Hobson v Endurance Homes Pty Ltd
[1998] QDC 163
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- Hobson v Endurance Homes Pty Ltd[1998] QDC 163
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Hobson v Endurance Homes Pty Ltd[1998] QDC 163
Hobson v Endurance Homes Pty Ltd[1998] QDC 163
IN THE DISTRICT COURT HELD AT BRISBANE QUEENSLAND | Application No. 1584 of 1998 |
BETWEEN:
FRANK HOBSON AND MARGARET HOBSON | Applicants |
AND:
ENDURANCE HOMES PTY. LTD. | Respondent |
REASONS FOR JUDGMENT - McGILL D.C.J.
Delivered the 2nd day of June 1998
This is an application pursuant to s. 94 of the Queensland Building Services Authority Act 1991 (“the Act”) for leave to appeal to the District Court from a determination of the Queensland Building Tribunal. The Tribunal had before it a claim by a builder for payment of monies in respect of building work undertaken by the builder for the owners who were the respondents in the Tribunal, and are the applicants before me. I shall refer to them as the owners, and the respondent before me as the builder. On 18 March 1998 the Tribunal ordered that the owners pay to the builder the sum of $39,111.47 on or before 17 April 1998, and that in part satisfaction of that amount $20,000 presently held in the trust account of the Tribunal be paid out forthwith to the builder's solicitors. There was also an order for costs made. On the 15 April 1998 an application was filed in this court seeking leave to appeal, and a stay of the order pending the determination of the appeal.
Section 94 does not provide any indication as to the basis upon which the court is to approach an application for leave. In a decision which is frequently cited in this context His Honour Judge Wylie in Truwin v. Clemitson (application 7/94,28.1.94 unreported) noted the absence of any standard which had to be satisfied before leave was granted, and any requirement for special leave, or that there be some important question of law or justice involved and, after considering authorities in other areas, continued:
“Parliament has provided the mechanism of an application for leave as a sieve so that only those matters justifying an appeal will pass through. In that sense, the aggrieved party is required to justify the reason for the appeal desired by showing a prima facie, or clearly arguable, case of an error affecting the Tribunal's final determination.”
In that case His Honour went on to refuse leave on the ground that he was satisfied that the intended appeal had no prospect of success whatever. I think that, where it is possible to determine in the course of hearing an application for leave that the argument advanced on behalf of the appellant was wrong, it is appropriate to refuse leave, even if the contention sought to be advanced on the appeal is not regarded as actually unarguable. If the proposed appeal turns on a question of statutory construction, for example, it may be possible on the hearing of the application for leave to conclude that the construction adopted by the Tribunal was correct, and on that basis refuse leave. I adopted that approach in Re Personal Lift Pty Ltd (application 3332/96,3.10.96, unreported). That approach is obviously applicable only when the point sought to be raised in an appeal is quite specific.
In the present case complaint is made about a number of specific matters, and in addition there is an allegation that the owners were unfairly treated by the way in which the proceedings were conducted before the Tribunal. That matter was originally argued as an issue of bias, but I think that it is unnecessary for the owners to go so far as to establish bias; what is really being complained about is that the Tribunal's procedures, designed to facilitate the expeditious resolution of matters before it, were enforced in a way which prevented the owners from fairly putting their case in respect of a number of matters in dispute.
That is the sort of allegation which is difficult to deal with without a degree of familiarity with the detail of what occurred in the course of the hearing below. It is unlikely that a court was expected to embark on a sufficient consideration of the matter to obtain any great degree of familiarity with those matters for the purposes of dealing with an application for leave. On the other hand it is not appropriate for there to be a situation where a person seeking to appeal could secure a grant of leave simply on the basis that there are enough issues raised, or the issues raised are of such complexity, that it will necessarily take some time for a court to come to grips with them adequately. In a situation such as this I think it is necessary for the court considering an application for leave to examine just what the applicant is seeking to argue, in order to ensure that the situation is not one where the applicant is seeking, by the quantity of the arguments advanced, to disguise a lack of quality.
It is also relevant to bear in mind that, if leave is granted, it will permit an appeal stricto sensu: Whywait Pty Ltd v. Davison [1997] 1 Qd.R 225. It is relevant to keep in mind the approach required by the Court of Appeal in that case when determining whether the owners can show prima facie a case of error in respect of issues of fact.
Nature of the dispute
The parties entered into a contract in writing dated 2 October 1996 to construct a dwelling house on land situated at Bribie Island. It was in the standard housing industry association form, second revision. Plans were approved and issued by the local authority on 31 October 1996, and construction was to take 120 days from a commencement date 20 days later. Contract price was $145,200, payable in stages, with 15% payable on completion.
The Tribunal found that work commenced on 10 November 1996, and that the first four progress payments were made; there were some complaints about defects, which at that stage were remedied. There were also further complaints about defects, and a list of defects was apparently sent on 16 June 1997 by the owners' solicitors.
There was also a finding that work was completed by the time the final council inspection was carried out on 4 July 1997, which inspection was passed. A final progress payment claim was issued on 8 July 1997, followed 3 days later by a claim for payment in respect of variations. Two of the variations were not disputed; the rest were all in issue in the proceedings before the Tribunal. On 17 July 1995 there was an arranged inspection of the property, in order to discuss the list of defects, but the owners' solicitors came to the site and handed over a letter purporting to terminate the contract, and demanding that the builder not enter the premises. On 7 August 1997 the builders' solicitors wrote to the owners' solicitors terminating the contract for repudiation by the owners.
On 24 July 1997 the builder had commenced proceedings in the Tribunal seeking payment of the final amount owing under the contract, or in the alternative payment for the work done on a quantum meruit. The owners responded with a claim alleging a number of defects (including claims of failure to construct in accordance with plans and specifications), and directions were evidently given for material to be filed in support of the allegations, that of the owners first because of the allegations about defects. They filed such material on 24 October 1997; statements were filed on behalf of the builder on 14 November 1997. The matter came before the Tribunal for hearing on 1 December 1997 but was then adjourned, with an order being made that a number of defects be rectified, and that the builder be allowed onto the premises for the purpose of doing so. Prior to 1 December 1997 the owners were excluding the builder from the site so that it could not rectify any defects, and had not themselves gone into occupation or done or caused to be done any rectification work on those defects. The owners were also ordered to pay $20,000 into the Tribunal's trust account by 13 December 1997, which they did. The hearing resumed on 16 February 1998, and occupied 6 days. The decision is dated 18 March 1998 and was accompanied by 40 pages of reasons.
It seems clear that there were a number of defects present in the work; the premises were inspected on 2 July 1997 by Mr Hayes, an inspector with the Queensland Building Services Authority who gave evidence before the Tribunal and whose evidence the Tribunal accepted. He found a list of 55 defects set out in a report of 14 October 1997. The order of 1 December 1997 required the builder to rectify the defects on that list, and the builder did do rectification work, although there was some further dispute as to whether it had been done adequately. The property was inspected again on 30 January 1998 and Mr Hayes in a report dated 3 February 1998 identified two remaining defects which he regarded as being cosmetic only.
Proposed grounds of appeal
A number of matters were set out in the written submissions on behalf of the owners dealing with proposed grounds of appeal. I shall deal first with the specific matters, and later with questions of bias or unfair conduct of the proceedings.
Paragraph 1.
The first is that there was an error in refusing to allow the tendering of what was described as the original contract into evidence. The circumstances were apparently that a version of the contract had been put in evidence by the builder and during the trial the owners sought to tender their copy of the contract, in order to show that the specifications were different, in support of a argument that the specifications in the copy filed on behalf of the builder had been altered. This was apparently refused on the basis that the matter ought to have been dealt with in the statements of evidence filed prior to the hearing. It appears that the Tribunal operated on the basis that the parties were to file statements of evidence prior to the hearing, which was to allow for cross-examination and argument only. That is a way of conducting a trial which is unfamiliar in this court, but is used in other jurisdictions, and where it is in use the parties to litigation are expected to comply with it. It has the effect of shortening the hearing, although it may increase the overall cost of the dispute, particularly if some care is applied to the preparation of the statements. It appears in the present case that the attempt to tender the copy of the contract was refused on the basis that the material had not been put in evidence in accordance with the Tribunals directions.
Counsel for the builder has submitted that even if this were an error it did not affect the result. The dispute was as to the list of prime cost items, but the Tribunal ultimately gave judgment on the basis of the claim in quantum meruit, which proceeded on an assessment of reasonable remuneration for what was in fact built. Whether the particulars items were or were not prime cost items would be irrelevant to the claim in quantum meruit. That seems to me to be correct. Although a refusal to accept as evidence a document as fundamental as the building contract seems a little surprising, that can not be a ground for interfering with the decision of the Tribunal if the decision did not depend on the issue for the purpose of which it was sought to tender the document.
Paragraph 2.
The second matter raised is related to the control which the member of the Tribunal exercised over the proceedings and is more conveniently dealt with later in conjunction with other matters.
Paragraph 3.
It was argued that the proposition in the reasons that the owners had conceded that the figure of $19,426 was correct was wrong and that no such concession had been made. That may be the case, but again in circumstances where the decision ultimately proceeded on the basis of an assessment in quantum meruit whether this figure was conceded (or even correct) ultimately did not matter.
Paragraph 4.
It was then submitted there had been mathematical errors in the calculations. On page 4 of his reasons the member identified the figure claimed by the builder as payable under the contract as $27,604.25 plus extras of $8,178.25, when in fact the former figure included the extras. Again this does not matter if the ultimate decision was based on the claim in quantum meruit. It was argued that the Tribunal may have been influenced in accepting the figure assessed for the value of the work done by the circumstance that it was not that much greater than the amount claimed as payable under the contract, when in fact it was significantly greater. Given that the value of the work done was assessed by reference to an expert valuation, which was subject to sufficiently detailed consideration that in some areas adjustments were made, if there was some misapprehension I do not think it was significant in the outcome. It must be remembered that the finding of the value of the work done was a finding of feet by the Tribunal - Brooking “Building Contracts” 3rd Ed. 1995 para. 8.6 - and it is clear from the decision of the Court of Appeal in Whywait (supra) that such a finding is difficult to challenge. I do not think that this point could be seen as adequate for that purpose.
The issue is raised again at page 18 where there is a reference to the evidence of the owners' expert on quantum, but ultimately that expert's conclusions were generally (but not always: p. 19) rejected in favour of the evidence of the expert called by the builder. The member regarded the figure from the owners' expert as “highly comparable” with the amount the builder claimed under the contract, whereas it was not so comparable if the builder's claim was inflated by the double counting which occurred on page 4. That suggests that the member was not led into error on this point. What the member is saying is entirely consistent with the point the owners seek to make. It seems to me that it is impossible to conclude that, had this mathematical slip not been made, the member might have accepted the evidence of Mr Titheradge in preference to the evidence of Mr Sim.
Paragraph 5.
A complaint was made about a comment at page 4 of the reasons, that there was no evidence in quantum or liability to justify an $8,000 claim for replacement of the roof. Apparently there had been some staining of the roof which was one of the matters complained of, and the owners sought to prove damages in respect of this by reference to figures for the cost of the roof in the builder's documents. I find it a little surprising that some staining on the roof tiles would require replacement of the roof, but if it did the cost of doing that would be unlikely to correspond to the cost of erecting the roof as part of the construction of the house. There was a finding on page 16 that the stains were only a cosmetic blemish, and that the roof was otherwise correctly built; it appears that to some extent this was based on the evidence of Mr Hayes, the authority inspector. Plainly in these circumstances the Tribunal was not going to award damages of, or make some allowance for, the cost of rebuilding the roof. It does seem to be correct to say that there was no evidence from the owners on quantum or liability to justify a claim for any particular amount as the cost of reconstructing the roof in response to a defect in the work. In context that I think is all that was being said on page 4.
Paragraph 7.
It was argued that the owners were not permitted to put in evidence in support of an allegation that the rectification work carried out pursuant to the order of the 1 December 1997 had not been properly done. At p. 5 the member said that he did (reluctantly) allow in such evidence - Exhibit 3 - although it came very late. It appears at page 26 that the member did not allow quantum evidence on the existing state of the defects to be given by Mr Titheradge, where it had not been put to the builder's witnesses in cross-examination. Ordinarily the party who gives evidence second should put his case to the witnesses of the party who gives evidence first, so that those witnesses have the opportunity of commenting on or disputing the various propositions advanced. Such an approach is part of the requirement for procedural fairness; indeed procedural fairness ordinarily requires notice in advance of the hearing of the factual propositions sought to be established. The appropriate response in a case where the party calling evidence second has not complied with this requirement is not fixed and certain, but will vary depending on the circumstances of the particular case. It would necessarily be difficult on an appeal of this nature to show that a decision to exclude evidence where that evidence had not been put to appropriate witnesses on the other side in cross-examination was so clearly wrong as to justify setting aside the decision. In any case it appears that the witnesses whose evidence the member accepted said that any defects remaining were only minor and cosmetic.
The member's reasons dealing with the question of any remaining defects are difficult to follow because of the way the reasons are laid out; the discussion of whether there are any and what remaining defects and what consequence this has is not conveniently grouped together at one point in the reasons. It also appears that there has been some inconsistency in the language used by the member when dealing with those remaining defects from time to time. The proposition at page 15 that any remaining defects can be left “to the contract” is difficult to reconcile with the fact that on any version the contract in this case as at an end. I think the position in relation to this point is simply that the member was affirmatively satisfied by the evidence of witnesses whom he accepted that there was now little wrong with the house, that what was wrong was no more than cosmetic blemishes, and that the owners had not proved what effect that had on the value of the house. Strictly speaking an assessment of the value of the work done by way of quantum meruit ought to have accommodated any defects which still remain; whether it did in practice would depend on whether the existence of the continuing defects was taken into account by the witness whose evidence was accepted in proving the reasonable amount, which makes the cross-examination of Mr Sims crucial. If he was not properly cross-examined at the trial that is not a good reason for having a further trial.
The member was also criticized for leaving any remaining defects to “directions to rectify”. This appears to me obviously to be a reference to the power in the Queensland Building Services Authority, under s. 72(1) of the Queensland Building Service Authority Act 1991, to direct a person who carried out building work to rectify defective building work within a reasonable period stated in the direction. By sub-section 5 such a direction can be given up to six years and three months after the building work to which the direction relates was completed, a time which had not then and still has not expired. In these circumstances the reference by the member was far from incomprehensible. There was no direction by him to rectify the work, this power to issue such a direction rests with the authority.
Paragraph 8.
The next point raised is whether there was an error of law in the conclusion that the owners wrongfully repudiated the contract and that the builder correctly accepted the repudiation. The matter relied on for repudiation is the letter of 17 July 1997. That letter purports to terminate on the basis that the contract had not reached practical completion. The difficulty with that proposition is that there was a finding by the Tribunal that the contract had reached practical completion. That was a finding of fact, based on the evidence of witnesses accepted by the Tribunal, including the evidence of Mr Hayes the authority inspector, whose evidence was to the effect that notwithstanding the defects he found on his inspection at 2 July 1997, the property was fit for habitation. It therefore met the definition of practical completion. A letter of 16 June 1997 could be regarded as giving notice of intention to terminate, but that would only assist if there was a right to terminate. The provision of the contract dealing with termination by the owner, Clause 24, could not have been relied on by the owners because they were themselves in breach of Clause 9 of the agreement in failing to pay disputed monies into a security money account, as found on page 31. In any case the procedure specified in Clause 24 was not followed. Apart from under that clause, the owners could terminate the contract only in response to some repudiation of it by the builder. In circumstances where the builder had as found by the Tribunal constructed the dwelling to practical completion, and where the builder had arranged to come to the site with a view to inspecting alleged defects, presumably with a view to rectifying or at least attempting to rectify them, it is difficult to see how the builder's conduct could be characterized as repudiation of the contract, and on appeal the owners would face the difficulty that there was at p. 39 what looks very like a finding by the Tribunal that there was no repudiation by the builder. The letter of 17 July was most unfortunate for the owners; not only did it not terminate the contract, it opened the door to the claim by the builder of a larger sum on a quantum meruit.
If the owners were not entitled to terminate the contract, because there had been no repudiation by the builder, their purported termination was itself a repudiation: Carr v. J.A. Berriman Pty Ltd (1953) 89 CLR 327 at 343. The letter of 17 July 1997 not only purported to terminate the contract, but expressly prohibited the builder from entering the premises. Since under the contract the builder was entitled to possession of the premises, it seems to me that, if the owners were not entitled by that letter to terminate the contract, it can only be regarded as a repudiation of the contract which the builder was at liberty to accept and did accept by its solicitors' letter of 7 August 1997. It does not appear that anything had been done by the builder prior to this date by which the right to elect to terminate had been lost. I am unable to detect any error of law in the conclusion complained of.
Paragraph 9.
It was argued that the Tribunal had erred in finding the owners were refusing to allow the builder back onto the site in circumstances where the builder always had a key and could enter the site at will, and where the owners were not in physical occupation of the site. To advance such an argument is to blow hot and cold; the owners can scarcely write to the builder barring him from the site, and then complain that he has not gone onto it. From the time when the contract was at an end, which on any view occurred by 7 August 1997, the builder no longer had any contractual right to be on the site; if he had attempted to go onto the site he would have been committing a trespass. He only went back onto the site as he was required and entitled to do pursuant to orders made by the Tribunal on 1 December 1997. There was a finding that the builder had wanted to attend to the rectification of the list of defects identified by the authority inspector, and was prevented from doing so by the attitude of the owners. That conclusion appears to me to be amply justified on the basis of facts not disputed by the owners.
Paragraph 11.
Paragraph 10 revisits the issue of the roof, with which I have already dealt. A complaint was also made about the statement on page 9 that practical completion was not the issue. What was actually said there was the issue of practical completion was not central to the question of termination on the facts of the case. Certainly termination of the contract was an important issue, because it was only if the contract were terminated that the builder would be entitled to recover on a quantum meruit, and hence recover the amount ultimately ordered to be paid. The proposition that the issue was not “practical completion” is I think explained on the basis that, if the house had not been completed to the stage of practical completion, the builder would not have been entitled to recover under the contract the payment due when practical completion had been achieved. No doubt that was what the owners were contending. However, in circumstances where both sides contended that the contract had been terminated, it is difficult to see why that should have been important to the outcome, unless the builder were better off suing on the basis of a contractual right to payment which arose prior to termination rather than on the basis of a quantum meruit. In any case, whether or not the Tribunal was correct in its assessment of the significance of the issue of practical completion, there is no basis for interfering with the Tribunal's finding of fact that there had been practical completion prior to 2 July 1997, a finding based on the evidence of Mr Hayes which was accepted. The proposition that the defects, although fairly numerous (55), were never serious also seems to have been supported by the evidence of Mr Hayes, and the evidence of Mr Sim that the total cost of rectification would have been about $4,010 if carried out in a timely fashion, which evidence was accepted: p. 35. If it were the case that the owners were at the time of the trial still contending that the house was unfit for habitation, in circumstances where there was evidence accepted by the Tribunal that there were no long any significant defects, it is understandable that the Tribunal may have taken the view that the owners were behaving unreasonably.
Paragraph 12.
A challenge was made to the Tribunal's acceptance of the evidence of Mr Eton, the principal of the builder. That ground is supported by an affidavit from the owner's solicitor denying that the builder gave his evidence in a straight forward and honest manner, and relying on the proposition that Mr Eton was shown not to be a shareholder of the company. Assuming that at some stage he had stated that he was, that does not strike me as a particularly significant misstatement. The affidavit by the owners' solicitor also refers to what is said to be a misunderstanding by the member of the significance of suggested inconsistency between Mr Eton's evidence and his documentation.
The difficulty with this proposed ground is that it is not clear that Mr Eton's credibility was a matter of any real significance. The question of whether or not the owners validly determinated the contract turned essentially on the terms of the correspondence, and the question of the amount payable on the quantum meruit was determined by witnesses other than Mr Eton, as was the conclusion that any remaining defects were no more than minor cosmetic blemishes. I have not identified any point of significance in the reasonings which toned on an assessment of Mr Eton's credit, and in those circumstances strictly speaking it does not matter if he was erroneously treated as a witness of credit. However, given the nature of an appeal from a decision of the Tribunal as determined by the Court of Appeal in Whywait (supra), a finding that a witness is credible and, in effect, that an attack upon the credibility of that witness been unsuccessful, is a very difficult finding to overturn. Nothing has been shown to demonstrate any real prospect of doing so if an appeal were heard.
That finding is not going to be overturned by the disclosure that, as he admitted, the witness had once been bankrupt (the same could have been said of Sir Garfield Barwick) or that he had a conviction for assault. Even if some of the factual matters in his statement were shown to be erroneous, that did not demonstrate that he was a liar; it may be that he was simply mistaken about those matters. The Tribunal member said (p. 12) in his reasons that he expressed his disapproval of the cross examination of Mr Eton at the time, and it is not apparent to me that such disapproval was inappropriate.
Paragraph 13.
It was submitted that the Tribunal had erred in making an award on a quantum meruit rather than in awarding of the amount due under the contract as varied. The Tribunal accepted the builder's argument that, the contract having been rescinded, it was entitled, at its election, to recover the amount which had become due under the contract at the time of recision, or reasonable remuneration for work done on a quantum meruit: Renard Constructions (ME) Pty Ltd v. Minister for Public Works (1992) 26 NSWLR 234 at 276-7. It had pursued those claims in the alternative, and during the hearing elected to recover on the latter basis. Contrary to paragraph 19 of the affidavit in support of this application it was the builder's election, not that of the Tribunal. Termination of a contract in this way does not extinguish a right to damages or a debt which has arisen under the contract prior to termination: McDonald v. Dennys Lascelles Ltd (1933) 48 CLR 457 at 477. Even with an entire contract an entitlement in debt to the consideration may arise if the contract has been substantially performed (as was found here: p. 35), or if entire performance is prevented by the other party: Cheshire & Fifoot “Law of Contract” (7th Aust. Ed. 1997) para. 25.11, 25.12. Claims under a contract and claims in quantum meruit can co-exist in the alternative up to and during trial, although at some point an election has to be made if they lead to different remedies.
In Gino D'Alessandro Constructions Pty Ltd v. Powis [1987] 2 QdR 40 it was held that it was permissible to claim under a contract or in the alternative in quantum meruit even when the contract had not been rescinded, so long as the repudiation was continuing so that it could ultimately be accepted to put an end to the contract, thereby removing the obstacle to quantum meruit that there was an existing (although in that case unenforceable) contract covering the same obligation. See also Pavey & Matthews Pty Ltd v. Paul (1987) 162 CLR 221. That case also establishes that where there was a contract for the work to be done the contract price provides an upper limit to the amount recoverable on a quantum meruit in circumstances where the contract has not been rescinded (p. 257) but that is not the case here and otherwise the claim is not subject to any ceiling to be derived from the terms of the contract: Renard Constructions (ME) Pty Ltd v. Minister for Public Works (1992) 26 NSWLR 234. In my opinion in the present case the builder was not confined to the amount payable under the contract, and was therefore entitled to elect to recover on a quantum meruit if that led to payment of a larger amount, and there was no error of law on the part of the Tribunal in proceeding on that basis.
Paragraph 14.
There is a complaint about the treatment of the owners' argument that the builder had exceeded the time limited in the contract. This matter is dealt with by the member at pages 20 and 21 of his reasons. The point is initially made that the owners were starting on the wrong basis, in that the contract provided for a different commencement date from that assumed by the owners. In this respect also the member adopted without repeating in detail the written submissions made by counsel for the builder. For reasons given earlier I think that this was permissible. The conclusion arrived at was simply that the owners had not proved their case about a time overrun; that appears to be essentially a question of fact. There was no argument advanced that there was any error of law in the submissions adopted by the Tribunal, which therefore became incorporated in its reasons. I am not persuaded that the owner's have shown any prima facie argument that there was any error in relation to the treatment of the claim that the time limit had been exceeded by the builder.
Paragraph 15.
There was also some criticism of the fact that the Tribunal at different points said that it accepted submissions in writing on questions of law provided by counsel for the builder, without setting out the reasoning disclosed in those submissions in the reasons for the decision. There are practical advantages and disadvantages in this course, but in terms of the obligation on the Tribunal to provide to the parties reasons for its decision, so long as the owners have a copy of the written submissions on behalf of the builder so that the reference to the submissions is comprehensible, I think that the Tribunal has discharged its obligation in this respect. This is not very different from saying that a particular conclusion of law was arrived at for reasons set out in a particular reported case, something which is frequently done.
It was argued that it was the duty in the Tribunal to deal with the outstanding defects, but the Tribunal has dealt with these, by finding that any outstanding defects are trivial and cosmetic matters only, and by finding that the owners have failed to prove the amount of any rectification cost in respect of those outstanding defects. The Tribunal has dealt with the matter in the same way as a court would deal with a matter if a party failed to prove its claim; the claim would fail. The reference to the continuing availability under the Act of the authority's power to direct rectification may have been intended as some form of consolation to the owners, but the position would have been the same if that power had not been present; the owners had the opportunity to prove their claim and did not do so. As to the (repeated) argument that there was evidence for the cost of replacing the roof, I think it is clear that the Tribunal has rejected the proposition that any staining the roof may have justifies rectification by means of replacement, a conclusion which is unsurprising.
Bias and unfair treatment
This issue is dealt with in paragraph 6 of the grounds of appeal in the written submissions, by reference to matters raised in the affidavit of the plaintiffs solicitor. That affidavit asserts the conclusion that bias was being shown, and then goes on to refer to specific matters. The first was a reference to the size of the material filed by the builder in comparison with the size of material filed by the owners. The proposition is put that the owners had refrained from filing material in reply because they were proposing to rely on deficiencies disclosed in the builders' material. That is a perfectly reasonable way to proceed, provided that it is possible to demonstrate that there are deficiencies in that material, which are relevant to the matters in issue, but the affidavit immediately proceeds to refer to an attempt at the beginning of the owners case to put in evidence, in the form of the “original contract”. The owners can not have it both ways; if they are going to rely on deficiencies in the builders material, they should continue to do no more than that at the hearing. It is apparent that their approach was to rely on those deficiencies prior to the hearing, but during the hearing seek to put in what was really evidence in chief. The fact that they sought to put in further evidence during the hearing falsifies the proposition that they were content to rely on mere deficiencies in the builder's material. A complaint is made of the member having taken no notice of the inconsistencies and outright lies in the statement of Mr Eton; I have already commented on this matter, and strongly suspect that this really shows that the owners were not focussing on the real issues.
The real difficulty with the argument that the owners could just sit back and rely on deficiencies in the builder's material is that what really mattered, at least by the time the dispute reached the Tribunal, was “what was then wrong with the house. The owners were claiming to have terminated the contract, and not to be liable to pay the final progress payment, on the ground that the time for that payment had not been reached when the contract was terminated, the building not having then reached practical completion. Leaving aside the difficulty with this argument posed by the finding by the Tribunal that the building had reached practical completion prior to this attempt at termination, the owners were not terminating in accordance with the express provision in the contract for termination by the owner, so that in order to be entitled to terminate they had to show that the contract had been repudiated by the builder. Unless time was of the essence of the contract (and no one has suggested it was) even if the builder was running late with the construction that would not amount to repudiation. It would I think be very difficult to characterize a defective performance of a building contract as repudiation, rather than breach of the contract. The owners therefore faced the difficulty that almost inevitably there was going to be a finding that their purported termination of the contract by the letter of 17 July was unjustified, and itself a repudiation of the contract. But even if that had been a valid termination of the contract by them, that would not have left the builder without a remedy. It would still have been entitled to recover on a quantum meruit for the work done prior to termination. Since no more work was done between 17 July and 7 August, whether the contract was terminated by the owners or by the builder, the issue remains what is reasonable remuneration for the work done and not paid for prior to 17 July. To address that issue the owners are required to put in evidence to show that that work was defective. From the owners' point of view what was important in this case was to show that the house as it stood had defects in construction which diminished its value, or would cost money to rectify. If the owners were litigating on the basis that the house had not reached practical completion, and the builder had run over time, and they were therefore entitled to terminate the contract and not pay any more money to the builder, their approach was wholly unrealistic. It was also relevant of course to put in material disputing the basis of valuation of the work done. Yet it appears that no such material was put in on behalf of the owners until a statement of Mr Titheradge which became Exhibit 2 was allowed in on 16 February 1998, although it was dated 28 November 1997 and there is no obvious reason why it had not been exchanged earlier: p. 6.
Obviously it was appropriate to respond to the performance of the builder under the orders made on 1 December 1997 for rectification of defects, and a supplementary report by Mr Hayes dealing with that rectification became Exhibit 1: p. 5. Evidence in response from the owners' expert Mr Titheradge was admitted on 18 February 1998 and became Exhibit 3: p. 5. It appears that rectification work was continuing on 30 January 1998 when Mr Hayes made his last visit (p. 17) I doubt whether much rectification work was done after that date, and it seems surprising that it took until 18 February to produce this evidence. Given the way in which the case ought to have been conducted, a report should have been obtained from Mr Titheradge prior to the resumed hearing, and provided to the other side. No only was that not done, but the report was not even made available at the commencement of the resumed hearing. Given that the proceedings were being conducted on the basis that evidence in chief was to be in writing and filed and served in advanced, one could understand some adverse reaction from the Tribunal to the way in which the case was being conducted.
The owners should have put on evidence of defects in the building as constructed when they filed their original material including evidence of rectification costs. When the builder put on evidence in support of a claim in quantum meruit, evidence in reply ought to have been filed and served on behalf of the owners, namely the evidence which ultimately came in from Mr Titheradge in Exhibit 2. If the Tribunal was critical of the owners' failure to file this evidence in an appropriate time in accordance with the Tribunal's directions, it seems to me that such criticism was justified and does not suggest bias or unfairness on a part of the Tribunal. In the event the evidence was allowed in, and some attention was paid to it; parts which were regarded as an objective analysis were accepted by the Tribunal: p. 19. In those circumstances the owners can it seems to me hardly complain about any unfairness to themselves in the way in which the case was conducted.
What does appear is that, after the hearing resumed on 16 February, the owners were not permitted to introduce fresh allegations of defects in the construction work, that is to say were not allowed to complain about things which they had not previously complained about. Obviously if new matters were raised at the hearing that placed the builder in difficulty, because it would not necessarily be able to respond immediately to such allegations. It is I think not necessarily an answer to say that the builder could have met any such prejudice by having the proceedings adjourned, since, if the builder was being kept out of a lot of money while this dispute continued, the builder could well have suffered prejudice as a result of the adjournment of the proceedings which could not have been adequately met by an order for costs or interest.
In any case, like the member I would reject the idea that, regardless of any directions made by the Tribunal, parties can litigate in whichever way they want and raise fresh issues whenever they feel like it. One of the objects of this legislation is to provide for the efficient resolution of building disputes: Section 3(c) (emphasis added). Section 87(3)(a) provides that the procedure is within the discretion of the Tribunal, and paragraph (b) provides that the proceeding is to be conducted with as much speed as the requirements of this Act and a proper consideration of the matters before the Tribunal permit. In the light of these provisions, I do not think it is right to say that a Tribunal hearing an application is obliged to allow a party to raise new issues, if that requires adjournment of the hearing in order to give the other party a fair opportunity to respond. In circumstances where the premises had been inspected by an independent expert in the form of the authority's inspector, and where the owners had not prior to the hearing given proper notice to the builder of any allegation that there was any defect in the premises in addition to the defects identified by the inspector, it is I think understandable that the Tribunal would refuse to allow the owners to raise allegations of additional defects for the time of the hearing. Insofar as that is the basis of the owners complaint, in my opinion it is unjustified.
I have carefully considered all of the matters raised in the affidavits filed on behalf of the owners, and the arguments advanced on their behalf. Some of the matters of complaint are themselves in error; for example the reference to interest having been allowed from 11 July when the correct date was 17 July does not survive a check of the calculation, which shows interest was calculated from 17 July, so that 11 July must be a typing error. I am conscious of the fact that it may be difficult to detect whether there has been bias or unfairness on the part of the member without the opportunity of a thorough investigation on the hearing of an appeal, but I consider that, in order to show a prima facie argument for saying that the decision under appeal is wrong on such a ground, it is necessary for the applicant to show from material put before the court that there is some objective reason to be concerned that that may have occurred. That is not done merely be asserting the conclusion that there was bias or unfairness. These specific matters of complaint when considered in context ultimately do not persuade me that this might be a case of bias or unfairness, so as to justify having the matter investigated further by the conduct of a full appeal. I am not persuaded that the applicants have shown a prima facie or clearly arguable case of error affecting the Tribunal's final determination, and I am not persuaded that this is a proper case to give leave to appeal.
I would merely add that the complexity of this application and the amount of consideration that it required provides further support for the view that a two stage process of appeal, requiring first an application for leave, is unjustified and inefficient in circumstances where the legislature has not specified any criteria on the basis of which leave is to be granted or refused. In my opinion either the legislature should specify the relevant criteria, or the requirement for leave should be removed.
The application is dismissed with costs.
Counsel for the applicant: | S.W. Shaeffe |
Counsel for the respondent: | J.D. Houston |
Solicitors for the applicant: | Colwell Wright |
Solicitors for the respondent: | Maunsells |
Date of hearing: | 24 April 1998 |
DISTRICT COURT | No 1584 of 1998 |
CIVIL JURISDICTION
JUDGE McGILL SC
FRANK HOBSON and MARGARET HOBSON | Applicants |
and
ENDURANCE HOMES PTY LTD | Respondent |
BRISBANE
DATE 02/06/98
JUDGMENT
HIS HONOUR: In this matter the application is dismissed. I order the applicants to pay the respondent's costs of and incidental to the application to be taxed.
I publish my reasons.