Yu trading as Ebenesel Landscapes v Kong & Cha

NCAT Appeal Panel|2024-01-30

Background

This appeal arises from a two decisions of the Consumer and Commercial Division. In HB 23/18794 Sooyeon Yu, trading as Ebenesel Landscapes, (the builder) was ordered to pay $16,601 to Hyemi Kong and Bohyun Cha (the owners). The builder's application HB 23/20198 was otherwise dismissed. The parties entered into a contract for residential building work on 27 July and 1 August 2022 respectively to undertake landscaping work. The builder completed the work on about 19 September 2022.
The Tribunal made a money order in the amount of $16,601.50 in favour of the owners, payable by the builder immediately.

The Tribunal proceedings and decision

The written reasons for decision published by the Tribunal are relatively lengthy. For ease of reference we have set out the critical findings in relation to those passages which were referred to by the respective parties in their submissions on appeal: 1. the owners had contracted with the builder between about 27 July and 1 August 2022 to undertake landscaping work at the Lavington property at an agreed price of $36,267 inclusive of GST. The agreed works were set out in the builder's initial estimate dated 28 July 2022 which was modified as set out in the builder's invoice dated 2 August 2022. 2. The builder's terms of trade required the owners to pay 50% of the agreed price i.e. $18,133.50. The 50% deposit charged by the builder exceeded the maximum 10% deposit set by section 8(1) of the Home Building Act 1989 (the HB Act). 3. The parties agreed to various other variations. Those variations were not agreed in writing contrary to the writing requirements of the HB Act. 4. The builder finished the landscaping work at the property on or about 19 September 2022. 5. The builder has been fined by New South Wales Department of Fair Trading for breaching sections 7 and 8 of the HB Act amongst other provisions for contracting to do work under a building contract that did not comply with the requirements of section 7 and contracting for and demanding and receiving a deposit for residential building work greater than 10% of the contract price. 6. The parties agreed on nine variations to the original scope of works which adjusted the contract price. 1. Steppingstones to the left and right side of the house ($2,900); 2. Setting back the retaining wall 1.5 m ($500); 3. Stepping stones to the front of the house ($1,360); 4. Moonlight pebbles ($1,251.25); 5. Fixings a width of one step of the retaining wall ($350); 6. Extra concrete for a pathway in lieu of concrete for an alfresco area ($250; 7. Seething ceiling and saw cutting the driveway ($600); 8. Extra work on the retaining wall ($1,200); and 9. More Front steppingstones ($260), 10. being a total of $8,671.25 including GST. 1. When adding the agreed variations to the contract sum of $36,267 including GST, the total value of original works and agreed variations is $44,938.25 including GST. 2. The owners made further payments between August and September 2023. 3. The Tribunal found that $6,545 was paid to the builder in cash sometime in the afternoon of 31 August 2022 after the owners withdrew $6,590 in cash from their bank account at about 2:34 pm that day.

Relevant Law: The nature and scope of internal appeals

Internal appeals may be made as of right on a question of law, and otherwise with permission (that is, the "leave") of the Appeal Panel: s 80(2) of the Civil and Administrative Tribunal Act 2013 ('CAT Act').
As has been noted in Robinson and Lucy's "NCAT Practice and Procedure", Second Edition 2020, [NCATA80.30] at page182, there is no satisfactory test of universal application to define the concept of an error of law. However, in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast) the Appeal Panel set out at [13] a non-exclusive list of errors of law. 1. a failure to provide proper reasons; 2. identification of the wrong issue or asking the wrong question; 3. the application of a wrong principle of law; 4. a failure to afford procedural fairness; 5. a failure to take into account relevant (i.e., mandatory) considerations; 6. the taking to account of an irrelevant consideration; 7. the absence of evidence to support a finding of fact; and 8. the decision was so unreasonable that no reasonable decision-maker would have made it.

Notice of Appeal and Submissions

The appeal was commenced on 4 October 2023 date and was, therefore, filed one day out of time.

Grounds of Appeal

At the hearing the builder refined his grounds of appeal as follows: 1. The Tribunal erred as it found that the owners paid $6,594 to the builder on the basis that the owners withdrew cash in the sum of $6,590 as evidenced by a receipt from an automatic teller machine. 2. The Tribunal erred in making a money order because the Tribunal failed to recognise that the builder had the capacity to rectify any defects in the work and/or to complete any defects in the work because his personal license was renewed and he was duly licensed to undertake any work. 3. The Tribunal erred in calculating the variations at [85] and [86] of the decision where the Tribunal determined that the owners conceded to variations totalling $8,671.25 including GST. The Tribunal erred as the variations do not take into account labour cost and GST. By conceding that amount the owners were only conceding the cost of material and the amount did not allow for GST and or labour costs in circumstances where the owners knew that they had to pay for additional amounts in respect of fencing work, extra excavation, changes to the original scope of work in respect of stepping stones and pebbles. Additional invoices for labour costs and GST was sent to the owners on 9 September and 19 September 2022 respectively.

Reply to Appeal

In its Reply to Appeal filed on 26 June 2023 the respondents support in full the orders made on 5 September 2023.

Extension of time

The appeal was filed one day out of time. As the respondents were unable to demonstrate any real or perceived prejudice in relation to the minor delay, we have decided to extend time for the filing of the Appeal to 4 October 2023.

Ground 1: the Tribunal made an error on a question of law in that the Tribunal found that the builder was paid $6594, based on evidence of a cash withdrawal slip dated 31 August 2022.

The builder submitted that he may have suffered a substantial miscarriage of justice because there were findings and conclusions of the Tribunal which were not fair and equitable, and which were against the weight of evidence.
The findings and conclusions of the Tribunal challenged by the builder, were found at page five of the typed written material. He submits there was not sufficient evidence to prove that he was paid $6,594 in cash based on an ATM receipt for a withdrawal of $6,590. In support of this contention the builder has asked three witnesses to provide fresh evidence for the purpose of the appeal hearing. The witness statement of Alexander Witachitsa is provided in email form and dated 27 September 2024. The email states that ""I have never seen home owner giving Soo money in person."
In respect of the new evidence, fresh evidence cannot be received by the Appeal Panel unless the appellant can establish that the new evidence was not reasonably available to the appellant at the time of the first hearing.
We have had regard to the application form filed by the owners in proceedings HB 23/18794 dated 23 April 2023. The owners provided a paginated bundle to the Tribunal at first instance containing a conciliation of amounts paid to the builder from time to time. At page 3 of the bundle the owners provide a table which states "$6594" "31/08/2022 Handed Cash in Person".
At page 84 of the original documentation filed and served in the proceedings below, the owner Hyema Kong deposed in a sworn statement provided to the Department of Fair Trading on 10 February 2023 that payments were made totalling $43,389.75, being an amount of $34,618.50 and $8,771.25 for variations.
At page 5 Mr Kong deposes "Additionally we paid $6594 in cash to the landscaper at the work site on 31 August 2022".
The evidence relied upon by the owners in the hearing below was filed and served in the appeal proceedings in accordance with the Directions issued and was tendered in the appeal without objection.
The circumstances in which an Appeal Panel may grant leave to appeal from decisions made in the CCD are limited to those set out in cl 12(1) of Sch 4 of the CAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: (a) the decision of the Tribunal under appeal was not fair and equitable; or (b) the decision of the Tribunal under appeal was against the weight of evidence; or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
The test of whether evidence is reasonably available is not considered by reference to any subjective explanation from the party seeking leave but, rather, by applying an objective test which asks whether the evidence in question was unavailable because no person could reasonably have obtained it: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 at [23]; see too Elsayed v Tassone [2022] NSWCATAP 69 at [18].
In this instance we declined leave to rely on fresh evidence because the builder gave no explanation why the evidence of Alexander Witachitsa was not reasonably available to be tendered at the first hearing. In addition it is not relevant in the sense that the affidavit does little to disprove the proposition that the owners paid $6,594 in cash to the builder on the same day that they withdrew $6,590 from an ATM machine.
The appellant submits that it was illogical for the Tribunal to find, solely based on the tender of an ATM receipt, that the cash withdrawn on that day was handed to the builder. We disagree. The owners tendered contemporaneous evidence in the form of an ATM cash withdrawal slip, and provided reasonably contemporaneous sworn evidence that the cash was withdrawn for the sole purpose of payment for the builder. The owners were not cross-examined and their veracity in this respect was not challenged.
We are not satisfied the Tribunal erred in its conclusion that, on the balance of probabilities, the owners paid $6,594 on the stated date. There is no error demonstrated that rises to the level of legal irrationality nor was the Tribunal's conclusion not fair and equitable, nor was it against the weight of the evidence. The appellant did not miss a chance at a more favourable result. This ground of appeal is not made out.

Variations

The second ground of appeal is difficult to ascertain. In short, the builder submitted two additional invoices on 9 and 19 September 2022 seeking payment of $15,609 consisting of additional payments not included in the original quotation. It is stated on the Notice of Appeal that the Tribunal misconstrued the variations and as a result the Tribunal dismissed the builder's claim for payment.
By way of example, in his Notice of Appeal the builder submits that $1,251 was an agreed variation for "moonlight pebbles" in accordance with the contract but submitted another $4,500 was due and owing for the labour cost to install the pebbles over a course of three days at $1,500 per day, a sum claimed in the invoice of 19 September 2022. In other submissions he states that he seeks an additional $4,500 for three labourers at $1,500 each on one day.
The respondents deny that any additional payment was due or owing. On 22 October 2022 the owners emailed the builder in the following terms: "We dispute the invoice you have sent claiming additional moneys are owed. We have already paid you in full for your earlier quote and any variations. When you finished the landscaping work, you were paid in full".
In the Reply to Appeal the owners stated: "the decision reached was grounded in a comprehensive assessment of the entirety of the information and not merely on the initial invoice alone the grounds of appeal lack substantial merit."
The builder states that the Tribunal Member erred on a question of fact when he failed to take the 9 and 19 September 2022 invoices into account in the adjusted contract sum.
The owners conceded nine agreed variations set out above and the builder has provided no evidence why extra amounts are owed either under contract or by reason of quantum meruit. The mere provision of an invoice is not sufficient to establish a debt.
The conciliation of the contract price is contained in at [85] of the decision and the builder has not identified an error on a question of law or an error for which the leave of the Appeal Panel is required.
The builder was un-represented and we conducted the appeal with the assistance of an interpreter. As best as we can summarise, the builder appeals the decision to dismiss his claim for payment of $15,609 on account of the two invoices which contain additional sums over and above the adjusted contract price. We infer that the builder complains that the Tribunal erred in finding that the invoices did not constitute evidence of variations, nor were the alleged variations capable of being recoverable in accordance with Liebe v Molloy [1906] HCA 67; (1906) 4 CLR 347.
The Tribunal did address the invoices and the builder's accompanying spreadsheet which was said to explain why the builder was entitled to claim additional sums after the contractual arrangement had come to an end and after the owners asked the builder not to return to the premises. Critically the Member found that it was not possible to reconcile the accompanying spreadsheet or the 19 September 2022 invoice with the evidence provided by the owners. The Member concluded that a scope of work had been agreed, including the nine variations, and the Member found at [53] that the spreadsheet appears to be an uplift on the original contract price for additional time and labour cost that was not provided for in the original quote or the original invoice.
We have had regard to the lengthy written explanation provided by the builder. We also cannot reconcile the invoice and the spreadsheet with the invoice and the various payments established. In a third document entitled 'applicant's written submissions' the builder states that 'the owners are obliged to pay total of $21,616.60" including GST which includes GST they had intentionally omitted, the third progress payment and variations". During the hearing the builder was asked to particularise this sum and was unable to do so. In respect of the variation claimed for $4,500 for the additional labour to install pebbles, the builder states "I had explained to [the respondent] that the labour cost per day is $1500 if three workers are on site". However, there is no suggestion that the builder actually paid three subcontractors or labourers to attend site, there was no evidence led that the actual labour cost of $4,500 had been incurred, nor was there a suggestion that the Member had overlooked or failed to consider relevant evidence to that effect. The component parts of a Liebe v Molloy claim had not been satisfied. In particular, the three critical findings establishing an entitlement to payment for variations were not open to the Tribunal on the evidence, namely: 'the owners: (1) had actual knowledge of the extra works, in this case the provision of the structural steel, as they were being done; (2) knew that the provision of structural steel was outside the contract; (3) knew that the builder expected to be paid for them as extras, see Update Constructions Pty Ltd v Rozelle Child Care Centre Ltd (1990) 20 NSWLR 251 at 272 and the other authorities referred to in Dorter and Sharkey, Building and Construction Contracts in Australia, 2nd Ed (looseleaf service) (Lawbook Co. Sydney), at [8.160].'
Refer to Rekrut and Scott v Champion Homes Sales Pty Ltd; Champion Homes Sales Pty Ltd v Rekrut and Scott [2017] NSWCATAP 187 at [238]
It follows that no obligation to pay for the work the subject of the additional invoice in the sum of $15,609 was established and the Member was correct to conclude that the additional invoice was an attempt to increase the agreed contract price.
We dismiss this ground of appeal.

Ground 3 - Should the Tribunal make a work order?

In respect of ground three of the Notice of Appeal, the builder submits that he was deprived of a work order pursuant to section 48MA of the HB Act, preventing him from returning to the premises to rectify any defects.
Section 48MA prescribes 48MA RECTIFICATION OF DEFECTIVE WORK IS PREFERRED OUTCOME IN PROCEEDINGS A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the "responsible party" ) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
The Tribunal found at [92]: the evidence produced by the Homeowners reveals that, while the Builder was licensed at the time the works were conducted, the Builder's license has since expired. Further, I am not confident that the Builder has the requisite insurance or the skills necessary to repair the landscaping works to put them into the state that that were required to be under the terms of the contract, the implied warranties under the HB Act and the statutory guarantees under the ACL. For those reasons, I am not satisfied that rectification of the defective work by the Builder is the preferred outcome in this case. Consequently, I consider that the appropriate outcome this case is to make an order that the Builder pay the Homeowner's compensation for the likely cost that they would incur in rectifying the defective works identified in Mr Augustine's report.
Had the Tribunal arrived at a finding that the builder was not suitably licensed to make a work order, contrary to the evidence before him, we consider that this is an error on a question of law for which the leave of the Appeal Panel is not required. However, the evidence provided showed that the license of HS Chung and SY Yu expired on 16 February 2023.
It is submitted that that the Member failed to acknowledge that the builder renewed his license in March 2023 and was therefore appropriately licensed to undertake any rectifying work. The builder submits that the Tribunal erred in making a money order and should have taken into account that the builder, Mr Sooyeon Yu, was issued a license in his personal capacity in March 2023, see submissions received 7 November 2023, page 1:
The builder states "the Tribunal determined that Ebenesel Landscapes' contractor license was expired in February this year. However, I was issued an individual contractor license in March this year which was not submitted to the original decision."
On the appeal form the builder states: The Tribunal Member determined that my company license was expired but my sole trading license xxxxx is in a validated status.
We understand the builder to mean that although the Tribunal found that his company was not licensed as at the relevant time the finding was made, being the date of the hearing on 17 July 2023, he was licensed in his personal capacity.
We have had regard to the evidence submitted by the owners and tendered at the hearing below. At page 115 of the owners' bundle the builder's licensing history is provided. The licensing history is readily obtained by the Department of Fair Trading and shows that as at 16 February 2023 the relevant contractor license had expired. We note that at no time before the filing of the appeal on 4 October 2023, did the builder bring it to the Tribunal's attention that he was the holder of an individual contractor license. Instead, the Tribunal was provided with evidence that allowed it to arrive at a finding at [92] that "the builder's license had since expired" and therefore correctly declined to make a work order.
Further we have had regard to the license provided by the appellant and attached to the Notice of Appeal dated 4 October 2024. The licence speaks for itself and merely states that Soo Yeon Yu is the holder of a license permitting him to carry out "structural landscaping" and that the license expires on 1 March 2028. We have not been provided with any evidence that supports the contention the license was issued in March 2023, or that this was brought to the Tribunal's attention before the money order was issued.
We further consider that the Tribunal not merely arrived at a finding that a work order is not the "preferred outcome" based on the builder's license status. The Tribunal, correctly, considered that the builder had not complied with the writing requirements of the HB Act, and critically, that the work was uninsured. It is highly unlikely that in the event of a work order being issued retrospectively, that insurance cover for the work could be obtained particularly in light of the adverse findings by the Tribunal as to the nature of the defective work. For all of these reasons we do not find an error on a question of law established and this ground of appeal is dismissed.

Orders

We make the following orders. 1. Time for filing the Notice of Appeal is extended to 4 October 2023. 2. The appeal is dismissed.

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: 08 May 2024

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