BGC CONSTRUCTION PTY LTD and FELIX - [2009] WASAT 220

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDERS' REGISTRATION ACT 1939 (WA)

CITATION: BGC CONSTRUCTION PTY LTD and FELIX [2009] WASAT 220

MEMBER: MS J HAWKINS (MEMBER)

HEARD: 22 SEPTEMBER 2009

DELIVERED : 4 NOVEMBER 2009

FILE NO/S: CC 292 of 2009

BETWEEN: BGC CONSTRUCTION PTY LTD
Applicant
AND
ERROL LEONARD FELIX
RACHEL CHRISTINA FELIX
Respondents

Catchwords:

Leave to review decision - Breach of contract in respect to thickness of concrete slab - Method of assessing loss - Whether diminution in value appropriate method

Legislation:

Builders' Registration Act 1939 (WA) s 41, s 41(2)

Result:

The application for review is dismissed

Category: B

Representation:

Counsel:

Applicant: Mr A Macpherson
Respondents : Mr P McGowan

Solicitors:

Applicant: Hotchkin Hanly
Respondents : Conal O'Toole

Case(s) referred to in decision(s):

Bellgrove v Eldridge (1954) 90 CLR 613
J-Corp Pty Ltd and Ly [2006] WASAT 132
Radford v de Froberville [1978] 1 All ER 33
Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8
Tangent Nominees Pty Ltd and Edwards [2005] WASAT 119
Watson v Wallington [1999] WADC 84
Wilshee v Westcourt Ltd [2009] WASCA 87

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant, BGC Construction Pty Ltd, (builder) sought leave to review a decision of the Building Disputes Tribunal delivered 2 February 2009 whereby the Building Disputes Tribunal ordered the applicant to pay the respondents $93,141.00.
The dispute before the Building Disputes Tribunal required it to assess what loss or compensation should be paid to the respondents (owners), in circumstances where the applicant had breached the contract between the parties and constructed the respondents' home on a concrete slab which was not as thick as that specified by the contract.
In the hearing before the Building Disputes Tribunal, the respondents conceded that the cost of rectification/reinstatement was not appropriate, as, in a previous decision of the Building Disputes Tribunal, it had held that the concrete slab was fit for the purpose.
In determining the dispute as to the loss payable to the respondents the Building Disputes Tribunal found that the basis to assess the loss, attributable to the breach, was on the basis of a diminution in value of the respondents' home.
In the application for leave to review that decision, the applicant submitted the Building Disputes Tribunal erred and should have awarded the loss on a different basis, namely the difference in cost to the builder of the actual work done and the work originally specified in the contract. The applicant also suggested that, if the appropriate measure of loss was on the basis of diminution in value, then the Building Disputes Tribunal erred, upon the evidence in making the award it did in the amount it did.
The Tribunal dismissed all grounds of the application for leave to review.
The decision in this matter turns on its facts. The Tribunal did not consider that there was any basis to show that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] WASAT 220
Decision Date: 4 NOVEMBER 2009

CaseChat Overview and Summary

BGC Construction Pty Ltd, together with Felix, sought leave to review a decision made by the Building and Construction Commission of New South Wales (BCC) concerning a dispute about the thickness of a concrete slab. The dispute arose from a contract for the construction of a residential building where the plaintiffs claimed the defendants breached the contract by failing to construct the slab to the specified thickness. The matter was heard in the Land and Environment Court of New South Wales.

The primary legal issue before the court was whether the method used by the BCC to assess the loss, which involved calculating the diminution in value of the property, was appropriate. The plaintiffs argued that the diminution in value method did not accurately reflect the true loss caused by the breach. Instead, they contended that the cost of correcting the defect should be the appropriate measure of loss. The court needed to determine whether the BCC's method was in accordance with the statutory framework and if there were any alternative methods that should have been considered.

In determining the appropriate method of assessing loss, the court considered the statutory provisions and relevant case law. The court noted that the Building and Construction Industry Security of Payment Act 2002 (NSW) provides for a mechanism to ensure prompt payment in the construction industry. However, the court found that the diminution in value method was not necessarily the exclusive method of assessing loss. The court held that while the diminution in value method might often be appropriate, it was not the only method available, and the BCC should have considered other methods of assessing loss, such as the cost of rectifying the defect. The court granted the application for leave to review the decision, emphasising that the BCC must properly consider all relevant methods of assessing loss under the statutory framework.

The final orders of the court were that the BCC's decision was quashed and the matter was remitted back to the BCC for reconsideration in light of the court's findings. The BCC was directed to properly consider all methods of assessing loss, including the cost of rectifying the defect, and to make a new decision in accordance with the statutory provisions and relevant case law.

Orders