B and T Constructions (ACT) Pty Ltd v Construction Occupations Registrar
[2015] ACTCA 7
•23 March 2015
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and Anor |
Citation: | [2015] ACTCA 7 |
Hearing Date(s): | 10 November 2014 |
DecisionDate: | 23 March 2015 |
Before: | Murrell CJ, Gilmour J and Cowdroy AJ |
Decision: | 1. The appeal is dismissed. 2. The appellant is to pay the respondents’ costs. |
Category: | Principal Judgment |
Catchwords: | PROFESSIONS AND TRADES – Builders – Statutory power to require rectification of defective or incomplete building work – In dismissing application for review ACT Civil and Administrative Tribunal confirmed rectification order under s 38 of Construction Occupations (Licensing) Act 2004 (ACT) requiring rectification of items not complying with approved building plans – Whether primary judge of ACT Supreme Court erred in dismissing appeal against ACAT decision – Meaning of loss and damage under s 36 of Construction Occupations (Licensing) Act 2004 (ACT) APPEAL AND NEW TRIAL – Procedure – Australian Capital Territory – Nature of appeal removed to ACT Supreme Court by s 82 of ACT Civil and Administrative Tribunals Act 2008 (ACT) |
Legislation Cited: | ACT Civil and Administrative Tribunals Act 2008 (ACT) s 79(3) Building Act 2004 (ACT) ss 19, 42, 48, 69 Workplace Relations Act 1996 (Cth) s 807(1) |
Cases Cited: | ACT Construction Occupations Registrar v Tokich [2006] ACTSC 89 Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526 Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 |
Texts Cited: | Halsbury’s Laws of England (LexisNexis, 5th ed, 2014) vol 29 |
Parties: | B & T Constructions (ACT) Pty Ltd (Appellant) Constructions Occupations Registrar (First Respondent) The Owners – Units Plan 3324 (Second Respondent) |
Representation: | Counsel: Mr C Erskine SC (Appellant) Mr G McCarthy (First Respondent) Dr A Greinke (Second Respondent) |
| Solicitors: Trinity Law (Appellant) ACT Government Solicitor (First Respondent) Goodman Law (Second Respondent) | |
File Number(s): | ACTCA 85 of 2013 |
Decision under appeal: | Court: Supreme Court Before: Burns J Date of Decision: 6 November 2013 Case Title: B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and The Owners – Units Plan 3324 Citation: [2013] ACTSC 219 |
MURRELL CJ and COWDROY AJ:
The appellant appeals from the decision of Burns J delivered on 6 November 2014 (see B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and The Owners – Units Plan 3324 [2013] ACTSC 219). The primary judge dismissed an appeal from a decision of the ACT Civil and Administrative Tribunal (the ACAT) dated 6 August 2012 (as amended on 5 September and 7 November 2012). The ACAT affirmed a decision of the first respondent (the registrar) to issue a rectification order (the rectification order) to the appellant under Part 4 of the Construction Occupations (Licensing) Act 2004 (ACT) (the COLA).
The rectification order directed the appellant to undertake rectification works to a building constructed at Block 13, Section 27, Forrest in the ACT (the subject land). The rectification order included approximately 40 items, but only three are the subject of this appeal. They are described as:
(a)Item 15: Cement board or render painted finish to be replaced with aluminium/stone façade cladding;
(b)Item 25: Translucent glass inserts not constructed; and
(c)Item 28: Canberra Avenue balustrades to units 14, 23 and 29 are not as designed.
These items will be referred to as the non-complying items.
Facts
On 26 March 2007, B & T Developments (ACT) Pty Ltd (B & T Developments) became the registered proprietor of the subject land, and thereupon contracted with the appellant to construct a building on the land comprised of residential home units (the building). The two companies are closely related, having a sole and common director, Mr Ivan Bulum.
On 5 June 2006, the ACT Planning and Land Authority approved a development application for the building on the land, to be known as ‘Empire Apartments’. The approval was slightly amended on 25 July 2007.
On 22 September 2007, the appellant appointed a building certifier (the certifier) in accordance with s 19 of the Building Act 2004 (ACT) (the Building Act). On the same day, the certifier issued a building approval and commencement notice to the appellant.
The home units in Empire Apartments were described in advertising material as ‘the epitome of luxury, prestige, and convenience’.
The building plans that were approved on 22 October 2007 by the certifier indicated that the external finishes would be of high quality, comprising Alucobond aluminium panels and ‘stone cladding to all exposed faces of corner element’ (which became the subject of item 15 of the rectification order), translucent glass inserts in the balustrades (item 25), and distinctive balustrades to units 14, 23 and 29, being the penthouse apartments (item 28).
On 15 April 2009, the certifier issued a Certificate of Completion of Building Work under s 48 of the Building Act. On 17 April 2009, the registrar issued the appellant with a Certificate of Occupancy and Use under s 69 of the Building Act.
The second respondent, the Owners – Units Plan 3324 (the Owners Corporation), came into existence in May 2009, at the time of the registration of the units plan for the development, pursuant to s 33 of the Unit Titles Act 2001 (ACT) (the Unit Titles Act). Thereafter, pursuant to s 15 of the Unit Titles Act, property in those areas of the building relevant to the non-complying items became the property of the Owners Corporation as common property.
In 2008, many apartments were sold off the plan. The contracts for sale of those units precluded the purchasers from having any recourse in relation to variations from the approved plans. Clause 29.3 of a sample contract relevantly provided:
Variation
The Seller is permitted to make variations to:
a) the Plans and Specifications...
The builder did not amend the approved plans, but instead used a cheaper product in relation to the façade, namely cement board and rendered painted finish (item 15), did not provide translucent glass inserts to the balconies (item 25) and failed to provide high quality balustrades to units 14, 23 and 29 (item 28). The costs savings are estimated to be not less than $200,000. There is no dispute that the non-complying items constituted departures from the approved plans. The approved plans also recorded the type of finishes for the stone to be installed.
On 18 October 2011, the registrar issued a rectification order to the appellant pursuant to s 38 of the COLA, requiring rectification of works. Those works dealt with rectification of approximately 40 items which failed to conform to the approved building plans, including the three non-complying items.
The appellant made an application for review of the decision. On 6 August 2012, a Senior Member of the ACAT confirmed the rectification order with respect to items 15 and 25, and on 7 November 2012 a similar order was made with respect to item 28.
Appeal to the Supreme Court
On 31 August 2012, the appellant appealed against the ACAT decisions to the Supreme Court. By judgment dated 6 November 2013, the primary judge dismissed the appeal, subject to an aspect which is not relevant to this appeal (which related to the cost of accommodation of persons who might be displaced by reason of the carrying out of the work required by the rectification order).
Appeal to this Court
The appellant raises several alleged errors in the decision of the primary judge.
First, we will address the statutory provisions relevant to this appeal. They are:
COLA
Section 34 provides:
Intention to make rectification order
(1) This section applies if the registrar believes on reasonable grounds that—
(a)a licensee or former licensee (the entity) has provided a construction service otherwise than in accordance with this Act or an operational Act; and
(b)it may be appropriate to make a rectification order.
Examples ...
(2)The registrar may give the entity, and the land owner in relation to whose land the construction service was provided, a written notice that—
(a)gives details of the rectification order that may be made; and
(b)explains why the registrar intends to make the order; and
(c)invites submissions about the making of the order within the time stated in the notice that is not less than 5 working days after the day the entity or land owner receives the notice; and
(d)states that—
(i) the registrar will not make a rectification order if the registrar is not satisfied that it is appropriate to make a rectification order in relation to the entity; and
(ii) if the registrar does not make a rectification order the Territory may authorise someone else to do the things stated in this notice, and the entity will have to pay for the things to be done.
Section 35 provides:
When rectification order may be made
(1)This section applies if—
(a)the registrar has given an entity notice under section 34; and
(b)the entity provided the construction service, or part of the construction service, to which the notice relates; and
(c)after considering any submissions made within the time mentioned in the notice, the registrar is satisfied—
(i) the entity is contravening, or has contravened, this Act or an operational Act; and
(ii) it is appropriate to make a rectification order in relation to the entity.
Note 1If deciding under this section whether it is appropriate to make a rectification order, the registrar must consider the considerations mentioned in s 36.
Note 2A reference to an Act includes a reference to the statutory instruments made or in force under the Act, including any regulation (see Legislation Act, s 104).
(2)The registrar may make an order under section 38 (Rectification orders) in relation to the entity.
(3)However, the registrar may not make an order under section 38 in relation to the entity if a submission is made that satisfies the registrar that the act that caused the contravention happened, or ended, more than 10 years before the day the registrar proposes to make the order.
Example ...
Section 36 provides:
Considerations for deciding under s 34 and s 35
(1)In deciding whether it is, or may be, appropriate to make a rectification order in relation to an entity that is contravening, or has or may have contravened, this Act, the registrar must consider the following:
(a) any injury, loss or damage caused, or that could have been caused, by the contravention;
(b) if a rectification order is proposed—how the proposed order may affect people affected by the contravention.
Examples of effect of contravention, including injury, loss and damage
1reduction in safety, reliability, durability, soundness, functionality, accessibility, serviceability, service life, usability, usefulness, amenity, aesthetic quality, value or efficiency of thing affected by contravention
...
(2)The registrar may consider anything else that is relevant.
(3) ...
Building Act
Part 3 of the Building Act concerns certification of approved building plans. Section 19 provides:
Appointment of certifiers—work not begun
The owner of land where it is proposed to carry out building work may appoint an eligible entity as certifier for the work.
Pursuant to s 26, the owner may apply to the certifier for building approval. Pursuant to s 29, the certifier must examine whether the building work accords with the approval. Under s 32, there is power to amend approvals.
Significantly, building work must be carried out in accordance with the “approved plans”. Section 42(1) relevantly provides:
Requirements for carrying out building work
(1)Building work must not be carried out except in accordance with the following requirements:
(a) the materials used in the building work must comply with the standards under the building code for the materials in buildings of the kind being built or altered;
...
(d)building work must be carried out—
(i) in accordance with approved plans; or
...
In the proceedings before the primary judge, the assertion that the building was not constructed in accordance with the plans was not in contention.
Issues on appeal
The appellant advances five grounds, namely:
(a)The Court wrongly assumed that there was evidence of loss and damage under s 36(1)(a) of the COLA.
(b)The Court misunderstood the proper role of the public record, constituted by the approved building plans.
(c)The Court wrongly assumed that the Owners Corporation could speak for individual unit owners in its consideration of s 36(1)(b) of the COLA.
(d)The Court erred in assuming under s 35 of the COLA that there were reasonable grounds to believe that the appellant had contravened s 42 of the Building Act.
(e)The Court erred in upholding a rectification order that did not comply with s 38 of the COLA in that it did not specify the rectification work with sufficient clarity.
We now turn to consider these grounds.
Did the Court wrongly assume that there was evidence of loss and damage under s 36(1)(a) of the COLA?
The appellant submits that the registrar erred in his approach to the mandatory considerations; namely, whether injury, loss or damage was caused or could have been caused from the contravention (s 36(1)(a)), and as to the impact of the proposed order on people affected (s 36(1)(b)).
The appellant submits that the individual unit holders can have no claim for loss or damage arising out of the failure to complete the building in accordance with the approved plans, because:
(a)In respect of persons who purchased units ‘off the plan’ (i.e. before the creation of the Owners Corporation and the registration of the relevant units plan), each contract for sale incorporated a specific provision which authorised the appellant, as builder, to make variations to the plans and specifications (i.e. the plans and specifications for the unit and the building). As the variations referred to in the non-complying items are those which the builder was authorised by the contract to make, no claim can lie at the suit of the ‘off the plan’ unit holders.
(b)As to those purchasers who acquired their units after registration of the units plan following completion of the building, the building was constructed as it now stands. Any departures from the plan were irrelevant, since the departures were not latent defects. They were obvious, to those purchasers, who acquired their units as constructed. They also have no claim.
(c)As to the Owners Corporation, the non-complying items were all at the exterior of the building; they were not structural problems, but purely aesthetic considerations. The non-complying items did not require planning approval. However, the appellant concedes that the non-complying items did require building approval.
The appellant refers to the recent decision of the High Court of Australia in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 313 ALR 408, which held that a builder owed no tortious duty to an Owners Corporation because the latter was not incorporated at the building stage. Similarly, so the appellant contends, there can be no contractual relationship between the builder and the Owners Corporation. It follows that neither the owners of the individual units nor the Owners Corporation have any entitlement to have the building completed to accord with the ‘hypothetical alternative’, i.e. according to the building plans.
Consideration
Under the Building Act, it is a requirement that building work must not be carried out except in accordance with the approved plans (s 42(1)(d)(i)). The non-complying items were not carried out in accordance with the approved plans.
Section 34 of the COLA empowers the registrar to issue a rectification order when the registrar believes ‘on reasonable grounds’ that a builder has provided a ‘construction service’ otherwise than in accordance with the COLA or, relevantly, the Building Act (s 34(1)(a)), and that it ‘may be appropriate to make a rectification order’. The requirements for the issue of an order are contained in s 35.
The statutory obligation imposed by s 36(1)(b) of the COLA on the registrar required the registrar, as a mandatory consideration, to ‘consider’ any injury, loss or damage caused ‘or that could have been caused’ by the contravention: see s 36(1)(a).
The primary judge found that the ACAT considered this issue. The injury, loss or damage so considered related to the increased maintenance costs, the likelihood of more marked deterioration of the façade resulting from the inferior standard of finish as constructed, and the consequential reduction in the value of the units.
Before the ACAT, there was evidence about the difference in cost to complete the building in accordance with the approved plans compared to the cost of constructing the building without the finishes for the respective items. The estimate, both as at May 2009 and as at May 2012, established a difference of approximately $200,000. That is, the builder avoided expenditure of not less than this sum by failing to provide the items as indicated in the approved plans. Mr Alex Feng of Donald Cant Watts Corke (ACT) Pty Ltd Quantity Surveyors estimated that the cost to rectify the façade was $484,926.
Before the ACAT, the appellant did not dispute that the external finish on the building as constructed was not as durable as that provided in the approved plans. The ACAT found that the external finishes did not constitute structural defects, but were rather ‘cosmetic defects’. Nevertheless, they met the test of being described as ‘substantial’ for the reasons set out by the respondents, and justified the making of the order.
There was evidence that the Alucobond aluminium panels were expected to be durable for over 30 years, and a warranty was provided to that effect. However, the fibro finish which was installed would require regular and frequent maintenance to maintain the integrity of that material. Unchallenged evidence was given in cross-examination at the ACAT by the appellant’s construction manager, Mr McInnes, that the finishes of aluminium and stone would have cost the appellant significantly more than the finish provided, and that in consequence the building was of inferior quality because of this departure from the approved plans.
The failure of the appellant to provide the translucent glass inserts to the balconies and the failure to provide the elegant balustrades to units 14, 23 and 29 are obvious omissions from the approved plans.
Section 36(1)(b) does not define ‘injury, loss or damage’, nor does it specify the kind of loss or damage nor the quantum thereof. The nature of the detriment suffered might arise in different ways, and by s 36(a) the registrar may consider ‘anything else that is relevant’. The registrar fulfils his statutory obligation under s 36(1)(a) and (b) if he gives ‘consideration’ to them.
There is no reason to interpret the words ‘injury, loss or damage’ as being confined solely to a contractual or tortious loss, it can extend to a financial or aesthetic detriment which results from the contravention. The primary judge concluded at [49]:
In my opinion, the loss encompassed by s 36(1)(a) is not confined to loss upon which a sufficiently interested person could maintain an action at law as at the date that the registrar determines to make a rectification order. To interpret s 36(1)(a) in that way would seriously reduce the efficacy of the provision, and would be contrary to the legislative purpose underpinning the power to make rectification orders. The policy considerations behind the legislature granting the registrar power to make rectification orders include protection of the public and consumer protection, making it highly unlikely that the legislature intended to restrict the meaning of the words “injury, loss or damage” in this way.
We agree with these observations. Principles relating to damages resulting from a breach of contract or tort have no place in the COLA legislative scheme.
‘Damage’ has been defined ‘widely, as any detriment, liability or loss capable of assessment in monetary terms’: see Halsbury’s Laws of England (LexisNexis, 5th ed, 2014) vol 29, [343]. See also, Forster v Outred & Co [1982] 1 WLR 86 at [94], CA per Stephenson J. The cost of additional maintenance and the failure to use the intended façade, represents a disadvantage to the owners.
A claimant may suffer recoverable damage even though actual expense has not been incurred. In Jones v Stroud District Council [1988] 1 All ER 5 at [14](c-d), Neill J said:
It is true that as a general principle a plaintiff who seeks to recover damages must prove that he has suffered a loss, but if property belonging to him has been damaged to an extent which is proved and the court is satisfied that the property has been or will be repaired I do not consider that the court is further concerned with the question whether the owner has had to pay for the repairs out of his own pocket or whether the funds have come from some other source.
At least with respect to damage resulting from negligence, it is the reasonable cost of reinstating the damaged article, which is the measure of damage. It is immaterial that the article may not have been repaired, or has been destroyed, or can be repaired at less than cost or for nothing; this will not prevent the claimant from recovering the diminution in value of the chattel that has been caused by the negligence of the tortfeasor: see Coles v Hetherton [2014] 3 All ER 377, CA at [27] per Aikens LJ.
There is no reason why such principles should not be applied to the reinstatement of the respondents’ building. The liability to reinstate arises differently, namely through breach of the provisions of a statute, rather than negligence. However, it is the restitution arising from the breach which is critical.
The unit owners, via the Owners Corporation, will incur expense if they complete the building in accordance with the approved plans. By virtue of s 19 of the Unit Titles (Management) Act 2011 (ACT), the Owners Corporation holds the common property. It is therefore directly affected by the rectification order. Further, there was evidence that the maintenance costs for the façade as it exists will be borne by the unit owners, whereas such costs would have been avoided had the aluminium façade been installed.
This conclusion is reinforced by the provisions of s 34(2) of the COLA, which empower a registrar to issue an order to a builder even though the owner has sold the land, provided that the rectification order is made within 10 years of the contravening act (s 35(3)). It is irrelevant that the property owner may, in consequence of a rectification order being issued to the builder, become entitled to a better building than that which was acquired by that owner or by a subsequent owner. Sections 34(2) and 36 apply with regard to the land rather than the party who may have contracted with the builder. The regulatory regime is directed to ensuring compliance with the building approval, and is distinct from any concepts of contractual or tortious relationship. The Explanatory Statement to the draft Bill relating to the proposed s 34 states, inter alia:
Clause 34 applies if the registrar has reasonable grounds to believe that a licensee (or former licensee) has provided a construction service in a way not in accordance with this Act or an operational Act and that it may be appropriate to issue a rectification order.
That is, as was found by the primary judge, the remedy ‘runs with the land’. So construed, any suggested defence to a rectification order based on an absence of contractual or tortious liability is irrelevant. It was not Parliament’s intention that any such relationships must exist before a rectification order might issue. We concur with the primary judge’s conclusion at [52] where his Honour, inter alia, said:
The provisions of s 35(3) of the COLA make it clear that the registrar’s power to make a rectification order “runs with the land”, with the only restrictions upon the power to make the order being the act that caused the contravention must have happened no more than 10 years before the day the registrar proposes to make the order. It would be contrary to the objects of the COLA, and in particular those provisions dealing with the making of rectification orders, to construe s 36(1)(a) as meaning that a person or entity that took legal ownership of a building containing non-compliant works had suffered no loss because the non-compliant work existed at the time the entity took legal ownership.
There was evidence before the registrar that the cost of reinstating the building to accord with the approved plans would be substantial. As to the façade, there is evidence, not only of the inferior finish resulting in a degraded building compared to the building shown in the plans, but also as to the cost of ongoing maintenance which would have been avoided, had the building materials shown in the building plans been provided. The loss or damage that may be incurred has resulted directly from the appellant’s failure to comply with the requirements of s 42(1)(d)(i).
The appellant relied upon the principle in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514.The principles of loss or damage considered in that decision relate to damages claimable under the Trade Practices Act 1974 (Cth) (now repealed). In Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388, the High Court at [46] referred to Wardley, and after observing the statutory provisions under consideration, emphasised that the statutory context of the entitlement to damages created by the Trade Practices Act. Wardley was specific to that legislation. That decision has no relevance to the consideration of damages arising under the legislation before us.
By virtue of s 36(1)(b) of the COLA, the registrar fulfilled his statutory obligation arising under that provision. There is no error in the primary judge’s conclusion.
For the above reasons, we are satisfied that despite the fact that the unit owners had no contractual claim against the appellant for the rectification costs, and that the Owners Corporation also has no contractual claim, loss or damage ‘existed’ in that the building as constructed is of an inferior standard or quality to that for which the appellant had lawful approval.
Did the Court misunderstand the proper role of the public record, constituted by the approved building plans?
The appellant contends that there is no occasion for the approved plan to be amended, in view of the Certificate of Compliance which had been issued by the certifier, which certified that the building was completed in accordance with the approved plans. The primary judge observed that, if amended plans had been prepared which incorporated the building as constructed, the non-complying items could have been approved, but found that such a consideration was irrelevant and said at [34] of his decision:
In my opinion, the policy behind the legislature granting the registrar power to make a rectification order is based on considerations of protection of the public, consumer protection and protection of the integrity of public records. Doubtless, there are areas of overlap between these three considerations. For example, protection of the integrity of public records will often, in this field, involve a strong element of consumer protection. As such, the reason for a builder not applying for approval of amended plans (where that reason is not relevant for some other purposes, such as estoppel) is irrelevant to the decision of the registrar to issue a rectification order.
The appellant challenges that conclusion, claiming that the non-complying items raise no issue of structural insufficiency, or unfitness for their purpose, that the integrity of the public record would be adversely affected if the appellant applied to amend the building approval to reflect the building as constructed; and that subsequent purchasers who had inspected prior to purchase would have known what had been constructed, and would have purchased their units with that knowledge.
Consideration
As was found by the primary judge, the integrity of the public record is, with respect to consumer protection, of great significance. Nevertheless, it must be recognised that various regulatory regimes exist. In this instance, certification by a certifier under the Building Act relates to a regulatory regime entirely separate from matters that might arise under the COLA. For the purposes of considering whether an order should be made for rectification, it is specifically provided by s 36(3) that ‘the registrar need not consider whether the registrar, planning and land authority, a certifier or other entity has given a certificate or approval...’. That provision is supplemented by s 33A of the COLA, which relevantly provides:
Rectification orders—exercise of registrar's powers
To remove any doubt, the registrar is not prevented from having a belief on reasonable grounds, or being satisfied, about a matter mentioned in this part in relation to a construction service only because the registrar, the planning and land authority, a certifier or another entity has—
(a)given a certificate, or approval under—
(i)this Act or an operational Act in relation to the construction service; or
(ii)the Planning and Development Act 2007 in relation to the place where, or the territory lease under which, the construction service was provided; or
(b)...
Whilst the appellant submits that s 36(3) of the COLA states that the registrar ‘need not consider’ whether a certificate has been issued, this does not mean that the issue of the certificate can be ignored. However, we consider that the submission has little weight, taking into account the express provisions in s 36(3) and s 33A. Section 33A was inserted in response to a decision of Higgins CJ in ACT Construction Occupations Registrar v Tokich [2006] ACTSC 89, where his Honour held that the registrar was estopped from asserting that there had been a breach of the Building Act provided a Certificate of Compliance under that Act remained valid.
For the above reasons we reject the submission of the appellant.
Did the Owners Corporation represent the unit owners?
The appellant contends that the primary judge erred in assuming that the Owners Corporation could represent individual unit owners with regard to the consideration under s 36(1)(b) of the COLA.
The appellant submits that it cannot be assumed that the Owners Corporation represents the owners of the building, since there is no evidence of any meeting or resolution by unit owners authorising the Owners Corporation to take proceedings on their behalf. In summary, it is submitted that there was no entitlement either by the unit owners, nor by the Owners Corporation, to have the building constructed in accordance with the approved plans; that is, there was no entitlement for them to have constructed to their satisfaction the hypothetical alternative building.
Consideration
Before the primary judge, the following point was taken:
(e)The Tribunal did not take into account how the proposed orders may affect people affected by the contravention…
His Honour found:
43.Section 36(1)(b) of the COLA requires the registrar, in deciding whether to make a rectification order, to consider how the proposed order may affect people affected by the contravention. The appellant claims the ACAT did not consider this issue.
44. It is clear from the terms of s 36(1) that the ACAT was bound to consider the effect of the proposed order on those who may be affected by it. In fact, the ACAT did consider this issue. At [21] the ACAT referred to the increased maintenance costs, the likelihood of deterioration and the reduced value of the apartments. The second respondent in these proceedings, the Owners Corporation of the apartment complex under the Unit Titles (Management) Act 2011, was joined as a party to the ACAT proceedings. It supported the confirmation of the rectification orders. It has also refused to consent to the lodging of amended plans, which would have removed the basis for the making of the rectification order. The ACAT was entitled to proceed on the basis that the second respondent spoke on behalf of those most likely to be presently, adversely affected by the rectification orders. It is implicit in the reasons of the ACAT that it had regard to this matter.
45.In any event, even if the ACAT did not have regard to how the proposed rectification order may affect the owners or residents of the apartments, it was made clear in the course of this appeal that the second respondent supports the making of the rectification order. Even if the ACAT was in error as alleged in this ground, this court should not intervene, applying the principles enunciated by Mason J in Minister for Aboriginal Affairs v Peko-Wallsend (see above at [10]). If anything, the ACAT failed to take into account a fact which supported the decision it made.
The ground now relied upon by the appellant differs from that considered by his Honour. The appellant did not specifically raise the point upon which it now relies, and the appellant is restricted to the issues that it raised in the court below: see Hampton Court Ltd v Crooks (1957) 97 CLR 367; Port of Melbourne Authority v Anshun Pty Ltd (1981) 47 CLR 589; Tyson v Brisbane Market Freight Brokers Pty Ltd (1994) 120 ALR 1. Had this issue been raised below, the Owners Corporation would have been able to call evidence in rebuttal. However, we will nevertheless provide our finding.
In answer to the submission of the appellant that the Owners Corporation was not active in supporting the claim, there is evidence that in the ACAT the Owners Corporation sought to be represented by members of its executive committee by application dated 8 December 2011. Attached to that application were the records of minutes of a reduced quorum at a general meeting of units plan 3324, which referred to special resolutions being passed to raise levies for the purpose of rectification of the building defects. It must also be remembered that the membership of the Owners Corporation is the unit owners in the Strata Plan 3324; the executive committee was similarly comprised; and the Owners Corporation was present at the ACAT hearing to express the wishes of the members of Strata Plan 3324.
The Owners Corporation owns the external walls of the building outside the common boundary with unit holders (s 15 of the Unit Titles Act); and where the external walls are common with a unit, the external walls are jointly owned. Both the unit holders and the Owners Corporation have the potential to be affected by external rectification works. Each has a separate interest. Further, pursuant to s 16 of the Unit Titles (Management) Act, the Owners Corporation is required to maintain the common property. The costs of doing so are met by contributions from the unit owners.
We are satisfied that the interests of the unit holders and of the Owners Corporation were properly taken into consideration by the ACAT in its assessment of loss and damage under s 36(1)(a). The appellant refers to the fact that only 13 unit holders joined in the resolution. But there is no evidence of the support or otherwise of the other 21 unit holders. The undisputed fact is that the Owners Corporation, which was directly affected, sought the order and sought to uphold its effect. Further, there is no requirement under the COLA that individual unit holders must each express their opinion before an order can be made. The registrar is only required to consider the effect of an order under s 36(1)(b). The effect on the Owners Corporation, and upon the individual unit holders, was considered by the ACAT.
Accordingly, we reject the submissions that the ACAT did not give consideration to the provisions of s 36(1)(a), and wrongly assumed that the Owners Corporation could speak for the unit holders.
Did the Court err in assuming under s 35 of the COLA that there were reasonable grounds to believe that the appellant had contravened s 42 of the Building Act?
Section 35 of the COLA is set out in [19] above.
The submission made by the appellant on this ground is puzzling. At no stage has the appellant disputed the fact that the building as constructed departs from the approved plans at least with regard to items 15, 25 and 28. The registrar was entitled to issue a notice under s 34 with respect to the non-complying items, together with any other items where departures from the approved plans existed. This issue does not appear to have been raised before the primary judge and we find it to be lacking in any merit, even if leave was granted to raise the issue.
Did the Court err in upholding a rectification order that did not comply with s 38 of the COLA in that it did not specify the rectification work with sufficient clarity?
The appellant seeks leave to raise the issue that the rectification order does not specify ‘the stated action’ with sufficient clarity, especially in view of the potential criminal sanction provided by s 40.
Section 38 of the COLA relevantly provides:
Rectification orders
(1)The registrar may make an order (a rectification order) in relation to an entity requiring the entity—
(a)to take stated action to rectify work done as part of a construction service…
It is submitted that the terms of the order are unclear. Reliance is placed also upon s 40 of the Act, which renders it an offence for a person to intentionally fail to comply with the requirements of an order. The appellant maintains that the need for a clear statement of the action required to be undertaken was referred to by the primary judge.
The primary judge found that one aspect of the order relating to the relocation of affected persons was imprecise, and could not constitute ‘stated action’. However, it is apparent that the appellant made no specific challenge to the clarity of the stated action with respect to the non-complying items.
Each of the respondents opposes the granting of leave on the basis that, had this issue been raised, they would have adduced evidence before the ACAT or even before the primary judge to show that there was clarity in the orders. We were taken to the complete order, which encompassed the non-complying items together with numerous other defects which are not of relevance.
Insofar as defect 15 (the façade) was concerned, the replacement of the existing fibro cement board with the aluminium/stone façade cladding referred to the approved drawings and the fact that the building as constructed was not in accordance with the approved plans, and contravened s 42(1)(d)(i) of the Building Act. The stone finishes to be incorporated were contained on a sample board which was before the ACAT, being a sample board which had been prepared by the appellant for the proposed construction. While the appellant maintains that there were several types of stone referred to on the board and that the order did not specify which stone was to be applied, this is an issue which could have been met with evidence and submissions, and it would have been a relatively simple matter for the appellant to determine which of its selected stone it should use. It was, after all, its design and intent to incorporate stone into the project.
As regards item 25 the failure to supply the translucent balustrades, the order specified the failure of the builder to comply with the specific drawings, and nominated those drawings.
As regards item 28, the order identified the approved plans showing the proposed balustrades.
We are satisfied that leave should not be granted to raise this issue. To do so would run counter to authority to the effect that a party is bound by the manner in which it conducts its case at first instance: see Metwally v University of Wollongong (No 2) (1985) 60 ALR 68. As was observed in Lansen v Minister for Environment and Heritage (2008) 174 FCR 14 at 19, an appeal is not to constitute a ‘reworking of the trial’. The need for finality in litigation is also well established: see Coulton v Holcombe (1986) 162 CLR 1 at 7.
The matter before us is an appeal from the decision of the primary judge; it is not an opportunity for the appellant to raise, as new grounds, matters which could have been raised before both the primary judge and before the ACAT. Accordingly, leave to raise this issue is refused.
Nature of the Appeal before the primary judge
The appellant challenges the finding of the primary judge that the appeal before him constituted a ‘rehearing’.
As to the nature of the hearing before the primary judge, his Honour correctly found that the appeal before him was an exercise of the Supreme Court’s original jurisdiction, on the basis that the matter had been removed from the ACAT under s 79 of the ACT Civil and Administrative Tribunals Act 2008 (ACT) (the ACAT Act). Sub-section 79(3) thereof provides:
A party to the original application may, by application, appeal the decision to the tribunal on a question of fact or law.
The appeal was removed to the Supreme Court by s 82, and the Supreme Court exercised the jurisdiction of the ACAT. In this instance, no new evidence was called and the matter proceeded before the primary judge on submissions related to statutory construction.
It was a ‘rehearing’ as described in Fox v Percy (2003) 214 CLR 118. At [22]-23] the majority (Gleeson CJ, Gummow and Kirby JJ) said:
The “rehearing” does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. No such fresh evidence was admitted in the present appeal.
This principle has been followed many times: see The Legal Practitioner v The Council of the Law Society of the ACT [2011] ACTSC 207; Federow v Federow [2011] ACTCA 10 per Gray P, Penfold J, and Nield AJ at [7]-[9]; Connelly v Allan [2011] ACTSC 170 per Refshauge J at [12]-[13]; and Lukatela v Birch (2008) 164 ACTR 24 per Rares J at [18].
We see no error in the approach of the primary judge in his understanding of the nature of the appeal before him.
Conclusion
In view of the above findings, we consider that:
1. The appeal should be dismissed.
2. The appellant should pay the respondents’ costs.
| I certify that the preceding eighty-three [83] numbered paragraphs are a true copy of the Reasons for Judgment of their Honours Chief Justice Murrell and Acting Justice Cowdroy. Associate: Date: 23 March 2015 |
31.
GILMOUR J
The appellant appeals from the decision of the primary judge delivered on 6 November 2013 (see B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and The Owners - Units Plan 3324 [2013] ACTSC 219) which relevantly dismissed an appeal from a decision of the Australian Capital Territory Civil & Administrative Tribunal (ACAT) dated 6 August 2012, as amended on 5 September 2012 and 7 November 2012. The ACAT decision affirmed a decision of the first respondent (the registrar) to issue a rectification order (the rectification order) to the appellant under Part 4 of the Construction Occupations (Licensing) Act 2004 (ACT) (the COLA).
I have had the advantage of considering the reasons in draft of Murrell CJ and Cowdroy AJ. I agree with their Honours’ reasons other than in respect of issue (a). In my opinion, as to that issue, to the extent that leave to rely on this ground of appeal is required, I would grant such leave and would allow the appeal and set aside the rectification order.
Background
The rectification order made by the registrar directed the appellant to undertake rectification work in respect of a range of items which are broadly described in an annexure to the ACAT’s reasons for decision.
However, the present proceedings relate only to items 15, 25 and 28 in this annexure. The other items have been dealt with separately. The three items are broadly described as:
(a)Item 15 - Aluminium/stone facade cladding to replace fibre/cement board or render/painted finish;
(b)Item 25 - Translucent glass inserts not constructed; and
(c)Item 28 - Canberra Avenue balustrades to units 14, 23 and 29 are not as designed.
On 26 March 2007, B & T Developments (ACT) Pty Ltd (B&T Developments) became the registered proprietor of Blocks 5, 6, 7 and 8, Section 27, Forrest (which subsequently became Block 13, Section 27, Forrest) (the Land). B&T Developments is a related entity of the appellant.
On 5 July 2006, the Australian Capital Territory (ACT) Planning and Land Authority approved a development application to build the Empire Apartments on the Land with a later minor amendment approved in mid 2007.
B&T Developments contracted with the appellant to construct a building on the Land.
On or about 22 September 2007, B&T Developments appointed Certified Building Solutions Pty Ltd as the building certifier in accordance with s 19 of the Building Act 2004 (ACT) (Building Act).
On 22 September 2007, Mr Mihaljevic of Certified Building Solutions Pty Ltd (the Certifier) issued a building approval and commencement notice to the appellant for Empire Apartments.
On 15 April 2009, the Certifier issued the appellant with a certificate of completion of building work. This certificate was issued under s 48 of the Building Act when the Certifier concluded that the building work was substantially in accordance with the building approved plans.
On 17 April 2009, the first respondent issued the appellant with a certificate of occupancy and use. This certificate was issued under s 69 of the Building Act.
B&T Developments sold some units in Empire Apartments. B&T Developments retained ownership of units 2, 6 and 7.
During May 2009, the units plan for Empire Apartments was registered and the second respondent (the Owners Corporation) came into existence under the Unit Titles Act 2001 (ACT) (Unit Titles Act).
Following the registration of the units plan, the property in those areas relevant to items 15, 25 and 28 became the property of the Owners Corporation in that it was common property pursuant to s 15 of the Unit Titles Act.
Section 33(3) of the Unit Titles Act provides that the owners corporation becomes the holder of an estate of leasehold in the common property on registration of the units plan. Prior to registration, the owners corporation neither exists nor holds any property.
However, it is the individual unit owners who have the beneficial interest in the property, and who have a direct economic interest in that property: Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 313 ALR 408 per Gageler J at [173].
Being a class A unit titles development, the boundary of the external walls of each unit is along the centre line of each external wall. That is, the part of the external wall outside the boundary is common property of the Owners Corporation and the part of the external wall inside the boundary is part of the property of the unit pursuant to s 15 of the Unit Titles Act.
It appears that on or about February 2011, the Owners Corporation lodged a complaint about the Empire Apartments with the registrar, which led to various matters, including the issuing of:
(a)the rectification order; and
(b)a controlled activity order of 3 November 2011 (controlled activity order).
By proceedings AT11/110 and AT11/124 the appellant and others sought review by the ACAT of the decisions to make the rectification order and the controlled activity order.
Items 15, 25 and 28 of the rectification order, but not the controlled activity order, continue to be in issue in these proceedings.
The statutory framework
Part 4 of the COLA provides for the making of rectification orders.
Section 34(1) of the COLA provides that the section applies if the registrar (see s 103(1) COLA) believes on reasonable grounds that a licensee or former licensee, defined as the “entity”, has provided a construction service otherwise than in accordance with the COLA or an operational Act, and that it may be appropriate to make a rectification order.
Section 34(2) at the material time provided that the registrar may give the entity, and the land owner in relation to whose land the construction service was provided, a written notice giving details of the rectification order that may be made, explaining why the registrar intends to make the order and inviting submissions about the making of the order within the time stated in the notice.
Section 33A relevantly states that, to “remove any doubt”, the registrar is not prevented from having a belief on reasonable grounds, or from being satisfied, about a matter mentioned in the part in relation to a construction service only because the registrar, the planning and land authority, a certifier or another entity has given a certificate or approval under the COLA or an operational Act in relation to the construction service or has otherwise endorsed the construction service under the COLA or an operational Act.
Pursuant to s 16 of the COLA, the Building Act is an “operational Act” for the purposes of the COLA.
Section 35 of the COLA includes the following:
35When rectification order may be made
(1)This section applies if—
(a)the registrar has given an entity notice under section 34; and
(b)the entity provided the construction service, or part of the construction service, to which the notice relates; and
(c)after considering any submissions made within the time mentioned in the notice, the registrar is satisfied—
(i) the entity is contravening, or has contravened, this Act or an operational Act; and
(ii) it is appropriate to make a rectification order in relation to the entity.
...
(2)The registrar may make an order under section 38 (Rectification orders) in relation to the entity.
Section 42(1) of the Building Act provides that building work must not be carried out except in accordance with certain listed requirements, including that it must be carried out in accordance with approved plans (s 42(1)(d)). It is not in dispute that the building involved here was not constructed in accordance with the plans.
Importantly, s 36 of the COLA provides that in deciding whether it is, or may be, appropriate to make a rectification order, the registrar must consider any injury, loss or damage caused by the contravention and how the proposed order may affect people affected by the contravention. This section is in the following terms:
(1)In deciding whether it is, or may be, appropriate to make a rectification order in relation to an entity that is contravening, or has or may have contravened, this Act, the registrar must consider the following:
(a)any injury, loss or damage caused, or that could have been caused, by the contravention;
(b)if a rectification order is proposed—how the proposed order may affect people affected by the contravention.
Examples of effect of contravention, including injury, loss and damage
1.reduction in safety, reliability, durability, soundness, functionality, accessibility, serviceability, service life, usability, usefulness, amenity, aesthetic quality, value or efficiency of thing affected by contravention
2.adverse affect on health of user of thing affected by contravention
Note An example is part of the Act, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears (see Legislation Act, s 126 and s 132).
(2)The registrar may consider anything else that is relevant.
(3)However, the registrar need not consider whether the registrar, planning and land authority, a certifier or other entity has—
(a)given a certificate, or approval under—
(i) this Act or an operational Act in relation to the construction service; or
(ii) the Planning and Development Act 2007 in relation to the place where, or the territory lease under which, the construction service was provided; or
(b)otherwise endorsed the construction service under this Act or an operational Act.
As is noted on numerous occasions throughout the COLA, an “example” is part of the COLA, is not exhaustive and may extend, but does not limit, the meaning of the provision in which it appears: see Legislation Act 2001 (ACT), ss 126(4) and 132.
Section 38 provides for the making and content of rectification orders. The section relevantly provides that the registrar may make a rectification order requiring an entity to take stated action to rectify work done as part of a construction service, to demolish a building or part of a building where a construction service has been provided and provide the construction service under the COLA or an operational Act, or to start or finish stated work in relation to which a construction service has been, is being or was proposed to be provided.
Other sanctions exist in the COLA for contravention of the COLA or an operational Act.
Section 55 of the COLA provides grounds for “occupational discipline” in relation to a licensee. One of these grounds is that the licensee, or a nominee or employee of the licensee, has contravened or is contravening the COLA or an operational Act. Section 56 at the material time provided that if the registrar believed on reasonable grounds that a ground for occupational discipline existed in relation to a licensee, the registrar could apply to the ACAT for an “occupational discipline order” or take certain disciplinary action, including reprimanding the licensee, requiring the licensee or its nominee to complete a course of training or imposing a condition on the licence.
Pursuant to s 117, anyone who believes a licensee is contravening or has contravened the COLA or an operational Act may complain to the registrar. The registrar must take reasonable steps to investigate each complaint the registrar accepts for consideration: s 121 COLA. After investigation, if satisfied that a ground for occupational discipline exists in relation to the complaint, the registrar must, relevantly, apply to the ACAT for an occupational discipline order in relation to the licensee or take disciplinary action against the licensee: s 123 COLA.
Section 31 provides for the role of nominees. Pursuant to the Dictionary in the COLA, a “nominee” of a corporation or partnership means a person who is appointed as a nominee of the corporation or partnership under s 28. Section 28 relevantly provides that a corporation or partnership is eligible to be licensed only if it complies with either of the following:
(a)it has a single nominee appointed by it and the nominee is responsible for the supervision of the construction services provided by it.
(b)it has 2 or more nominees appointed by it, each nominee is responsible for the supervision of particular construction services provided by it, there is a written record of the construction services each nominee is responsible for supervising, and between them the nominees are responsible for the adequate supervision of all the construction services to be provided by the corporation or partnership.
Pursuant to s 31, a nominee of a licensed corporation or partnership has the function, relevantly, to ensure that the relevant construction services comply with the COLA and the operational Acts. Under s 31(2), the nominee commits an offence if the nominee fails to ensure that the relevant construction services comply with the aforementioned legislation. If guilty of an offence, the nominee becomes subject to a penalty.
Issue (a)
The issue in the appeal where I differ from the majority concerns issue (a): in effect, did the primary judge err in failing to conclude that the ACAT took into account irrelevant matters in its consideration as to whether it was appropriate to make the rectification order. It is clear that the ACAT, having regard to s 36(1)(a) of COLA, took into account loss or damage taken to have been suffered by the owners of the units and the Owners Corporation and caused by the contravention of s 42(1)(d) of the Building Act.
The primary judge referred to this loss and damage in his reasons at [46]. There his Honour referred to what had been found by the ACAT at [21]-[24]. The ACAT also dealt with this at [30]-[31]. The loss and damage thus identified was characterised in the ACAT reasons as follows:
21.The nature of the non-compliance is said to be that it was not built in accordance with approved plans as a result of the above. This leads to non-conformance with section 42(1)(d)(i) of the Building Act and as a consequence of increasing maintenance costs, creates likelihood of deterioration and having a reduced value effect on the apartments.
22.The controlled activity order in relation to item number 25 (T53) specifies a defect as pent house balustrade which has not been constructed in accordance with the approved plan. Therefore, the building, it is alleged, is not built in accordance with the approved plans. See, Drawings WD 204 and WD 3004 and others. It is alleged that this is a contravention of section 42(1)(d) of the Building Act and has the consequence of reducing the value and quality of the building. At T27, the intent of the controlled activity order is set out precisely. It is as follows-
"The order requires B & T Developments (ACT) Pty Ltd , B & T Constructions (ACT) Pty Ltd, Mr Cornelius Hank Van Roon, Certified Building Solutions (Pty) Ltd, and Sellack Consultants to comply with the Development Approval Number 200406079 in its entirety."
23.Exhibit C is a bundle of approved plans and drawings located under Tab H of the respondent's further supplementary T documents at page 84. This is Stanic Harding no.0703WD300/A and shows a north-east elevation of the proposed building. Contained in this drawing are the following notes -
•Stone cladding to all exposed faces of corner elements
•Aluminium panel cladding to all exposed faces
•Aluminium
•Clear glass infill to balustrade- This refers to the balustrades of the pent house apartments.
24.Exhibit C contains no less than 6 references to aluminium composite cladding in addition to the WD 300 drawing at T84. These references are contained in various approved plans at T85, T87, T92, T95, T89 and T70. There is no doubt that it was intended when approved that particular exterior finishes were specified as set out in items 15 and 25.
...
30.The party joined called Mr Alex Feng to give evidence. Mr Feng is a quantity surveyor and has given evidence in other court proceedings. He was aware of the Code of Conduct for Expert Witnesses and signed an undertaking to comply with that Code. He was accepted as an expert engaged to provide estimates of the cost of rectifying the non-compliance with approved plans that is listed as item 15. He stated in his report (Exhibit G), inter alia, "The DA and BA approved drawings identify the requirement for aluminium composite paneling and stone paneling on specific external architectural elements of the building. Instead of these finishes a 9mm fibre cement panel or a rendered painted finish has been used." He has estimated the present day cost of rectifying the paneling to that which was approved as $484,926. His report does not take account of the cost of providing glass panels in accordance with item 25. Nor does it take account of the cost of continuing maintenance of what was provided as compared with that which was approved. Mr Feng was not cross examined.
31.The Tribunal accepts the content of Mr Feng's report.
The primary judge proceeded on the basis that the losses, so described, constituted loss and damage for the purposes of s 36(1)(a) of the COLA.
Section 36(1)(a) relevantly required the ACAT to consider any loss or damage caused by the contravention. The ACAT wrongly concluded that there had been loss and damage suffered as a result of the contravention. There was no such loss or damage. The ACAT erred in this respect.
The primary judge was in error in failing to conclude that the ACAT had so erred. His Honour should have found that no relevant loss and damage had been suffered by the unit owners or the Owners Corporation. In particular, he should have found that the loss and damage described at [120] above was not loss and damage for the purposes of s 36(1)(a) and that in concluding to the contrary the ACAT had taken into account irrelevant considerations.
Whilst it is not a requirement before making a rectification order that there be loss and damage established it is an error of law in purported compliance with s 36(1)(a) to consider supposed loss and damage when in fact there was none. The error proceeded from an erroneous construction of what loss and damage means under s 36(1)(a) of the COLA. This error infected the ACAT decision as well as that of the primary judge.
His Honour concluded, in effect, that the fact that no loss or damage was suffered by the owner or subsequent purchasers by reason of any breach of contract(s) was irrelevant to the question whether loss or damage had been caused by the contravention within the meaning of s 36(1)(a). Likewise, his Honour held that it did not matter that the second respondent, the Owners Corporation, did not exist at the time the building was constructed.
As his Honour formulated it, “the loss encompassed by s 36(1)(a) is not confined to loss upon which a sufficiently interested person could maintain an action at law as at the date that the registrar determines to make a rectification order”: at [49].
The primary judge on this point said at [51]:
The determination for the purposes of s 36(1)(a) of whether any loss has been caused requires a simple comparison between what was constructed and what was depicted in the approved plans. To require the registrar to enquire into, and reach a conclusion on, the contractual or other legal or equitable interests of those who have contracted to purchase units off the plan, or who subsequently derive a proprietary interest in the building, would be an impossible task. The legislature could not have intended s 36(1)(a) to be approached in this way. In my view, what the section demands is a common sense approach to the question of loss: on a comparison between what was built and what is shown in the approved plans, has any loss been caused because, for example, the building is now less valuable, or more costly to maintain?
In my opinion, this is not correct. The expressions “injury, loss or damage” are well understood in the legal context. They are each the product of a legal wrong, of whatever kind. They are the product of actionable wrongs. Such, textually, is what s 36(1)(a) contemplates. This is so whether it is that injury, loss or damage was caused or alternatively could have been caused by the contravention.
The alternative circumstance is concerned with causation. It does not alter the meaning of the words “injury, loss or damage”.
Although the legislative provision here is concerned with rectification orders and not compensation, cases dealing with the meaning of injury, loss or damage in a statutory context are of some assistance. For example, in a claim for damages under s 82 of the former Trade Practices Act 1974 (Cth) a contingent loss occasioned by misleading conduct in contravention of s 52 of that Act was held not to constitute damage suffered by that conduct (contravention) until the contingency was fulfilled and the loss became actual: Wardley Australia Limited v The State of Western Australia (1992) 175 CLR 514 at 527-533, especially at 532. In that case the contingent loss was said to have arisen by entering into a contract as a result of misrepresentation. There must have been actual damage caused by the contravention. It was not enough that there had been contravention. There had to be a contravention causative of actual loss or damage. To the extent that the remedy sought was recovery of the amount of loss or damage then that loss or damage had to have been caused “by” the conduct. See also Murphy v Overton Investments Pty Limited (2004) 216 CLR 388 at [46].
The power of the Court to award compensation under the former Workplace Relations Act 1996 (Cth) (WR Act) and the current Fair Work Act 2009 (Cth) (FW Act) provide some further analogous assistance.
Under both the FW Act and the WR Act, the making of a compensation order is confined by the express purposes of such orders: “compensation for loss … suffered because of the contravention” (FW Act s 545(2)(b)) and “compensation for damage suffered … as a result of the contravention” (WR Act s 807(1)(b)). In both cases, the statutory precondition to a compensation order is that there has been loss or damage suffered because, or as a result, of the contravention. There must be “an appropriate causal connection between the contravention and the loss claimed”: Australian Licenced Aircraft Engineers Association v International Aviation Service Assistance Pty Ltd (2011) 193 FCR 526 at [423] (Barker J). There must be a “factual foundation” for any such finding: Transport Workers’ Union of Australia, NSW Branch v No Fuss Liquid Waste Pty Limited [2011] FCA 982 at [41] (Flick J).
There is no such factual foundation in this case.
The injury, loss or damage referred to in s 36(1)(a) is said to be that, relevantly, “caused … by the contravention”. This will include loss or damage for breach of contract: either the original building contract or later sales contracts. However, injury, loss or damage may be suffered which does not emanate from any breach of contract. An adjacent landowner might suffer loss and damage through actual damage to its building because the contiguous building was not constructed according to approved plans. This might occur in a number of ways, for example, because of structural deficiencies. Occupiers of a building not built according to approved plans resulting in structural defects might suffer actual physical injury and consequential loss and damage because part of the building collapses. Such an event might cause injury to passing pedestrians.
However, I do not consider that either the original owners, subsequent owners or the Owners Corporation suffered loss and damage of the kind taken into account by the ACAT.
It appears to have been accepted before the ACAT and the primary judge that the contravention did not constitute breach of the building contract between the developer and the owner, or breach of the contract between the owner and those buying off the plan or in subsequent on-sale contracts. It was not contended that there had been any breach of contract causative of loss or damage. Each obtained that for which they contracted. In particular there was no contractual obligation by the builder, or subsequent vendors, to provide or include in the sale of units items 15, 25 and 28.
No purchaser who bought off the plan could have claimed, or in fact did claim, based in contractual breach any diminution of value because the external finishes did not match the approved plans. The same must be true of any subsequent purchaser, because they had the opportunity to see what they were buying. Therefore, there was no loss or damage suffered by any unit owner for this reason.
In the ordinary course contraventions of the kind involved here may well have also been contractual breaches giving rise to actionable claims by the owner against the builder. That would be a relevant consideration. It is no answer to say, as does the second respondent, that if such a claim existed the owner could compel performance under the contract with the builder in which case there would as a result be no loss and damage. That may be so but unless and until there was such performance there would be identifiable loss and damage. Damages of the kind identified and taken into account by the registrar are not caused merely because of contraventions of s 42(1)(d).
The requirement of s 42(1)(d) that buildings are constructed in accordance with approved plans is no doubt informed by an important public interest to that end. However, contravention will not necessarily result in the registrar exercising the discretion to make a rectification order.
In deciding whether to make a rectification order the registrar must, relevantly, consider any injury, loss or damage caused by the contravention: s 36(1)(a); and may consider anything else that is relevant: s 36(2) COLA.
As I have mentioned, it is not a pre-condition to the making of a rectification order that injury, loss or damage has been established to have been caused or that it could have been caused by the contravention. All that is required is that the registrar must consider any injury, loss or damage caused or that could have been caused by the contravention.
By s 36(1)(b), the registrar must also consider, if a rectification order is proposed, how the proposed order may affect people affected by the contravention. This is different to what is required to be considered under s 36(1)(a). It may be that people affected by the contravention will include people who have not suffered actionable loss. However, the primary focus of s 36(1)(b) is a consideration of the effect of the proposed rectification order and not loss or damage caused by the contravention.
The ACAT took into account loss and damage which had not, relevantly, been suffered let alone caused by the contravention. The rectification order would, in this case, be productive of a windfall given to the owners of the units beyond their respective contractual entitlements. These incorrect and therefore irrelevant considerations were central to the decision to make the rectification order. That it did so proceeded from a wrong construction of s 36(1)(a).
The primary judge failed to so find for the very same reasons. This constituted an error of law.
It is unnecessary to consider the complaint concerning s 36(1)(b) save to say that this was not an alternative basis available to the ACAT to consider the effect of loss and damage of the kind asserted.
The appeal upon this issue should be allowed.
Order 1 of the orders of the primary judge, to the extent that it otherwise dismissed the appeal, should be set aside and in substitution there should be orders that:
(1)the ACAT’s orders confirming the rectification order in respect of items 15, 25 and 28 be set aside; and
(2)the rectification order in respect of those items be set aside.
Given the division of success and failure as to the grounds of appeal argued I would hear the parties on the question of costs.
| I certify that the preceding paragraphs numbered eighty-four [84] to one hundred and forty-eight [148] are a true copy of the Reasons for Judgment of his Honour Justice Gilmour. Associate: Date: 23 March 2015 |
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