Diploma Construction Pty Ltd and Bacica and Anor
[2007] WASAT 151
•13 JUNE 2007
DIPLOMA CONSTRUCTION PTY LTD and BACICA & ANOR [2007] WASAT 151
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 151 | |
| BUILDERS' REGISTRATION ACT 1939 (WA) | |||
| Case No: | CC:54/2007 | 16 MARCH 2007 | |
| Coram: | MR C RAYMOND (SENIOR MEMBER) | 13/06/07 | |
| 12 | Judgment Part: | 1 of 1 | |
| Result: | Application for leave granted in part but otherwise refused Application for review dismissed | ||
| B | |||
| PDF Version |
| Parties: | DIPLOMA CONSTRUCTION PTY LTD (ACN 00939179) PAUL MARK BACICA GILLIAN JOHANN MCGILL |
Catchwords: | Application for leave to review and the review of decision of Building Disputes Tribunal Whether claim can be made under s 12A(1) of the Builders' Registration Act 1939 (WA) after disposal of interest in property Whether compliance with preliminary notice requirements |
Legislation: | Builders' Registration Act 1939 (WA), s 12A, s 12A(1), s 12A(1a), s 12A(2),s 12A(3), s 41 Builders Registration Regulations, reg 23 Home Building Contracts Act 1991 (WA), s 17 Interpretation Act 1984 (WA), s 74 |
Case References: | Nelson v Mardesic (1999) 22 WASR 42 Salthouse and APG Homes Pty Ltd [2006] WASAT 43 Tangent Nominees Pty Ltd and Edwards and Anor [2005] WASAT 119 Tangent Nominees Pty Ltd and Edwards and Anor [2006] WASAT 243 |
Orders | For the above reasons:,1. The application for leave to review the decision of the Building Disputes Tribunal made on 19 December 2006 is:,(a) granted in respect of whether a valid preliminary notice was given; and,(b) otherwise dismissed.,2. The application for review is dismissed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDERS' REGISTRATION ACT 1939 (WA) CITATION : DIPLOMA CONSTRUCTION PTY LTD and BACICA & ANOR [2007] WASAT 151 MEMBER : MR C RAYMOND (SENIOR MEMBER) HEARD : 16 MARCH 2007 DELIVERED : 13 JUNE 2007 FILE NO/S : CC 54 of 2007 BETWEEN : DIPLOMA CONSTRUCTION PTY LTD (ACN 00939179)
- Applicant
AND
PAUL MARK BACICA
GILLIAN JOHANN MCGILL
Respondents
Catchwords:
Application for leave to review and the review of decision of Building Disputes Tribunal - Whether claim can be made under s 12A(1) of the Builders' Registration Act 1939 (WA) after disposal of interest in property - Whether compliance with preliminary notice requirements
Legislation:
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Builders' Registration Act 1939 (WA), s 12A, s 12A(1), s 12A(1a), s 12A(2),s 12A(3), s 41
Builders Registration Regulations, reg 23
Home Building Contracts Act 1991 (WA), s 17
Interpretation Act 1984 (WA), s 74
Result:
Application for leave granted in part but otherwise refused
Application for review dismissed
Category: B
Representation:
Counsel:
Applicant : Mr D Vilensky
Respondents : Self-represented
Solicitors:
Applicant : Bowen BuchbinderVilensky
Respondents : Self-represented
Case(s) referred to in decision(s):
Nelson v Mardesic (1999) 22 WASR 42
Salthouse and APG Homes Pty Ltd [2006] WASAT 43
Tangent Nominees Pty Ltd and Edwards and Anor [2005] WASAT 119
Tangent Nominees Pty Ltd and Edwards and Anor [2006] WASAT 243
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Summary of Tribunal's decision
1 The applicant applied for leave to review a decision of the Building Disputes Tribunal made on 19 December 2006. The applications for leave and review were heard together.
2 The Tribunal rejected the applicant's submissions that as non-owners, at the time of making the complaint to the Dispute Tribunal, the respondents were not entitled to any remedy, other than an order to carry out remedial work. Further, the Tribunal rejected the applicant's contention that the correspondence from the respondent's solicitors did not constitute substantial compliance with the preliminary notice requirements of s 12A(3) of the Builders' Registration Act 1939 (WA). As the Tribunal had come to the same conclusion as the Building Disputes Tribunal in respect of the preliminary notice issue but for different reasons it granted leave on that issue, and dismissed the application for review.
Nature of proceedings and issues raised
3 On 19 December 2006 the Building Disputes Tribunal (Disputes Tribunal) delivered written reasons for decision in which it found that it had jurisdiction to entertain a complaint made by the respondents against the applicant (the builder) in respect of alleged defective building work.
4 The application for review is made pursuant to s 41 of the Builders' Registration Act 1939 (WA) (BR Act) in terms of which an application for review cannot be made unless this Tribunal gives leave. The requirements for leave are set out in the decision of Tangent Nominees Pty Ltd and Edwards and Anor [2005] WASAT 119. While there is a wide discretion to grant or withhold leave, it is in general necessary to show that the decision in respect of which leave is sought is wrong, or at least attended with sufficient doubt to justify the grant of leave and, in addition, that a substantial injustice would be done by leaving the decision unreversed. What is a substantial injustice must depend on all the circumstances of the case. Because of the informal nature of proceedings before the Disputes Tribunal strict adherence to the ordinary principles of appeals is not required and the Tribunal should be slow to grant leave except in cases where clearly there is no discernible basis for the decision, or, for example, where fundamental rules of natural justice have been breached by preventing a party adequately being heard.
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5 The outcome of the proceedings is dependent upon a determination of whether:
(1) The respondents are entitled to make a claim under s 12A(1) of the BR Act for effective relief, having disposed of their interest in the dwelling constructed by the builder, subsequent to the respondents having incurred the cost of carrying out remedial work but prior to proceedings being commenced before the Disputes Tribunal; and
(2) the correspondence from the respondents' solicitors dated 14 December 2005 and 27 January 2006 constitutes the giving of a preliminary notice as required under s 12A(2) and s 12A(3) of the BR Act.
The decision under review
6 The Disputes Tribunal addressed firstly whether or not the correspondence constituted compliance with the preliminary notice requirements of the BR Act. The Disputes Tribunal concluded, in particular, that the letter of 14 December 2005 included all the information necessary for the builder to be fully aware of the nature of the claim, and although not in the prescribed form, held that it was valid, relying upon s 74 of the Interpretation Act 1984 (WA). The Disputes Tribunal proceeded to find that on a proper construction of s 12A any person could make a complaint and that there was no restriction limiting the persons who could make a complaint to those for whom the work had been done. The Disputes Tribunal also rejected an argument that the builder had to be given an opportunity to rectify the works, pointing out that s 12A(3) requires that a preliminary notice call on the other party to either rectify the complaint, or otherwise attempt to settle any matters in dispute.
7 In relation to the first issue on which the proposed review is based, the Disputes Tribunal stated as follows at par 3.2.3:
"Can the Owners claim after they have sold the property? There is nothing in the Act to stop previous owners from claiming provided they prove that they have at all times met the consequences of the fault and done the repairs. This is not a case of an owner accepting less than the contract price and leaving the new owners to repair the alleged faults. In such a sale the owners, both previous and present, would have no claim on the Building. [There is no reasoning given for this conclusion and it is not necessary in the context of the present
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- application to deal with it. By the Tribunal not dealing further with this matter it should not be assumed that the conclusion stated is approved. Parenthesis added]
Here the previous owners undertook the cost of the work and have produced proof of that cost. They have demonstrated their loss and can claim in law against the builder."
8 Finally the Disputes Tribunal rejected the builder's contention that the action in repairing and then only thereafter calling on the builder to pay the cost, was inconsistent with s 12A(3) of the BR Act. The Disputes Tribunal also rejected the builder's argument that the nature of the letter was a claim for debt, not an offer to negotiate. The learned chairman stated:
"I know of no circumstances where a letter requesting payment of an account preclude the person who might owe the money from negotiating a settlement."
The builder's submissions
9 The applicant filed lengthy written submissions which were supplemented by oral argument. They have all been taken into account but may be distilled into the following main submissions.
10 Firstly, the builder submits that the correspondence of 14 December 2005 and 27 January 2006 is fatally flawed because it does not contain either an invitation to rectify the alleged faulty work, or attempt to settle the matter. It was submitted that the letters constitute no more than a simple demand. Consequently, it was submitted that s 74 of the Interpretation Act 1984 could not aid the respondents, as non-compliance was obvious. In any event, the builder had no earlier communications with the respondents and there was therefore no dispute which could be settled.
11 Secondly, on the authority of Tangent Nominees Pty Ltd and Edwards and Anor [2006] WASAT 243, which was the final review hearing of the decision already referred to above, it was submitted that the preliminary notice had to be given in such a manner as to provide the builder with the opportunity of remedying the alleged defective workmanship or to resolve the dispute prior to a complaint being referred to the Disputes Tribunal.
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12 Thirdly, the builder referred to the scheme of s 12A of the BR Act and contended that as no building work was carried out on behalf of the respondents they were not entitled, being non-owners, to any remedy pursuant to s 12A(1a) of the BR Act. This, it was submitted, only provides a remedy to a person for whom building work has been carried out not in a proper and workmanlike manner and there is no evidence that any building work was not carried out in a proper and workmanlike manner. It was submitted that the only remedy available to the respondents under s 12A(1) is an order to remedy faulty or unsatisfactory building work and that compensation could only be paid to the owner of the building, which the respondents are not.
Considerations
13 The Tribunal had occasion to comment on the operation of s 12A of the BR Act in Salthouse and APG Homes Pty Ltd [2006] WASAT 43. That decision recognised that s 12A(1) allows any person to make a complaint and it is not necessary for the complainant to be the owner of the building the subject of complaint. The section authorises an order to be made against the person who carried out the building work requiring that person to –
"(a) remedy the faulty or unsatisfactory building work … ; or
(b) pay to the owner of the building such costs of remedying the building work that is faulty or unsatisfactory as the Disputes Tribunal considers reasonable …".
14 The builder's argument turns on the requirement that payment be made "to the owner of the building", because the respondents are no longer the owner.
15 The respondents were the owners when the damage in question became manifest. They took it upon themselves to carry out remedial work and the property was placed on the market for sale. The exact circumstances as to why it may or may not have been necessary to carry out the repairs, without affording the builder an opportunity to carry out remedial work, is not apparent on the information before the Tribunal.
16 The expressed purpose of the legislation, as reflected in its long title, includes the establishment of a tribunal with jurisdiction in respect of certain building disputes. The certain building disputes referred to are those relating to faulty or unsatisfactory workmanship or material, or claims arising out of a failure to carry out building work in a proper and
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- workmanlike manner (other than being faulty or unsatisfactory) (s 12A(1a)). The stated measure of damage is the cost of remedying the building work that is faulty or unsatisfactory, or which has not been carried out in a proper workmanlike manner (s 12A(1a)).
17 Any remedy under s 12A(1a), whether it be an order to remedy or an order for compensation can be made only in favour of the person for whom the building work was carried out.
18 By contrast under s 12A(1) any person may make a complaint and may pursue an order to remedy. Thus a next-door neighbour who might be adversely affected by defective building work has standing to bring a claim, as was the case in the Salthouse decision. Such an order is sufficient to safeguard any public or private third party interests which might be affected by defective building work, but the section restricts a claim for compensation to the owner of the building because on ordinary legal principles it is the owner who suffers loss as a result of defective work.
19 I can see no logical reason why a person who is the owner, and who suffers loss as a result of defective building work, should be precluded from recovering that loss. In the circumstances where the building in question has been sold after the carrying out of remedial work, the natural consequence of the builder's submissions, would be that the builder is fortuitously released from liability because the new owner would have no right to claim. It might be arguable that a new owner could claim if the facts demonstrated that the new owner had received no reduction in the purchase price in respect of known defective work on the basis that the new owner would make a claim, but there is no suggestion that is the case in this instance. Further, a builder does not have any right to carry out remedial work, although an unreasonable refusal to provide an opportunity to the builder to do so may affect the compensation to which the owner is entitled: see Nelson v Mardesic (1999) 22 WASR 42. Thus an owner may press a claim for monetary compensation under the BR Act, having had the remedial work completed. Yet, on the builder's submissions, that right to do so would be lost if the dwelling was subsequently sold. I consider that would be an absurd result.
20 To accept the builder's submission that it is necessary for a complainant to be the owner at the time of the hearing of the claim, which is the effect of the builder's submissions, would in my view be contrary to the purpose of the BR Act. If jurisdiction is to be provided to deal with certain building disputes the legislation must be construed in a manner
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- which preserves the effectiveness of that jurisdiction. A claim in the common law courts of the above nature would remain vested with the former owner and if the BR Act intended a different result it would have to be very clearly expressed. I do not accept that it is necessary to read the section as meaning that compensation can only be paid to the person who is the owner of the building, either at the time of commencing the proceedings or at the time of hearing.
21 I turn to consider the correspondence in question to ascertain whether it constitutes compliance with s 12A(3) which provides:
"(3) A preliminary notice is a notice in writing in the prescribed form setting out the matters of which the intending complainant complains and calling on the other party to -
(a) rectify them; or
(b) otherwise attempt to settle any matters that are in dispute."
23 Subsection 12A(2) provides that a complaint under s 12A cannot be made before the complainant has given to the other party a preliminary notice under s 12A(3). As was held in Tangent Nominees Pty Ltd and Edwards and Anor [2006] WASAT 243, the giving of a preliminary notice is a prerequisite to the Dispute Tribunal's exercise of jurisdiction under s 12A of the BR Act.
24 The respondents did not give a preliminary notice in the prescribed form. I do not accept the builder's suggestion that regard cannot be had to s 74 of the Interpretation Act1984. This submission, as developed, was to the effect that regard could be had to the Interpretation Act 1984 only if there was some doubt as to whether any notice complied with s 12A(3) of
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- the BR Act and in this case, there was no doubt, because there was no invitation to settle. Section 74 of the Interpretation Act1984 applies when there is a deviation from a prescribed form and requires a consideration as to whether or not the deviation materially affects the substance of the notice, and whether the deviation is likely to mislead, and that requires a process of analysis which is in any event necessary in order to conclude whether or not, as submitted by the builder, a material element of the preliminary notice is missing.
25 The letter of 22 January 2006 was written by the respondents' solicitors to the builder. The heading identified the building concerned but the contents simply referred to a previous letter of 14 December 2005, a copy of which was annexed for ease of reference, which enclosed a copy of an account stamped "paid" in relation to the repair work carried out and concluded that unless the amount of those repairs of $5967.50 was paid within 14 days, a summons would be issued without further notice. In order to fully understand this letter it is therefore necessary to consider the letter of 14 December 2005.
26 The letter of 14 December 2005 is similarly addressed and has the same heading. It states that the solicitors act on behalf of Mr and Mrs Paul Bacica, "the previous registered owners of the above property". The letter sets out that prior to selling the property it became apparent that there was water seepage which caused damage to the bamboo flooring and that the damage was as a result "of your negligent workmanship when constructing the building". It will be seen therefore that the letter identifies who is making the complaint, where the building work was carried out and who carried out the building work.
27 The letter continues to state that the solicitor's clients had spent the sum of $5967.50 to replace the flooring and concludes with a statement that the solicitor is instructed to demand payment for the sum of $5967.50 within 14 days of receipt of the letter. The letter encloses a number of reports relating to the investigation of the cause of damage and a quotation for the cost of repair.
28 The correspondence does not call on the builder to rectify the work as it is clear that the remedial work had already been carried out by the respondents, but this is a disjunctive requirement, so that there may still be a compliance with s 12A(3) if the notice calls on the other party to otherwise attempt to settle any matters that are in dispute. The builder's submission to the contrary is rejected.
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29 The letter demands payment of the full cost of the remedial work. But the demand for payment must be seen in the context of the letter and all the enclosures, and the nature of the claim. Any builder would know that issues relating to causation and even cost of repair are not cut and dried, that there is room for debate and negotiation. It is not a claim for a liquidated demand. I consider in these circumstances that a demand for the cost of repair is a reflection of what the respondents required, or called upon the builder to do, in order to settle the matter.
30 The further issue, however, is whether there was in existence any dispute which the builder could be called to settle. The letter of 14 December 2005 was the first indication that the builder had of any problem and in my view there cannot then be said to have been a dispute between the parties. If this letter had been the only letter upon which reliance could be placed as constituting preliminary notice to the builder, it would therefore be insufficient and would not constitute a valid notice. It is perhaps fortuitous for the respondents that the further letter of 27 January 2006 was sent. It was common cause that there had been no response at all to the letter of 14 December 2005 and that therefore raises the question of whether the builder's silence is capable of constituting a dispute.
31 The issue of whether or not a dispute existed was considered in Fletcher Construction Australia Ltd v New South Wales (1997) BC9708024 at page 15 where Hunter J held:
"In this case the principal's case for claim was met by the silence of the contractor. In those circumstances, the question of determining when the principal could regard itself as being in dispute with the contractor would involve determining what time should be reasonably allowed to elapse sufficient to enable the contractor to consider the substance of the claim made upon it and to reach an informed decision to pay or not to pay on the demand. When that time had elapsed, without payment, the principal may reasonably regard itself as in dispute with the contractor. The determination of that question will depend on 'the circumstances and relations of the parties and it would be difficult, perhaps impossible, to lay down any rule of law on the subject except that the interval must be a reasonable one.'"
32 I consider that the elapse of some six weeks, particularly in circumstances in which action had been threatened within 14 days, is sufficient to infer that the builder disputed liability for the claim. In these
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- circumstances I consider that the letters of 14 December 2005 and 27 January 2006 when read together do not materially deviate from the prescribed form and are not likely to have misled the builder.
33 Finally, the Disputes Tribunal has made no final determination of the merits of the claim. The decision relates only to the determination of the preliminary matter as to whether or not the Disputes Tribunal had jurisdiction by reason of the builder's contention that a preliminary notice had not been given. In those circumstances to the extent that the builder relies on submissions that there was no evidence that the work was faulty or unsatisfactory is of no relevance at this stage. It must of course follow that if the Disputes Tribunal ultimately finds that there is no evidence suggesting either that the work was faulty or unsatisfactory or that it was not carried out in a proper workmanlike manner, the builder will succeed in its defence of the claim.
34 I have therefore come to the same conclusions as the Disputes Tribunal, although for slightly different reasons in respect of the preliminary notice issue. I will accordingly grant leave in respect of the validity of the correspondence as constituting a preliminary notice only, otherwise dismiss the application for leave and dismiss the review application.
Orders
35 For the above reasons:
1. The application for leave to review the decision of the Building Disputes Tribunal made on 19 December 2006 is:
(a) granted in respect of whether a valid preliminary notice was given; and
(b) otherwise dismissed.
2. The application for review is dismissed.
- I certify that this and the preceding [35] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR C RAYMOND, SENIOR MEMBER
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