D G Australia Pty Ltd v Alexander No. Scciv-03-139

D.G. AUSTRALIA PTY LTD v ALEXANDER
(plaintiff/respondent) (defendant/appellant)

[2003] SASC 176
Magistrates Appeal: Civil

PERRY J. The appellant was the defendant in an action in the Civil Division of the Magistrates Court in which the respondent was the plaintiff. The respondent claimed $14,600.74 said to be the balance of the contract price for the installation by it of an air conditioning system in the appellant’s house at Hyde Park, which was then under construction. As well, the respondent claimed an order enforcing a lien lodged by it under the Workers Lien Act 1893 for the same amount.
The appellant denied liability for any part of the respondent’s claim and counterclaimed damages for breach of contract, together with reimbursement of $15,000 which she claimed to have paid to the respondent under a mistake of law.
The appellant asserted in her defence that the respondent was in breach of two provisions of the Building Work Contractors Act 1995 (“the Act”), namely a provision requiring it to hold a licence to undertake building work, and a provision setting out formalities associated with the form and content of contracts for the carrying out of domestic building work. The consequences of the alleged breaches of the Act were said to be that the respondent was unable to recover the amount claimed, even if it was otherwise due, and further that the contract for the performance of the work in question was “void and unenforceable”.
The trial magistrate found in favour of the respondent on all issues. He gave judgment in favour of the respondent for $11,816.74, being the amount claimed less the value of some work which the respondent conceded it had not performed. He dismissed the counterclaim.
In her notice of appeal, the principal complaints of the appellant are that the trial magistrate erred in failing to hold that the respondent was required to be licensed under the Act, and in finding that the installation of the air conditioning system was not “building work” within the meaning of the Act.
She further complains that the trial magistrate erred in not holding that the respondent was required to repay a progress payment of $15,000 which she had made, which she asserted was recoverable as moneys paid under a mistake of law, and in failing to hold that the contract for the performance of the work did not comply with the requirements of the Act. She contended that having regard to those matters, the respondent stood to recover no more than the amount payable on a quantum meruit, which she contended would be substantially less than the amount awarded.
Factual Issues
The appellant contracted with Mr Chris Duthy, trading as C.A. and C.S. Duthy, builders, to build a house for her at her premises at 17A Mitchell Street, Hyde Park. Construction commenced in about September 2000.
The contract between the appellant and Mr Duthy provided for the installation by Mr Duthy of reverse-cycle air conditioning in accordance with a quotation dated 7 July 2000 which had been given for that work by a company known as All Seasons Air Conditioning. Mr Duthy also contracted to install under-floor heating to the laundry and some other “wet” areas.
The All Seasons quote was for the installation of a Mitsubishi air conditioning system at a cost of $9,900. The quote included the statement:
“The air conditioning has been designed as a zoned ducted system and the maximum number of outlets recommended is six by day.”
I should say something about a zoned air conditioning system.
The vast majority of domestic air conditioning systems are designed to operate on a “zoned” basis. This means that the capacity of the unit supplied will ordinarily be sufficient to achieve the desired degree of heating or cooling with respect to a limited number of outlets. These are selected to cover the areas in use on the one hand during day time, and the areas likely to benefit from conditioning during the evening or night time.
The split zoning between day and night use means that a system of smaller capacity than otherwise would be necessary may be utilised, with a commensurate saving in installation and operating costs.
Apparently it is very unusual for a system to be required with a view to heating or cooling the whole of a house at the one time. It was common ground between the witnesses called on both sides at the trial that in excess of 90 per cent of domestic installations involve split zoning.
For many years, of the order of 40 years, Mauro De Gioia had conducted the business of a contractor, specialising in air conditioning and what he describes as home automation systems. At first he carried on business in partnership with his wife, but later the business was operated by the respondent company, of which he and his wife are directors.
Early in 2001, while the appellant’s house was still under construction, the appellant contacted Mr De Gioia with a view to him installing a home automation system (“the HAS”). He agreed to meet her at her then home address in Thornber Street, Unley Park, where she showed him a plan of the new house. During the course of their discussion, Mr De Gioia indicated that as well as installing the home automation system, the respondent could also install the air conditioning system which could be integrated with the HAS system.
The respondent furnished a written quotation by letter to the appellant dated 31 January 2001. This is a detailed quotation which covered both the reverse cycle air conditioning and the home automation system. The air conditioning system specified in the quotation was a Daikin reverse cycle ducted split system with a rated cooling capacity of 16.2 kilowatts.
The respondent’s quotation for the air conditioning system was $14,500 and for the HAS $16,460.
Mr De Gioia said in his evidence that he had a discussion with the appellant as to how the house was to be zoned, and that he quoted on a system which would conform with the outcome of that discussion. This is consistent with the terms of the written quotation in which there is a reference to “each area controlled by motorised damper”, with the result that the “need for a particular area to be always running is eliminated. This allows for the system to provide relief where required whilst maintaining maximum efficiency”.
On the other hand, it was the appellant’s case at the trial that she had made it clear to the respondent that she wanted the system to operate over the whole house, including the garage, at any one time, and that she had asked the appellant for a larger unit than that which had been quoted for by All Seasons.
The appellant further maintained that she spoke to Mr De Gioia in terms of horsepower rather than kilowatts; that she had thought that All Seasons had quoted for a six horsepower unit which she did not consider to be big enough; and that she asked the respondent to install an eight or ten horsepower unit.
Mr De Gioia denied in evidence that there was ever any discussion with respect to horse power, and that if there had been, he would have switched the discussion to refer to kilowatts, as it was not the “industry norm” to discuss horsepower. References to kilowatts are more precise and specifications for air conditioning installations are invariably expressed in terms of kilowatts rather than horsepower capacity.
In fact the All Seasons written quotation given to the builder Mr Duthy dated 7 July 2000 specifies the nominal capacity of the unit to be supplied by them in terms of kilowatts. Furthermore, as I have said, that quotation expressly describes the system to be installed as a “zoned ducted system”.
It is, to say the least, surprising if the appellant had made it clear from the outset that she wanted a system which would air condition the whole house at any one time, that Mr Duthy should have obtained a quotation from All Seasons based on a zoned system. All of the evidence points to the fact that if she did entertain such a view, she did not convey it either to Mr Duthy or to Mr De Gioia.
As Mr De Gioia said in evidence, if the appellant had made clear to him that she required a larger unit which would enable all of the outlets to operate in the hottest conditions, he would have supplied a much bigger system at a much greater cost. He would have been happy to do so - it would have meant a more lucrative contract.
At all events, on this and the other critical issues in the case, the magistrate clearly preferred the evidence of Mr De Gioia where it conflicted with the evidence of the appellant. I have read the evidence for myself, and I would not be prepared to interfere with the trial magistrate’s view as to the credit of the parties.
Mr Keen for the appellant contended that in accepting the evidence of Mr De Gioia, the trial magistrate failed to take into account, or allow sufficiently for the evidence of two witnesses called by the appellant, namely the evidence given by Mr Duthy, the builder, and Mr Albert Callegher, a property developer, who is an acquaintance of the appellant.
Both of those witnesses deposed to being present at a time when a conversation or conversations took place between the appellant and Mr De Gioia.
Mr Callegher spoke also of conversations which, having regard to the evidence, appear to have taken place between him and the appellant when Mr De Gioia was not present, as a result of which he was given to understand that at least a ten horsepower unit was to be installed. Evidence of any conversation in the absence of Mr De Gioia would be inadmissible hearsay and could not assist the appellant on this issue.
Furthermore, it is not clear to me that, when Mr Callegher gave evidence of a conversation at the house in which he said that the appellant emphasised that she wanted a unit which would be “ice cold” and that he (Mr Callegher) said that it needed to be at least ten horsepower, this was after the work had been commenced. If so, the contract had already been entered into.
Mr Duthy’s evidence was in part:
“Q.Going back to the airconditioning, did you actually supply and install the airconditioning in the end.
A.No.
Q.Why was that.
A.Basically Stelanie [the appellant] had (INAUDIBLE) on site and she brought.
Q.When do you believe this was.
A.Approximately mid to end of January. I order the airconditioning through All Seasons to do their first fix and a few weeks prior to that, on site Stelanie was getting C-Bus organised and at that point there was discussions about the airconditioning.
Q.What did Stelanie say to you.
A.She just wanted a bigger unit.
Q.A bigger unit than what.
A.Than what All Seasons had quoted.
Q.What did you understand All Seasons quoted for, what size.
A.It was a 6 horsepower.
Q.Did she mention to you any particular size horsepower she wanted.
A.She wanted a bigger unit on site, 8 or a 10 horsepower.
Q.Did you say you could do that or what happened then.
A.That was when we were on site and that’s when Mauro [Mr De Gioia] said he could do the airconditioning.
Q.Did he say he could provide a unit of that size.
A.He just said that he would be able to provide a Rolls Roys airconditioning system.
Q.Did Stelanie ask him how much that would cost.
A.It was it worked out to be $4,000 more than All Seasons’ quote.
Q.Did Mr De Gioia say anything about what an 8 to 10 horsepower unit was.
A.Not that I recall.
Q.Was anyone else there during that conversation.
A.Yes, a chap by the name of Albert.
Q.You don’t know his last name.
A.No.
Q.Did he discuss the airconditioning unit with you at all.
A.All together there when Stelanie was talking about the airconditioning.
Q.Did Stelanie make any decision about who she was going to go with during that conversation.
A.She engaged Mauro to do the airconditioning.
Q.Did you have to do anything about All Seasons then.
A.Yes, I had to ring up and cancel.”
As I understand the appellant’s case, it is that the written quotation dated 31 January 2001 was a fabrication, in the sense that it was prepared after the work had been done, or at least undertaken, and that it was prepared in order to counter the suggestion that the unit supplied by the respondent was under capacity and not in accordance with the appellant’s requirements.
In dealing with that issue, the trial magistrate also dealt with the evidence of Mr Callegher and Mr Duthy of the conversations involving Mr De Gioia. The following passages from the magistrate’s reasons for judgment are apposite:
“19..... When the subject of the airconditioning came up, Mr DeGioia had said he could help by supplying an airconditioning system. She told Mr DeGioia she was looking at a Daikin unit with a minimum of eight and preferably 10 (presumably horsepower) and Mr DeGioia said to her that’s a commercial unit. The defendant told him she knew that, but she said that she suffered pretty badly from the heat and wanted the house ‘ice cold’. He told her to not worry as the Daikin was the Rolls Royce of airconditioning. She asked him for a price and he said off the top of his head it would be about $14,000. The builder Mr Duthy was present and said that was fine with him if the plaintiff did the air conditioning and he would credit her the corresponding amount. She said the airconditioner arrived a week later and was huge. ........
21It is interesting to examine the evidence of the builder Chris Duthy and Mr Albert Callegher concerning the terms of the contract.”
The magistrate then refers to the passage from the evidence of Mr Duthy which I have quoted above.
Later in his reasons he continues:
“26The critical determination in this matter is whether Exhibit P5 which is the quotation from the plaintiff to the defendant dated 31 January 2001 sets out the work which the plaintiff was to perform and the equipment that he was to use in carrying out that work amounts to the contract between the parties. It is a very detailed quote which Mr DeGioia says he posted to the defendant in the ordinary course of post and which the defendant denied receiving. I note that the acknowledgment of the terms and conditions in P5, which is the last page of that exhibit, is not signed by the defendant as obviously intended by Mr DeGioia. However, a possible explanation is that it was imperative that the plaintiff commence the installation of the airconditioning before the construction of the house proceeded further because of the necessity of putting in place the ducting. The second matter is the plaintiff could have trusted the defendant and indeed did so in commencing the work without the last page of Exhibit P5 being signed by the defendant. In a letter, which is D6 dated 16 February 2001, the defendant thanks Mr DeGioia for the quote and she said the letter is to confirm the discussions regarding the airconditioning. She points out the original quote from the other supplier, namely, Mitsubishi was for a six horsepower unit, but says after speaking with you Mr DeGioia, she would prefer a minimum of eight horsepower or even 10 horsepower which is not clear ‘in your quote’. This is quite true so far as P5 is concerned because Mr DeGioia said that the industry does not talk in horsepower, but in kilowatts and this evidence was confirmed by Mr Blanchard. However, it is not clear from the letter to which document the defendant is referring, namely, the one page document that she says she received or Exhibit P5. I find it very difficult to make a finding as to which document she was referring. The defendant said that she received a one page quote, but that one page was never produced in evidence.
........
31Perhaps an important aspect in deciding whether P5 did incorporate the terms of the contract between the plaintiff and the defendant was the evidence of the conversation between the defendant, the builder and a Mr Albert Callagher (sic) who have ostensibly no interest in this matter and which occurred on site in late January or early February and who both confirm the essence of the defendant’s version of the contract to which I have already referred. In essence, these persons said that Mr DeGioia was offered the airconditioning contract in late January or early February 2001. The plaintiff at that stage was on site for the purpose of supplying the C-Bus minder security system. More important is the evidence of Mr Duthy that Mr DeGioia only contacted him about installing the under floor heating in mid February. It may be that this is correct that Mr DeGioia only contacted Mr Duthy about such installation in mid February, but that would not prevent him from compiling a quotation of that work from an earlier request from the defendant prior to that date. There is no suggestion from any of these witnesses there was any discussion about the change in the operation of the airconditioning system from the type of system for which the builder had obtained a quote. In other words there was no discussion about the airconditioning unit being capable of heating or cooling every room in the house including the garage and in fact the defendant agreed there was no discussion about the airconditioning operating effectively in all areas at the time (see cross-examination at page 152). In any event, Mr DeGioia said he ordered the airconditioning unit on 5 February and it is unlikely that he would have done so if the discussion about him performing the airconditioning had not taken place until the end of January of early February. It is true that Exhibit D6 (the letter from the defendant to the plaintiff confirming the contract dated 16 February) refers to various discussions and telephone conversations, but these could have occurred during late January or February. There is no evidence as to when the telephone conversations and discussions to which she refers took place. I find it difficult to find on the balance of probability that the plaintiff having ordered the major equipment for the job and having commenced the work at the urgency of the builder would then fabricate a detailed and comprehensive quote and backdate it to 31 January 2001. One asks oneself what was his purpose. In addition Mr DeGioia is obviously very experienced having been in the airconditioning business for about 40 years. He has also served the community to the extent that he has been honoured by the Rotary Club to which he belongs. I cannot but place little weight on these matters, but they are factors to be borne in mind.
32I make a finding that the document Exhibit P5 constituents (sic) the contract between the parties.”
I would not be prepared to interfere with the finding which the magistrate comes to at the conclusion of those passages from his reasons.
Even if the appellant did state to Mr De Gioia that she wanted an eight to ten horsepower unit, and even if she dramatised that she wanted a unit that was capable of reducing the temperature in the house on hot days to “ice cold”, Mr De Gioia clearly made a decision, based on his long experience, as to what the appropriate unit would be, and quoted on that basis. The magistrate found, and I would not be prepared to interfere with the finding, that the appellant did not convey to the respondent that she wanted the unit to be capable of cooling the whole of the house at any one time.
The unit in fact supplied was capable of cooling the house satisfactorily on a “zoned” basis. Evidence given on behalf of the appellant by a mechanical engineer, Mr Clive Blanchard, supports that view. Although he perceived some minor faults in that a damper in one of the bedrooms did not appear to be operating and that there were some leaks, if those matters were to be attended to, he agreed that there was no reason why a satisfactory cooling level could not be obtained on the basis of a zoned system.

Significantly, he agreed that the system quoted for by All Seasons was of about the same capacity as that supplied by the appellant. The nominal cooling capacity of the All Seasons Mitsubishi unit was quoted at 17.404 kilowatts compared with the cooling capacity of 16.2 kilowatts applicable to the Daikin unit supplied by the respondent. Mr Blanchard said that they are “roughly the same”.
I do not overlook the argument put by Mr Keen that the price differential between the unit supplied by the respondent and the unit quoted for by All Seasons could only be explained if the respondent had agreed to supply a much larger unit.
But the magistrate explained the difference in price by reference to the fact that it was common ground between the witnesses on both sides who were familiar with air conditioning installations, that the Daikin units were the “Rolls Royce” of air conditioning systems, or at least “top of the range”, and further that the installation of the Daikin unit by the respondent was tied in with the installation of the HAS system.
Whatever may be the explanation for the difference in price, in my view it does not detract from the finding, clearly based on the evidence, that the terms of the contract are as set out in the respondent’s quote dated 31 January 2001.
Accepting then that the contract is evidenced by the respondent’s written quote of that date, the only remaining question is whether or not the appellant succeeds on her arguments based upon the Act.
I turn to those arguments now.
The Building Work Contractors Act 1995
The requirement for building work contractors to be licensed appears in s 6(1) of the Act which provides:
“(1)A person must not-
(a)     carry on business as a building work contractor except as authorised by a licence under this Part; or
(b)    advertise or otherwise hold himself or herself out as being entitled to carry on business as a building work contractor unless authorised to carry on business as such a contractor by a licence under this Part.
Maximum penalty:     $20,000”
An important consequence of a person performing building work within the meaning of the Act while unlicensed is provided for in subsection (2) of the same section:
“(2)A person required by this Act to be licensed as a building work contractor is not entitled to any fee, other consideration or compensation under or in relation to a contract with another on whose behalf the person performed work as a building work contractor unless-
(a) the person was authorised to perform the work under a licence; or
(b) a court hearing proceedings for recovery of the fee, other consideration or compensation is satisfied that the person’s failure to be so authorised resulted from inadvertence only.”
Section 3(1) of the Act contains several relevant definitions. They are:
“building work contractor” means-
(a)a person who carries on the business of performing building work for others; or
(b)a person who carries on the business of performing building work with a view to the sale or letting (whether by lease, licence or other agreement) of land or buildings improved as a result of the building work;
.........
“building work” means-
(a)the whole or part of the work of constructing, erecting, underpinning, altering, repairing, improving, adding to or demolishing a building; or
(b)the whole or part of the work of excavating or filling a site for work referred to in paragraph (a); or
(c)work of a class prescribed by regulation;
.........
“domestic building work” means-
(a)the whole or part of the work of constructing, erecting, underpinning, altering, repairing, improving, adding to or demolishing a house; or
(b)the whole or part of the work of excavating or filling a site for work referred to in paragraph (a); or
(c)work of a class prescribed by regulation;
............
“domestic building work contract” means a contract between a building work contractor and another person for the performance by the contractor of domestic building work (including any variation of such a contract), but does not include a subcontract for the performance of domestic building work;
...........
“house” means a building intended for occupation as a place of residence but does not include a building of a class prescribed by regulation; .....”
There are certain requirements imposed by the Act with respect to the form and content of domestic building work contracts. They appear in s 28, which provides:
“(1)The following requirements must be complied with in relation to a domestic building work contract:
(a)     the contract must be in writing;
(b)    the contract must set out in full all the contractual terms;
(c)    the contract must set out the name in which the building work contractor carries on business under the contractor’s licence, the contractor’s licence number and the names and licence numbers of any other persons with whom the contractor carries on business as a building work contractor in partnership;
(d)    the contractor must comply with any requirements of the regulations as to the contents of domestic building work contracts;
(e)    the contract must be signed by the building work contractor and the building owner personally or through an agent authorised to act on behalf of the contractor or building owner;
(f)     the building owner must be given a copy of the signed contract as soon as reasonably practicable after it has been signed by both parties together with a notice in the prescribed form containing the prescribed information;
(g)    the copy of the contract and the notice given to the building owner must (apart from signatures or initials) be readily legible.
(2)If any of the requirements of subsection (1) is not complied with, the building work contractor is guilty of an offence.
Maximum penalty:     $5000.”
Having regard to the provisions to which I have referred, the case gave rise to the following issues:
(a) Was the work in question “building work” within the meaning of the Act?
(b) If the work was building work within the meaning of the Act, given that the respondent was unlicensed, was it able to recover the amount claimed, or any other amount with respect to the work?
(c) What is the consequence of the fact that the contract for the work did not comply with the requirements of s 28 of the Act?
As to (c), paragraph 12 of the defence pleaded that as the contract in question was a domestic building work contract, it did not comply with s 28 of the Act in that it was not in writing (s 28(1)(a)); it did not set out all the contractual terms (s 28(1)(b)); it failed to set out the plaintiff’s licence number and otherwise comply with s 28(1)(c); it was not accompanied by a prescribed form containing the prescribed information (s 28(1)(f)); and a signed copy was not provided to the appellant (s 28(1)(f)).
The issues raised by that paragraph of the defence were not considered by the magistrate, or at least were not dealt with in his written reasons.
In ground 5 of the appeal, the appellant complains that if the appellant failed in her s 6 argument, nonetheless the respondent was limited to recovery only on a quantum meruit by reason of its non-compliance with s 28.
However, on the hearing of the appeal that ground was abandoned, Mr Keen for the appellant conceding that the decision of the Full Court in Corradini and Anor v Lovrinov Crafter Pty Ltd[1] stood in the path of that contention.
[1] (2000) 77 SASR 125.
It is therefore necessary to deal only with issues (a) and (b).
I will deal with those issues now.
(a) Was the work in question building work within the meaning of the Act?
This question was argued only with respect to the installation of the air conditioning system, as opposed to the other work done by the respondent.
The arguments put at the trial and the trial magistrate’s conclusions as those arguments appear in the following passage from the magistrate’s reasons for judgment:
“4The first submission by the plaintiff is that the work performed by the plaintiff’s workers and supervised by Mr DeGioia was in a category of ‘installation’ of building work rather than building work itself, and therefore a licence was not required by the plaintiff. The plaintiff’s counsel pointed out in addresses quite forcibly that in evidence Mr DeGioia had said that ‘we do not do any construction work at all, in essence we do installation rather than construction’. The Macquarie Dictionary defines installation as (1) something installed, (2) a system of machinery or apparatus placed in position for use, (3) the act of installing, (4) the fact of being installed. Definitions (5) and (6) relate to military and sculpture which are not relevant for my decision. The definition includes a large device, system or piece of equipment. I also note my previous observation that the construction of the equipment did not take place on the premises, but by another business. I observed also in what I might call every day talk an air conditioning plant or system is referred to being installed in a building. A perusal of the transcript reveals that both counsel and witnesses referred to the air conditioning and C-bus systems as being installed.
5Mr Keen in his submissions on behalf of the defendant pointed to the definition of domestic building work, which includes the whole or part of the work of constructing, erecting, underpinning, altering, repairing, improving, adding to or demolishing a building. Certainly the addition of a ducted air conditioning and C-bus systems are improvements to a house. However, in this matter we are dealing with the Act and in my view the word ‘improving’ must be confined to an activity normally carried out by a builder. To take an extreme example, no-one would suggest a person who installed furniture in a house (which would improve the house) needs a licence under the Act. In other words, for the Act to apply the work or part thereof must relate to the construction, alteration, underpinning, repairing, improving or adding to the actual building and not to work within the house which forms no part of the construction of it. The plaintiff not being the entity that constructed the air conditioning system, but was the installer of it in my view does not require a licence under the Act. I have looked through each of the cases that I have been supplied on the subject and in no case is the subject matter of an air conditioning system or similar type of installation within a house mentioned. All cases relate to the actual builder of the house or building being constructed.”
Mr Keen, who appeared for the appellant on the hearing of the appeal contended that necessarily the installation of an air conditioning system must involve constructing, altering, improving or adding to the structure of a building within the meaning of those words where they appear in the definition of building work in s 3(1) of the Act.
In support of that submission he contended that the air conditioning system installed by the respondent became incorporated in the structure of the building, in that the vents became part of the roof/ceiling structure, and the electrical wiring and what he described as the “pipes” of the air conditioning system were incorporated into the building. He further submitted that an air conditioning system is a fixture, and that to characterise it as such supported the view that it became part of the building.
In support of the latter proposition, Mr Keen referred to Belgrave Nominees Pty Ltd v Barlin-Scott Airconditioning (Aus)t Pty Ltd.[2] That case concerned the question whether two air conditioning plants, each of which included a chiller, supplied and fitted to the roof of two buildings under construction, were fixtures. On completion of the buildings, it was intended that they be developed as a three-storey office complex.
[2] [1984] VR 947.
In that case, the trial judge, Kaye J, observed:[3]
“Whether the annexation of the plants was sufficient to constitute the plants fixtures must be determined by the circumstances in which the same were positioned on the platform, and more particularly the intention as evidenced by the degree of annexation and the purpose of the annexation.”
[3] Ibid 950.
Kaye J goes on to refer to a number of well known authorities which deal with particular considerations which have been held relevant to the determination of the question whether or not an item attached to land has become a fixture.
In the course of his review of the authorities, Kaye J set out a long passage from the judgment of Jordan CJ in Australian Provincial Assurance Co Ltd v Coroneo.[4] That passage concludes with the following observation:[5]
“If a thing has been securely fixed, and in particular if it has been so fixed that it cannot be detached without substantial injury to the thing itself or to that to which it is attached, this supplies strong but not necessarily conclusive evidence that a permanent fixing was intended: Holland v Hodgson;[6] Spyer v Phillipson.[7] On the other hand, the fact that the fixing is very slight helps to support an inference that it was not intended to be permanent. But each case depends on its own facts.”
[4] (1938) 38 SR (NSW) 700 at 712-713.
[5] Ibid 951.
[6] (1872) LR 7 CP 328.
[7] [1931] 2 Ch 183 at 209-210.
The facts established in Belgrave Nominees included the facts referred to in the following conclusions which appear in Kaye J’s judgment:[8]
“The defendant positioned a chiller on the platform constructed on the roof of each building for its support. The chiller stood free on its own weight on Vibersorb pads between its legs and the surface of the platform. Had it been secured or attached to the platform, the chiller when in operation would have caused substantial noise by vibration. The pads acted as shock absorbers. The chillers were connected to the water reticulation system of the buildings by means of flanges and bolts and water supply pipes were connected to a water pump which was secured to each platform. Water pipes were fitted to each building in a manner to circulate water, either hot or cold as required, throughout each floor. Electric supply cables forming part of the structure of the building were connected to an electrical junction box fitted to the chiller on the premises at 102-194 Victoria Street. Connection to the electric power supply, however, was not made.”
[8] Ibid 949.
It is against the background of those findings of fact that Kaye J reached the conclusion in that case that the air conditioning plants were fixtures.
Recently I had occasion to consider the authorities bearing on the nature of fixtures: see Dixon Investment Co Pty Ltd (In Liq) and Ors v Woakwine Industries Pty Ltd.[9]
[9] (Unreported) 23 May 2002, judgment No [2002] SASC 161.
In that case, I observed:
“76..... The Latin maxim ‘quicquid plantatur solo, solo cedit’ begs the question. It is descriptive rather than definitive of what is a fixture.”
I went on to refer to the judgment of the Court of Exchequer Chamber in Holland v Hodgson cited by Kaye J in Belgrave Nominees. I drew attention to the authorities which make it clear that the relevant intention must be ascertained objectively, and that the subjective intention which may accompany the installation of plant or equipment, although relevant, is not decisive.
In that respect, I referred to the judgment of Walsh J in Anthony v Commonwealth,[10] a case concerning the compulsory acquisition of land which had on it a section of telephone line, a section of electric power line and some water pipeline. I quoted the passage from the judgment of Walsh J in that case to the following effect:[11]
“If the question to be considered was whether an actual intention could be inferred that the poles and the line should become the property of the land owner, it seems plain in the circumstances that that question would be answered ‘No’. But, in my opinion, the question is not one of ascertaining the actual intention, but one of determining from the circumstances of the case, and in particular from the degree of annexation and the object of the annexation, what is the intention that ought to be imputed or presumed.”
[10] (1974) 47 ALJR 83.
[11] Ibid par 79.
I proceeded to refer to authorities which establish that even though an object is mere resting on the ground by its own weight, it may nonetheless become part of the realty, and conversely, “even if a chattel if physically annexed to the realty, it may yet remain at all times personalty”.[12]
[12] Dunn Pty Ltd v Ericsson Pty Ltd (1979-1980) Aust & NZ Conveyancing Reports 301 per Mahoney J at 302.
It follows that it is not possible to say that an air conditioning system will necessarily, per se, be a fixture. There is nothing in the judgment of Kaye J in Belgrave Nominees to suggest that to be so, and any such view would be inconsistent with principle.
The question whether an air conditioning system has become a fixture may only be determined on a case by case basis in the light of all relevant circumstances.
Here it becomes necessary not only to examine the circumstances in which the air conditioning system was installed, but to have regard particularly to the manner in which, if at all, it was affixed. As to that aspect of the matter, there is a surprising paucity of evidence.
A fairly detailed description of the Daikin system which was installed is given in the quotation dated 31 January 2001, but this does not include any specifications as to the manner in which it was to be installed, more particularly as to how the compressor unit, which was mounted outside the house, and the ducting, which was mounted in the ceiling, were to be affixed.
The major component in the system was, of course, the compressor unit.
Mr De Gioia’s evidence was in part:
“Q.Can you recall when in a mechanical sense you got the air conditioning system up and running.
A.Yes. When the side of the house was sealed off somewhat Chris Duthy, the builder, put in a plinth or part of the paving for us. As soon as that happened we actually brought the external part of the air conditioning system to site and the rest of the work on that air conditioning was done, including the connection with the wiring. ...”
The picture created by that evidence, which so far as I can see is the only evidence on the matter, is that the compressor unit was mounted, or at least placed, on what Mr De Gioia describes as a “plinth or part of the paving” at the side of the house. There is no evidence as to whether it was bolted down, and there is no evidence which indicates whether or not it was even attached to the house in any way, for example, by being braced against it or supported by any framework attached to the house. Likewise, there is a complete lack of evidence as to how the ducting was affixed, if at all, in the ceiling, and the manner of fixation of the vents.
When I raised this aspect of the matter with counsel during the course of argument, I was referred to a plan (exhibit P10) which is a floor plan of the house upon which had been superimposed lines indicating the position of ducting in the ceiling and what I assumed to be outlets in the ceiling of each of the rooms serviced by the system.
Although this paucity of evidence on what I regard as a critical matter to be addressed in determining whether or not the system became a fixture, was not addressed expressly by the trial magistrate in his reasons for judgment, in my view, the lack of evidence on this topic was fatal to the argument that the system became a fixture. Insofar as the appellant relied upon alleged non-compliance with the relevant provisions of the Act, the evidentiary onus lay on the appellant to adduce evidence in support of the contention that the system was a fixture, and in that sense part of the building, in support of her contention that its installation should be regarded as building work. It would have been a simple matter to adduce evidence as to whether or not the unit was bolted down, attached in some way to the side of the house, and whether the ducts and vents were affixed, and if so how, and so on. No attempt was made to prove those matters.

In any event, the fact that the compressor unit was mounted outside the house suggests that what was obviously a very major part of the installation was not affixed in the relevant sense to the house itself. Depending on its degree of annexation to the plinth or paving upon which it was mounted, it may have become a fixture in the sense that it had become part of the land, but I am not sure that, absent any evidence showing a real and physical attachment to the house as opposed to the land, it could be regarded as building work.
Certainly, the appellant did not present a case on the basis that the compressor unit was a separate building; it’s case was that the installation of the air conditioning system involved constructing, altering, improving or adding to the structure of a building, the building being the house.
Although in deference to the arguments adduced on the appeal I have dwelt on the question whether or not the evidence supported the contention that the air conditioning system had become a fixture, the essential question to be addressed, irrespective of whether it became a fixture, is whether the work involved in its installation was building work as defined in the Act.
I accept that if the work in question results in a fixture in the sense that it becomes part of the building, this would go a long way to establishing that the “whole or part of the work” involved “constructing, erecting, underpinning, altering, repairing, improving, adding to or demolishing” a building. But the fact that the work in question did not result in the creation of a fixture in the technical legal sense may not be conclusive of the question whether or not it amounts to building work within the meaning of the Act.
I accept that the words “improving, adding to ...” in the definition of building work in the Act are words of wide import, but they cannot be given unrestricted application.
For example, I hardly think that the work involved in repainting a room in an existing building, while it undoubtedly might be thought to “improve” the building, and while undoubtedly the paint, once applied, forms part of the building, could properly be characterised as “building work”.
While the definition of building work in the Act should not be limited to a “bricks and mortar” definition, the application of the definition to items which are manufactured, or at least substantially manufactured elsewhere and installed in or around the building in circumstances which fall short of establishing that they became a part of the building in the sense of having been shown to be fixtures, is problematic.
In the passage which I have cited from the trial magistrate’s reasons for judgment, he suggested that the word “improving” “must be confined to an activity normally carried out by a builder”. I would prefer to say that the word “improve” must be read ejusdem generis. In particular, I think that it takes its colour from the remaining words in the definition, namely “erecting, underpinning, altering, repairing, adding to or demolishing a building”. When the word is understood in context, in my view, the word “improving” applies to improvements of a structural nature.
That, of course, does not take the matter very far for the purposes of the present case.
However, a further observation which I make is that whereas the first two words in the definition, that is, the words “constructing, erecting” unquestionably relate to the creation or establishment of a building, the remaining words “underpinning, altering, repairing, improving, adding to or demolishing” are words which are more appropriate to describe activities with respect to an existing building, rather than a building under construction, as was the case here.
In another part of the passage from the reasons for judgment of the magistrate which I have quoted above, he observed:
“The plaintiff not being the entity that constructed the air conditioning system, but was the installer of it, in my view does not require a licence under the Act.”
With respect to the magistrate, I am not sure that the concept of installing a particular piece of equipment as opposed to constructing it as part of the building work is a necessarily helpful distinction for the purposes of the definition of building work in the Act. In the course of the erection of a building, a builder may have occasion to install or embody in the building many items which have been fabricated by others, such as window frames, vents, doors and the like. The work associated with such a process may well be properly characterised as building work in the relevant sense.
In the case of air conditioning, the equipment or system may take many forms. It may well be that the installation of a simple window-mounted air conditioner does not constitute building work, whereas the installation of a large system on the roof of a city building of the kind the subject of the decision in Belgrave Nominees might well constitute building work in the relevant sense, particularly if it is associated with built-in ducting, and if there is a substantial degree of annexation of the plant.
Obviously every case falls to be determined in accordance with its own facts.
Standing back from this case, it seems to me that for the reasons which I have given, particularly the fact that what must have been a substantial part of the equipment which was supplied, namely the compressor unit, stood outside the house and was not shown to be annexed to it in any way, and the complete absence of evidence as to the nature of the annexation, if any, of those parts of the system which were within the house, such as the ducting and vents, meant that there was simply an insufficient evidentiary basis established upon which the Court could conclude that the installation of the system constituted building work for the purposes of the Act. I reach that view, notwithstanding the fact that minor aspects of the installation, such as wiring, were more than likely integrated into the construction of the house. Even then, however, the evidence did not indicate whether or not the power supply to the compressor unit was simply plugged in, as opposed to being permanently wired in to the electricity supply.
For these reasons, in my view, the appellant did not establish that the respondent required a licence pursuant to the Act, and the arguments founded on s 6 of the Act were properly rejected by the trial magistrate.
Strictly, that conclusion makes it unnecessary to consider the second of the issues which I have set out above. But in deference to the arguments which were presented, I will make some brief observations as to that aspect of the matter.
(b) If the work was building work within the meaning of the Act, given that the respondent was unlicensed, was it able to recover the amount claimed or any other amount with respect to the work?
Put shortly, the respondent’s case at the trial and on the hearing of the appeal was that a line of authority in South Australia supported the view that even if the respondent was unlicensed, it was nonetheless able to recover the fair value of the work performed on a quantum meruit.
The authorities which it was suggested supported that view are Pavey and Matthews Pty Ltd v Paul;[13] Tea Tree Gully Builders Co Pty Ltd and Ors v Martin and Anor;[14] Nunkuwarrin Yunti v A.L. Seeley Constructions Pty Ltd;[15] and Lee Gleeson Pty Ltd v Sterling Estates Pty Ltd.[16] Reference may also be made to two cases concerning building contracts which did not comply with the Act, namely Stokolosa and Anor v Weeks Peacock Homes and Anor[17] and Corradini and Anor v Lovrinov Crafter Pty Ltd.[18]
[13] (1986) 162 CLR 221.
[14] (1992) 59 SASR 344.
[15] (1998) 72 SASR 21.
[16] (1991) 23 NSWLR 571.
[17] (1998) 200 LSJS 190.
[18] (2000) 77 SASR 125.
Mr Keen for the appellant relied on two decisions of the Supreme Court of Queensland, namely Zullo Enterprises Pty Ltd and Ors v Sutton[19] and Marshall and Anor v Marshall.[20]
[19] (Unreported) Supreme Court of Queensland Court of Appeal, December 1998, BC9806709.
[20] (Unreported) McPherson JA, (1997) QCA 382, 28 October 1997.
I do not embark on an analysis of these cases. But I indicate that if it was necessary to do so, I would decline to follow the Queensland cases insofar as they might be thought to be inconsistent with the South Australian authorities to which I have referred.
It was further argued that the abovementioned South Australian authorities were decided by reference to the Builders Licensing Act 1986, whereas the present case falls to be decided by reference to the Building Work Contractors Act 1995. The latter Act repealed the earlier Act, and although it substantially re-enacts the relevant provisions, s 6(2) of the latter Act modifies the corresponding provision in the earlier Act, in that it adds the words “or compensation” to the words “fee” or “other consideration”.
I can only say that if the intention of the legislature was to prevent recovery on a quantum meruit, it could easily have said so expressly. It is at least arguable that the word “compensation” is inapt to describe recovery on a quantum meruit. This is because it has been made clear by the High Court in Pavey and Matthews Pty Ltd v Paul (supra) that the juristic basis for recovery on a quantum meruit is not to compensate the builder for any loss suffered by the builder, but to oblige the building owner, who has benefited from the work done pursuant to a non-enforceable contract, to account for the benefit accruing from his or her acceptance of the performance of the unenforceable contract. I add that I do not regard the use by Deane J in his judgment in that case of the expression “compensation” as detracting from that analysis.
In my view, if, contrary to the opinion which I have expressed, the contract in this case was unenforceable at the suit of the respondent, it would have been entitled to recover on a quantum meruit.
I accept that some questions arise as to the evidentiary basis for assessment of the amount which might be allowed on a quantum meruit, if assessment on that basis was to be contemplated. But it is unnecessary to address that question in view of the conclusion which I have reached as to the arguments based on the Act.
The appeal must be dismissed.
I so order.
JUDGMENT CITATIONS
LISTED IN ORDER OF APPEARANCE IN JUDGMENT
1. (2000) 77 SASR 125.
2. [1984] VR 947.
3.    Ibid 950.
4. (1938) 38 SR (NSW) 700 at 712-713.
5.    Ibid 951.
6. (1872) LR 7 CP 328.
7. [1931] 2 Ch 183 at 209-210.
8.    Ibid 949.
9. (Unreported) 23 May 2002, judgment No [2002] SASC 161.
10. (1974) 47 ALJR 83.
11.    Ibid par 79.
12.    Dunn Pty Ltd v Ericsson Pty Ltd (1979-1980) Aust & NZ Conveyancing Reports 301 per Mahoney J at 302.
13. (1986) 162 CLR 221.
14. (1992) 59 SASR 344.
15. (1998) 72 SASR 21.
16. (1991) 23 NSWLR 571.
17. (1998) 200 LSJS 190.
18. (2000) 77 SASR 125.
19.    (Unreported) Supreme Court of Queensland Court of Appeal, December 1998, BC9806709.
20. (Unreported) McPherson JA, (1997) QCA 382, 28 October 1997.

[2003] SASC 176

17 June 2003