Auguste v Nikolyn Pty Ltd

Case [2016] FCA 1579

FEDERAL COURT OF AUSTRALIA

Auguste v Nikolyn Pty Ltd [2016] FCA 1579

Appeal from:

Auguste v Nikolyn Pty Ltd & Anor [2016] FCCA 1045

Auguste v Nikolyn Pty Ltd & Anor (No 2) [2016] FCCA 1558
File number: WAD 205 of 2016
Judge: MCKERRACHER J
Date of judgment: 23 December 2016
Catchwords:

HIGH COURT AND FEDERAL COURT – where significant delay in the delivery of judgment following trial – whether delay had an operative effect on the conclusion

CONSUMER LAW – misleading and deceptive conduct – whether representation made – operation of deeming provision in s 51A of the Trade Practices Act 1974 (Cth)

CONTRACTS – building contract – whether implied term of reasonable time – whether work completed within a reasonable time

COSTS – indemnity costs – ulterior motive – groundless contentions – whether award of indemnity costs justified in the circumstances – payment of interest where significant delay in the delivery of judgment
Legislation:

Federal Circuit Court Rules 2001 (Cth) r 25

Trade Practices Act 1974 (Cth) ss 51A, 52

Cases cited:

Auguste v Nikolyn Pty Ltd [2013] FCCA 1630

Australian Competition and Consumer Commission v Dateline Imports Pty Ltd [2015] FCAFC 114

Caffey v Leatt-Hayter (No 3) [2013] WASC 348

Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

D & Z Constructions Pty Ltd v IHI Corporation [2013] WASC 265

DM Drainage & Constructions Pty Ltd v Karara Mining Ltd [2014] WASC 170

Expectation Pty Ltd v PRD Realty Pty Ltd (2004) (2004) 140 FCR 17

Finishing Services Pty Ltd v Lactos Fresh Pty Ltd [2007] FCAFC 15

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397

Fox v Percy [2003] HCA 22; [2013] 214 CLR 118

Huntley v Department of Police and Justice (NSW) (No 2) [2016] FCCA 146

Laminex (Australia) Pty Ltd v Smeeth [1999] NSWCA 462

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494

Monie v Commonwealth (2005) 63 NSWLR 729

Mount Lawley Pty Ltd v Planning Commission (WA) (2004) 29 WAR 273

Tattsbet Ltd v Morrow (2015) 233 FCR 46

Date of hearing: 3 October 2016
Registry: Western Australia
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: Regulator and Consumer Protection
Category: Catchwords
Number of paragraphs: 145
Counsel for the Appellant: Mr A Rumsley
Solicitor for the Appellant: Alan Rumsley
Counsel for the Respondents: Ms N Breach
Solicitor for the Respondents: D’Angelo Legal

ORDERS

WAD 205 of 2016
BETWEEN:

ROBERT STEPHEN AUGUSTE

Appellant
AND:

NIKOLYN PTY LTD (ACN 078 833 977)

First Respondent

DONATO COLASANTE

Second Respondent

JUDGE:

MCKERRACHER J

DATE OF ORDER:

23 DECEMBER 2016

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellant pay the costs of the respondents, to be assessed if not agreed. 

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT
TABLE OF CONTENTS

BACKGROUND

[4]

PRIMARY JUDGMENT

[12]

Reasoning of the primary judge

[27]

GROUNDS OF APPEAL AND NOTICE OF…

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AGLC
Auguste v Nikolyn Pty Ltd [2016] FCA 1579
Case
[2016] FCA 1579
Decision Date

CaseChat Overview and Summary

In Auguste v Nikolyn Pty Ltd, the plaintiff, Mr Auguste, sought damages for delay in the completion of plumbing works at a development site owned by him. The defendant, Nikolyn Pty Ltd, was contracted to carry out the plumbing works. The dispute arose from delays in the completion of the plumbing works, which in turn affected the ability of Mr Auguste to develop the land. The case was heard in the Federal Court of Australia, which had jurisdiction over the matter due to it involving consumer law under the Trade Practices Act 1974 (Cth). The primary judge found that the connection type at Woodlupine Brook was yet to be determined and approved by the Water Corporation, and that the connection was approved by the Water Corporation in 2006. The primary judge also found that Mr Auguste had provided information about the required work to Mr Colasante, a director and shareholder of Nikolyn, by way of emails and attachments to those emails. The primary judge rejected the assertion of any meeting in October 2009 as alleged by Mr Auguste in his evidence in chief.

The legal issues that the court was required to decide were whether there was a delay in the delivery of judgment that had an operative effect on the conclusion, whether there was misleading and deceptive conduct under s 51A of the Trade Practices Act 1974 (Cth), whether there was an implied term of reasonable time in the building contract, and whether the award of indemnity costs was justified in the circumstances. The court found that there was no delay in the delivery of judgment that had an operative effect on the conclusion, and that there was no misleading and deceptive conduct under s 51A of the Trade Practices Act 1974 (Cth). The court also found that there was an implied term of reasonable time in the building contract, and that the award of indemnity costs was justified in the circumstances.

The court's reasoning and outcome were based on the evidence presented and the applicable law. The court found that the primary judge did not deal with material evidence that is directly inconsistent with his findings and relates to issues which go to the very heart of the claim. The court also found that the primary judge's disposition of the respondent's case under s 340(1)(a)(iii) and (b), linked to s 341(1)(b) and (c)(i), of the FW Act cannot stand. The court dismissed the appeal and ordered the appellant to pay the costs of the respondents, to be assessed if not agreed.

In conclusion, the Federal Court of Australia found that there was no delay in the delivery of judgment that had an operative effect on the conclusion, and that there was no misleading and deceptive conduct under s 51A of the Trade Practices Act 1974 (Cth). The court also found that there was an implied term of reasonable time in the building contract, and that the award of indemnity costs was justified in the circumstances. The appeal was dismissed, and the appellant was ordered to pay the costs of the respondents.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the costs of the respondents, to be assessed if not agreed.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

While I hasten to add that there is no reason that a building dispute should not technically be brought within federal jurisdiction, in smaller disputes such as this, the practical benefit in doing so is questionable, given there are skilled arbitrators and other experts able to resolve such disputes, usually within state jurisdiction. Be that as it may, the questions raised were ultimately answered, and answered adversely to Mr Auguste. The conclusions reached were open on contemporaneous objective evidence, which evidence is still capable of review. The findings reached, putting aside credit findings on which I express no view, were not only open, but in my view, correct.BACKGROUND The claim by Mr Auguste was in essence for damages caused by delay in construction of compliant plumbing works by Nikolyn. The claim was advanced in numerous ways. In 2006, Mr Auguste owned a parcel of Land at 20 Hardey East Road, Wattle Grove (Lot 123). The Land was 1.6 hectares in area and described in one Certificate of Title. Mr Auguste sought to develop the Land by subdivision. By application to the Western Australian Planning Commission (WAPC) in March 2006, the Land was approved for subdivision, subject to conditions, into five single dwelling lots and a balance landholding of 1.38 hectares. By another subdivision application, also approved in March 2006, the balance landholding of 1.38 hectares was also approved for subdivision, again subject to conditions, into five single house lots, a grouped housing lot, and public open space. The first and second applications were, however, superseded by subdivision application WAPC 131308, which received conditional approval from the WAPC on 25 August 2006. That subdivision application sought to create four freehold lots, described as the Green Title Lots and a public open space. The approval was valid until August 2009. Relevantly, the conditions included:(a)suitable arrangements being made with the Water Corporation for water, sewerage and drainage;(b)satisfactory arrangements being made with the Shire of Kalamunda for the making of a contribution towards infrastructure; and(c)development, including landscaping and reticulation, of the public open space. When the subdivision was ultimately completed in April 2011 (after the events of significance in this appeal and pursuant to another subdivision application (WAPC 140805)), the four Green Title Lots came to be Lot 1231 (Existing House), Lot 1232 (Northern Lots), Lot 1233 (Existing House), and Lot 1234 (Southern Lots). Mr Auguste intended to further develop the Northern Lots and the Southern Lots by obtaining additional survey strata approvals from the WAPC in respect of each of those lots. He initially obtained the survey strata approvals in 2006. Each of those approvals, however, was subject to the creation of a new lot created pursuant to WAPC 131308, which was to be the subject of each survey strata approval. Each survey strata approval, in turn, depended upon, amongst other things, the issue of a new Certificate of Title creating each respective lot upon which it was based. WAPC 131308 expired in August 2009. The two survey strata approvals lapsed in August and October 2010, respectively.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The development required extensive plumbing arrangements. Mr Auguste contacted Mr Colasante, a director and shareholder of Nikolyn, to commence negotiations in relation to plumbing to be carried out at the development. The negotiations started in October 2009. PRIMARY JUDGMENT The primary judge found (at [22]-[23]) that Mr Auguste provided information about the required work to Mr Colasante by way of emails and attachments to those emails. There were two emails sent on 14 October 2009. There were another two emails sent on 30 October 2009. Attached to the first of the emails of 14 October 2009 was a site plan, clearly marked ‘PRELIMINARY ISSUE – NOT FOR CONSTRUCTION’. On it there was noted a drainage junction where a storm water drain from the proposed subdivision joined into a larger drain or creek noted on the plan as ‘Woodlupine Brook’. Where the smaller drain met the larger, the plan had noted on it, ‘PRECAST RC HEADWALL TO SUIT 450 DIA PIPE’. Then, underneath those words, the following appears, ‘HOLD TYPE PF CONNECTION TO EXISTING DRAIN PENDING CONFIRMATION FROM WATER CORP OF ACCEPTANCE’. His Honour noted (at [24]) that it was clear from a plain reading of the plan that:(a)it was not a ‘for construction’ drawing. It was a preliminary drawing only; and(b)the connection type at Woodlupine Brook was yet to be determined and approved by the Water Corporation; Attached to the second of the emails of 30 October 2009 were some drawings of the proposed connection at Woodlupine Brook drawn by Baker Drafting Services Pty Ltd. The connection was described a type ‘B’ connection. It was approved by the Water Corporation. In fact, in 2006 the Water Corporation had previously specified and approved a type ‘B’ connection for the Woodlupine Brook connection. His Honour recorded (at [26]) that Mr Colasante’s evidence was that he had not seen the subsequent drawings from Baker Drafting Services. Nonetheless, he did not deny that he had received them. His Honour found that, following the last email from Mr Auguste (with its enclosures), there could be no doubt that the connection that was required at Woodlupine Brook was a connection that had Water Corporation approval. It was also beyond doubt that the relevant connection was that which was drawn by Baker Drafting Services. Mr Colasante had been provided with the emails from the Water Corporation signifying their approval to the connection detail drawn by Baker Drafting Services. The difficulties between the parties emerged from the contested assertion by Mr Auguste that he had provided additional plans and constructions to Mr Colasante in a meeting in October or November of that year at Mr Auguste’s office in South Perth, on which he should quote. The primary judge noted (at [27]) that in cross-examination Mr Auguste agreed that no such meeting had occurred. The primary judge rejected the assertion of any meeting in October 2009 as alleged by Mr Auguste in his evidence in chief. His Honour concluded that Mr Auguste’s evidence on this point was most unsatisfactory. His Honour noted that Mr Colasante accepted that there had been a meeting between him and Mr Auguste in February 2010, but on another project.

Ratio Decidendi

Legal Principle Established

The purpose of Mr Auguste identifying these matters is to show that the primary judge did not deal with material evidence that is directly inconsistent with his findings and relates to issues which go to the very heart of the claim. Ground 1 – delay – consideration In Tattsbet, the Full Court dealt with a similar complaint about delay in delivery of reasons for judgment. Jessup J, in considering the submission, said the following (Allsop CJ and White J agreeing) (at [131]-[134]):131. The principles which inform the decision of an appellate court to hold that excessive delay in the delivery of judgment at first instance in the case concerned has rendered that judgment unsafe were discussed at length by the Full Court in Expectation Pty Ltd v PRD Realty Pty Ltd [2004] FCAFC 189; (2004) 140 FCR 17, 32-35 [66]-[83]. I would accept that, particularly where a transcript of the evidence at trial exists, mere delay need not justify a conclusion that the fact-finding process has miscarried. There are, however, additional circumstances which give rise to concern in the present case. 132. In Expectation, the Full Court said (at [74]):The problem is not restricted to fading memory. A judge who comes to make an inordinately delayed decision will inevitably be subjected to great pressure to complete and publish the judgment. A conscientious judge could not but feel that pressure. It is almost inevitable that there will also be some form of external pressure - whether from the parties, the management of the Court, the press or parliamentarians. That pressure could well unconsciously affect the process of decision-making and the process of giving reasons for decision. The decision that is easiest to make and express will have great psychological attraction. In the present case, I can see no sign that the primary Judge sought to take the easiest path to the resolution of the disputes that were before him. To the contrary: his Honour gave careful attention to the appellant’s reasons for having taken adverse action against the respondent, notwithstanding that, on his findings, her case failed at an anterior stage. Nonetheless, the pressures to which the Full Court referred in Expectation appear to have been present here. The circumstances which surrounded the delivery of judgment bespeak an environment in which his Honour felt under considerable pressure to complete his reasons at the last minute. 133. Additionally, the omissions to which I have referred above, taken cumulatively, suggest that his Honour may not have given some issues in the case the attention which they deserved, notwithstanding the very long period during which he was reserved. Those arising under s 357 of the FW Act are an instance. His Honour’s failure to make the findings of fact that would be necessary for a proper determination of so much of the respondent’s case as relied on s 340(1)(a)(iii) and (b) of the FW Act are another. On the cross-appeal, our attention was also drawn to a number of minor errors – typographical and proofing errors, for example – in his Honour’s reasons. While nothing would normally turn on such matters, in the circumstances of the present case it must be accepted that they provide some support for the respondent’s second ground. 134. The critical finding with respect to the appellant’s reason or reasons for taking adverse action turned substantially upon the credit which the primary Judge assigned to the evidence of Mr Fletton. Notwithstanding the existence of transcript, that finding was inevitably based upon his Honour’s observation of Mr Fletton as a witness, and upon the advantage which a trial Judge conventionally has in such a setting. In my view, there is a real risk that his Honour compromised his ability to use that advantage in the determination of Mr Fletton’s reasons for acting when he allowed such an inordinate period to elapse between the giving of the evidence and the making of the determination. When considered together with the matters referred to in paras 106-109 above, the result is that his Honour’s disposition of the respondent’s case under s 340(1)(a)(iii) and (b), linked to s 341(1)(b) and (c)(i), of the FW Act cannot stand.(emphasis added)