Woodward v D J & T L Mellross Pty Ltd t/as Mellross Homes

NCAT Consumer and Commercial|2018-06-22

REASONS FOR DECISION

In these proceedings the applicant claims damages against the respondent because allegedly, a residence with associated structures built by the respondent for the applicant and his wife was not built in the precise locations shown on the contractual plans.
There is no dispute between the parties that the applicant's claim is a 'building claim' for the purposes of section 48A of the Home Building Act 1989 (the 'Act') and that the Tribunal has the jurisdiction to hear and determine the claim under section 48K of the Act.
In proceedings HB 16/52751 which were heard and determined on 19 September 2017, the Tribunal heard and determined claims brought by the applicant against the respondent in relation to defective building work performed by the respondent for the applicant and his wife in connection with the same residence the subject of these proceedings.
In these Reasons for Decision I will refer to the applicant as the owner and to the respondent as the builder.
These proceedings were heard in Yass on 22 June 2018.
The evidence relied upon by the owner was: 1. Exhibit A, bundle of documents filed in the Tribunal on 18 April 2018; and 2. Exhibit B, bundle of documents filed in the Tribunal on 22 November 2017.
The builder did not file evidence but filed Amended Points of Defence with various attached documents which I accepted as exhibit 1. The builder also filed submissions on 5 February 2018.
The owner claims $50,000.00 for breach of a building contract. Specifically he alleges that the builder failed to construct a house and a water tank precisely where they ought to have been situated in accordance with a site plan referred to in the contract signed by the parties.
The damages of $50,000.00 are claimed on the basis of loss of amenity and disappointment. The claim is broken up into four items as follows: 1. the house was constructed 8 m away from an existing shed when that distance should have been 7 m; 2. the house was constructed 15.8 m from the back fence of The property when that distance would have been 16.315 m; 3. the water tank was located 7.5 m from the house when that distance should have been 5 or 6 m; 4. the water tanks were installed 2.7m forward of the rear wall of the house when they should have been installed in line with the rear wall of the house.

Builder's defence

In relation to the claims made by the owners, the builder raises a number of issues in its point of defence. The builder makes no admissions regarding the owner's allegations that the house and the water tank were not situated precisely where they should have been in accordance with the contract, specifically document A-02, the site plan.
The builder claims that the issue of loss of use and enjoyment of land surrounding the house has been dealt with in proceedings HB 16/52751 and had merged with that decision. The builder cited Blair v Curran (1939)62 CLR 464, and Port of Melbourne v Anshun Pty Ltd [1981] HCA 45, 147 CLR 589 in support of its submissions.
In exhibit A the owners set out their submissions on the res judicata issue addressing the builder's submissions as referred to.
In HB 16/52751 decided 19 September 2017, the owner claimed among other things 'Loss of use and enjoyment of the land surrounding the house and stress'. The claim was related to a reduction in the amount of usable space between the new residence and a pre-existing shed. This head of claim was dealt with and rejected at [90] - [93] of that decision where it was stated: 'No case has been made out pursuant to section 16 of the Civil Liability Act 2012 that the owners have suffered personal injury arising out of stress. I am not persuaded that the owners have suffered a loss and enjoyment as claimed by them. Their evidence asserts a loss of enjoyment of their land and refers to a large reduction in the amount of usable space between the new residence and a pre-existing shed which causes that result. The owners have not established that this state of affairs exists. In addition the amount of $10,000.00 claimed is not explained or broken up in any way. I have no hesitation in rejecting this item of the owners' claim.'
On appeal that determination was not altered. Woodward v D J & T L Mellross Pty Ltd [2018] NSWCATAP 179.

Res Judicata and issue estoppel

In Pearson v Clark [2016] NSWCATAP 134 an appeal panel considered the differences between res judicata and issue estoppel. It stated at [63] - [66]: 'In order to understand the correctness of the October Decision it is necessary to understand the circumstances in which the principle of res judicata apply. In Effrem Foods v Trawl Industries 115 ALR 337 the Full Court of the Federal Court of Australia Northrop and Lee JJ said at p380 line 10: 'In principle, res judicata is a defence to a claim in a legal proceeding. Traditionally it is a technical defence allowing no discretion in the court. The defence, if made out, is a complete bar to the claim. Unfortunately lack of a clear dichotomy between the defence of res judicata and similar defences based upon estoppel can give, and has given, rise to confusion in Australia, England and the USA.' Their Honours, at p380 then referred to the High Court decision in Jackson v Goldsmith (1950) 81 CLR 446 in which the principles of res judicata and issue estoppel arose for consideration. In that case, Fullagar J set out the applicable rules of law. As noted by Northrop and Lee JJ in Effrem, "(a)lthough Fullagar J dissented in the judgement of the High Court, his exposition on this aspect of the matter can be treated as authority since his dissent was based upon the application of the principle to the facts of that case". In Jackson, Fullagar J said at 466-8: 'The rule as to res judicata can be stated sufficiently for present purposes by saying that, where an action has been brought and judgement has been entered in that action, no other proceedings can thereafter be maintained on the same cause of action. This rule is not, to my mind, correctly classified under the heading of estoppel at all. It is a broad rule of public policy based upon the principles expressed in the maxim "all". The rule as to issue estoppel is generally stated in the words of Lord Ellenborough in Outram v Morewood (1803) 3 Beast 346 at 355; 102 ER 630 at 633. His Lordship said that the parties and privies are "precluded from contending to the contrary of that point, or matter of fact, which having been once distinctly put in issue by them … has been, on such issue joined, solemnly found against them". This is I think, a true case of estoppel, analogous to estoppel by deed and estoppel by representation. The same rule was concisely stated by Dixon J in Blair v Curran (1939) 69 CLR and 531 where his Honour said "A judicial determination directly involving an issue of fact or of law disposes once for all of the issue, so that it cannot afterwards be raised between the same parties or their privies." It is unnecessary here to discuss these two principles further beyond noting two points. In the first place, if A sues B to judgement and in subsequent proceedings between them a plea of res judicata is raised, the primary question is whether the cause of action in the later proceedings is the same as that which was litigated in the former proceedings. This was the question which arose in the well-known case of Brunsden v Humphrey (1884) 14 QBD 141. It was held there that the causes of action were not the same. The injuria was the same but the damnum was different, and, since damage was "of the gist" of the particular action, the causes of action were not the same. The plea therefore failed. On the other hand, if A sues B to judgement and in subsequent proceedings between them a plea of issue estoppel is raised, the plea may succeed although the causes of action in the two cases are entirely different. The question will be whether an issue of fact or law which is raised in the later proceedings was an issue of fact or law which was also raised in the earlier proceedings and therefore determined. In the second place, it follows from the very nature of the difference between the plea of res judicata and the plea of issue estoppel that different materials are relevant in each case. Where the pleas of res judicata, only the actual record is relevant. Where the plea is of issue estoppel, any material may be looked at which will show that issues were raised and decided. Reasons given for the judgement pronounced are likely to be particularly important for this purpose: see Ord v Ord [1923] to KB 432 at 440 and Marginson v Blackburn Borough Council [1939] 2 KB 4 to 6 at 437. Both those cases were cases of issue estoppel and were clearly treated as such, though I think, with great respect, that both illustrate the unfortunate absence of a clear legal terminology, to which I have already referred. It should perhaps be added that, as Dixon J said in Blair v Curran [1939] 62 CLR at 532, the estoppel, so far as it applies to the facts, is confined to ultimate facts. It does not extend to mere evidentiary facts.' In relation to the reference by Fullagar J to the decision of Dixon J in Blair v Curran (1939) 62CLR 464 , it is useful to set out in full the principle stated by Dixon J. At 531-532 Dixon J explained that: 'A judicial determination directly involving an issue of fact or of law disposes once and for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgement, decree or order necessarily established as the legal foundation or justification of its conclusion. … Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue- estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established."
I find that having regard to what was said by the Appeal Panel in the above extract, there are at least 2 issues for me to deal with in connection with this defence of res judicata raised by the builder. (there is also a third issue which is dealt with later in these reasons). The first is whether the causes of action that the owner raises in these proceedings are the same as were raised in proceedings HB 16/52751. The second issue is whether the issues raised by the owner in these proceedings have been determinatively found against the owner in the decision given in proceedings HB 16/5275. The third issue is whether the
I find that the owner's cause of action in these proceedings in relation to claim 1, namely a claim relating to the distance between the new residence and the existing shed, is the same as the cause of action raised in the proceedings HB 16/52751, namely a reduction in the amount of usable space between the new residence and a pre-existing shed. As a result I find that the cause of action has merged into the decision in proceedings HB 16/52751.
I find that the matters raised in claims 2 -4 of the owners Points of Claim as found in exhibit A do not raise the same cause(s) of action as were raised in proceedings HB 16/52751.
However the issues raised in those claims raise similar issues as that made by the owner in proceedings HB 16/52751, namely the degree to which the residence and water tanks constructed by the builder were accurately sited on the owner's land.
As a result it is necessary to consider in more detail the question of issue estoppel. This is the third issue to which I referred in [16]. In Ravenscroft v Skinner [2016] NSWCATAP 107 an Appeal Panel considered the question of issue estoppel stating at [8] - [12]: The High Court has recently outlined the nature of issue estoppel and how it works in practice: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [21] and [22]. The following discussion summarises the principles the High Court explained in that decision. 'Issue estoppel in relation to judicial determinations is a common law doctrine informed by considerations of finality and fairness. It operates "as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law": Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [21] citing Jackson v Goldsmith (1950) 81 CLR 446 at 446. The High Court has identified three forms of estoppel: cause of action estoppel, issue estoppel and Anshun estoppel. Cause of action estoppel prevents a party from asserting in a subsequent proceeding a claim to a right or obligation which was asserted in earlier proceedings between the same parties and in relation to which a final judgment or decision was made. That doctrine applies to the facts of this case because the second proceedings were based on the same claim or cause of action that Mr Ravenscroft made in the first proceedings. That claim was that when supplying the boat, Skinner Marine engaged in deceptive or misleading conduct in breach of s 18 of the ACL (NSW) or that Skinner Marine had breached the consumer guarantee in s 54 of the ACL (NSW). The Tribunal determined those claims in the first proceedings and awarded Mr Ravenscroft damages. The Tribunal relied on the second form of estoppel, issue estoppel, to dismiss the second proceedings. That doctrine operates "to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination" made in the first proceedings: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [22]. It operates regardless of whether the cause of action is the same in each proceeding. In our view, the second proceedings did not just raise certain issues of fact and law that had been resolved in the first proceedings; the cause of action was the same. Alternatively, the Tribunal relied on the third form of estoppel, Anshun estoppel, to dismiss the second proceedings. The High Court has described that form of estoppel as an extension of the first and second forms: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [22]. It operates to preclude the assertion of a claim or the raising of an issue of fact or law "if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding:" Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [22]. The second proceedings were not just connected with the subject matter of the first proceeding; the cause of action was the same.'
Of the three forms of issue estoppel identified by the High Court in Tomlinson v Ramsey Food Processing Pty Ltd, I conclude that the principle of Anshun estoppel relates most closely to the owner's claims 2 - 4. Thus the question is whether claims 2 - 4 were so connected with the subject matter of proceedings HB 16/52751 as to have made it unreasonable in the context of those proceedings for those claims not to have been made or those issues not to have been raised in those proceedings.
I find that claims 2 - 4 were so connected with the subject matter of proceedings HB 16/52751 as to have made it unreasonable in the context of those proceedings for those claims not to have been made or those issues not to have been raised. The reasons for this finding are first, that in proceedings HB 16/52751 the owners raised a claim relating to alleged failures by the builder to site the residence precisely where it should have been constructed in accordance with the contractual site plan. Claims 2 - 4 raise identical claims except that they refer to differing instances or consequences of the residence and the water tanks not being constructed precisely where the site plan required them to be situated. Secondly, proceedings HB 16/52751 were for breach of clause 39 of the contract. These proceedings also rely on a breach of clause 39. I find that the similarity in the nature of the claims in these proceedings to the claims in proceedings HB 16/52751 both as to the nature of the claim and the breach of contract relied upon make it unreasonable for claims 2 - 4 not to have been made in proceedings HB 16/52751.
For the reasons provided, I would dismiss these proceedings.
However If I am wrong in my findings of res judicata and issue estoppel, I will consider the owner's claims.

Defence - Proceedings out of time

A further defence relied upon by the builder is that the claim in these proceedings is out of time.
The building contract was dated 12 June 2015. In HB 16/52751 I found that practical completion occurred on 24 May 2016. I make the same finding in these proceedings for the same reasons previously provided. These proceedings were commenced on 27th October 2017. Under section 18E of the Act the owner is required to bring proceedings on a claim which does not relate to a major building defect within two years of completion of the work in question. I find that the matters raised by the owner in these proceedings are not major defects. Therefore these proceedings were required to be brought within 2 years of the work being completed.
I find that the two year period for bringing a claim for a breach of a statutory warranty relating to a defect would expire on 23 May 2018. The proceedings have been brought comfortably within the time required by section 18E of the Act. The builder's submissions that these proceedings have been brought out of time are rejected on the basis of the analysis provided.

The owner's evidentiary case

The owner is obliged to establish by credible evidence the matters alleged in items 1 - 4 of his claim. He must do that on the basis of the civil balance of probabilities. The relevant principles in relation to discharging the burden of proof in civil cases were recently summarised by the New South Wales Court of Appeal in Nguyen v Cosmopolitan Homes [2008] NSWCA 246 at [55] as follows: '(1) A finding that a fact exists (or existed) requires that the evidence induce, in the mind of the fact-finder, an actual persuasion that the fact does (or at the relevant time did) exist; (2) where on the whole of the evidence such a feeling of actual persuasion is induced, so that the fact-finder finds that the probabilities of the fact's existence are greater than the possibilities of its non-existence, the burden of proof on the balance of probabilities may be satisfied; (3) where circumstantial evidence is relied upon, it is not in general necessary that all reasonable hypotheses consistent with the non-existence of a fact, or inconsistent with its existence, be excluded before the fact can be found; and (4) a rational choice between competing hypotheses, informed by a sense of actual persuasion in favour of the choice made, will support a finding, on the balance of probabilities, as to the existence of the fact in issue.'
Exhibits A and B contain the statutory declarations of the applicant dated 21 November 2017. The evidence in support of claims 1 - 4 is in paragraphs 15-19 of the statutory declaration.
The first thing that the owner must do is establish that as alleged in his Points of Claim the: 1. house was to be built 7m from existing shed; 2. house was to be built with a distance of 16.315m from the back fence of the property; 3. water tanks were to be located either 5 or 6m from the house; and 4. water tanks were to be installed in line with the back wall of the house
The owner relies primarily on site plan job 3567 Sheet A-02 to establish the dimensions referred to in the preceding paragraph. A copy of the site plan is included in exhibits A and B. He also relies on his statutory declaration declared 21 November 2017 to support the above matters and also to support the pleaded position of the builder's failure to place the house and water tanks where they were required to be located. The builder has not filed evidence to contradict this evidence. Further when cross examined the owner did not concede or agree that his evidence was incorrect or inaccurate. I have no reason not to accept the owner's evidence.
In further support of the owner's claim exhibits A and B contains colour photographs of distances between various structures which rely upon a tape measure from one structure or place to another showing a mark on a tape measure.
There are 2 photographs that show a measured distance of 8 metres between the house and the shed.
There is one photograph marked distance from water tank to house which shows a tape measure up against the building at a point of 7.4 m. There is also another photograph marked distance from water tank to house which does not show the water tank and which does not adequately show the distance on the tape measure.
The photographs marked distance from back fence to house show a tape measure up against what is presumed to be the house showing a distance of 15.8 m.
One Photograph marked house to back wall of water tank and distance from back wall of water tank to house shows a tape measure measurement which cannot be ascertained from the of the back house to a witch's hat. Another photograph from the water tank to a witch's hat similarly marked shows a measurement of around 2700 mm. I find that the witch's hat lines up with the back of the house and a straight line from the witch's hat to the water tank lines up with the centre of the tank.
A further photograph marked distance from back wall of water tank to house shows a tape measure at the top of a red plastic witch's hat at 2750 mm or 27.5m.
The owner relies on this evidence to support his claims rather than a survey from a qualified surveyor. The photographic evidence is very poor and is barely persuasive. However based on the owner's photographs I find that the owner has established his case in that: 1. the distance from the house to the existing shed is 8m when it should be 7m; 2. the distance from the water tank to the house is 7.4m when it should be 6m; 3. the distance from the back fence of the property to the house is 15.8 m when it should be 16.315m; 4. the water tanks do not line up with the back of the house.
I find that the owner has established that the builder failed to comply with clause 39(a) of the contract in that it failed to fully comply with plan A-02 in the details referred to above.

Damages

As stated above the owner claims damages of $50,000 on the basis of loss of amenity and disappointment.
The owner's statutory declaration of 21 November 2017 does not address the issues of loss of amenity or disappointment except to refer to the decision in Stone v Chappel [2017] SASCFC 72. However in cross examination the owner stated that due to the builder's failure to site the house in accordance with plan A-02 he is unable to have carport between the house and the shed. The owner stated that he planned having a carport 6m wide and with a 1 m overhang and that he could not build an 8 metre carport or that if he could it would cost an additional $10,000.00.
The owner's evidence is not that he cannot build a carport with an overhang between the shed and the house. There is no evidence at all to suggest that he cannot. Rather his evidence as to loss of amenity suggested that if he did build a carport 6m wide carport with a 1 m overhang he would be exposed to the risk of getting wet as he traversed the extra unprotected metre to the residence.
I do not regard the owner's evidence to be particularly persuasive as establishing a loss of amenity because the only evidence that there is on this subject is as stated above. In that regard the owner has not produced evidence from contractors stating what is possible as regards carport width or overhang. I regard his evidence as being speculative and unsupported by material from contractors as to what might be built or provided to address his concerns.
The owner has given no evidence at all about a loss of amenity flowing from the discrepancy in distance between the house and the boundary, the distance between the house and the water tanks or the positioning of the water tanks relative to the back line of the house.
The builder also relies on section 16 of the Civil Liability Act 2002 which requires a non-economic loss claim to exceed 15% of the maximum amount of damages for non-economic loss of $612,500 which equates to a claim greater than $91,875.
Insofar as the owners claim is for disappointment, I find that such a claim is related to an impairment of a person's mental condition and as submitted by the builder, section 16 of the Civil Liability Act applies.
In Moore v Scenic Tours Pty Limited (No.2) [2017] NSWSC 733 Garling J. at [862] - [865] stated: 'Barr AJ in Flight Centre Ltd t/as Infinity Holidays v Janice Louw [2011] NSWSC 132, was called upon to consider whether the Local Court had made an error of law in awarding damages to the plaintiffs in that court whose holiday was affected by construction noise and inaccessibility of parts of a resort by reason of construction activity. The Local Court had found that the plaintiff suffered loss, inconvenience, distress and disappointment as a result of that construction activity. An order in the Local Court was made for a sum of damages to reflect that loss. The defendant in the Local Court, Infinity Holidays, sought relief in the Supreme Court pursuant to s 69 of the Supreme Court Act 1970 to quash the orders of the Local Court for error of law. The primary argument put to Barr AJ was that no award under that sum ought to have been given because s 16 of the CLA applied to it, and the relevant threshold was not reached. The central submission made by Infinity Holidays in the Supreme Court was that an award for inconvenience, distress and disappointment constituted "impairment of a person's ... mental condition" and was therefore an award for personal injury as defined in s 11 of the CLA. Once so defined, the provisions of s 16 would apply. Having referred to the relevant authorities, Barr AJ said at [31]: "It seems to me that much assistance is to be gained from the several remarks of the members of the Court of Appeal in the cases cited. In my opinion, the inconvenience, distress and disappointment experienced by the first and second defendants constituted non-economic loss for the purposes of s 3 [of the Civil Liability Act], being pain and suffering. In my opinion, they constituted impairment of the mental condition of each of the first and second defendants and so amounted to personal injury. It follows that the assessor was obliged to ask himself, in accordance with s 16, whether the severity of the non-economic loss was at least 15% of a most extreme case. He did not do so. The plaintiff has established that there was an error of law ..." Although I am not strictly bound by the decision of Barr AJ, it is appropriate that I follow it, unless I am persuaded that it is obviously wrong. I am not so persuaded.'
In Tralee Technologies Holdings Pty Ltd v Yun Chen [2015] NSWSC 1259 Bellew J said at [54]: 54 Spigelman CJ re-visited the issue in Insight Vacations Pty Limited v Young [2010] NSWCA 137 (at [78]-[79]) and concluded that grief, anxiety, distress and disappointment were elements of pain and suffering within the definition of "non-economic loss" contained in s. 3 of the CLA. In the same case, Basten JA (with whose reasoning Spigelman CJ agreed) said (at [125]): "It is undoubtedly true, as the Chief Justice noted in Ibbett at [21], that injury to reputation, deprivation of liberty and outrage, humiliation, indignity and insult are not commonly referred to as forms of personal injury; rather they usually derive from torts other than negligence, often intentional torts. Matters such as grief, anxiety, distress and disappointment, may fall into a different category. They can be elements of pain and suffering which are the subject of awards for non-economic loss. Similarly, as reflected in the definition of non-economic loss in the Civil Liability Act, an award may be made for "loss of amenities", to cover the non-economic loss resulting from "the deprivation of the ability to participate in normal activities and thus to enjoy life to the full and to take full advantage of the opportunities that otherwise it might offer": Teubner v Humble [1963] HCA 11; 108 CLR 491 at 506 (Windeyer J). … These, however, are heads of damage which fall within the general law understanding of non-economic loss and the statutory definition of that term. Accordingly, they are subject to the constraints imposed by s 16."
I find in accordance with the authorities referred to above that the owners claim for disappointment is subject to the provisions of section 16 of the Civil Liability Act. The owner has not established that the severity of the economic loss was at least 15% of a most extreme case, I dismiss his claim for damages for disappointment.
Should I be wrong in dismissing the owner's case, the orders that I would make would be based on the breaches of contract that I have found. In making an award of damages, I have found that owner has not established loss of amenity to my satisfaction and has not established the necessary severity of the economic loss for disappointment as required by the Civil Liability Act.
I would award the owner nominal damages in the sum of $40.00 in relation to the 4 breaches of contract found in his favour.

Civil and Administrative Tribunal of New South Wales

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: 23 October 2018

At a glance

Court

Decision date

Source

Judgment (8 paragraphs)

Parties

Cases Cited (13)