Salam v Henley Properties (Qld) Pty Ltd
[2015] QCATA 118
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- Unreported Judgment
- Salam v Henley Properties (Qld) Pty Ltd[2015] QCATA 118
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Salam v Henley Properties (Qld) Pty Ltd[2015] QCATA 118
Salam v Henley Properties (Qld) Pty Ltd[2015] QCATA 118
CITATION: | Salam v Henley Properties (Qld) Pty Ltd [2015] QCATA 118 |
PARTIES: | Muhammad Salam Seowmee Salam (Applicant/Appellant) v Henley Properties (QLD) Pty Ltd (Respondent) |
APPLICATION NUMBER: | APL429-14 |
MATTER TYPE: | Appeals |
HEARING DATE: | 29 April 2015 |
HEARD AT: | Brisbane |
DECISION OF: | Senior Member O'Callaghan Member Deane |
DELIVERED ON: | 11 August 2015 |
DELIVERED AT: | Brisbane |
ORDERS MADE: |
|
CATCHWORDS: | APPEALS – DOMESTIC BUILDING DISPUTE – whether claim under section 84 of the Domestic Building Contracts Act 2000 (Qld) for non-compliant variations ought to have been allowed – whether failure to afford natural justice where application made after close of evidence – whether builder required to make application – whether late application was an application to amend – whether builder would suffer unreasonable hardship – whether unreasonable hardship equates to concepts of unfairness – whether reasons inadequate Domestic Building Contracts Act 2000 (Qld), s 84 Queensland Civil and Administrative Tribunal Act (Qld) 2009 ss 3, 28, 33, 64, 142, 146, 147 Seymour v Racing Queensland [2013] QCATA 179 Pickering v McArthur [2005] QCA 294 Ericson v Queensland Building Services Authority [2013] QCA 391 Aon Risk Services Aust Pty Ltd v Australian National University [2009] HCA 27 Baldwin v Von Knorring [2015] QCATA 107 Go & MJ Nominees Pty Ltd v Hollywells Homewares Pty Ltd [2010] QSC 169 Ryan v Worthington Simmons [2014] QCATA 277 Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 209 Peterson Management Services Pty Ltd (ACN 094234474) as trustee for the Peterson Family Trust v Body Corporate for the Rocks Resort Community Title Scheme 9435 (No 1) [2014] QCAT 541 HK Developments Pty Ltd v Doeuk [2013] QCAT 504 Commissioner for Children and Young People and Child Guardian v FGC [2011] QCATA 291 Ricchetti v Lanbuilt Pty Ltd [2011] QCATA 266 Commissioner for Children and Young People and Child Guardian v Eales [2013] QCATA 303 Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37 Allaro Homes Cairns Pty Ltd v O'Reilly & Anor [2012] QCA 286 Ross v Rangel [2004] CCTB 432-02 Tilecorp Pty Ltd v Pinnacle Seal Pty Ltd [2011] QCATA 102 |
APPEARANCES: |
|
APPLICANTS: | Muhammad Salam Seowmee Salam |
RESPONDENT: | Henley Properties (QLD) Pty Ltd |
REPRESENTATIVES: |
|
APPLICANTS: | Muhammad Salam and Seowmee Salam represented by Mr Russell Ensby of CBP Lawyers |
RESPONDENT: | Henley Properties (QLD) Pty Ltd represented by Mr Steven Hogg of Counsel instructed by Mills Oakley Lawyers |
REASONS FOR DECISION
- [1]Henley Properties is a construction company. It entered into a contract to build a house for Dr and Mrs Salam. Henley Properties sought payment of $21,417 for variations together with interest and costs. The Salams disputed their liability to pay for the variations because the Henley Properties’ variation documentation did not strictly comply with the Domestic Building Contracts Act 2000 (Qld) (the DBC Act). The Salams sought $60,979.84 for the cost of rectifying claimed defective work.
- [2]The learned Member ordered the Salams to pay Henley Properties $17,779.53.[1] In arriving at this amount, the learned Member found that the amount of $21,417 was recoverable by Henley Properties under s 84(4) of the DBC Act and offset $3,637.47 in respect of defects.
- [3]The Salams appeal various aspects of the decision relating to the allowance of the claim for variations and seek leave to appeal in respect of the decision relating to three items of defective work claimed by the Salams, of which one was disallowed and two were allowed for a much lesser amount than claimed. They also seek to set aside the Tribunal’s decision as to costs and for the issue of costs to be reconsidered in light of the outcome of this appeal as well as seeking costs of the appeal.
- [4]The Salams contend that all of the grounds relied upon in respect of the s 84 claims are errors of law and, therefore, they have a right to appeal. In relation to the defective work claims the Salams rely upon errors of fact and seek leave to appeal.
- [5]It is appropriate, in our findings in relation to whether the grounds of appeal raise questions of law, or fact, or mixed law and fact, to apply the distinction articulated by the Deputy President in Seymour v Racing Queensland:
In a case in which the grounds of appeal raise both a question (or questions) of fact or mixed law and fact, and leave to appeal in respect of the latter is granted, then the distinction between the nature of the appeal and powers exercisable by the Appeal Tribunal will lose significance. However, in a case in which leave to appeal on the grounds involving fact is refused, it is important that the category of the appeal as of right on the question of law alone is preserved. That integrity will not be preserved, and the right to appeal on a question of law will be lost if the Appeal Tribunal impermissibly subjects those grounds to a requirement to obtain leave when the statute does not impose it.[2]
- [6]Where grounds of appeal raise questions of fact or mixed law and fact, leave to appeal is necessary.[3] Leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.[4] Where leave is granted the appeal is to be decided by way of rehearing.[5]
- [7]Section 146 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) sets out the Appeal Tribunal’s powers on appeal where the appeal is on a question of law. It does not provide for rehearing as compared to s 147, which relates to appeals on questions of fact or mixed law and fact.[6] If the question of law resolves the matter as a whole then the Appeal Tribunal may substitute its decision, otherwise it is to remit the matter for further consideration.
Section 84 grounds
- [8]The Salams contend that the learned Member made a number of errors of law in relation to allowing Henley Properties to make a claim under s 84 of the DBC Act.
- [9]We are satisfied for the reasons set out below that the learned Member erred in law. The appeal is allowed. The learned Member’s decision is set aside. The questions of law do not resolve the matters and therefore we remit the matters to the learned Member to decide according to law.
Was it an error to entertain a section 84 claim?
- [10]The substance of these grounds is that the learned Member erred in entertaining the claim under s 84 of the DBC Act although it had not been pleaded, ‘an application pursuant to s 84’[7] was made after the close of evidence and Henley Properties did not explain its delay in making its application.
- [11]We are satisfied that there is a demonstrated error of law.
- [12]We accept that in permitting a claim under s 84 to be made after the evidence was closed that the Salams were not afforded natural justice contrary to s 28(3) of the QCAT Act.
- [13]Although the Salams had raised s 84 of the DBC Act, by way of defence, and were afforded an opportunity to make submissions about the appropriateness of relief in favour of Henley Properties under s 84 we accept that they were denied natural justice as they were not given an opportunity to adduce evidence or cross-examine Henley Properties’ witnesses about relevant matters because a claim was not expressly made until after the evidence had closed.
- [14]The Salams contend that the learned Member erred in allowing what was in substance an application for leave to amend Henley Properties’ claim to make an alternative claim. They rely upon Aon Risk Services Aust Pty Ltd v Australian National University[8].
- [15]We find that the learned Member erred in law in permitting Henley Properties to seek the Tribunal’s approval for a payment under s 84 without considering whether it was appropriate to exercise the discretion. This occurred because he made an erroneous finding that it was not necessary for Henley Properties to make an application.
- [16]In rejecting the Salams’ submissions that Henley Properties had:
- a)sufficient opportunity to bring an application to amend its claim prior to the commencement of the hearing; and
- b)failed to explain its delay in making its application,
- a)
the learned Member found that the submissions took
insufficient account for the fact that QCAT is not a court and is a non-pleadings jurisdiction; nor is their sufficient regard for the objects in s 3(b) in the QCAT Act. Moreover, s 84(4) of the DBC Act confers a discretion upon QCAT to approve the recovery of an amount by a building contractor for a variation upon being satisfied of those matters set out in the provision. There is nothing in the words of s 84(4) that provides that the power is only enlivened on the making of an application, by a building contractor.[9]
- [17]The Salams contend that the learned Member erred in finding that no application by Henley Properties was required. Although we accept that Henley Properties orally applied we find that the learned Member did not reconcile his findings in respect of s 84(4) with s 84(2)(b) which relevantly provides
- (2)If the variation was originally sought by the building owner, the building contractor may recover an amount for the variation –
……
- (b)only with the Tribunal’s approval given on an application made, as provided under the QCAT Act, to the Tribunal by the building contractor
- [18]In interpreting the ordinary meaning of s 84, we have had regard to its context in the DBC Act. We find that the preferable construction of s 84(4) is that the discretionary powers set out are to be exercised where the building contractor has made an application. This finding is consistent with another recent decision of the Appeal Tribunal.[10]
- [19]In this respect, we find that the learned Member erred.
- [20]We accept that the Tribunal does not conduct cases in the same way as Courts conduct cases and there is no provision for formal pleadings in the QCAT Act or Rules. In Go & MJ Nominees Pty Ltd v Hollywells Homewares Pty Ltd[11] it was held that the rules about a party being bound by the pleaded case do not strictly apply in a tribunal.
- [21]In this Tribunal, the application and response documents are usually brief and the Tribunal relies upon statements of evidence supplemented in this case by an oral hearing. This manner of conducting cases is consistent with the Tribunal’s objects to deal with matters in a just, economical, informal and quick manner.[12] However, the Appeal Tribunal has observed that ‘where the parties' legal advisers choose to conduct the case in more formal way, this cannot be ignored by the Tribunal.’[13]
- [22]In this case, both parties were legally represented and documents very much akin to court pleadings were filed. The Appeal Tribunal has previously accepted that in such cases it is appropriate to have some regard to the pleaded case in considering the evidence[14].
- [23]
Where parties are legally represented it is more likely than where parties are self represented that tactical decisions will be made during the conduct of the hearing as to the nature of evidence to be lead and the extent of cross examination pursued in opposing the claims being made against them.
- [24]The Salams’ Response filed 5 June 2013 specifically pleaded that the variation documents failed to comply with the DBC Act and that Henley Properties did not have ‘any lawful entitlement to be paid for the variations without satisfying the requirements for payment set out in Section 84 of the DBC Act.’[16]
- [25]The learned Member observed that
In all events, this hearing has been conducted on the basis that relief pursuant to s 84(4) was always in contemplation, and the Respondents have not been caught by surprise.[17]
- [26]The Salams contend that this was an error of fact. Counsel for Henley Properties indicated early on the first day of hearing that an application for relief may be made depending on the learned Member’s view of Henley Properties’ case[18].
- [27]It is clear that as at early on the first day of hearing there was no actual claim for such relief. An application for relief pursuant to s 84(4) was made after the evidence was finished on the second day[19]. We accept that the learned Member erred in finding that ‘relief’ was always in contemplation.
- [28]Counsel for Henley Properties submitted during the hearing of the appeal that it was not an application to amend but rather a new application and there was nothing to prevent the making of an oral application.
- [29]The difficulty with this submission is that s 33 of the QCAT Act sets out the way applications are to be made, which prescribes applications are to be made in writing. We find that the application made was in substance an application to amend the application before the Tribunal to claim in the alternative under s 84 of the DBC Act.
- [30]
- [31]
must contain three essential elements: appropriate and sufficient reference to the relevant evidence; the material findings of fact that were made (and the reasons for making those findings); and, the applicable law and the reasons for applying it..... the crucial requirement is for the Tribunal to give reasons which disclose what has been taken into account in a way that means that any error is revealed.
- [32]It has also been accepted by the Appeal Tribunal that the adequacy of the Tribunal’s reasons is to be considered ‘in light of the simpler, expedited procedures it is obliged to adopt under the QCAT Act’.[23]
- [33]The learned Member’s reasons:
- a)while referring to Aon do not indicate whether or not he had any regard to the factors set out in Aon.
- b)do not indicate whether or not he had any regard to the fact that the parties were legally represented and had chosen to proceed in a more formal way despite the amount claimed.
- a)
- [34]A failure to provide sufficient or adequate reasons for a decision is an error of law.[24] We find that the learned Member erred in these respects. The appeal is allowed.
Was it an error to find Henley Properties will suffer unreasonable hardship?
- [35]We find that the learned Member erred in law in applying a test for ‘unreasonable hardship’, which solely involved concepts of fairness to the builder. In this respect, the appeal is allowed.
- [36]Henley Properties contended, and the learned Member found, that it will suffer unreasonable hardship if it does not receive payment for the variations, which the Salams admit they requested and in respect of which the Salams signed documents agreeing to pay for the variation work. During the hearing before the Appeal Tribunal, Henley Properties’ Counsel confirmed that his client does not rely upon the ground of financial hardship.
- [37]The Salams contend that:
- a)there was no evidence of unreasonable hardship;
- b)there was no evidence of the consequences of non-payment;
- c)the learned Member erred in applying a test which involved concepts of equity and fairness;
- d)the learned Member erred in finding unreasonable hardship.
- a)
- [38]It is accepted that
The circumstance that a builder might be unpaid for work done does not necessarily lead to an inference that hardship is suffered. Something more than non-payment should be demonstrated to establish ‘unreasonable hardship’ suffered from the operation of the act.[25]
- [39]The learned Member relied upon a decision of the former Commercial and Consumer Tribunal, Ross v Rangel[26], in deciding that the word ‘unreasonable’ before the word ‘hardship’
encompasess a need for consideration of concepts such as equity, justice, and fairness when assessing whether there has been any unreasonable hardship.[27]
- [40]Counsel for Henley Properties submitted that:
- a)the unreasonable hardship is the extent of the unfairness of the Salams taking the benefit of the work requested by them without paying for that work when there is no suggestion that they were prejudiced by the manner in which there was non-compliance.
- b)it is necessary to look at the circumstances of the non-compliance and that here it was a technical non-compliance.
- a)
- [41]
The test of unreasonable hardship requires an assessment of the impact of that sanction on the builder in the circumstances in which the non-compliance occurred. That is both a subjective and an objective enquiry: subjective, in that evidence must be led to demonstrate hardship to the builder; and objective, in that the nature and extent of the hardship must be unreasonable in the circumstances in which it occurs[29].....
Objectively, the amount the builder is out of pocket will be one of the many possible factors to consider in determining whether the hardship would be unreasonable. Other factors include the conduct of each of the builder and the owner in explaining why the variation was not documented and any discussions they had about the matter.[30]
- [42]These findings were in the context that the builder was claiming it had suffered financial hardship.
- [43]We accept that neither the Appeal Tribunal nor the Court of Appeal in Allaro[31], which upheld the Appeal Tribunal’s decision, exhaustively set out what is or is not unreasonable hardship.
- [44]We are not satisfied that the preferable construction of ‘unreasonable hardship’ equates to concepts of unfairness. The section expressly includes the concept of unfairness as regards the building owner.[32] If the legislature considered that unreasonable hardship equated to unfairness to the builder then it could have expressly included such a concept.
- [45]We accept that the extent of the non-compliance was not as great as many cases that come before the Tribunal but nevertheless there was non-compliance and the respects in which there was noncompliance were entirely within the control of Henley Properties.
Was it an error to approve the amount of the payment?
- [46]The Salams also contend that the learned Member erred in approving the payment, as there was no evidence of cost of the variations or reasonable profit.
- [47]We are satisfied that the learned Member erred.
- [48]Section 84(6) provides that where there is an entitlement to recover an amount for a variation in a fixed price contract the amount is
- (a)the increase in the contract price stated, or worked out in the way stated, in the appropriate variation document for the variation; or
- (b)if paragraph (a) does not apply – the cost of carrying out the variation plus a reasonable profit.
- [49]The Appeal Tribunal has previously found that the cost incurred in performing the non-compliant variation is a relevant factor to a finding of unreasonable hardship.[33] There was no evidence of the cost of the variation as distinct from the price set out in the non-compliant documentation.
- [50]Counsel for Henley Properties submitted that it was not argued that the price of the variation was unreasonable. To some extent, this illustrates the mischief in making an application for relief under s 84 after evidence had closed. The Salams in seeking to defend the claim for variations under the contract as being non-compliant with the DBC Act relied upon the respects in which the variation documents did not comply. In the absence of a claim under s 84 there would not have been any need to lead evidence or to cross-examine Henley Properties’ witnesses about the amount.
- [51]The learned Member’s reasons do not clearly indicate whether he considered that s 84(6)(a) as distinct from s 84(6)(b) applied and why, so that issues of cost and reasonable profit were not relevant to determining the amount payable.
- [52]In this respect, the reasons are inadequate and the appeal is allowed.
Should leave to appeal the findings in respect of defective work be granted?
- [53]The Salams seek leave to appeal the findings in relation to 3 claims of defective work. They contend that the Appeal Tribunal is entitled to interfere with these findings of fact because the only reasonable conclusion open on the evidence was different to that reached by the learned Member[34] and that leave is required to avoid a substantial injustice.
- [54]
- [55]The Salams contend that:
- a)the learned Member erred in not accepting the evidence of Mr Dixon;
- b)they would suffer a substantial injustice if the full amount required to undertake the required rectification was not awarded;
- c)the only reasonable conclusion on the evidence before the learned Member was that the sums claimed ought to have been allowed in full.
- a)
- [56]The learned Member’s reasons do not disclose why he made the particular findings in respect of these defects other than in a very generic way. They do not disclose why Mr Dixon’s evidence was not accepted. Even taking into account the objects of the tribunal, the reasons are inadequate. They simply set out in tabular form Mr Dixon’s expert report reference, a brief description of the defect and the rectification amount allowed with a preamble which states
Having considered the evidence, and in particular the opinions of Mr Vada, Mr Reeve, and Mr Dixon, my conclusions in relation to all those items from the list of alleged defects that should now be recognised as defects is as follows: [37]
- [57]A failure to provide adequate reasons is an error of law. Whilst the Salams did not seek to expressly rely upon such an error of law, during the hearing we raised the issue of the adequacy of the reasons in respect of these findings.
- [58]In light of this finding and the earlier findings as to other errors of law, we set aside the decision and remit the matters to be decided according to law.
- [59]The Salams also seek to have the consequential cost orders set aside. In view of our findings, it is appropriate to set aside cost orders made and to remit the question of costs for reconsideration.
- [60]The Salams seek costs of the appeal. It is appropriate to make directions for the determination of the issue of the appeal costs.
Footnotes
[1] Decision dated 3 September 2014.
[2] Seymour v Racing Queensland [2013] QCATA 179 at [18].
[3] QCAT Act s 142(3)(b).
[4] Pickering v McArthur [2005] QCA 294 at [3].
[5] QCAT Act s 147(2).
[6] Ericson v Queensland Building Services Authority [2013] QCA 391 at [13].
[7] Transcript 2-52 at 20.
[8] [2009] HCA 27.
[9] Reasons at [30].
[10] Baldwin v Von Knorring [2015] QCATA 107 at [70] – [72].
[11] [2010] QSC 169.
[12] QCAT Act s 3(b).
[13] Ryan v Worthington Simmons [2014] QCATA 277 at [9]; Airstrike Industrial Pty Ltd v Robertson [2014] QCATA 209.
[14] Airstrike Industrial Pty Ltd v Robertson & Anor [2014] QCATA 043.
[15] [2014] QCATA 277 at [14].
[16] Response Annexure A paragraph 2. This same contention was made by the Salams in correspondence between the lawyers dated 29 May 2012. The letter highlighted that the Tribunal’s approval ‘must be granted on application by’ Henley Properties. A copy forms Exhibit MS1 to the Affidavit of Dr Salam filed 14 August 2013.
[17] Reasons at [30].
[18] Transcript 1-9 at 45-46.
[19] Transcript 2-52 at 18-21.
[20] QCAT Act s 64.
[21] Peterson Management Services Pty Ltd (ACN 094234474) as trustee for the Peterson Family Trust v Body Corporate for the Rocks Resort Community Title Scheme 9435 (No 1) [2014] QCAT 541 at [21]; HK Developments Pty Ltd v Doeuk [2013] QCAT 504.
[22]Commissioner for Children and Young People and Child Guardian v FGC [2011] QCATA 291 at [47].
[23] Ricchetti v Lanbuilt Pty Ltd [2011] QCATA 266 at [3]; Commissioner for Children and Young People and Child Guardian v Eales [2013] QCATA 303 at [44].
[24] Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37 at [22].
[25] Allaro Homes Cairns Pty Ltd v O'Reilly & Anor [2012] QCA 286 at [21].
[26] [2004] CCTB 432-02.
[27] Reasons at [36].
[28] [2012] QCATA 037.
[29] Ibid at [29].
[30] Ibid at [31].
[31] [2012] QCA 286.
[32] DBC Act s 84(4)(b).
[33] Better Homes Queensland Pty Limited v O'Reilly & Anor [2012] QCATA 37 at [31].
[34] Tilecorp Pty Ltd v Pinnacle Seal Pty Ltd [2011] QCATA 102.
[35] Outdoor floor tiles – balcony claim of $9,510.72.
[36] Outdoor floor tiles – Grand Alfresco claim of $6,535.89 allowed only to the extent of $500; Carpet laying claim of $2,220.56 allowed only to the extent of $500.
[37] Reasons at [41].