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- Unreported Judgment
A.L. Builders Pty Ltd v Fatseas QCATA 185
A.L. Builders Pty Ltd v Fatseas  QCATA 185
A.L. Builders Pty Ltd ACN 113 964 711
Nicholas Fatseas and Tricia Fatseas (Respondents)
7 October 2015
Senior Member Stilgoe OAM
Member Steven Holzberger
15 December 2015
APPEAL – LEAVE TO APPEAL – BUILDING DISPUTE – Domestic building dispute – effect of s 55(4) of Domestic Building Contracts Act 2000 – discharge of applicant’s onus – test for overturning finding of fact.
Domestic Building Contracts Act 2000 (Qld) ss 30, 55
Dearman v Dearman (1908) 7 CLR 549
Waterford v The Commonwealth (1987) 163 CLR 54 Australian Broadcasting Commission v Bond (1990) 170 CLR 321
Fox v Percy (2003) 214 CLR 118
Chambers v Jobling (1986) 7 NSWLR 1
Slater v Wilkes  QCATA 12
APPEARANCES and REPRESENTATION (if any):
Mr LD Bowden of counsel instructed by Nicholas Radich, solicitor.
Mr M Williams of counsel instructed by Royston Carlyle
REASONS FOR DECISION
- Nicholas and Patricia Fatseas wanted to build a new home. Their first builder went into receivership. After some time, and negotiation, they engaged AL Builders Pty Ltd (‘AL’) to complete the build. AL had provided a quote for $1,098,939.60 but, because Mr and Mrs Fatseas wanted to make substantial alterations to the plans, the parties entered into a costs plus contract.
- The parties fell into dispute. AL filed a claim for unpaid progress claims. Mr and Mrs Fatseas filed a claim for the cost of repairing defective work. The tribunal dismissed AL’s claim but found for Mr and Mrs Fatseas in the sum of $205,624.20.
- AL wants to appeal that decision. It says the tribunal erred in dismissing its claim for payment under the costs plus contract. It also takes issue with the tribunal’s decision to award damages to Mr and Mrs Fatseas for the cost of rectifying a number of defects set out in their counterclaim.
- The appeal grounds are either challenges to various findings of fact by the learned Member or questions of mixed law and fact. All require leave to be obtained before the appeal can proceed.
- Both counsel agree that the appropriate test for leave to appeal is that articulated in Fox v Percy. It was submitted by counsel for AL that while, that test applies to finding of facts, it does not apply to an error in the fact finding process because that is an error of law.
- An appeal tribunal will not usually disturb findings of fact on appeal if the facts inferred by the Tribunal, upon which the finding is based, are capable of supporting its conclusions, and there is evidence capable of supporting any inferences underlining it.
- An appellate tribunal may interfere, however, if the conclusion at first instance is ‘contrary to compelling inferences’ in the case. As the High Court said in Fox v Percy:
In such circumstances, the appellate court is not relieved of its statutory function by the fact the trial judge has, expressly or implicitly, reached a conclusion influenced by an opinion concerning the credibility of witnesses. In such a case, making all due allowances for the advantages available to the trial judge, the appellate court must “not shrink from giving effect to” its own conclusion.
- There is no error of law simply in making a wrong finding of fact unless there is no evidence to support that finding.
Did the tribunal err in dismissing AL’s claim under the contract?
- The learned Member found that the contract between AL and Mr and Mrs Fatseas was an unsigned cost plus contract and, as a consequence, was not enforceable by AL.
- AL’s claim for payment has, at various stages of these proceedings, been particularised as:
- a)an application to the Tribunal to exercise its discretion under s 55(4) Domestic Building Contracts Act 2000 (Qld) (DBCA);
- b)an application for exercise of the Tribunal’s discretion under s 84(4) DBCA;
- c)a quantum meruit claim (raised for the first time in submissions of the original hearing); and
- d)a claim for an account stated (the prospect of which was first raised in AL’s submissions in these proceedings).
- Counsel for AL confirmed that only the first of these was being pressed in the application for leave to appeal. He also confirmed that AL did not assert that an account stated had been established and that AL did not adduce evidence at hearing to support a claim made in amended pleadings for exercise at the tribunal’s discretion under s 84(4) DBCA. In other words, AL‘s first ground of appeal succeeds or fails on the tribunal’s application of 55(4) DBCA.
- Counsel for Mr and Mrs Fatseas, in oral submissions, submitted that if AL had any remedy it is in those grounds it abandoned and not the one pressed at hearing. He says that AL never gets to s 55(4) because it assumes that there is an otherwise enforceable contract. We can see nothing in the wording of section 55 that supports that conclusion but nothing turns on this.
- AL bears the onus of proving that an award under section 55(4) ‘would not be unfair to the building owner’ and ultimately the learned Member found that it failed to discharge that onus. In coming to that conclusion, the learned Member found:
- a)Obvious discrepancies in AL’s invoices including double charging;
- b)Deficiencies in AL’s accounting system and delegation of the task to an office girl (who was not called);
- c)That Mr Haley, director of AL, had no independent knowledge of the accuracy of the company’s accounts;
- d)Payments made by Mr and Mrs Fatseas were consistent with the original contract price, although the learned Member conceded ‘a degree of artificiality’ in that exercise.
- Counsel for AL submits that the parties’ process of dealing with the progress claims resulted in an agreement as to the quantum of claims and the parties should be bound by that agreement. Counsel confirmed that he did not intend that submission to be an argument for an account stated claim but rather an ‘admission by conduct’ that the costs were not unfair. Counsel further submitted that, through this exercise, Mr and Mrs Fatseas compromised their rights in relation to these claims.
- The discretion to award the cost of providing the contracted services lies with the tribunal. The fact that the parties may have agreed some of those costs may inform the tribunal’s exercise of its discretion but it does not compel the tribunal to adopt that agreement.
- Counsel for AL submits that the learned Member’s assessment of the reasonable costs ‘involves too many uncertainties and cannot be relied upon’. Counsel gives examples: he submits that the claims did not have consistent numbering. He submits that the work AL did was not necessarily the same as the work quoted, so that the reconciliation process was not reliable.
- Counsel’s submissions on appeal, together with the learned Member’s findings, rather prove the learned Member’s point. AL had the onus of proving that the costs were not unfair and it was unable to do so because of the inherent difficulties in its accounting process.
- We can find no reason to disturb the learned Member’s finding that AL failed to discharge the onus of establishing that an award by the tribunal under section 55(4) would be unfair to the building owner.
Did the tribunal err in giving Mr and Mrs Fatseas damages for defective building work?
- Mr and Mrs Fatseas sought damages in respect of some 130 items which they claimed were defective. The learned Member found for them in respect of 40 of these items. As Mr and Mrs Fatseas’ Counsel submits, in considering the various claims the learned Member accepted the evidence of the expert witnesses on some points but not others, and he did not necessarily agree with their proposals for rectification. This is consistent with a careful consideration of the evidence in respect of each of the items.
- In considering each of these grounds of appeal, we are mindful of the considerable hurdle that Counsel for AL must overcome. It is not enough to demonstrate that the evidence can support an alternative funding; Counsel for AL must demonstrate that the learned Member’s finding is contrary to the compelling inferences.
- The test to be applied is set out comprehensively in the appeal tribunal’s decision of Slater v Wilkes:
The applicant for leave must show that the decision in question is affected, arguably at least, by an appealable error, resulting in a substantial injustice. It is not such an error to prefer one version of the facts to another, or to attribute more weight to the evidence of witness “A” than to the testimony of witness “B”. Findings of fact will not usually be disturbed on appeal if the findings of fact by the original decision maker have rational, albeit debateable support in the evidence. Where reasonable minds may differ, a decision cannot properly be called erroneous, simply because one conclusion has been preferred to another possible conclusion. Leave is not to be given where a party simply desires to re-argue the case, on the existing or additional evidence. One clear purpose of a “leave” requirement is to preclude any attempt to conduct a retrial on the merits.
Fractured paving tiles
- In his reasons for decision the Learned Member said:
I accept the evidence of Dr Hensell, particularly where his evidence differed with Mr McLeod. I was of the opinion that Mr McLeod’s recollection of events was hazy. He gave his evidence by telephone from Thailand where he was holidaying. He demonstrated little interest in the issues being canvassed.
- Counsel for AL was critical of Dr Hensell’s evidence which he said was not reliable because:
- a)He did not correctly identify the adhesive used by Mr McLeod;
- b)He relied heavily on the adhesives labelling instructions and specifications; and
- c)He changed his opinion as to the cause of the damage from the adhesive used to the consistency of the screed on which the tiles were laid.
- d)His expertise was as a geologist, not a tile expert.
- The learned Member received reports and heard evidence from Mr Betteridge, a building expert, Dr Hensell, a geoscientist, and Mr McLeod, AL’s tiler.
- Counsel for AL submitted that the evidence about the cause of the fractured tiles was ‘all over the place’, He submitted that the evidence called by Mr and Mrs Fatseas was vague, inconsistent and contradictory and Counsel took us to examples in the transcript. He urged us to prefer the evidence of AL’s tiler which, he submitted, was clear and unchallenged as to the way the tiles were laid.
- The learned Member canvassed the evidence as a whole. There was no dispute that the tiles were defective; the question for the learned Member was whether AL was responsible for the defective tiles. The learned Member accepted Dr Hensell’s report that noted ‘…the saturation of the screed and consequential movement of the slab was more likely the cause’ (of the cracking). That finding did not depend upon any conclusion about the adhesive. It was within Dr Hensell’s expertise and the learned Member was entitled to rely on it in forming his conclusions.
- That another conclusion was open to the learned Member is not the test that we are required to apply. The evidence can support the learned Member’s conclusions and we can find no compelling reason to come to a contrary view.
Incomplete waterproof membranes
- Counsel submits that AL should not be liable for work that it did not do and for which it did not charge.
- The learned Member heard competing evidence about whether the waterproof membranes was part of the scope of works. The learned Member said:
According to Mr Davidson this was not evident in the drawings. I assume therefore that the applicant installed them at the request of the owner in which case the applicant is liable as a cost plus matter.
- The evidence can support a finding that the concrete block planters to which this item refers were included in the contract drawing and schedule of finishes and specified that the interiors be waterproofed. There is no evidence that any agreement was reached between the parties to exclude waterproofing from the contract.
- In those circumstances the learned Member’s finding of fact can be supported by the evidence and we can find no compelling reason to come to a different view.
Efflorescence and algae – stairs from River Terrace
- The learned Member heard competing evidence about the cause of the efflorescence and algae. Mr Aitken told the tribunal it was a maintenance issue. The learned Member also had the evidence of Mr Betteridge and Dr Hensell, which he clearly preferred to that of Mr Aitken. Counsel for AL is critical of the learned Member’s reliance on Mr Betteridge and Dr Hensell because, he says, those reports focus on the issue of the adhesive.
- The learned Member accepted that a considerable amount of Mr and Mrs Fatseas’ claim was due to deterioration because of lack of maintenance. However, in relation to the efflorescence, he noted “Mr Aitken agreed this was the responsibility of the Applicant”. The learned Member was entitled to find as he did and we can find no compelling reason to come to a different view.
- This ground is dismissed.
Cracked tiles, pool waterline
- Mr Aitken considered that five tiles needed replacing. Mr and Mrs Fatseas’ expert, Mr Betteridge, relying on Dr Hensell’s report, gave evidence that all existing tiles needed to be replaced as the adhesive was defective.
- As with the defective tiles, the learned Member accepted Dr Hensell’s evidence as he was entitled to do. The learned Member did not however accept Mr Betteridge’s evidence that all pebblecrete in the pool would require replacement as a consequence. He found for Mr and Mrs Fatseas only in respect of the replacement of all of the tiles.
- It is not the case that there was no evidence to support the leaner Member’s finding. Counsel for AL might urge upon us a different conclusion from the evidence but that, as we have mentioned, is not the test. The learned Member is entitled to prefer the evidence of Mr and Mrs Fatseas’ experts to that of AL’s experts and accordingly this ground is dismissed.
Delamination of the front entry gate
- Whether the problem with the front entry gate was caused, or at least contributed to, by a lack of maintenance was not a relevant consideration for the learned Member. He found, and there was no dispute, that the gate was not the one specified by the contract, it was of a lesser quality and, therefore, more likely to delaminate. He found that Mr and Mrs Fatseas were entitled to the gate as specified. The evidence can support that view.
Laminated timber trim delaminating around portholes
- The learned Member did not know whether AL installed the trim or whether the previous builder installed it. Counsel for AL submits that, because of this uncertainty, the learned Member should not have made AL liable for the delamination.
- AL’s main objection on this item, as with the front entry gate, was that the delamination was a maintenance issue. The learned Member found that it was a defect that AL should have noticed and rectified. In taking over the building from the previous contractor, AL assumed responsibility for the quality of the work done to date. The learned Member found that it was not a maintenance issue. We can find no evidence that would cause us to come to a different view.
- Counsel for AL submits that Mr McLeod was the only tiling expert called and his evidence, that the tiling was not defective, should have been accepted.
- The learned Member also had evidence from Mr Betteridge, a registered builder. Although he was not a “tile expert”, the learned Member obviously found him a persuasive witness about whether or not the joints in tiles were properly aligned.
- Whether or not expert evidence is necessary to prove that tile joints do not align, the learned Member preferred Mr Betteridge. The learned Member expressed his views about Mr McLeod. We have no reason to come to a contrary view.
- This ground is dismissed.
New internal timber stairs
- The learned Member’s finding that the internal stairs are non‑compliant is supported by the report of Mr Betteridge.
- While there is some evidence from Mr Haley in cross‑examination of an agreement to rectify the defect by placing a landing at the foot of the stairs, the evidence showed that the stairs are still non‑compliant and, accordingly, still defective.
- The Member has found the work to be defective because it is non‑compliant and that finding should stand.
- This ground is dismissed.
- Leave to appeal is refused.
 (2003) 214 CLR 118.
 Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy ibid at 125-126.
 Chambers v Jobling (1986) 7 NSWLR 1 at 10.
 Fox v Percy ibid at 128 per Gleeson CJ, Gummow and Kirby JJ.
 Waterford v The Commonwealth (1987) 163 CLR 54 at 77; Australian Broadcasting Commission v Bond (1990) 170 CLR 321 at 341.
 Domestic Building Contracts Act 2000 (Qld) ss 30, 55(4) .
 Ibid, ss 30, 55.
 Reasons for decision at .
 Ibid at , .
 Reasons for decision at 
 Reasons for decision at .
 Reasons for decision at  to .
  QCATA 12 at  (footnotes omitted).
 Reasons for decision at .
 Ibid at .
 Ibid at .
 Ibid , item 30.
 Appellant’s outline of submissions.
 Reasons for decision at p 27.
 Ibid at p 29.
 Ibid at .
- Published Case Name:
A.L. Builders Pty Ltd v Fatseas
- Shortened Case Name:
A.L. Builders Pty Ltd v Fatseas
 QCATA 185
Senior Member Stilgoe OAM, Member Steven Holzberger
15 Dec 2015