CONTENT LIVING PTY LTD and ROBERTS - [2012] WASAT 194

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: BUILDING SERVICES (COMPLAINT RESOLUTION and ADMINISTRATION) ACT 2011 (WA)

CITATION: CONTENT LIVING PTY LTD and ROBERTS [2012] WASAT 194

MEMBER: MR C RAYMOND (SENIOR MEMBER)

HEARD: 9 JULY 2012

DELIVERED : 26 SEPTEMBER 2012

FILE NO/S: CC 767 of 2012

BETWEEN: CONTENT LIVING PTY LTD
Applicant
AND
MICHELE ROBERTS
Respondent

Catchwords:

Building Services (Complaints Resolution and Administration) Act 2011 (WA) - Application for leave to review - Compensation awarded for misleading and deceptive conduct - Whether reliance established - Whether chain of causation broken - Whether measure of damages incorrect based on cost of achieving conformity with representation

Legislation:

Building Services (Complaints Resolution and Administration) Act 2011 (WA), s 5(2), s 41, s 41(2)(d), s 41(2)(d)(i), s 41(3), s 58(2)
Home Building Contracts Act 1991 (WA), s 15, s 15A, s 17, Pt 2
Trade Practices Act 1974 (Cth), s 52, s 82

Result:

Leave to review granted on limited grounds

Category: B

Representation:

Counsel:

Applicant: Mr R Shaw
Respondent: Self-represented

Solicitors:

Applicant: Lavan Legal
Respondent: N/A

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

Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494
Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119
Tangent Nominees Pty Ltd v Edwards & Anor [2006] WASC 45

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant applied under s 58(2) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) for leave to review a decision of the Tribunal awarding the respondent compensation for misleading and deceptive conduct in breach of s 15A of the Home Building Contracts Act 1991 (WA).
The Tribunal found that there would not be a substantial injustice if leave to review was not granted in relation to grounds raised by the applicant, based on the representation having been so qualified by a subsequent written communication that the representation was eliminated, that there could be no reliance upon it, and that the respondent had acted unreasonably. However, the Tribunal found that the decision proposed to be reviewed had failed to address what the consequences would have been if the representation had not been made. Further, that the Tribunal had erred in awarding compensation on the basis of the cost to achieve compliance had the representation been carried into effect, without an evidential base to justify an award on that basis.
Leave to review the decision was granted, limited to the issues of whether the respondent suffered loss and, if so, the amount of the loss.

Introduction

Ms Michele Roberts alleges misleading and deceptive conduct on the part of Content Living Pty Ltd in the formation of a building contract for the construction of a dwelling at Lot 20 Kelston Way, Australind. The contract was entered into during December 2008. On 14 May 2012, the Tribunal, constituted by Member T Carey and Sessional Member P Mittonette, found in favour of Ms Roberts and awarded compensation in the sum of $5,709.
Content Living seeks leave to review that decision under the internal review mechanism of s 58(2) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (BS(CRA) Act). Unless otherwise stated, all references to legislation in this decision are to the BS(CRA) Act and specific reference to the BS(CRA) Act will be made only where the context requires.
The representation found by the Tribunal is not clearly expressed but, according to Content Living, is that Content Living engaged in misleading and deceptive conduct by representing that it would prepare drawings based on a sketch (which included front eaves). The final drawings did not include front eaves. Compensation was awarded based on the cost of altering the premises so as to conform with the representation by providing eaves to the front of the dwelling.
Content Living says that:
a)the representation was a continuing representation and, if false at the time it was acted upon, was nevertheless sufficiently qualified in a letter dated 29 October 2008 (Cover Letter) from Content Living, so as to eliminate any misrepresentation;
b)as a result of the Cover Letter, any reliance on the representation is not established;
c)Ms Roberts failed to take reasonable care in checking the contractual drawings and, therefore, the chain of causation of any loss was broken; and
d)no loss is established because there is no evidence that, if the representation had not been made, Ms Roberts could have entered into another contract at the same or a lower price, which included the front eaves, being the usual measure of loss for misleading and deceptive conduct.

The criteria for the grant of leave

In order to obtain leave to review the decision, Content Living must show that the decision of the Tribunal was wrong or attended with sufficient doubt, such that if leave were not to be granted, Content Living would suffer a substantial injustice. These criteria are based on the principles set out in Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119, which also reflect that the Tribunal has a broad discretion to have regard to other features which might require consideration on review in order to avoid a substantial injustice.

The issues for determination

The contentions advanced by Content Living can be usefully considered under a discussion of the following issues:
1)What representation was made?
2)What is the effect of the Cover Letter from Content Living to Ms Roberts?
3)If the representation made was false, has any loss been established?
The Tribunal prepared a hearing book, and it appears from the transcript that the parties referred freely to the documents contained therein. The hearing book does not appear to have been admitted as a formal exhibit, but, in the circumstances, I take it that all the documents contained in the hearing book were before the Tribunal and taken into consideration by it. It should be noted that Ms Roberts is now married and that the transcript refers to her by her married surname of Brookes.
It is evident that none of the material facts are in dispute. The facts referred to in the discussion which follow have been extracted from either the transcript of evidence or the documents contained in the hearing book.

What representation was made?

Ms Roberts dealt initially with a salesman employed at Content Living's Bunbury office, who was described throughout the proceedings only by his first name, Tyrone. The negotiations centred around the construction of a dwelling in accordance with Content Living's standard design known as 'Mayne'. The standard diagrammatic form of floor plan was signed on 30 June 2008 subject to various alterations reflected in an amended plan (sketch plan) also signed on the same date. The sketch plan had drawn upon it a dotted line representing that eaves were to be constructed around the entire dwelling, apart from the garage. A document described as 'Annexure 1 precontract price' was completed to show variations and additions to the standard specifications or design for the dwelling. The last item on the annexure, item 26, states: 'Provide eaves to RHS and rear of house as per plan $2,480'.
This description does not appear to be particularly apposite, because it was clear that the additional eaves, over and above those ordinarily provided, were to the front elevation and the one side (presumably, the lefthand side). The total price agreed was $184,506 as set out in Annexure 1.
It appears that Annexure A is an annexure to an Agreement for Preparation of Drawings, which was also signed by the parties on 30 June 2008. Relevantly, cl 5 of the Agreement for Preparation of Drawings provides:
Content Living will carry out the Preparation of Drawings Work based on the Sales Sketch and the Pricing in Annexure 1. Any representation, written or oral, as to the content of the building works or the price for the building works not contained in the Sales Sketch and Pricing is of no effect and will not be considered.
On 29 October 2008, Ms Roberts received a number of documents together with the Cover Letter flowing from Content Living's performance of the Agreement for Preparation of Drawings. The documents enclosed were the plans, addenda and specifications, and a letter of quotation of the same date (Quotation Letter). Further reference will be made to the Cover Letter because, as already indicated, it is relied upon by Content Living to support its contentions regarding reliance, failure to act reasonably and the alleged break in the chain of causation of any loss or damage.
The Quotation Letter listed the additions and variations to the basic house price, although the final price was $184,862, approximately $300 more than previously quoted. The two quotations are not easily reconciled. Item 24 of the Quotation Letter also includes provision of eaves to the rear and righthand side of the house, 'as per plan', for $2,480.
The additional eaves which Ms Roberts had discussed with Tyrone and for which she had agreed to pay $2,480 were not constructed on the front elevation. A consequence of this is that a bulkhead ceiling had to be provided along the wall of the bedroom forming the front elevation. The contract drawings forwarded with the Cover Letter did not show any eaves on this elevation and did reflect that a bulkhead was to be constructed in the bedroom concerned.
The representation relied on by Ms Roberts is not clearly formulated. In Ms Roberts' statement of issues, facts and contentions, it was alleged:
Unconscionable, misleading and deceptive conduct with regards to sales contract and drafting plans. Many attempts to resolve and inability to resolve issues with the builder and duress caused to client regarding this.
Issues as follows: The Builder did not comply with the Sales Plans and did not construct an eave to the front bedroom window (as is CLEARLY VISIBLE on the sales plans), and did not advise the client of this omission for her approval, or even make contact with the client for clarification. Not in accordance with the sales contract.
…
Content Living accepts in its submissions in these proceedings that it represented that it would carry out the preparation of drawings work based on the sketch, being a representation as to a future matter, not an existing fact. Content Living also asserts that the representation was a continuing representation and that, if proved false at the time it was acted upon, this would amount to misrepresentation. All of this is clearly correct.
In evidence, Ms Roberts was asked by the Tribunal whether she had checked any of the items that she and Tyrone had discussed and which had resulted in an amendment to the original sketch plan (which she had been requested to do in the Cover Letter). Ms Roberts replied: 'No, because it said, "As per plan"'. The reference here must be understood to be to the Quotation Letter and item 24, which specifically stated that eaves were provided as per the plan (T:16; 14.05.12).
The transcript of the short oral reasons for decision given by the Tribunal immediately after the conclusion of the hearing reflects that the Tribunal referred to cl 5 of the terms of the Agreement for Preparation of Drawing, and also to the Quotation Letter (T:63; 14.05.12). The Tribunal observed that the notation under item 24 (which shows that it is a reference to the quotation letter) was identical to the notation referred to in the precontract quotation, save as to numbering it was item 26 in the precontract quotation. In that context, the Tribunal stated:
The applicant's case, in short, is that she was entitled to rely upon her discussions with Tyrone and also clause 5 of the agreement in securing the house that she wanted. If, in the event, some unilateral change was encompassed in the final drawings, it was incumbent on the respondent to bring this to her attention. The applicant was constructing a house for the first time and was therefore not experienced in reading plans and should not be expected to identify discrepancies of this nature. (T:63; 14.05.12)
Later, the Tribunal stated:
We agree with the applicant that in those circumstances when the detailed drawings were sent to her for signing, the change from the sketch should have been brought to her attention. She had a certain expectation arising from her discussions with the respondent['s] sales representative and, in this case[,] is assisted by the contractual term for consistency between the sales sketch and detailed drawings. Although, she might be criticised for paying insufficient regard to the detailed drawings, she says that she relied upon what she was told by Tyrone. (T:64; 14.05.12)
Content Living interprets the reasons for decision, it appears correctly, as reflecting that the Tribunal found that Content Living engaged in misleading and deceptive conduct by representing that it would prepare drawings based on a sketch, which included front eaves.
During the hearing of the leave application, I raised with counsel for Content Living whether Ms Roberts' case, properly understood, showed reliance also on a representation made in the Quotation Letter. It is perhaps unfortunate in this case that the precise representation relied upon was never clearly formulated. Given the manner in which the case was conducted by both the parties and the Tribunal, the representation or representations relied upon must be gleaned from the totality of evidence.
It appears, from the transcript of evidence referred to above, that the Tribunal may have lost sight of Ms Roberts' explanation that she had not checked that the eaves were included in the final drawings, because of the representation made in the Quotation Letter that the eaves were included as per the plan. This will bear upon the effect of the Cover Letter and final consideration of whether the criteria for the grant of leave have been met.

What is the effect of the Cover Letter of 29 October 2008?

This letter contained the following provisions on which Content Living relies:
We have enclosed the full contract documents. These, in particular the working drawings and the addenda, have been prepared from the documents provided to us either directly through yourself or our sales representative. Once final plans and contracts are signed, we will build to them.
If you have any understanding as to what we will build or the terms upon which we will build that is not contained in the final working drawings, addenda and other contract documents, you must make sure these documents are amended, prior to signing them. You must not rely upon any representation made or the contents of any other document (including any preparation of plans agreement).
Further, the working drawings reflect our draftsman's interpretation of the design and may not fully satisfy your requirements for such things as your proposed uses for each room. Similarly, the addenda will include many of our standard inclusions and exclusions. We therefore ask you to carefully read through the contract documents to make sure that they fully reflect your requirements and let us know of any changes needed.
…
If in doubt you should consider seeking independent professional advice.
Content Living submits that the Cover Letter qualifies the representation made by it to such an extent that it obliterates the effect of any misrepresentation.
That might be accepted to be so if one does not have regard to the Quotation Letter. While the representation relied upon may not have been properly formulated, the Tribunal was alive to the effect of item 24 in the Quotation Letter, and in that context found that if there was some unilateral change made in the final drawings, it should have been drawn to Ms Roberts' attention.
Content Living then submits that the representation, as formulated by the Tribunal, could not have been relied upon beyond the point that the representation was corrected. I accept that this raises doubt about the correctness of the Tribunal's decision. The effect of this finding will be discussed further in the conclusion below.

If the representation made was false, has any loss been established?

The representation made by Tyrone, on behalf of Content Living, that drawings would be prepared based on a sketch which included the front eaves was a representation which, arguably, consistent with the finding above, continued only until receipt of the Cover Letter. It remains to consider, further below, the effect of the Quotation Letter, which contained a statement that the eaves were included 'as per plan'.
On the first scenario, the representation as found was arguably no longer continuing and had been qualified to such an extent that it would not be operative. Consequently, it could not have caused any loss.
On the other hand, if the representation, properly formulated, includes the statement in the Quotation Letter that the eaves were included as per the plan, that is, that on a proper reading of the final plan the eaves were shown, it would be necessary to consider whether any loss was established because of reliance thereon. In any event, it is necessary to consider whether any loss is established for the purpose of determining whether leave should be granted on that issue.
The evidence of Ms Roberts referred to above supports a conclusion that she relied upon the representation contained in the Quotation Letter that the final plans included provision for the front eaves. As a result of this, she signed and returned the plans and proceeded to enter into the contract (T:16 and 17; 14.05.12). Content Living submits that it is necessary to consider what Ms Roberts would have done differently if the representation had not been made. Their submissions that:
•there is no evidence of any alternative contract that Ms Roberts might have entered into; or
•there is no evidence to suggest that it would have cost Ms Roberts the same for a house with front eaves
are accepted.
A further submission that it was impossible to build the house with the front eaves as shown in the sketch plan and that Ms Roberts could not have entered into an alternative contract to do so is not accepted. The evidence does not support that submission. To the contrary, the compensation awarded was based on evidence establishing the cost of achieving conformity with the sketch.
Content Living then submits that the Tribunal has 'incorrectly applied the cost to produce conformity which would typically arise for a breach of a contractual warranty, but does not in this case flow from the inducement'. The reasons for decision reflect that this is what the Tribunal did in assessing Ms Roberts' damages. The amount awarded was based on a quotation from a contractor to alter the roof configuration so as to achieve the desired result.
It is submitted for Content Living that the Tribunal erred in measuring the loss to be the cost to produce conformity, referred to as the contractual measure for breach, rather than the loss which flowed from the inducement, referred to as the misleading and deceptive conduct measure of damages.
The Tribunal awarded compensation based on a breach of s 15A of the Home Building Contract Act 1991 (WA) (HBC Act). The remedies for such a breach are as set out in s 41 of the BS(CRA) Act. In that regard, the supplementary submissions filed on behalf of Content Living, subsequent to the hearing, to the effect that the remedies are to be found within s 41(2)(d)(i) rather than s 41(3) thereof (which relates to a breach of s 15 rather than s 15A of the HBC Act) are also accepted.
Section 15A of the HBC Act provides:
A person who is a builder or an owner must not, in connection with -
(a)the formation or execution of a contract; or
(b)negotiations to vary a contract after execution; or
(c)the circumstances in which a contract or variation of contract is entered into,
engage in conduct that is misleading or deceptive.

Section 17 of the HBC Act provides that an owner or builder under a home building works contract may make a complaint under s 5(2) of the BS(CRA) Act for, amongst other things, a breach of a provision of Pt 2, which includes s 15A. Section 41(2)(d) of the BS(CRA) Act empowers the Tribunal to make an order that a person pay specified compensation for loss or damage caused by a breach of Pt 2 of the HBC Act, and in other circumstances which are not relevant.
The effect of s 15A of the HBC Act, in the above legislative context, is similar to that of s 52 and s 82 of the Trade Practices Act 1974 (Cth) and, consequently, cases and texts dealing with the Commonwealth legislation are a guide as to the correct approach to the measure of damages in respect of a breach of s 15A. It is apparent that damages under the Commonwealth legislation are not restricted to a measure based on deceit, although that will often be the correct measure: see the discussion in Miller's annotated Trade Practices Act, RV Miller, Thompson Law Book Co, 26th ed, 2005, at para 1.82.21, and Marks v GIO Australia Holdings Ltd (1998) 196 CLR 494 (Marks) at [504].
Nevertheless, as discussed in the above text and Marks, in order to establish loss or damage, it is necessary to show that, but for the misleading and deceptive conduct, the loss would not have been suffered. That would ordinarily mean that there must be evidence of the type submitted by Content Living above. However, on the facts of this case, an inquiry of what Ms Roberts might have done had the misrepresentation not been made could conceivably lead to a different basis upon which loss could be shown. If Tyrone had never represented that the eaves could be included, then it is arguable that Ms Roberts would have still entered into the contract but not on terms which involved the extra payment of $2,480.

Conclusion

Content Living has demonstrated that there is some doubt as to the correctness of the Tribunal's decision. It is necessary to weigh whether the aspects in relation to which doubt is evident are such as to justify the grant of leave to review the entire decision, or whether leave should be limited in any way: see Tangent Nominees Pty Ltd v Edwards & Anor [2006] WASC 45.
The representation relied upon was never clearly identified prior to or even during the hearing, and that was unfortunate. For the reasons given above, the representation as it appears to have been formulated by the Tribunal gives rise to sufficient doubt about the correctness of the decision concerning the effect of the Cover Letter and whether it so qualified the representation that it was no longer operative and, consequently, whether it could be relied upon and caused loss. On the other hand, the evidence as a whole demonstrates that Ms Roberts relied also on the statement contained in the Quotation Letter to the effect that the eaves were shown on the final plans. It is difficult to conceive that any rehearing might result in an identification of the representation as not including that statement and that it was this which induced Ms Roberts not to check the plans, to sign and return them and, in due course, to enter into the contract (T:16 and 17; 14.05.12). This representation would have been read after the Cover Letter, which explained which documents were included with it. The warnings about representations in context would be open to interpretation that they referred to earlier conduct not to a specific representation still to be read, that the eaves were provided for in the final plans. I do not consider that this representation was sufficiently qualified by the Cover Letter, and given Ms Roberts' lack of experience in building matters, I do not consider that it was unreasonable for her to rely on the further representation that the eaves were shown on the final plans. Consequently, I do not consider that there would be a substantial injustice if leave were to be refused on all issues save the questions of proof and assessment of loss.
On the evidence, it is clear that the Tribunal erred in relation to the basis upon which it measured Ms Roberts' loss. Although there may be a basis upon which to find that a loss of $2,480 was suffered, this is a matter which can only be determined on final hearing when the parties have been given an opportunity to address the issue in evidence, and by way of submissions. In any event, there is a sufficient difference between the amount awarded by the Tribunal of $5,709 and any possible alternative award in favour of Ms Roberts (which would also have to take into account a credit she was given of $552 for the omission of the eaves), such that there would be a substantial injustice, having regard to the nature of the matters which were in dispute before the Tribunal, if an opportunity were not granted to review the Tribunal's decision in relation to this aspect of the matter.

Order

For the above reasons, the Tribunal will cause an order to issue, that:
1.Leave is granted to review the decision of the Tribunal made on 14 May 2012, limited to:
(a)whether the respondent suffered loss; and
(b)if so, the amount of such loss.
2.The matter is listed for a directions hearing on 11 October 2012 at 2.30 pm in order to program the matter to a final hearing of the review.

I certify that this and the preceding [45] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR C RAYMOND, SENIOR MEMBER