the builder claimed was owing should go towards the cost of repairing defective work or damages caused by the builder.
When the matter came before the Tribunal for hearing on 19 May 2022, the Tribunal (at [1(2)] of its Reasons) described the homeowners' claim as follows:
(2) HB 21/52061 filed 22/12/21 by the Home Owners (the Owners) for relief from payment of the unpaid balance of the Builder's claims $8,770, and the Builder to pay for the cost of remediation work $26,586.37.
Then, at [12], the Tribunal recorded homeowners claims and the concessions made by the builder in the following terms:
12 The Owners claim:
(1) Relief from having to pay the balance of the amount claimed by the Builder (even though no tax invoices) $28,800;
(2) the cost of rectification set out in the Scott Schedule in the sum of $26,586.37;
(3) Cost to replace wall light $52, this item has been conceded by the Builder who has offered to replace it;
(4) Cost of the Scott Report evidenced in a tax invoice no 101131 dated 12/1/22, $3,410;
(5) Quote from Southeast Guttering dated 28/1/22 for replacement of gutter with hi-front quad guttering and downpipes, remove rubbish $1,965. This work has not been done;
(6) Quote from ABN Painting Services undated to treat ceilings and cornice mould, repaint ceilings, engage electrician and remove rubbish $9,900; and quote from Brothers Interiors Pty Ltd dated 10/2/22 for the same work $8,910.00. None of this work has been done.
The amount of $26,586.37 represented the cost of repairs detailed in a Scott Schedule prepared by Mr Brad Scott, an expert engaged by the homeowners who had also prepared a report in connection with the defects alleged by the homeowners (collectively the Scott report).
The Tribunal had both the Scott report and some evidence in the form of a quotation prepared by Brothers Interiors Pty Ltd for an amount of $8,910.00 (Brothers Interior quote). The Brothers Interior quote was to repair ceiling damage said to be caused by the builder, a matter about which there was also photographic evidence.
In addition to making a work order for the various items conceded by the builder, the Tribunal found the builder liable for 80% of the Brothers Interiors quote, namely $7,218.00: Reasons at [42].
[5]
Notice of Appeal and submissions
The homeowners filed a Notice of Appeal on 16 June 2022. The appeal was filed in time.
The grounds of appeal can be summarised as follows:
1. The Tribunal was in error in making an award in favour of the builder in respect of the unpaid contract sum. The builder failed to comply with its obligations concerning the contract being in writing and the requirements of s 7 of the Home Building Act 1989 (NSW) (HB Act). Consequently, s 10 of the HB Act prevented recovery.
2. The Tribunal was in error in rejecting the Scott report.
3. Insofar as the Scott report did not comply with the expert code of conduct because of the failure of Mr Scott to sign and date the report, any error has now been corrected. In that regard the homeowners referred to the signed and dated report provided with the submissions on appeal.
To the extent necessary, leave to appeal was sought on the basis the decision was not fair and equitable or against the weight of evidence. The homeowners in essence relied on the matters set out in [26 (1)-(2)] above.
The homeowners seek the following orders:
1. That the builder's application be dismissed; and
2. that the builder pay the homeowners $26,485.37.
The builder did not file a reply to appeal. However, an email was sent to the Tribunal and the homeowners providing a short written submissions. That email said:
Sir/Madam. The Vijikas [sic] I believe have no grounds for appeal, I was ordered to replace the gutter and mail flush a view of the emails which I did. Now they are complaining that the nails are still not flush and there is a tiny gap between the evil and back of gutter. They supplied some pictures which are of poor quality, I can see no nails protruding, it should be noted [tp] that Mr Vujikas [sic] has been prepping the area for painting, applying tape to the joint at the wall. He could be disturbing these areas.
Sincerely,
Tony Marshall
TNM Roofing
The homeowners appeared at the hearing of the appeal, which was an "in person" hearing. The builder did not appear and no explanation was provided to us concerning his absence at or prior to the hearing. We were satisfied from a review of the file that notice was served on the builder advising of the hearing date. This was contained in the directions of the Appeal Panel made 29 June 2022.
[6]
Consideration
There is a right of appeal on questions of law. Otherwise leave to appeal is required: s 80(2)(b) Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
Sch 4 cl 12(1) of the NCAT Act sets out the circumstances applying to the grant of leave from a decision of the Consumer and Commercial Division, being the Division in which the present application was heard. Collins v Urban [2014] NSWCATAP 17 sets out the principles applicable to the grant of leave.
The grounds of appeal raise questions of law. The first concerns the rejection of the Scott report. The second involves the Tribunal making a money award in favour of the builder despite s 10 of the HB Act.
[7]
Rejection of the Scott report
The reasons for rejecting the Scott report were set out in the Reasons at [6], which we have set out above. In essence, the Scott report was rejected because it was not dated and signed.
The Tribunal was in error in rejecting the report for the following reasons.
First, the reliance upon the need for signatures and other obligations that might arise under the Evidence Act 1995 (NSW) was misplaced. The rules of evidence do not apply to these proceedings: s 38(2) of the NCAT Act. To use the requirements of the Evidence Act to determine questions of admissibility in these circumstances was an error.
Secondly, a direction was made that Procedural Direction 3 - Expert Evidence apply to these proceedings. The Procedural Direction was made by the President of the Tribunal under s 26 of the NCAT Act. Consequently, the Tribunal was required to apply that direction: s 26(4) of the NCAT Act.
Procedural Direction 3 does not require an expert to sign and date their report. While this may be desirable, it is not mandatory.
Even if the procedural direction is not complied with, the report is not rendered inadmissible. In this regard, cl 3 of the procedural direction states:
In proceedings where the Tribunal is not bound by the rules of evidence, the acceptability of expert evidence is a question of weight not admissibility. Nonetheless, if those proceedings involve complex or difficult expert issues, it is appropriate to require expert evidence to be prepared and presented in a manner which seeks to ensure its usefulness.
Lastly, even where a direction has been given for the report to be signed and dated and not complied with, this is not fatal to the reception of such evidence in proceedings before the Tribunal to which the rules of evidence do not apply. In this regard cl 5 of the procedural direction provides:
The Tribunal may excuse a party or an expert witness from complying with this Procedural Direction before or after the time for compliance.
Similarly, non-compliance with any other direction of the Tribunal may be excused, subject of course to the issue of procedural fairness.
Consequently, in exercising its discretion in rejecting the Scott report the Tribunal fell into error in the following respects:
1. The Tribunal failed to consider whether, to the extent Procedural Direction 3 applied, any technical non-compliance of the witness should be excused. In this regard it is clear from the Reasons that the Tribunal accepted the expert, Mr Scott was agreeing to be bound by the requirements of the procedural direction despite his erroneous reference to "Expert Witness Code of Conduct in UCPR Schedule 7": Reasons at [6].
2. At the hearing on 19 May 2022 the Tribunal failed to consider whether it should offer the applicants an adjournment or an opportunity to telephone Mr Scott so he could provide evidence to confirm he was the author of the report and held the views expressed therein. On the first aspect, the decision of Basten JA in Italiano v Carbone & Ors [2005] NSWCA 177 at [88] is relevant. This obligation was not ameliorated by any directions previously made by the Tribunal concerning the need for the report to be signed and dated or by any possible prejudice to the builder. This is because the builder had in fact responded to the Scott report. This was contained in a statement dated 27 January 2022 from Mr Marshall, the director of the builder. Indeed, despite rejecting the evidence from Mr Scott, the Tribunal had regard to the evidence of the builder in reply to the Scott report: Reasons at [3].
[8]
Tribunal making a money award in favour of the builder despite s 10 of the HB Act
It would seem from the Reasons of the Tribunal at [23]-[24] and [31]-[32], set out above, that the Tribunal:
1. recognised the value of the contract exceeded $20,000.00 and that s 7 of the HB Act applied to the contract;
2. found that the initial quote for $46,000.00 "evidences the agreement";
3. determined that all that what was required for the builder to recover the balance of the unpaid contract price of $20,000.00 was the delivery of an invoice by the builder to the homeowners.
This was despite findings at [5(5)-(6)] of the Reasons referred to above that there was no written contract.
The effect of order 2 of the Orders, namely that the homeowners pay the builder $12,872.00 on or before 17 June 2022, was to permit the builder to enforce a claim under the contract for the sum of $20,000 (being the difference between original negotiated contract price agreed at $40,000 less $20,000 previously paid by the homeowners) after set-off of the amount due to the homeowners as assessed damages as determined by the Tribunal.
In our view, the Tribunal was in error in reaching this conclusion.
There is no dispute s 7 of the HB Act applied to the present contract, the contract price being greater than $20,000.00: reg 5(1)(b) of the Home Building Regulation 2014 (NSW). Section 7 provides:
7 Form of contracts (other than small jobs)
Note -
Section 7AAA applies to contracts for small jobs.
(1A) This section applies to a contract only if the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The prescribed amount is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST.
(1) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it.
(2) A contract must contain -
(a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and
(b) the number of the contractor licence, and
(c) a sufficient description of the work to which the contract relates, and
(d) any plans and specifications for the work, and
(e) the contract price if known, and
(f) any statutory warranties applicable to the work, and
(f1) the cost of cover under Part 6 or 6B (if insurance is required under Part 6), and
(g) in the case of a contract to do residential building work - a conspicuous statement setting out the cooling-off period that applies to the contract because of section 7BA, and
(h) in the case of a contract to do residential building work (other than a construction contract to which the Building and Construction Industry Security of Payment Act 1999 applies) - details of any progress payments payable under the contract, and
(i) in the case of a contract to do residential building work - a statement that the contract may be terminated in the circumstances provided by the general law and that this does not prevent the parties agreeing to additional circumstances in which the contract may be terminated, and
(j) any other matter prescribed by the regulations for inclusion in the contract.
(3) The contract must comply with any requirements of the regulations.
(4) If the contract price is known, it must be stated in a prominent position on the first page of the contract.
(5) If the contract price is not known or may be varied under the contract, the contract must contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known.
(6) A contract must not include in the contract the name of any person other than the holder of a contractor licence as, or so it may reasonably be mistaken to be, the holder's name.
(7) This section does not prevent the holder of a contractor licence with a business name registered under the Business Names Registration Act 2011 of the Commonwealth from also referring in such a contract to the business name.
(8) This section does not apply to -
(a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or
(b) a contract to do specialist work that is not also residential building work.
Note -
The exception in paragraph (a) applies to a subcontracting arrangement between licensees, and to a contract between licensees for work to be done on premises that one of the licensees owns.
[9]
Disposition of the appeal
The homeowners sought that the orders of the Tribunal to be set aside, that the builder's application be dismissed and an award for damages in their favour of $26,485.37.
In our view the orders of the Tribunal in both applications, save for the work order (order 1) should be set aside and the proceedings remitted for further hearing.
Order 1 should not be set aside as there was no submission by the builder that this order concerning defective work should not have been made or that the defects did not exist.
In any event, we understand that some works have been performed in accordance with order 1.
Our reasons for setting aside the other orders, rather than finally determining the proceedings, are as follows.
On appeal, the builder asserted in written submissions that all these works were completed as required by the Tribunal and also said that some of the areas the subject of dispute had been affected by works done by the homeowners. On the other hand, the homeowners asserted rectification work had not been done, or at least some work had not been properly completed. Any continuing dispute can be dealt with on remittal and any necessary evidence provided.
Secondly, as there was no adjudication by the Tribunal about the matters raised in the Scott report, there were no relevant findings concerning the scope of work, completion of the contract and assessment of the defective work. There has been no cross-examination of witnesses on contested facts.
We do not have sufficient evidence before us to evaluate these aspects of the dispute. Further, there was evidence provided by the builder to the Appeal Panel after the hearing of the appeal. While no orders were made permitting this evidence, the homeowners said they "will not stand in the way of [the builder] presenting the said documents".
This evidence, if relied upon in the remitted proceedings, should be dealt with at that time, cross-examination being permitted as appropriate.
Thirdly, when referring to the Scott report, there was some lack of clarity in the submissions of the homeowners concerning what works were required in that report and whether some of the defects identified in that report have now been rectified.
Fourthly, while the builder did not appear at the hearing on 19 May 2022 or at the hearing of this appeal, the builder apparently participated in an earlier hearing before the Tribunal in March 2022 at which the Member constituting the Tribunal appears to have considered himself part heard.
[10]
Orders
The Appeal Panel makes the following orders:
1. Orders 2 and 3 made on 19 May 2022 in applications HB 21/52061 and HB 21/49598 are set aside.
2. The proceedings are remitted to the Consumer and Commercial Division for redetermination in accordance with these reasons and according to law by a differently constituted Tribunal.
3. The respondent is to repay to the appellants the amount of $12,872.00, such amount to be paid within seven days from the date of these orders.
4. The Tribunal may permit such further evidence as the Tribunal considers appropriate.
[11]
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: 20 September 2022
However, the Tribunal rejected the claims dealt with in the Scott report. At [48] of the Reasons the Tribunal said:
I do not allow the Owners the cost of the Scott Report prepared by Mr Scott as it is defective (undated and unsigned) and was inadmissible.
The reasons for rejecting the Scott report were dealt with at [6] of the Reasons where the Tribunal said:
The expert report
6 The Owners rely on an undated and unsigned Report of Brad Scott of Best Building Inspections (the Scott Report) which refers to an inspection of the Premises on 7/1/22, his observations and opinions, and an agreement to be bound by the Expert Witness Code of Conduct in UCPR Schedule 7 which is the equivalent of the Tribunals Code of Conduct, but as I have said, this document is unsigned. I raised this matter at the first hearing on 8/3/22 and made a direction that "Witness statements are to be dated and signed by the witness" and expected that the fresh copy of the Scott Report would be dated and signed. A fresh copy was filed on 5/4/22 but is also undated and unsigned. In a Court, the Scott Report would be rejected because of these defects, even when served under the Evidence Act s177 (Certificates of expert evidence) which requires service of an expert certificate signed by the person. This defect could have been cured in this Tribunal by the Owners calling Mr Scott, but he was not called. I am guided by the Evidence Act s177 and reject the Scott Report: see the Evidence Act s177(6).
Having reached these conclusions, the Tribunal ordered the homeowners to pay the builder the sum of $12,872.00. At [43] the Tribunal said:
The net amount payable by the Owners is $12,872.00 calculated as $20,000 due to the Builder less $7,128 allowed to the Owners.
Our conclusions should not be taken as rendering irrelevant considerations of the content of an expert report. As said by Macfarlan JA at [30]-[31], in Forster v Hunter New England Area Health Service (2010) 77 NSWLR 495; [2010] NSWCA 106 (referring to Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305):
30 As Heydon JA (as his Honour then was) indicated in Makita, for an expert report to be useful it is necessary for it "to comply with a prime duty of experts in giving opinion evidence: to furnish the trier of fact with criteria enabling evaluation of the validity of the expert's conclusions" (at [59]). Heydon JA referred to the observations of Lord President Cooper in Davie v Lord Provost, Magistrates and Councillors of the City of Edinburgh [1953] SC 34 at 39-40 which included the following:
"The scientific opinion evidence, if intelligible, convincing and tested, becomes a factor (and often an important factor) for consideration along with the whole of other evidence in the case, but the decision is for the Judge or jury. In particular the bare ipse dixit of a scientist, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross-examination nor independently appraised, and the parties have invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert" (cited in Makita at [59]).
31 To like effect are the statements, also quoted by Heydon JA, in Makita of Sir Owen Dixon in an extra-judicial address that "[c]ourts cannot be expected to act upon opinions the basis of which is unexplained" (Makita at [60]) and of the authors of Phipson on Evidence, 15th edition (2000) London Sweet & Maxwell, that "[i]n general, an expert may give evidence in chief as to the grounds on which he has reached his opinion, and it may be said that, without the grounds, the opinion is valueless" (Makita at [63]).
Similarly in Pownall v Conlon Management Pty Ltd (1995) 12 WAR 370 at 389-90; (1995) 16 ACSR 227 Anderson J stated:
Expert opinion is to be judged like any other evidence. It must be comprehensible and reach conclusions that are rationally based. The process of inference that leads to the conclusions must be stated or revealed in a way that enables the conclusions to be tested and a judgment made about the reliability of them.
As is evident from these authorities, these considerations arise not as rules of evidence and the admissibility of such evidence but rather whether the evidence offered is probative of a matter in issue.
Further, our conclusions should not be taken as a statement of principle that "evidence" can never be rejected by the Tribunal where the rules of evidence do not apply. For example, scandalous or utterly irrelevant evidence may not be permitted, particularly where its admission would inappropriately affect the just quick and cheap resolution of the real issues in dispute or might work an injustice on the other party.
As recognised in Khan v Kang [2014] NSWCATAP 48, the Tribunal must consider the nature of the claim made and the evidence that is necessary to establish an entitlement to a remedy on the balance of probabilities in the circumstances of the particular case.
The only writing identified as forming the contract was the Quotation. It did not comply with the requirements of s 7(2) of the HB Act referred to in the previous paragraph.
Section 10 of the HB Act provides:
10 Enforceability of contracts and other rights
(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts -
(a) in contravention of section 4 (Unlicensed contracting), or
(b) under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6(2)), or
(c) in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph,
is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.
(2), (3) (Repealed)
(4) This section does not affect the liability of the person for an offence against a provision of or made under this or any other Act.
There is a question as to whether, on its proper construction, the requirements for writing so as to preclude the operation of s 10(1)(b) of the HB Act are satisfied by:
1. any writing, for example a simple quotation describing the work to be performed which is accepted orally; or
2. a written contract provided it satisfies the requirements of s 7;
3. a contract wholly in writing.
In an earlier decision of the Supreme Court of New South Wales, Beechwood Homes v Kirkpatrick & Ors [2002] NSWSC 87 (Beechwood), Master Malpass concluded at [23] that a contract that was in writing was not rendered unenforceable under s 10(1) (which was in similar terms as the current s 10(1)(b) of the HB Act) despite having found non-compliance with the requirements of s 7.
However, the Master found the now repealed s 10(3) did render the contract unenforceable by the builder. That section precluded a builder from recovering damages or enforcing any other remedy in respect of a breach of contract where the builder contracted to do work in contravention of a provision in the then Division of the HB Act.
At that time, s 10 of the HB Act was in the following terms:
10 Enforceability of contracts and other rights
(1) A contract to which the requirements of section 7 apply that is not in writing or that does not have a sufficient description of the work to which it relates is not enforceable by the holder of the licence against any other party to the contract.
(2) Subsection (1) does not apply to a contract entered into in the circumstances described in section 6 (2).
(3) A person who contracts to do work in contravention of this Division or who contracts to do work under a contract that does not comply with this Division:
(a) is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, but
(b) is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.
(4) This section does not affect the liability of the person for an offence against a provision of or made under this or any other Act.
Section 10 was amended and s 10(3) was repealed by the Statute Law (Miscellaneous Provision) Act (No 2) 2001 (NSW) (2001 Amending Act) in the form set out in [53] above. At this point it is relevant to note what the then Treasurer and Minister for State Development, the Hon Michael Egan, said in the Second Reading Speech in connection with the 2001 Amending Act (New South Wales Legislative Council, Parliamentary Debates (Hansard), 2 July 2001):
Three of those amendments clarifies the operation of sections relating to building contracts. The amendments ensure that those sections do not have the unintended effect of rendering a building contract wholly unenforceable at the suit of the builder merely because of the builder's very minor contravention of certain provisions of the Act.
The Second Reading Speech suggests that the amendment was to confine the operation of s 10 to non-compliances or contraventions of the sections referred to in s 10, not to other sections found in the Division as was the position because of the now repealed s 10(3).
In a more recent decision dealing with the current version of s 10, the Supreme Court interpreted differently the words "a contract to which the requirements of section 7 apply that is not in writing or that does not have a sufficient description of the work to which it relates", being the words now found in s 10(1)(b) of the HB Act.
In Anjoul v Anjoul [2021] NSWSC 592 (Anjoul) Robb J said at [209]:
209. Consequently, if s 7 of the Home Building Act required the parties to enter into a written contract that satisfied that section, no such written contract was made. In these circumstances, s 10 of the Act would have the effect that Jerry would not be entitled to damages or to enforce any other remedy in respect of a breach of contract by Ashley.
That is, his Honour concluded s 10(1)(b) operated to prevent a builder enforcing a contract where there was a contract in writing which did not meet the requirements of s 7 of the HB Act.
Section 10 should be construed by considering it in context. As the High Court said in Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503 at p519; [2012] HCA 55 at [39]:
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text" (citation omitted). So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and insofar as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.
The interpretation must be "consistent with the language and purpose of all provisions of the statute". In Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) 194 CLR 35; [1998] HCA 28 (Project Blue Sky) the plurality (McHugh, Gummow, Kirby and Hayne JJ) said at [69] (citations omitted):
The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined "by reference to the language of the instrument viewed as a whole". In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.
The purpose of s 10 is to secure compliance by a contractor with the obligations identified in s 10(1)(a)-(c) inclusive. It is a section which, in effect, sanctions a contractor by preventing that person claiming damages or enforcing a remedy in the prescribed circumstances. Those circumstances are where the person who contracts to do the work:
1. is unlicenced in "contravention" of the requirements of s 4 of the HB Act: s 10(1)(a); or
2. does so "under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates": s 10(1)(b); or
3. does so "in contravention of any other provision of [the HB Act] or the regulations that is prescribed for the purpose of this paragraph".
Unlike the language in ss 10(1)(a) and (c), which refers to "contravention", the language of s 10(1)(b) does not refer to a "contravention" of the requirements of s 7 but rather requires the contract to be "in writing" (s 7(1)) or have "a sufficient description of the work to which the contract relates" (s 7(2)(c)).
On one view, if any contravention of s 7 was to give rise to the consequences of unenforceability prescribed by s 10, the Legislature could have said so in s 10(1)(b) and used language consistent with that found in ss 10(1)(a) and (c). In the absence of such language, this different language suggests s 10(1)(b) should be given a more confined operation such that any writing would be sufficient.
For the reasons that follow we do not think this interpretation is correct.
The expression "contract … in writing" should be given its ordinary meaning. In this regard, it is well understood that a contract can be:
1. in writing;
2. oral;
3. partly in writing and partly oral;
4. inferred,
and it might have implied terms.
Section 7 of the HB Act requires a contract in writing, signed and dated by the parties containing the information specified in that section. Failure to include those matters constitutes a failure to comply the requirements of the HB Act and, necessarily, a failure of the required contract to be in writing containing those requirements.
The HB Act is consumer legislation, protective of the person for whom the work is done. The Legislature has determined that writing is required for the contract and that the writing must contain certain information. No doubt this is to ensure the receiver of the goods and services is informed in writing of the nature and scope of the agreement and their rights and obligations of the builder in connection therewith.
To construe the expression "in writing" narrowly would permit any writing to satisfy the requirements of s 10(1)(b) of the HB Act and thereby avoid its operation provided there was a "sufficient description of the work to which it relates". It would also permit the contractor to avoid contracting on the terms prescribed by the HB Act and enforce any non-complying contract.
For example, a narrow interpretation of the requirement for writing would permit a contractor to enforce a contract where only a sufficient description of the work is provided in writing, all other matters essential to the formation and terms of the contract (including price) and as to performance (such as warranties) being oral, implied or inferred.
As to the absence of the word "contravention" in the language of s 10(1)(b), the expression "contravention" should be seen as a reference to specified conduct for which a penalty can be imposed under the HB Act, not a reference to the requirements of the HB Act relating to the form and terms of any contract. Unlike s 4 (unlicensed contracting), s7 is only prescriptive of the form of the contract to which it applies and the required content of the contract. Section 7A deals with conduct in contravention of s 7 and the penalty applicable. As such, the absence of the word "contravention" in s 10(1)(b) is not a matter that supports an interpretation that the expression "in writing" should be construed narrowly rather than requiring a written contract that meets the requirements of s 7.
It follows, in our view, that a person who contracts to do residential building work under a contract that is in writing but does not comply with the requirements of s 7 of the HB Act is "not entitled to damages or to enforce any other remedy in respect of a breach" by reason of s 10(1)(b). In this regard the interpretation of Robb J in Anjoul is to be preferred to that of Master Malpass in Beechwood.
Finally, our interpretation is consistent with the authorities dealing with the requirement that variations be in writing and the statutory requirements relating thereto.
Schedule 2 Part 1 cl 1 of the HB Act provides:
Schedule 2 Terms to be included in certain contracts
Part 1 Contracts to do residential building work
1 Plans and specifications
(1) All plans and specifications for work to be done under this contract, including any variations to those plans and specifications, are taken to form part of this contract.
(2) Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf of each party to this contract.
(3) This clause only applies to a contract to which section 7AA (Consumer information) of the Home Building Act 1989 applies.
Section 7AA applies to contracts "to which section 7 applies" other than contracts between a contractor and developer or where the regulations prescribe. It applies to "[a]ny agreement to vary [the] contract", whether as to scope of work, price or any other term of the contract.
It would be a curious result if, as required by cl 1(2) of Sch 2, that "[a]ny agreement to vary [a contract to which s 7 applies] or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf of each party to this contract" but the original contract did not have to meet this requirement. Rather, applying the principles in Project Blue Sky, the language in s 10 and the requirement for writing should be construed in a manner "consistent with the language and purpose of all the provisions of the statute … [and] by reference to the language of the instrument viewed as a whole".
In the present case, the only document to which we are referred that might constitute a written agreement was the Quotation. However, this was not the offer which was accepted. As the Tribunal found, there were further negotiations and the price was varied from $46,000.00 stated in the Quotation to $40,000.00. This arrangement as varied was not in writing. Further, the contract in so far as it was constituted by the Quotation did not satisfy the requirements for writing in respect of the matters in s 7 of the HB Act.
Therefore, s 10(1)(b) precludes the builder from enforcing it to recover unpaid monies.
It follows that the Tribunal was in error in making a money award in favour of the builder based on the evidence before it in circumstances where the award was for the unpaid contract sum.
On this aspect two further comments need to be made.
First, the findings of the Tribunal at [31]-[32] suggests that all the builder was required to do was to deliver an invoice for the work performed and that this was the reason why the Tribunal said the claim "cannot succeed today". For the reasons above, this statement was obviously incorrect.
Secondly, the Tribunal made reference to the Australian Consumer Law (NSW) and the warranties in s 60 of that law concerning due care and skill. The Tribunal then found that the claim made by the homeowners was within the monetary jurisdiction - presumably a reference to the Fair Trading Act 1987 (NSW) (FT Act).
The reasoning process at [43] suggests that the Tribunal set off the amount found for damages due to the homeowners ($7128.00) against the unpaid sum under the contract and made an award in favour of the builder (in the homeowners' proceedings) as might be permitted in a consumer claim dealt with by the Tribunal under Part 6A of the FT Act. In this regard, s 79O provides:
79O Orders in favour of respondent
(cf CC Act 1998, s 8 (2))
In determining a consumer claim wholly or partly in favour of a respondent to the claim, the Tribunal may make any one or more of the following orders that it considers appropriate -
…
(b) an order that requires the claimant to pay to the respondent a specified amount of money,
…
Insofar as this was the justification for the money order made in favour of the builder, this was a further error. Nothing in the FT Act renders enforceable at the suit of the builder a contract expressly made unenforceable under s 10 of the HB Act. Section 79O enables the Tribunal to grant a remedy where a right to the remedy is established. It does not create a right nor operate to override the prohibition in s 10 of the HB Act.
In the present case, the builder had no entitlement to claim under the contract. A right to set off monies due under the contract does not enable the builder to otherwise make a positive claim for payment under the contract: Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 per Giles JA at [6]-[7], Basten JA at [48] and Handley JA at [57], all Judges recognising that a builder could rely on the contract to defend the claim bought by a homeowner even where the contract was not enforceable at the suit of the builder.
Further, the Tribunal did not deal with any claim in quantum meruit insofar as that claim related to works done under the contract (as opposed to the variations claimed) as might otherwise be permitted having regard to the principles in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221; [1987] HCA 5.
In these circumstances, there was no basis to make an award in favour of the builder.
In these circumstances we are not persuaded we should exercise the powers of the Tribunal as permitted by s 81(2) of the NCAT Act without affording the parties the opportunity to consider these reasons and deal with relevant factual disputes.
Consequently, we will remit the proceedings to the Consumer and Commercial Division for redetermination in accordance with these reasons and according to law.
In doing so, we will permit the parties to call further evidence in order to deal with any issues arising from any works carried out by the builder pursuant to order 1 as well as any claims made by the builder in quantum meruit.
We were informed by the homeowners that they had paid to the builder the amount of $12,872.00 as required by order 2 made on 19 May 2022. As this order will be set aside, the amount should be repaid by the builder to the homeowners. We will allow seven days for this to occur.
It is appropriate to make further comments concerning the reasons provided by the Tribunal. These comments concern the statements at [5] and [48] of the Reasons.
As is apparent from our reasons, the Tribunal failed to deal with evidence which it should have received. Consequently, the statement concerning "material facts" is both unnecessary for the provision of proper reasons and incorrect. Secondly, having regard to the errors which we have found, it could not be said that orders have been made "in the interests of justice as between the parties". Again this statement is both unnecessary and incorrect.
It would be hoped that such statements do not find their way into future decisions of the Tribunal. They provide little or no assistance to the parties in understanding any decision which has been made and tend to distract from the task of the Tribunal to consider the evidence, apply the law and make decisions as permitted and required in consequence thereof.