Edwards v Sovereign Homes (QLD) Pty Ltd
[2020] QCATA 146
•23 October 2020
QUEENSLAND CIVIL AND
ADMINISTRATIVE TRIBUNAL
CITATION:
Edwards v Sovereign Homes (QLD) Pty Ltd [2020] QCATA 146
PARTIES:
DONALD BRUCE EDWARDS
(appellant)v SOVEREIGN HOMES (QLD) PTY LTD
(respondent)
APPLICATION NO/S:
APL244-18; APL356-18
ORIGINATING APPLICATION NO/S:
BDL253-15
MATTER TYPE:
Appeals
DELIVERED ON:
23 October 2020
HEARING DATE:
10 June 2019; On the papers
HEARD AT:
Brisbane
DECISION OF:
Senior Member Brown
Member Burke
ORDERS:
In APL244-18:
1. Applications for leave to adduce fresh evidence refused.
2. Leave to appeal refused.
3. Appeal dismissed.
In APL356-18:
Leave to appeal refused.
In APL244-18 and APL356-18:
1. The parties are to file and exchange submissions on the question of the costs of the appeals within fourteen (14) days of the date of this decision.
2. The parties are to file and exchange submissions in reply within seven (7) days thereafter.
3. A submission must not exceed five (5) pages in length, in 12 pitch font and 1.5 line spacing.
4. The Appeal Tribunal will thereafter determine the costs of the appeals, on the papers.
CATCHWORDS:
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – INTERFERENCE WITH DISCRETION OF COURT BELOW – IN GENERAL – STRONG REASONS FOR INTERFERENCE – INTERFERENCE WITH JUDGE’S FINDINGS OF FACT – FUNCTIONS OF APPELLATE COURT – ADMISSION OF FURTHER EVIDENCE – where appellant sought to appeal on questions of law, questions of fact and questions of mixed law and fact – where appellant sought to adduce fresh evidence – where appellant contended that decision of Development Tribunal was fresh evidence – where the appeal tribunal can receive fresh evidence in relation to a ground of appeal relating to an error of law only
DAMAGES – GENERAL PRINCIPLES – GENERAL AND SPECIAL DAMAGES - where appellant claimed damages for solatium – where appellant claimed damages for loss of amenity – where appellant claimed damages for inconvenience and distress – where held that damages for loss of amenity not recoverable – where held that damages for non-physical inconvenience and distress only recoverable consequent upon real and substantial physical inconvenience – where appellant failed to discharge requisite onus of proof
CONTRACTS – BUILDING, ENGINEERING AND RELATED CONTRACTS – THE CONTRACT – OTHER MATTERS – where appellant asserted error in finding below regarding practical completion - where appellant claimed building work did not comply with contract – where the finding was open on the evidence
Domestic Building Contracts Act 2000 (Qld) repealed
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 142, s 143(2)(b), s 146, s 147
Addis v Gramophone Co Ltd [1909] AC 408
Archibald v Powlett [2017] VSCA 259
Bakir v Body Corporate for Chevron Renaissance & Tran [2016] QCATA 33
Baltic Shipping Co v Dillon (1993) 111 ALR 289
Bawden v ACI Operations Pty Ltd [2003] QCA 293
Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430
Bellgrove v Eldridge (1954) 90 CLR 613
Benham v Gambling [1941] AC 157
Boncristiano v Lohmann [1998] 4 VR 82
Camden v McKenzie [2008] 1 Qd R 39
Canada (Director of Investigation and Research) v Southam Inc [1997] 1 SCR 748
Chambers v Jobling (1986) 7 NSWLR 1
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194
Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389
Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1
Commissioner for Liquor and Gaming v Farquhar Corporation Pty Ltd [2018] QCA 202
Commissioner of Police v Stehbens [2013] QCA 81
Coshott v Fewings Joinery Pty Ltd [1996] NSWCA 122
Crosthwaite v Dewit [2017] QCATA 91
Crystal Dawn Pty Ltd v Redruth Pty Ltd [1998] QCA 373
Cypressvale Pty Ltd v Retail Shop Leases Tribunal [1996] 2 Qd R 462
Dearman v Dearman (1908) 7 CLR 549
Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219
DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423
Ericson v Queensland Building and Construction Commission [2014] QCA 297
Ericson v Queensland Building Services Authority [2013] QCA 391
Flannery v Halifax Estate Agencies [2000] 1 WLR 377
Fox v Percy (2003) 214 CLR 118
G v H [1994] HCA 48
Hadley v Baxendale (1854) 156 ER 145
Hamlin v Great Northern Railway Co (1856) 156 ER 1261
Hobbs v London and South Western Railway Co (1875) LR 10 QB 111
House v The King (1936) 55 CLR 499
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378
In Vitro Technologies Pty Ltd v Taylor [2011] QCA 44
Lida Build Pty Ltd v Miller and Anor [2011] QCATA 219
Macquarie Homes Queensland Pty Ltd v Edge [1996] QBT 66
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 136 ALR 481
Partington v Urquhart (No 2) [2018] QCATA 120
Pickering v McArthur [2005] QCA 294
Pivovarova v Michelsen [2019] QCA 256
Public Service Board of New South Wales v Osmond (1986) 159 CLR 656
Repatriation Commission v Hill (2002) 69 ALD 581
Rintoul v The Queen [2018] QCA 20
Ruxley Electronics and Construction Ltd v Forsyth [1996] AC 344
Silastone Trading Pty Ltd v Body Corporate for Q1 and Anor [2017] QCAT 349
Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247
Sovereign Homes Qld Pty Ltd v Edwards [2018] QCAT 276
Sovereign Homes Qld Pty Ltd v Edwards (No 2) [2018] QCAT 410
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 253 ALR 1
Terera v Clifford [2017] QCA 181
Thompson Residential Pty Ltd v Hart & Anor [2014] QDC 132
Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816
Watts v Morrow [1991] 1 WLR 1421
William George Carlsen t/as W & E Carlsen Builders v Tresidder [2015] QCAT 260
APPEARANCES & REPRESENTATION:
Applicant:
S B Whitten, instructed by Saal and Associates Lawyers
Respondent:
P W Evans, solicitor of Cornwalls
REASONS FOR DECISION
This is an application pursuant to s 142(1) and s 142(3)(b) of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’) for leave to appeal, and if given, appeal against the decision of the tribunal in a domestic building dispute.
There are two decisions the subject of this appeal.
The first decision dated 21 August 2018 relates to the substantive matters the subject of the hearing (‘the substantive decision’).[1]
[1]Sovereign Homes Qld Pty Ltd v Edwards [2018] QCAT 276.
The second decision dated 3 December 2018 relates to the issue of costs and interest (‘the costs decision’).[2]
[2]Sovereign Homes Qld Pty Ltd v Edwards (No 2) [2018] QCAT 410.
The appellant seeks the following orders:
(a)leave to appeal the substantive decision;
(b)if leave is granted, appeal of the substantive decision be allowed;
(c)award of the sum of $46,155.20 plus interest awarded to Sovereign be set aside;
(d)leave to appeal the costs decision;
(e)by way of application filed 14 Decembers 2018, a direction that leave be granted to adduce evidence and documents not before the tribunal at first instance (‘the further evidence application’) or alternatively fresh evidence being a decision of the Development Tribunal dated 4 September 2018 setting aside the certifier’s approval of the alternative solution.
Appeal APL244-18 – the substantive decision
Background
The appellant, Donald Edwards (‘Edwards’), is the owner of a residential home located at 35 Cameron Street, Fairfield, Brisbane (‘the property’).
The respondent, Sovereign Homes Qld Pty Ltd (‘Sovereign’), as builder, entered into a written contract dated 30 June 2014 with Edwards to carry out alterations and additions to the property. The contract was in the standard form of an HIA Queensland Plain Language Alteration, Addition and Renovation contract.
Work commenced on 25 July 2014 and involved the construction of an extension to the existing house adding a fourth level with three bedrooms, a bathroom, separate toilet and a retreat. Work was carried out satisfactorily until the relationship between Edwards and representatives of Sovereign began to deteriorate in November 2014.
The dispute arose after the issue of Sovereign’s final claim for the sum of $46,155.20.
Edwards denied that practical completion had been reached and made a cross-claim in the sum of $133,379.30, primarily relating to alleged defects in the works in addition to a claim for consolation damages and moneys alleged to be owing arising out of an insurance payment made to Sovereign as a result of two storm events during the construction period.
The tribunal delivered its decision on 21 August 2018 and an application seeking leave to appeal and appeal that decision was filed by Edwards on 18 September 2018. On 14 December 2018, Edwards delivered extensive submissions in support of the application for leave to appeal and filed an application seeking leave to adduce further evidence on the appeal.
The tribunal delivered its decision in relation to costs and interest on 3 December 2018. An application seeking leave to appeal the costs decision was filed on 21 December 2018. Submissions regarding the appeal of the costs decision were delivered by Edwards on 8 February 2019.
On 1 March 2019, Sovereign filed submissions responding to Edwards’ submissions in relation to the appeal of the substantive decision and in relation to Edwards’ application seeking leave to adduce further evidence.
Edwards delivered extensive submissions in reply to Sovereign’s submission on 22 March 2019. Objections to the nature of the reply submissions delivered by Edwards were filed by Sovereign on 11 June 2019. Further submissions were delivered by Edwards and Sovereign respectively on 14 June 2019 and 18 June 2019 in relation to the material included in the lengthy submissions.
The grounds of appeal relied upon by Edwards are set out in an attachment to Edwards’ application and identified as Annexure “A”.
For completeness, the grounds are set out below:
1. The learned Member erred in law in finding, at [23] of the Reasons, that the document described as a “Certificate on Practical Completion” fulfilled the requirements of clause 24 of the Contract including the requirement for the Respondent to provide the Applicant/Appellant with a Notice of Practical Completion, and at [39] of the Reasons, that the document established the date for practical completion.
2. The learned Member erred in law and in fact in finding, at [36] of the Reasons, that the Applicant/Appellant was satisfied that practical completion had then been reached.
3. The learned Member erred in law and in fact in finding, at [36] of the Reasons, that the Applicant/Appellant signed the form (the “Certificate on Practical Completion”) on 11 December 2014 and in doing so he accepted the box gutter design change issue.
4. The learned Member erred in law in finding, at [37] of the Reasons, that a Builder who has not complied with the plans or specifications of a contract, and who is in breach of the Contract, as was found at [147] of the Reasons, may nevertheless have reached practical completion.
5. The learned Member erred in law and in fact in finding, at [43] of the Reasons, that practical completion had been reached on 11 December 2014 pursuant to clause 24.9 of the Contract.
6. The learned Member erred in law and in fact in finding, at [44] of the Reasons, that clause 25 of the Contract had not been complied with and in failing to find that the Respondent permitted the Applicant/Appellant to take possession of the Works prior to practical completion having in fact occurred.
7. The learned Member erred in law and in fact in disposing, at [43] of the Reasons, of the Applicant/Appellant’s claim for delay damages, and in failing to assess those damages in the event the learned Member’s conclusion on practical completion was wrong.
8. The learned Member erred in law and in fact in finding, at [45] of the Reasons, that the Applicant/Appellant owed the Respondent $46,155.20 plus any interest under the Contract.
9. The learned Member erred in law and in fact in failing to find that clause 16.1 of the Contract enabled the Respondent to seek a reasonable extension of time for any claimable delay described in clause 16.2 and that the respondent could have but failed to make any such claim.
10. The learned Member erred in law in finding, at [65] to [67] of the Reasons, that a separate contract or scope of works was required for the damaged works and that practical completion was achieved before the damaged works were rectified.
11. The learned Member erred in law and in fact in finding, at [132] of the Reasons, that the gutter to be installed was not intended to fit the description “box gutter”.
12. The learned Member erred in law and in fact in finding, at [133] of the Reasons, that the Applicant/Appellant “acquiesced” in the “alternative arrangement’ and accepted the changes to the box gutter.
13. The learned Member erred in law and in fact in finding, at [149] of the Reasons, that the gutter as installed met a Q100 weather event, or implicitly that it met the contract specifications.
14. Subject to leave being granted to adduce fresh evidence in the form of a finding of the Development Tribunal dated 4 September 2018 setting aside the alternative solution approval and certification relied upon by the learned Member at [142] to [144] of the Reasons such that it was an error of law to rely on that evidence.
15. The learned Member erred in law in failing to consider or alternatively rejecting the Applicant/Appellant’s claims for false or misleading conduct and unconscionable conduct.
16. The learned Member erred in law in failing to determine that the Respondent engaged in misleading and deceptive conduct in:
a. Claiming to have reached the Practical Stage of the works under the contract when it knew:-
i. It had not constructed the box gutter according to law or the Contract and the specifications;
ii. There were defects in the Works that were not minor defects caused by the Rain Event and the Hail Event that it had not rectified;
b. Failing to inform the Respondent in the original proceedings (the Applicant in the appeal) of the details of the insurance claim and result of the claim it had made on its insurance policy in respect of the Rain Event and the Hail event; or
c. In offering to settle the dispute for a small amount of money without revealing the money it had received from the Insurance Company in relation to the Rain Event and the Hail Event.
17. The Tribunal erred in law in failing to determine that the respondent engaged in unconscionable conduct in:-
a. Claiming to have reached the Practical Stage of the works under the contract when it knew:-
i. It had not constructed the box gutter according to law or the Contract and the specifications;
ii. There were defects in the Works that were not minor defects caused by the Rain Event and the Hail Event that it had not rectified;
b.Failing to inform the Respondent in the original proceeding (the Applicant in the appeal) of the details of the insurance claim and result of the claim it had made on its insurance policy in respect of the Rain Event and the Hail Event; or
c. In offering to settle the dispute for a small amount of money without revealing the money it had received from the Insurance Company in relation to the Rain Event and the Hail Event.
18. The learned Member erred in law and in fact in failing to award the Applicant/Appellant damages for:-
a. Removal of the solar panel brackets;
b. Labour to pack the walls;
c. Removal and reinstallation of palings installed over the Overflow Relief Gully;
d. Installation of a smoke alarm;
e. Incorrectly installed balustrades;
f. New shower shelf;
g. Incorrectly installed Towel ring;
h. Replacement of boards to rear deck;
i. Plumbing work to unblock sewer line;
j. Incorrectly installed skirting palings;
k. Knots in weatherboards;
l. Solatium;
m. Interest on money in his joint bank account; and
n. Items or services not provided by the Respondent.
Edwards seeks the following orders, as set out in Annexure “A”:
1. To the extent necessary given the grounds of appeal, leave be granted to appeal the Tribunal’s decision.
2. Leave be granted to adduce new evidence or alternatively fresh evidence being a decision of the Development Tribunal dated 4 September 2018 setting aside the certifier’s approval of the alternative solution.
3. The appeal be allowed.
4. The award of the sum of $46,155.20 plus interest (if any) awarded to the Respondent be set aside.
5. That the Respondent pay the Applicant/Appellant such further damages according to the findings made on appeal and at law.
6. Pursuant to s 237(1) and s 243(c) of the Competition and Consumer Act 2010 (Cth), a declaration that the Respondent had not completed the Practical Completion stage of the Contract or an order refusing to enforce clause 24.5 and, to any extent necessary, clause 24.9 of the Contract.
7. Alternatively, pursuant to s 236(1) of the Competition and Consumer Act 2010 (Cth), an order requiring the Respondent to pay compensation to the Applicant/Appellant by way of the loss and damage he has suffered.
8. The Respondent pay the Applicant/Appellant’s costs of the appeal and of the proceedings at first instance.
Submissions on behalf of Edwards
Extensive written submissions[3] have been provided by Edwards to supplement the oral submissions provided at the hearing of the appeal. Those submissions relate to both the application for leave to appeal the substantive decision, the application for leave to adduce fresh evidence and the application for leave to appeal the costs decision.
[3]Written submissions on behalf of the Appellant dated 14 December 2018, 6 February 2019, 21 March 2019, 14 June 2019, 16 July 2019, 23 August 2019, 19 September 2019 and by letter dated 11 October 2019.
Errors of fact in the decision have been set out in detail at paragraphs 6.1, 6.2, 6.3, 6.4, 6.5, 6.6, 6.7, 6.9, 6.10, 6.11, 6.12, 6.13, 6.14, 6.15, 6.16 and 6.17 of Edwards’s submissions dated 14 December 2018. None of these alleged errors of fact pertain to the grounds relied upon by Edwards in this appeal. Accordingly, there is no need for this appeal tribunal to further consider those facts.
Submissions on behalf of Sovereign
In addition to oral submissions at the hearing of the appeal, Sovereign relies upon written submissions dated 1 March 2019, 11 June 2019, 18 June 2019 and 28 August 2019 and a letter dated 1 October 2019 in response to the Appellant’s submissions dated 19 September 2019 in relation to the application to adduce further evidence.
Legal Considerations for Leave to Appeal
A party may appeal on a question of law without the appeal tribunal’s leave, unless the decision falls into one of the limited categories set out in s 142 of the QCAT Act.
A party may generally appeal to the appeal tribunal on a question of fact, or a question of mixed law and fact, once leave has been granted.[4] The application for leave to appeal must state the grounds upon which leave to appeal is sought.[5]
[4]QCAT Act s 142(3)(b).
[5]Ibid s 143(2)(b).
The distinction between questions of law and fact is not always clear and courts have not found it easy to formulate a satisfactory test of universal application.[6]
[6]Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389, 394.
The Supreme Court of Canada in Canada (Director of Investigation and Research) v Southam Inc[7] has provided the following concise formula:
Briefly stated, questions of law are questions about what the correct legal test is; questions of fact are questions about what actually took place between the parties; and questions of mixed law and fact are questions about whether the facts satisfy the legal tests.
[7][1997] 1 SCR 748, [35] per Iacobucci J.
The basis upon which leave to appeal is granted has been considered in many decisions and succinctly summarised in Lida Build Pty Ltd v Miller and Anor:[8]
[7] Finality in litigation is highly desirable because any further action beyond the hearing can be costly, and unnecessarily burdensome on the parties. [Fox v Percy (2003) 214 CLR 18, 128 per Gleeson CJ, Gummow and Kirby JJ.] A finding of fact will generally not be disturbed on appeal if the evidence before the tribunal supports the inferences drawn and the facts found. [Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 355 per Mason CJ.] It is not the Appeal Tribunal’s task to decide where the truth lay as between the competing versions given by parties. [Fox v Percy (2003) 214 CLR 118 at 129 per Gleeson CJ, Gummow and Kirby JJ.]
[8] Whether a decision is based on findings of fact which are open on the available evidence is a question of law. [Kostas v HIA Insurance Services Pty Ltd t/a Home Owners Warranty (2010) 241 CLR 390.]
[9] Leave to appeal will ordinarily only be granted when a question of general importance upon which further argument and a decision of the Appeal Tribunal is to public advantage [Glenwood Properties Pty Ltd v Delmoss Pty Ltd [1986] 2 Qd R 388, 389; McIver Bulk Liquid Haulage Pty Ltd v Fruehauf Australia Pty Ltd [1989] 2 Qd R 577, 578 and 580.]; there is a reasonably arguable case that the primary decision-maker made an error [QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 Qd R 41.] and there are reasonable prospects that the applicant would be granted orders in its favour [Cachia v Grech [2009] NSWCA 232, [13].]; or to correct a substantial injustice to the applicant caused by error [QUYD Pty Ltd v Marvass Pty Ltd [2009] 1 QD R 41].
[8][2011] QCATA 219, [7]-[9].
The principles the appeal tribunal applies when considering an application for leave to appeal are summarized by Keane JA (as His Honour then was) in Pickering v McArthur: [9]
[3] Leave will usually be granted only where an appeal is necessary to correct a substantial injustice to the applicant, and there is a reasonable argument that there is an error to be corrected.
[9][2005] QCA 294, [3].
The general discretion to grant leave must be exercised in accordance with this orthodox principle and further, there must be reasonable prospects of success to warrant a grant of leave. Therefore, in deciding whether to grant leave to appeal the court will usually make some preliminary assessment of the prospects of the proposed appeal.[10]
[10]Terera v Clifford [2017] QCA 181, [10]; Rintoul v The Queen [2018] QCA 20, [10].
An appeal to the appeal tribunal on a question of fact or mixed law and fact is by way of rehearing.[11] The appeal tribunal must consider whether it is demonstrated by an appellant that there has been some legal, factual, or discretionary error obvious on the record. The appeal tribunal will not usually disturb findings of fact on appeal if the evidence is capable of supporting the conclusions.[12] An appeal tribunal may interfere if the conclusion is contrary to compelling inferences in the case.[13]
[11]QCAT Act s 147(2).
[12]Dearman v Dearman (1908) 7 CLR 549, 561; Fox v Percy (2003) 214 CLR 118, 125-126.
[13]Chambers v Jobling (1986) 7 NSWLR 1, 10.
The grounds of appeal involve both alleged errors of law and errors of mixed law and fact. We will address firstly those grounds in which an error of law is asserted taking into account the principles set out above.
Errors of Law
The errors of law relied upon by Edwards are contained in grounds 1, 4, 10 and 14 of the grounds of appeal[14] and are set out for ease of reference below:-
(a)Ground 1 - The learned member erred in law in finding that the document described as a Certificate on Practical Completion fulfils the requirements of a Notice of Practical Completion as referred to in clause 24 of the contract.[15]
(b)Ground 1 - The learned member erred in law in finding that the document described as a Certificate on Practical Completion established the date for practical completion.[16]
(c)Ground 4 - The learned member erred in law in finding that a builder who has not complied with the plans or specifications of a contract, and who is in breach of contract may nevertheless have reached practical completion.[17]
(d)Ground 10 - The learned member erred in law in finding that a separate contract or scope of works was required for the damaged works and that practical completion was achieved before the damaged works were rectified.[18]
(e)Ground 14 – Subject to leave being granted to adduce fresh evidence in the form of a finding of the Development Tribunal dated 4 September 2018 setting aside the alternative solution approval and certification relied upon by the learned member, it was an error of law by the tribunal member to rely on that evidence.[19]
[14]Annexure “A” to Application for leave to appeal or appeal filed 18 September 2018.
[15]Reasons for the substantive decision [23].
[16]Ibid [39].
[17]Ibid [37], [147].
[18]Ibid [65], [67].
[19]Ibid [142]-[144].
As a preliminary matter, it is necessary to determine whether the grounds relied upon do relate to questions of law only, and therefore leave is not required, or whether the grounds relied upon relate to issues of mixed law and fact.
In addressing an error of law there are well established principles which this appeal tribunal must take into account.
The most fundamental issue to determine is whether the tribunal has acted otherwise than in accordance with the law. It is well established that if a tribunal falls into an error of law ‘which causes it to identify a wrong issue, to ask itself a wrong question, to ignore relevant material, to rely on irrelevant material or, at least in some circumstances, to make an erroneous finding or to reach a mistaken conclusion, and the tribunal’s exercise or purported exercise of power is thereby affected, it exceeds its authority or powers. An error of law of this kind may support an appeal on a question of law.’[20]
[20]Commissioner for Liquor and Gaming v Farquhar Corporation Pty Ltd [2018] QCA 202, [15]-[18]; Repatriation Commission v Hill (2002) 69 ALD 581 per Black CJ, Drummond and Kenny JJ.
An appeal court will not be concerned with looseness in the language of a tribunal nor with unsatisfactory phrasing of a tribunal’s thoughts. Nor will the court construe the reasons for the decision under review ‘minutely and finely with an eye keenly attuned to the perception of error’.[21]
[21]Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 115 ALR 1, 9; Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 136 ALR 481.
This appeal tribunal proceeds on the basis of those fundamental principles.
Error of Law - Ground 1
The first part of ground 1 relates to the finding of the learned member in paragraph [23] of the reasons for the substantive decision.
At paragraph [23] the learned member states:
[23] I am satisfied that though described as a Certificate on Practical Completion the document, for all intents and purposes, fulfils the requirements of a Notice of Practical Completions (sic) as referred to in Clause 24 of the Contract.
To the extent that there is an error of law asserted in respect of the member’s finding, no basis is provided in ground 1 other than a statement that the conclusion reached by the member is an error of law.
In written submissions however, Edwards submits that the Certificate on Practical Completion dated 11 December 2014 (‘the Certificate’) cannot be classed as a Notice of Practical Completion for the following reasons:
(a)the Certificate does not certify anything (as stated by the learned member in paragraph [17] of the reasons);
(b)the Certificate does not state the Date of Practical Completion;
(c)the Certificate does not state Sovereign’s opinion of the date on which practical completion had been reached.
Edwards relies upon the decision of McGill DCJ in Thompson Residential Pty Ltd v Hart & Anor where His Honour states:[22]
[37] In my opinion the contract means what it says, what matters is whether the enclosed stage has been reached, and the plaintiff has not satisfied this element of the definition of enclosed stage: the reference to windows and doors means the windows and doors required to be installed under the contract, and the plaintiff has not installed those, even if only temporarily. In my opinion there is nothing in the wording of the contract to justify giving the document the interpretation contended for by the plaintiff. Accepting that the court should strive to give a practical commercial interpretation to a document of this nature, it seems to be that the interpretation for which the plaintiff contends really amounts to changing the terms of the contract. In circumstances where the term ‘enclosed stage’ is defined, it is not a question of whether the building is enclosed in a practical sense by a process which does not meet the definition, or whether that process would in practice serve the function or requirement of enabling the fitting of gyprock internal wall sheeting to proceed. The function of the progress payment schedule is to provide for certain amounts to be payable when certain stages in the building work are achieved, and the definition of the enclosed stage us expressed in terms such that the supply and least temporary installation of the windows and doors is to be achieved as part of the enclosed stage. The windows and doors for this building had not been supplied, and therefore that element of the works required for the enclosed stage had not been satisfied. The plaintiff’s argument to the contrary is rejected.
[22][2014] QDC 132, [37].
Sovereign submits that an objective approach should be taken in interpreting the Certificate and that in doing so a common-sense approach should be taken to give the contract an interpretation that avoids absurdity. Evidence of surrounding circumstances in the form of ‘mutually known facts’ may be admitted to identify the meaning of a descriptive term.[23] In this context, in its written submissions, Sovereign sets out the discussions between the parties in relation to the completion of the works.
[23]DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423, 429 per Mason J (as he then was).
As a preliminary observation, Edwards’ reliance upon the decision in Thompson Residential must relate to issues in the present case regarding the stage of works referred to as practical completion. A determination of whether the works have reached that particular stage must of necessity require consideration of issues of fact or mixed law and fact.
Based on the ground relied upon by Edwards, being a pure question of law, for the purpose of considering ground 1 the decision of McGill DCJ in Thompson Residential is not relevant as it relates to a factual interpretation of the stage of works in a contract.
To assess whether there has been an error of law in interpreting clause 24 it is necessary for this appeal tribunal to set out the proper interpretation of the relevant clause.
Before embarking on an exercise of determining the proper interpretation of clause 24 of the contract, it is necessary to establish the meaning of the term ‘practical completion’.
Schedule 2 of the contract provides a definition of practical completion as follows:
(a) where the works are for the erection or construction of a detached dwelling or the renovation, alteration, extension, improvement or repair of a home to a stage suitable for occupation – the stage when the works:
(i)have been completed in accordance with this contract and all relevant statutory requirements apart from minor defects or minor omissions; and
(ii) are reasonably suitable for habitation;
(b) in all other cases – when the works have been completed in accordance with this contract apart from minor defects or minor omissions.[24]
[24]See also Domestic Building Contracts Act 2000 (Qld) repealed.
Clause 24 of the contract relevantly provides:
24.1 The contractor must, at the owners request from time to time, give a non-binding estimate of when practical completion will be reached.
24.2 On reaching practical completion the contractor must give the owner:
(a)a notice of practical completion stating the contractor’s opinion of the date of practical completion; and
(b) the final claim.
24.3 Subject to subclause 24.4, the owner must, within 5 working days of receiving the final claim, pay the amount of the final claim to the contractor.
24.4 The final claim is not due until the contractor:
(a)gives the owner a defects document signed by the contractor listing minor defects and minor omissions;
(i)that are agreed to exist and the time for when those items will be completed or rectified; and
(ii)that the owner claims to exist but the contractor does not agree with; and
(b)makes all reasonable efforts to have the owner sign the document to acknowledge its contents.
24.5 If the owner believes that practical completion has not been reached the owner must, within 5 working days of receiving the notice of practical completion, give the contractor a written notice stating:
(a)the owner’s requirements for the works to reach practical completion; and
(b) the provisions of this contract that relate to each requirement.
…
24.7 On completion of those requirements the contractor must give a further notice of practical completion stating the new date of practical completion and subclause 24.3 applies.
24.9 The date stated in the last notice of practical completion is deemed to be the last date of practical completion unless within 5 working days of receiving the last notice of practical completion the owner gives the contractor written notice:
(a) disputing the date; and
(b) detailing the reasons why the date is disputed.
Clause 24 does not purport to address the meaning of ‘practical completion’ but rather sets out the process for the contractor notifying the owner of the Date of Practical Completion.
Clause 37.1 provides the meaning of terms used in the contract:
“date of practical completion” has the meaning in clause 24;
“practical completion” is defined as having the same meaning as in Schedule 2;
“notice of practical completion” has the meaning in clause 24; and
“works” means the works to be carried out, completed and handed over to the owner in accordance with this contract as shown in the contract.
The purpose of clause 24 is three-fold:
(a)to impose on the contractor/builder an obligation to:
(i) give a notice ‘on reaching practical completion’;
(ii) identify the Date of Practical Completion;
(iii) issue a final claim;
(b)to impose on the contractor/builder an obligation to identify minor defects and omissions to be completed or rectified;
(c)to re-assess the Date of Practical Completion upon any dispute regarding the Date of Practical Completion in any Notice of Practical Completion provided by the contractor/builder.
The document, purported to satisfy clause 24.2 of the contract, provided by Sovereign to Edwards is entitled ‘Certificate on Practical Completion’. It is an HIA standard form document used for the following purpose as stated in the document:
This document is to be completed after the works have reached practical completion. The date of practical completion may be stated on the builder’s/contractor’s final progress claim.
The document identifies the owner, the builder/contractor, the site and the contract date.
The document further provides:
Completion of works
The owner has inspected the works and:
Acknowledges that the builder/contractor has duly performed the contract to the owner’s satisfaction; and agrees that the works have reached practical completion and are in good order except for the following: …
The document then provides two parts which relate to the following:-
(a)Part 1 lists any minor defects or minor omissions which the owner and builder agree exist and the time in which the builder will attend to these items.
(b)Part 2 makes provision for the list of any minor defects or minor omissions which the owner claims exist but which are not agreed by the builder to exist.
Edwards’ name is inserted in the document and it is further signed by a representative of Sovereign and dated by both as 11 December 2014.
Further, the document provides that the owner authorises and directs the owner’s lending body to pay the balance of the money payable under the contract immediately to the builder. This section is signed and dated by Edwards.
The final account, which is undated, indicates the balance due at handover being $46,155.20.
The member accepted that:
(a)the Certificate relied upon did not expressly state the Date of Practical Completion;[25]
(b)the Certificate listed the minor defects but did not specify a time by which those defects were to be attended to by the builder;[26]
(c)the Certificate, which does not actually certify anything, is a notice to the owner acknowledging that the owner has inspected the works and that the builder has duly performed the contract to the satisfaction of the owner and that the works have reached practical completion and are in good order except for the listed minor defects;[27]
(d)the Certificate provided the payment authority directed to the owner’s lending body to pay the balance of the money under the contract immediately.
[25]Reasons for the substantive decision [16].
[26]Ibid.
[27]Ibid [17].
The main issue for determination is whether the Certificate satisfies the requirements of clause 24.2. On a proper interpretation of the contract, does the Certificate satisfy the requirement of a ‘Notice of Practical Completion’?
The requirements of clause 24.2 are that, on reaching practical completion:
(a)the contractor must give to the owner a notice stating the contractor’s opinion of the Date of Practical Completion; and
(b)the contractor must give to the owner a final claim.
There is no dispute that Sovereign gave to Edwards a final claim. There is no form of final claim required by clause 24. The only stipulation is that practical completion has been reached.
Edwards disputes the proper form of the Notice of Practical Completion provided by Sovereign to Edwards and the timing of that notice given Edwards’ argument that practical completion had not been reached.
The notice provided by Sovereign, in the form of a Certificate, does not state expressly Sovereign’s opinion of the Date of Practical Completion. The Certificate does state that the Date of Practical Completion may be stated on the final progress claim. It is undisputed that the final progress claim did not identify the Date of Practical Completion. The Certificate expressly states that practical completion has been reached.
In strict terms, it may be arguable that the Certificate does not satisfy the requirements of clause 24.2 in that it does not state that it is ‘Sovereign’s opinion’ that the Date of Practical Completion is a specified date. On the other hand, it may be the case that the date inserted by Sovereign may be interpreted as the Date of Practical Completion relied upon by Sovereign and may be interpreted as Sovereign’s opinion of the Date of Practical Completion.
The document certainly identifies that practical completion has been reached. As to the actual date of completion, it is open to interpretation that the date inserted by Sovereign is the date relied upon by Sovereign as the Date of Practical Completion.
The purpose of the Certificate is to notify the owner that the works have reached practical completion and for the owner to agree to that stage of completion of the works.
That being the case, it is open to interpretation that the date provided in the notification identifies not only the date Sovereign proposes as the Date of Practical Completion but the date which the parties have agreed is the Date of Practical Completion. It may be the case that the works have reached practical completion before the date nominated in the notice but in the absence of an express statement of the Date of Practical Completion, the date nominated by the builder, and agreed by the owner, may be accepted as the last Date of Practical Completion.
We think it was open to the learned member to interpret the Certificate on Practical Completion provided by the builder as identifying Sovereign’s opinion of the Date of Practical Completion. The Certificate satisfies the requirements of clause 24.2 of the contract and satisfies the requirements of being a Notice of Practical Completion pursuant to the contract.
The interpretation of clause 24 and whether the Certificate provided equated to the requisite notice is a separate issue from the question of fact as to whether practical completion has been reached. Accordingly, Edwards’ reliance upon Thompson Residential for the purpose of ground 1 is not regarded as relevant as its relevance lies in a determination relating to the factual circumstances of achieving the stage of practical completion.
In relation to the first part of ground 1, we have formed the opinion that no error of law by the learned member has been established.
The second part of the error of law alleged by Edwards relates to the learned member’s finding in paragraph [39] of the reasons where the member states:
[39] The Notice, or in this case, the Certificate establishes the date of practical completion and sets in motion the events described above. Clause 24 provides a formula to that effect. Until those requirements are satisfied the final payment is not due.
The events to which the member refers are set out in paragraph [38] as follows:
[38] The function of establishing the date for (sic) practical completion is, inter alia, to provide evidence of the point in time for a number of events to take place. Under the Contract it:
(a) sets a time for the payment of the final claim;
(b)allows the owner to dispute whether practical completion has been reached and identify what works if required to reach practical completion;
(c) identifies minor defects and omissions to be attended to;
(d) triggers the defects period;
(e) transfers the risk of the property to the owner; and
(f) sets a date for calculation of liquidated damages.
Edwards submits that the learned member erred in finding that the Certificate established the Date of Practical Completion.
A Notice of Practical Completion, or Certificate in this context, is intended to have a clear contractual operation. The purpose of the Certificate is to provide certainty of the Date of Practical Completion for the purpose of establishing further rights and obligations of the parties under the contract.
The alleged error of the member in paragraph [39] of the reasons for the substantive decision concentrates on the member’s failure to determine himself whether the works had reached practical completion in fact as opposed to relying solely on the Certificate as the evidence that practical completion had been reached.
The definition of ‘Date of Practical Completion’ in clause 37 states that the term has the meaning in clause 24.
The conclusion must therefore be that the last Notice of Practical Completion establishes the Date of Practical Completion. In the absence of a dispute regarding the Date of Practical Completion, a proper notice is deemed to identify the Date of Practical Completion.
The complaint by Edwards seems to be that the member did not address the factual issue of ‘reaching practical completion of the works’ but rather merely accepted the Date of Practical Completion as purportedly stated in the Certificate.
Whilst the wording of paragraph [39] of the reasons may be interpreted as the member relying solely on the Certificate as establishing the Date of Practical Completion, if read in the context of the foregoing paragraphs and the other findings made by the learned member, this is not the effect of paragraph [39].
The learned member specifically stated that he preferred the evidence of Mr Marshall, Sovereign’s project manager, in preference to Edwards and/or Ms Ogilvie (Edwards’ partner).[28] In this respect, the member was addressing the state of the works at the time of execution of the Certificate and his acceptance of Mr Marshall’s evidence that the works had achieved the practical completion stage.
[28]Reasons for the substantive decision [32].
Whereas it might be suggested that the learned member’s analysis of the evidence and his conclusion regarding preferring one witness over another was brief, the adequacy of the reasons is not relied upon by Edwards in relation to ground 1 of the appeal. In any event, this issue will be considered later in these reasons. As these reasons will later set out, even if the finding in favour of Mr Marshall’s credibility were set aside, the ultimate outcome of the proceeding would not have been different.
The member specifically queried whether the Certificate had the evidentiary effect of establishing the Date of Practical Completion. In so doing, the member concluded that Edwards’ signing of the document suggested that Edwards, at the time, was satisfied that practical completion had been reached.
The member did not conclude that the Certificate alone established the Date of Practical Completion but rather its execution supported the conclusion that Edwards accepted that practical completion had been reached.
Whilst the wording of paragraph [39] of the reasons loosely states that the Certificate establishes the Date of Practical Completion, we do not accept in the context of the discussion by the learned member that the member intended to rely solely on the Certificate as establishing the Date of Practical Completion in the event that the works had not in fact reached the practical completion stage.
In this respect, we do not accept that the member fell into an error of legal interpretation of the Certificate and that the member relied purely on the Certificate to establish the Date of Practical Completion.
The definition of ‘practical completion’ is the starting point for determining whether practical completion has been reached. It is necessary to assess whether the requirements of the definition of that term in Schedule 2 of the contract has been reached to assess whether the Date of Practical Completion has been established.
The Notice of Practical Completion does not establish that practical completion has been reached but rather records the Date of Practical Completion as required by clause 24 of the contract and provides the mechanism by which the Date of Practical Completion is deemed to have been achieved.
We have formed the view that Edwards has not established an error of law by the learned member and that ground 1 has not been made out.
Error of Law – Ground 4
Edwards submits that the learned member erred in law in finding that a builder who has not complied with the plans or specifications of a contract, and who is in breach of the contract, may nevertheless have reached practical completion.
Edwards refers to the learned member’s finding at paragraph [37] of the reasons for the substantive decision which states:
[37] Mr Edwards argues that as Sovereign had not complied with the plans and specification in respect to a number of issues, which are dealt with hereafter, that practical completion has not been reached. Such a proposition is fundamentally wrong in that it is not uncommon for a builder not to follow the plans and/or specifications, either inadvertently or deliberately, and that the omission might not be apparent at the time of practical completion. If, subsequently, a major latent defect is discovered it could not then be argued that, the (sic) on finding such a defect, the date of practical completion would be set aside, the completion date delayed and a claim for liquidated damages triggered.
It is difficult to understand the error of law upon which Edwards relies to support the alleged ground as no basis is given to support the error nor does Edwards outline the effect of the alleged error.
At paragraph [54] of the written submissions, Edwards outlines the respects in which there has been an error of law:
54.1 It (the Tribunal) has failed to provide any or adequate reasons for the proposition advanced by Mr Edwards as being ‘fundamentally wrong’. It has simply asserted that it is wrong without providing any reasoning to justify the assertion.
54.2 Based on the decision in Thompson Residential, a stage of construction, including Practical Completion, has either been completed or it hasn’t. The doctrine of substantial completion does not apply. Necessarily, this means that if the contract works have a defect or omission that is not minor (which is not necessarily be the same as a “major” defect or omission), then it is simply the case that the Practical Completion stage has not been completed. That being the case, there is no basis in law for the owner to not have a purported date of Practical Completion set aside. Being entitled to have it set aside follows logically from the fact that there would be, in fact, no Date of Practical Completion because the stage had never been completed. In such a scenario, the builder can hardly complain because it is his failure to complete the works except for minor defects or omissions and he would be aware of any defects in his own work.
54.3 Insofar as this reasoning applies to the current matter, it is irrelevant because the defects were not latent. The defects caused by the weather events were well known to Sovereign as early as 28 November 2014, although the nature and extent of them was not known to Mr Edwards at that time, i.e. 3 December 2014 or 11 December 2014 and immediately thereafter. Insofar as Sovereign genuinely considered that such work required a separate contract to be entered into (which is not admitted) and it is found that was not the case, then it is simply the case that Sovereign (in McGill SC DCJ’s words in Thompson Residential) “nailed its colours to the wrong mast”. It could have protected itself by including the damage caused by the weather events in the space provided for defective works alleged by the owner and not accepted by the builder and by claiming an extension of time to the date for practical completion.
55. It is also clear that the defects document prepared by Sovereign (i.e. the Certificate on Practical Completion) listed the replacement of glass in certain areas. It has been held that where work has to be removed and replaced, it is as if the work to be replaced was not there at all. The need to remove and replace this glass was not a minor defect, as it is as if the glass had not been there at all. Therefore, Sovereign has not reached Practical Completion in fact due to these defects.
The submission by Edwards clearly indicates that the error alleged by Edwards is a question of mixed law and fact. Accordingly, leave is required to be given in this appeal. No application for leave to appeal has been made nor have any grounds for granting leave been submitted.
Accordingly, in the absence of an application for leave to appeal, ground 4 should be dismissed.
For completeness, however, we will address the error alleged as an error of law only on the ground of the inadequacy of the reasons provided by the member.
It is uncontroversial that a failure to give adequate reasons constitutes an error of law. Crow J in Pivovarova v Michelsen [2019] QCA 256 at [46] to [47] made this clear in referring to the observations of the court in In Vitro Technologies Pty Ltd v Taylor[29] where Fraser JA stated:
[19] This Court has held in many decisions that the failure of a trial court from which an appeal lies to give adequate reasons amounts to an error of law. What is adequate must depend upon the circumstances of the particular case, including the nature and significance of the issues in question. In a passage to which Muir JA referred in Drew v Makita (Australia) Pty Ltd, Meagher JA observed in Beale v Government Insurance Office of New South Wales that whilst the trial judge should set out findings as to how the judge came to accept one set of evidence over a conflicting set of significant evidence, ‘that is not to say that a judge must make explicit findings on each disputed piece of evidence, especially it the inference as to what is found is appropriately clear’.
[29][2011] QCA 44, [19]; Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, 257-259 per Kirby P (as he then was); Commissioner of Police v Stehbens [2013] QCA 81, [6]; Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, 441, 444 per Meagher JA; Drew v Makita (Australia) Pty Ltd [2009] 2 Qd R 219, [59]–[66] per Muir J.
In Drew v Makita (Australia) Pty Ltd,[30] Muir JA set out the principles relating to the extent to which a trial judge was required to expose his or her reasoning for the conclusions reached and observed that it depended upon the nature of the issues for determination and the function to be served by the giving of reasons:
[30][2009] 2 Qd R 219, [58]-[63].
[58] The rationale for the requirement that courts give reasons for their decisions provides some guidance as to the extent of the reasons required. The requirement has been explained, variously, as necessary: to avoid leaving a losing party with a ‘justifiable sense of grievance’ through not knowing or understanding why that party lost; to facilitate or not frustrate a right of appeal; as an attribute or incident of the judicial process; to afford natural justice or procedural fairness; to provide ‘the foundation for acceptability of the decision by the parties and the public’ and to further ‘judicial accountability’.[31]
[31]Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430, 431, 442; Soulemezis v Dudey (Holdings) Pty Ltd (1987) 10 NSWLR 247, 257, 259, 269, 271, 273, 279; Public Service Board of New South Wales v Osmond (1986) 159 CLR 656, 666-667; Waterways Authority v Fitzgibbon (2005) 79 ALJR 1816, 1835, [129]; Flannery v Halifax Estate Agencies [2000] 1 WLR 377, 381-392; Cypressvale Pty Ltd v Retail Shop Leases Tribunal [1996] 2 Qd R 462, 475, 476.
[59] The extent to which a trial judge must expose his or her reasoning or the conclusions reached will depend on the nature of the issues for determination and ‘the function to be served by the giving of reasons. For that reasons, what has been required has been expressed in a variety of ways. For example, in Soulemezis v Dudley (Holdings) Pty Ltd, Mahoney JA said:[32]
[32](1987) 10 NSWLR 247, 273; Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378, 386.
‘... And, in my opinion, it will ordinarily be sufficient if - to adapt the formula used in a different part of the law…..by his reasons the judge apprises the parties of the broad outline and constituent facts of the reasoning on which he has acted.’
[60] McHugh JA’s view was that reasons sufficient to meet the above requirements do not need to be lengthy or elaborate but ‘…it is necessary that the essential ground or grounds upon which the decision rests should be articulated’.
[61] In Strbak v Newton (unreported, New South Wales Court of Appeal, Gleeson CJ, Samuels and Priestley JJA, 18 July 1989) Samuels JA said:
‘…What is necessary, it seems to me, is a basic explanation of the fundamental reasons which led the judge to his conclusion There is no requirement, however, that reasons must incorporate an extended intellectual dissertation upon the chain of reasoning which authorises the judgement which is given.’
[62] Woodward J, in Ansett Transport Industries (Operations) Pty Ltd v Wraith, said that the decision maker:
‘…should set out his understanding of the relevant law, any findings of fact on which his conclusions depend (especially if those facts have been in dispute), and the reasoning processes which led him to those conclusions.’
[63] Meagher JA in Beale v Government Insurance Office of NSW stated these propositions:
‘…there are three fundamental elements of a statement of reasons, which it is useful to consider. First, a judge should refer to relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However, where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where conflicting evidence of a significant nature it given, the existence of both sets of evidence should be referred to.
Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. The obvious extension of the principle in North Sydney Council is that, where findings of fact are not referred to, an appellate court may infer that the trial judge considered that finding to be immaterial. Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his findings as to how he comes to accept the one over the other. But that is not to say that a judge must make explicit findings on each disputes piece of evidence, especially if the inference as to what is found is appropriately clear: Selvanayagam v university of West Indies [1983] 1 WLR 585. Further, it may not be necessary to make findings on every argument or destroy every submission, particularly where the arguments advanced are numerous and of varying significance: Rajski v Bainton (Court of Appeal, 6 September 1991, unreported).
Thirdly, a judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Those reasons or the process of reasoning should be understandable and preferably logical as well.”
Muir JA observed that the fundamental elements need not be applied rigidly but they provide a useful guidance for a determination of sufficiency of reasons in the general run of cases.
In Camden v McKenzie,[33] the court relied on the well-established principle set out in Bawden v ACI Operations Pty Ltd[34] and Crystal Dawn Pty Ltd v Redruth Pty Ltd[35] that ‘a failure to give reasons which ought to be given amounts to appealable error’.
[33][2008] 1 Qd R 39, [29].
[34][2003] QCA 293, [29].
[35][1998] QCA 373.
In Camden v McKenzie,[36] the court highlighted the requirements of a judge’s reasons for a decision where an issue involved the credibility of witnesses. Keane JA (as he then was) observed:
[30] The appellants contend … that adequate reasons for judgement will refer to the evidence which was important to the determination of the matter, and will set out material findings of fact, giving the judge’s reasons for his or her findings of fact, and stating the basis on which the judge has come to prefer one body of evidence over a competing body of evidence.
[31] As a general rule, observance of these requirements is necessary to demonstrate that litigation has been determined fairly and rationally. Adherence to these requirements ensures that rights of appeal are not rendered meaningless, and that a party affected by a decision adverse to his or her interests is not left with a justified sense of grievance that the case has not been properly considered. In short, these standards promote the conscientious public discharge of the responsibilities of a judge to litigants, as well as to the community, which has a vital interest in the integrity of the judicial process.
…
[34] Usually, the rational resolution of an issue involving the credibility of witnesses will require reference to, an analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation. In Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186 at 191 to 192, Ipp JA, with whom Mason P and Tobias JA agreed, explained:
‘It is not appropriate for a trial judge merely to set out the evidence adduced by one side, then the evidence adduced by another, and then assert that having seen and hear the witnesses, he or she prefers or believes the evidence of one and not the other. If that were to be the law, many cases could be resolved at the end of the evidence simply by the judge saying: ‘I believe Mt X but not Mr Y and judgement follows accordingly’. That is not the way in which our legal system operates …
Often important issues of credibility involve sub-issues. Often. Objective facts, or facts that are probable, are capable of having significant bearing on the sub-issues. In cases of this kind, it is incumbent upon trial judges to resolve the sub-issues and to explain, by reference to the relevant facts, the conclusions to which they have come. This having been done , they should then turn to the ultimate facts in issue and explain how their decisions on the sub-issues have assisted the in forming a conclusion on the ultimate issue. It is only when adequate reasons of this kind are given that an unsuccessful party will be able to understand why the judge has believed his or her successful opponent.’
[35] Similarly, in Fletcher Construction Australia Ltd v Lines MacFarlane & Marshall Pty Ltd (No.2) (2002) 6 VR 1 43 at [157], the Victorian Court of Appeal said:
‘The duty to deal with facts or evidence is not absolute. The evidence must be significant in the sense that, unless disposed of, it stands in the way of the court’s conclusions. The court need not deal in terms with evidence when its importance falls away because of the manner in which the court disposes of the case. Nevertheless, if evidence is significant, it is not to be peremptorily shunted aside of ignored’.
[36][2008] 1 Qd R 39, [30]-[31], [34]-[35].
At reasons [37] and following the learned member provided substantiation for the proposition that Edwards was fundamentally wrong in relation to works which may be determined to contain latent defects. The learned member observed that it was not uncommon for a builder to fail to undertake building works other than in accordance with the plans and/or specifications (either inadvertently or otherwise) and that this may result in a latent defect. The learned member observed that it could not be correct that the discovery of a latent defect after the Date of Practical Completion rendered the Date of Practical Completion liable to be set aside with the consequences referred to by the learned member including a claim for liquidated damages. The learned member went on to consider the purpose and function of a Notice of Practical Completion and the specific contractual provisions. The learned member’s reasons were adequate.
In relation to the argument that the learned member’s statement was incorrect, the member set out the general principle in relation to defects which are regarded as latent conditions. Nothing flows from the statement made by the member as there was no issue in dispute regarding latent defects. The member’s statement was merely a generalized observation in which the member provided an example where practical completion may have been achieved despite non-compliance with the plans and specifications. In any event, questions of fact necessarily flow from the statement and therefore, without leave, this aspect of ground 4 cannot be the subject of the consideration of this appeal tribunal.
Accordingly, we have formed the view that no error of law has been substantiated.
Error of Law – Ground 10
Ground 10 relates to an alleged error of law by the member in paragraphs [65] to [67] of the reasons for the substantive decision:
[65] The Contract does not provide for the situation where work, already completed under the contract, is damaged or destroyed by events not within control of the builder. In some construction and engineering contracts there are standard clauses which qualify the liability of the builder in such circumstances. It is not uncommon for insurance clauses to provide that it is the builder’s responsibility to reinstate the works, but not until the insurance claim has been settled. In those circumstances, unless the settlement is delayed by an act or omission of the builder, the builder would be entitled to an extension of time for any delay. Provision can be made for the insurance monies to be paid into a joint account pending the reinstatement of the works. It is also the case, that the builder can only recover the monies received from the settlement of the claim for those works, exclusive of fees and costs.
[66] The construction favoured by Mr Edwards that Sovereign should have proceeded in reinstating the works prior to the settlement of the insurance claim, in my opinion, is unreasonable. Such a requirement, hypothetically, could place an unreasonable financial burden on a builder.
[67] It seems sensible that the reinstatement of the works should be the subject of separate scopes of works. It is submitted, on behalf of Mr Edwards, that the insurance work should have been completed before Practical Completion had been achieved. The fact is, that Practical Completion has occurred as I have already found. Mr Edwards and his family had moved into possession. He was aware that there was an insurance claim by Sovereign relating to damage to the works and that work would be attended to when the claim had been settled.
Edwards submits on appeal that the learned member was in error in finding that a separate contract or scope of works was required for the damaged works and that practical completion was achieved before the damaged works were rectified.
It is obvious to first note that the ground relied upon by Edwards is one of mixed law and fact and that leave to appeal is required. Leave has not been sought and no basis is submitted by Edwards in support of leave being granted.
At paragraphs [26] to [36] of his written submissions, Edwards sets out the basis for the alleged errors of fact or law or both.
Edwards submits that:
(a)the learned member erred in finding that the contract did not provide for circumstances where already completed works were damaged by events outside Sovereign’s control;
(b)the learned member failed to take into account clause 16 of the contract which entitled Sovereign to apply for an extension of time in circumstances where there was a delay arising from an insurance claim and the undertaking of rectification work;
(c)the learned member erred in fact in finding that the construction of the contract propounded by Edwards was that Sovereign had to reinstate the insurance work prior to the settlement of the insurance claim;
(d)the insurance work had to be completed before Sovereign completed the Practical Completion stage of the construction;
(e)the learned member failed to make any finding as to whether a new contract was required or not;
(f)the learned member erred in making a finding that it was ‘sensible’ that the reinstatement of the damaged works be the subject of a new ‘scope of works’;
(g)the learned member erred in law in not providing any or any adequate reasons for the conclusions reached in (f);
(h)the learned member denied both parties natural justice in making a finding based on a premise which neither party had argued, namely that the insurance works were a variation to the contract and that a new scope of works was required for the rectification works.
We will address the issue of clause 16 of the contract later in these reasons and confine this ground of appeal to the errors of law asserted by Edwards being the failure to provide adequate reasons and the denial of natural justice.
Having referred to the principles relating to what is regarded as proper reasons for a decision above, it is for this appeal tribunal to assess the reasons given by the learned member in paragraphs [65] to [67].
The complaint by Edwards regarding the adequacy of reasons is confined to the findings by the learned member that it was ‘sensible’ that the reinstatement of the damaged works be the subject of a new ‘scope of works’. The relevant issue is whether the reasons adequately set out the basis for the learned member’s reasons.
The learned member’s reasons at [67] cannot be read separately and apart from the other relevant passages from the reasons relating to the weather events. The learned member found that Edwards was satisfied that practical completion had been reached and that the damage from the weather events was a ‘separate issue’.[37] The ‘separate issue’ is clearly a reference to the scope of works required to be performed under the contract. The learned member observed that Sovereign was required to insure the works and to maintain the insurance until practical completion. The learned member found that the contract did not provide for a situation where completed work was damaged or destroyed. He observed that it was not uncommon for construction contracts to provide for the liability of a builder to reinstate works after the settlement of an insurance claim. The learned member observed that in those circumstances the builder would be entitled to claim an extension of time. He noted that provision could be made in the contract for the insurance monies to be paid into a joint account pending reinstatement of the works. The learned member noted that in those circumstances the builder would only be entitled to recover the monies received from the settlement.
[37]Reasons for the substantive decision [36].
The reasons make tolerably clear that, in the absence of those types of provisions to which he referred, the learned member favoured a construction of the contract that did not oblige the builder to undertake the reinstatement works at least absent a ‘separate scope of works’. We will come shortly to what the learned member was referring to by a ‘separate scope of works’. At reasons [67] the learned member observed he had found that practical completion had occurred. The learned member found that Edwards had taken possession of the works and was aware of the insurance claim by Sovereign relating to the works and that the works would be attended to when the insurance claim was settled. We note that these latter findings are not appealed.
The reference by the learned member to ‘separate scopes of works’ must be read and understood in the context of his finding that practical completion had occurred. In these circumstances it is reasonably readily apparent that the learned member did not consider the works required to be undertaken as a result of the weather events were variation works under the subject contract. Such a finding would be inconsistent with the finding that practical completion had occurred. Seen this way, it is also reasonably readily apparent that the learned member’s reference to ‘separate scopes of works’ is a reference to the need for a separate contract to be entered into between the parties in respect of the building works relating to the weather events. It follows from the above analysis that in circumstances where the learned member found practical completion had been reached and that, on a proper construction of the contract, the works relating to the weather events were not within the contractual scope of works, a separate contract would be required to be entered into between the parties in respect of the weather event related works. We will address these issues further in considering ground of appeal 9.
Accordingly, we are satisfied that the learned member’s reasons are adequate in relation to his finding at reasons [67].
Edwards submits that the learned member failed to provide procedural fairness to the parties by making a finding for which neither party contended. Edwards is referring here to the finding by the learned member that a new scope of works was required in respect of the weather related events. We do not accept this submission. Whether the works required to be carried out as a result of the weather events were within the scope of works under the contract was an issue well and truly alive in the proceedings below. It was an issue in relation to which both parties expected the learned member to make findings and a determination. Edwards cannot now complain that the learned member did so.
This ground of appeal has not been established.
Error of Law – Ground 14
By way of a preliminary matter in determining whether ground 14 of the appeal is sustainable, it is necessary to address Edwards’ application for leave to adduce new evidence.
Ground 14 of the ground of appeal provides:
Subject to leave being granted to adduce fresh evidence in the form of a finding of the Development Tribunal dated 4 September 2018 setting aside the alternative solution approval and certification relied upon by the Member at [142] to [144] of the reasons such that there was an error of law to rely on that evidence.
The paragraphs relied upon in the member’s reasons for the substantive decision state:
[142] Mr Blair believed AS3500.3 is irrelevant due to the National Construction Code (Alternative Solution) provision.
[143] Finally in their point report, Mr Blair and Mr Kwan were asked whether the box gutter specifications had to be designed by a suitably qualified person (hydraulic engineer), whether a Form 15 was required to be provided before certifying the plans and/or whether a Form 16 ought to have been provided before certifying the building, as constructed. Mr Blair did not believe it was a box gutter and he understood that a certifier had issued a building approval and had provided an ‘Alternative Solution’. Mr Kwan believed the Code required the box gutter to be designed by a suitably qualified person, who would have provided a Form 15 certification that the design complied with AS3500 and, at completion, the installer would then have provided a Form 16 certifying installation in accordance with the certified design drawing.
[144] In fact, a Form 15 – Compliance certificate for building design or specification dated 18 October 2017 has been provided by the Building Certification Group, based on an alternative solution for the gutter design, based on the hydraulic calculations of Neil Blair and Associates Pty Ltd. Mr Blair, in the course of cross-examination, stated that although the National Construction Code contemplated ‘alternative solutions’ should be approved prior to the event, in application, he said that it is very common for them to be approved, subsequently, as was the case here.
The evidence relied upon by the member therefore was the approval dated 19 October 2017. The purpose of the evidence was to assist the member in determining whether the box gutter had been constructed in accordance with an ‘approved alternative solution’.
Edwards has made two applications to the appeal tribunal for the consideration of fresh evidence.[38]
[38]Application for miscellaneous matters dated 14 December 2018; Application for miscellaneous matters dated 12 July 2019.
The first application dated 14 December 2018 relates to material which came into existence on 4 September 2018,[39] as a result of Edwards’ appeal to the Development Tribunal regarding the approval dated 19 October 2017. The material relied upon by Edwards is a determination by the Development Tribunal that the decision approving the alternate building solution for roof water drainage dated 19 October 2017 be set aside and that the Building Certification Group (‘BCG’) make a fresh decision based on the reasons provided by the Development Tribunal.
[39]Affidavit of Donald Edwards dated 12 December 2018, Attachment 10.
Edwards submits that the fresh evidence is relevant to determine whether the box gutter had been constructed by Sovereign in accordance with the contract and all legislative requirements and therefore impacted on the decision of the learned member as to whether the stage of Practical Completion had been met.
Edwards relies upon his affidavit dated 12 December 2018 which sets out the following salient facts:
(a)A decision notice for the works comprising the gutters under the contract was first provided by BCG on 17 July 2014. The decision notice required that the gutters be fitted to comply with BCA Part 3.5.2 and AS3500.
(b)The first development application decision notice for an ‘alternative building solution’ was provided by BCG (‘BCG first alternative solution decision’) on 19 October 2017. This decision approved the gutter system installed by Sovereign in September 2014. This notice was provided to Edwards by Sovereign two days before the hearing of the dispute between the parties.
(c)On 8 November 2017, Edwards appealed the BCG first alternative solution decision to the Development Tribunal.[40]
(d)On 4 September 2018, the Development Tribunal allowed the appeal, set aside the decision approving the alternate building solution for roof water drainage dated 19 October 2017 and ordered that BCG remake the decision having regard to the reasons provided by the Development Tribunal no later than 2 October 2018.[41]
(e)On 2 October 2018, Mr Retell, on behalf of BCG, provided another development approval decision notice (‘the second alternative solution decision) which included the following:
(i) a Form 15 prepared by Neil Blair, Sovereign’s hydraulic design expert;
(ii) a rudimentary sketch of the gutter profile at one section of the gutters to support calculations;
(iii) a plan from Sovereign identical to the one attached to the Decision with no dimensions or scale;
(iv) a Statement of Reasons which addresses capacity and calculations of the gutter.[42]
(f)On 22 October 2018, Edwards appealed the decision notice dated 2 October 2018 being the second alternative solution decision.[43]
[40]Affidavit of Donald Edwards dated 12 December 2018 [7]-[21].
[41]Ibid [22]-[23].
[42]Ibid [24].
[43]Ibid [29].
On 10 July 2019, the Development Tribunal set aside the second alternative solution decision dated 2 October 2018. This fresh evidence, being the decision of the Development tribunal dated 10 July 2019, is the subject of Edwards’ second application to introduce fresh evidence.
Edwards submits that the introduction of the fresh evidence is related to the determination of whether Sovereign had reached practical completion and whether Sovereign was entitled to issue a Notice of Practical Completion and a final claim for the practical completion stage as at 11 December 2014.
Edwards submits that as at 11 December 2014:
(a)the box gutter had not been constructed according to the contract including the plans and specifications;
(b)there was no alternative solution in existence;
(c)the doctrine of substantial performance did not apply;
(d)accordingly, the practical completion stage of the works had not been met.
It is Edwards’ case that as at the date of the second application to adduce fresh evidence, namely 12 July 2019, no valid alternative solution existed for the construction of the box gutter and accordingly the same applies as at the Date of Practical Completion determined by the learned member.
It follows, according to Edwards, that had the learned member had notice of the fresh evidence, which was not available at the time of the hearing, the member would not have reached the conclusions reached in regard to the Date of Practical Completion.
Sovereign submits:
(a)as at the date of Sovereign’s written submissions dated 12 September 2019, provided in accordance with directions of this appeal tribunal dated 5 August 2019, the box gutter is approved;[44]
[44]Affidavit of Paul Evans dated 28 August 2019.
(b)a new approval dated 22 August 2019 was provided to Edwards on 22 August 2019;[45]
(c)the facts remain, the alternative solution for the box gutter has been approved;
(d)Edwards’ conduct between the date of the hearing before the learned member and the date of the hearing of the appeal and subsequently has consisted of applications to the Development Tribunal to challenge an uncontested fact which Edwards did not like at trial in order to support an argument that Practical Completion was not reached (and has not been reached);
(e)Edwards has been compensated in the member’s reasons for the substantive decision for any damage arising from the construction of the box gutter. These damages are not the subject of the appeal;
(f)Edwards has acted in a manner aimed at defeating the performance of the contract by Sovereign, post hearing, in seeking to have an approved structure unapproved;
(g)no challenge to the approval in evidence at the hearing before the learned member was made at the hearing;
(h)the evidence submitted by Edwards to be ‘fresh evidence’ is not in fact ‘new evidence’ or ‘fresh evidence’ but evidence which has come about by the calculated and deliberate actions of Edwards designed to overcome a fact that existed at the hearing which was adverse to Edwards;
(i)to allow evidence of the kind proposed by Edwards would encourage litigants to sit back and not challenge certain evidence on the basis that the evidence could be challenged at a later stage in another forum and then re-introduced into the hearing of the dispute between the parties;
(j)the existence or otherwise of approval of the box gutter does not alter the finding of the learned member that practical completion had been reached;
(k)both applications for fresh evidence relate to a ground relied upon by Edwards in relation to an error of law. Thus no fresh evidence can be admitted in support of an appeal on a question of law only.
[45]Ibid annx “PWE1”.
It was not contentious in the tribunal below that, if the works were not within the scope, a variation would need to be raised. What was contentious was whether Sovereign was obliged to do so. What Edwards’ submissions overlook is that he would have been obliged to meet the cost of the works. The learned member correctly found Sovereign was not obligated to bear the cost. Accordingly, even if there was error by the learned member it would not have had an impact upon the final result in the proceedings below.
Incorrectly installed balustrades – Ground 18(e)
The issue of the balustrades was dealt with somewhat briefly at the hearing.[132] The evidence of Mr Boyle was that the balustrades conformed to the requirements of the contract.[133] Mr Carpenter’s evidence was that there was an uneven number of balustrades on either side of the centre feature situated at the rear deck.[134]
[132]T2-116, line 30 to T2-117, line 12.
[133]Report by Chris Boyle dated 14 March 2017, [86].
[134]Building Defect and Cost Report by Garry Carpenter dated 31 May 2016, D.9.
Unfortunately, the issue of the balustrades is not addressed in the reasons below. If the learned member did not accept the claim, the reasons do not reveal this. If the learned member did accept the claim then he has failed to allow an amount for the cost of rectification. In our view, either way, the error by the learned member is one of mixed law and fact.
The rectification cost if the work was found to be defective was agreed by the experts at $650.00. Given that the quantum claimed is not significant and given the outcome of the learned member’s reasons, we do not consider the error warrants the granting of leave to appeal.
New shower shelf – Ground 18(f)
The learned member accepted the evidence of Mr Boyle that the presence of rust underneath the shower shelf was a maintenance issue and was first brought to the attention of Sovereign outside the defects liability period. That period expired six months after the Date of Practical Completion.
The learned member was entitled to accept the evidence of Mr Boyle. This ground of appeal is not made out.
Incorrectly installed towel ring – Ground 18(g)
The learned member found that the towel ring issue was not brought to the attention of Sovereign within the defects liability period. It is implicit in the reasons that the learned member could not be satisfied, on the evidence, that the issue arose as a result of poor workmanship as opposed to the application of excessive force.
There was no error by the learned member. We would add that even had there been error, the quantum of the claim, being $80.00, would not warrant a grant of leave to appeal.
Replacement of boards to rear deck – Ground 18(h)
Edwards says that the learned member should have preferred the evidence of Mr Carpenter who said that the boards fitted to the rear deck were undersized with different surface profiles. He recommended the replacement of the boards to achieve a consistent appearance. Mr Boyle did not consider the installation of the boards to be defective.
The learned member was entitled to prefer the evidence of Mr Boyle. There was no error by the learned member.
Plumbing work to unblock sewer line – Ground 18(i)
The learned member found that Edwards accepted he was responsible for the blocked sewer line.[135] The learned member found that Sovereign had not contributed to the blockage of the ORG.
[135]Reasons for the substantive decision [112].
Edwards’ submissions do not address the nature of the error by the learned member. If Edwards says that the learned member failed to take into consideration relevant evidence, the submissions do not address the finding by the learned member or the specific evidence he failed to take into consideration.
In the absence of any cogent submissions by Edwards this ground of appeal is not made out.
Incorrectly installed skirting palings – Ground 18(j)
Mr Boyle opined that once painted the skirting palings would be of an acceptable standard.[136] The learned member found that painting was not within the scope of works. The learned member was entitled to accept the evidence of Mr Boyle.
[136]Report by Chris Boyle dated 14 March 2017, [119].
There was no error by the learned member in not allowing the claim.
Knots in weatherboards – Ground 18(k)
Mr Boyle’s evidence was that the weatherboards used were not defective[137] and could be adequately filled and painted.[138]
[137]Ibid [123].
[138]T2-130, lines 19-20.
The learned member was entitled to accept the evidence of Mr Boyle. There was no error by the learned member.
Interest on money in Edwards’s joint bank account – Ground 18(m)
By clause 8 and Annexure ‘B’ of the contract Edwards was required to pay an amount of $27,580.00 to the security deposit account. By clause 8.3 of the contract, Edwards was entitled to all interest earned on the investment of the security account money.
Edwards says that the learned member erred in not awarding him interest on the money he borrowed to pay into the security account.
The claim by Edwards is for consequential loss and falls within the second limb of the rule in Hadley v Baxendale:[139]
Now, if the special circumstances under which the contract was actually made were communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated.
[139](1854) 156 ER 145.
Edwards’ submissions do not address whether there was before the learned member evidence that, at the time the contract was entered into, Sovereign was aware that Edwards borrowed money to pay into the security account. Nor do Edwards’ submissions address whether there was any evidence that such loss as claimed by Edwards was within the contemplation of the parties when they entered into the contract.
In our view Edwards’ entitlement to interest on the borrowed monies was not made out and any failure by the tribunal to address the claim in the decision below had no impact on the final outcome of the litigation.
Items or services not provided by Sovereign – Ground 18(n)
Edwards says that the learned member failed to consider his claim for the recovery of the value of services not provided by Sovereign. In order to understand this ground of appeal it is necessary to examine the claim made by Edwards at first instance.
In the proceedings below Edwards claimed various amounts falling under six categories:-
(a)Items that did not form part of the initial build but should have and which were approved by QBE.
(b)Items claimed that did form part of the initial build, were performed by Edwards and not by Sovereign, and which were approved by QBE.
(c)Items claimed that did not form part of the initial build and which were not provided for under the contract and which were approved by QBE.
(d)Items claimed that did not form part of the initial build and which were misrepresented by Sovereign and which were not approved by QBE.
(e)Items claimed that did form part of the initial build but which were misrepresented by Sovereign and which were approved by QBE.
(f)Items claimed but which were paid for by others.
The appeal relates to categories (a), (b), (c) and (d).
The submissions by Edwards in support of this ground of appeal are almost entirely lacking in particulars. In an appeal such as this, given the vast number of issues agitated by Edwards, the expectation is that the appellant will sufficiently articulate each ground of appeal and identify, by reference to the evidence and the findings (or lack of findings), where the error asserted arises and what is said to be the consequence of the asserted error. Edwards has conspicuously failed to do this in relation to this ground of appeal.
If, as it appears, Edwards asserts that the learned member failed to consider evidence of loss, any error would be one of fact. In his submissions, Edwards fails to identify where the evidence of the loss claimed was before the learned member apart from a bland reference to, and repetition of, his closing submissions in the proceedings below. Those submissions refer to Edwards’ statement of evidence and an attachment thereto. The attachment consists of a table setting out 19 items. The table columns refer to ‘item claimed by Mr Firrell’, ‘costs built into initial contract’, ‘amount approved’ and ‘what happened during the build’. Edwards’ submissions do not explain in any way the significance of the attachment, the evidence before the learned member relevant to the contents of the attachment or whether the attachment was the subject of evidence at the hearing.
It is not for this appeal tribunal to construct, or attempt to divine, a litigant’s case in the absence of cogent submissions. This is particularly so when the party is legally represented. We are not prepared to consider this ground of appeal further.
Claim for false or misleading conduct and unconscionable conduct – Grounds 15, 16 and 17
Grounds of appeal 15, 16 and 17 were withdrawn at the hearing of the appeal.
Other grounds of appeal relevant to the assessment of damages - Ground 7
Ground of appeal 7 flows from the error asserted by Edwards in respect of the learned member’s finding as to practical completion having occurred. In light of our findings in relation to the issue of practical completion it follows that this ground of appeal is not made out.
Conclusion in appeal APL244-18
Insofar as the appeal relates to questions of law, the appeal is dismissed. Insofar as the appeal is on questions of fact or mixed law and fact, leave to appeal is refused.
Appeal APL356-18 - the costs decision
The learned member made the following costs orders:
a.Edwards pay 70% of Sovereign’s costs, on the standard basis, to be agreed or failing agreement to be assessed on the Magistrates Court scale appropriate to amounts exceeding $50,000.00;
b.Sovereign pay 30% of Edwards’ costs of the counter application, on the standard basis, to be agreed or failing agreement to be assessed on the Magistrates Court scale appropriate to amounts exceeding $50,000.00.
The application for leave to appeal or appeal in relation to the costs decision identifies two grounds of appeal. The first ground is that the learned member erred in awarding Sovereign 70% of its costs because the learned member erred in finding that Sovereign was entitled to be paid $46,155.20 plus interest. The second ground is that the learned member erred in awarding Edwards 30% of his costs of the counter application on two bases: firstly the learned member erred in finding that Sovereign was entitled to be paid $46,155.20 plus interest and, secondly, Edwards succeeded in his counter application. The grounds of appeal make no reference to the learned member’s findings or awards regarding interest to the parties.
We have had some difficulty reconciling the grounds of appeal with Edwards’ submissions.
Edwards says that the costs decision is ‘not so much wrong now, but will be wrong if (the Appeal Tribunal) finds that errors were made in the “Substantive Decision”.’ While we have found error in the substantive decision, these errors do not warrant the granting of leave to appeal and we have refused such leave.
Edwards however makes further, somewhat contradictory submissions, in which he asserts error by the learned member. Edwards says that the learned member took into consideration irrelevant and ‘incorrect’ matters. Edwards refers to the following passage from the reasons for the costs decision:[140]
[15] Sovereign was placed in the position that Mr Edwards would not pay the outstanding final claim, although he gave every indication he would do so. Mr Edwards then reduced the claim and continued to do so, even where Sovereign requested at least the payment of the balance. Sovereign’s only remedy was to commence proceedings which it did. The matter was factually and legally complex, its complexity was exacerbated by the numerous issues and multiplicity of expert opinions. Mr Edwards pleaded and agitated unmeritorious issues which were only abandoned in the last day of the hearing. However, they did not take up as much time as the issue of the box gutter on which he was substantially successful. (highlighting added; footnotes omitted)
[140]Sovereign Homes Qld Pty Ltd v Edwards (No 2) [2018] QCAT 410, [15].
Edwards’ submission is directed at the particular passage highlighted. He says that the learned member was referring to Edwards’ allegation of fraud relating to the QBE insurance claim. Edwards says that the fraud issue did not exacerbate the complexity of the litigation.
Edwards submits that taking into consideration his success in the counter application, the appropriate costs order was that Sovereign recover 50% of its costs of the application and Edwards recover 50% of his costs of the counter application.
In a further departure from his original submission that the costs decision was not wrong, Edwards says that the learned member erred in awarding costs to Sovereign on the Magistrates Court scale applicable to matters where the amount recovered exceeds $50,000.00 on the basis that Sovereign recovered an amount less than $50,000.00. This submission is not reflected in the grounds of appeal.
Sovereign says that Edwards has identified no grounds upon which leave to appeal against the costs decision should be granted.
The leave of the appeal tribunal is required to appeal a costs order.[141] As we have referred to above, the relevant principles in determining whether leave should be granted are: is there a question of general importance upon which further argument and a decision of the appeal tribunal is to public advantage; is there a reasonably arguable case that the primary decision-maker made an error and are there reasonable prospects that the applicant would be granted orders in its favour; is leave necessary to correct a substantial injustice to the applicant caused by error.
[141]QCAT Act s 142(3)(iii).
If the tribunal at first instance errs in exercising the discretion to award costs the appeal tribunal may set aside the costs decision and exercise the discretion afresh.[142]
[142]QCAT Act s 146, s 147(3).
Whether the exercise of the discretion to award costs has miscarried requires a consideration of the principles in House v The King:[143] did the tribunal act upon a wrong principle or otherwise err in law; did the tribunal make a mistake as to the facts; did the tribunal rely upon an irrelevant consideration or ignore a relevant consideration; in the absence of a specific error, is the decision unreasonable or plainly unjust.
[143](1936) 55 CLR 499.
In our view the learned member was correct in finding that the matter was factually and legally complex, and that the level of complexity was being exacerbated by the numerous issues and multiplicity of expert opinions. Indeed, the appeal has hardly been of less complexity than the proceedings below. Contrary to Edwards’ submission, the learned member did not find that the fraud issue exacerbated the complexity of the litigation. The learned member simply observed that the fraud issue was abandoned on the last day of the hearing. This is not contentious.
Edwards says that the learned member erred in allowing Sovereign its costs on the Magistrates Court scale applicable to matters where the amount recovered exceeds $50,000.00. Despite this not being properly raised in the grounds of appeal, we will nevertheless address the submission.
Unlike the Uniform Civil Procedure Rules 1999 (Qld) there is no scale of costs within the QCAT Act and Rules. The Magistrates Court scale of costs, where the amount recovered does not exceed $50,000.00 provides for the recovery of lump sum amounts based upon ‘events’. The scale provides for the recovery of costs on an item basis where the amount recovered exceeds $50,000.00. Where a building dispute involves a degree of complexity, factually and/or legally, and costs are awarded, it is appropriate that an item based scale be applied in determining those costs, whether that be the Magistrates Court scale, the District Court scale or the Supreme Court scale. The ‘lump sum’ Magistrates Court scale is, where matters are of some complexity, not suited to assessing costs.
Accordingly, it was open to the learned member to make the costs orders by reference to the Magistrates Court scale applicable to matters where the amount recovered exceeds $50,000.00.
Sovereign’s claim below was for the final payment under the contract of $46,155.20 plus interest and costs. Sovereign was successful in respect of its claim. Edwards’ counter application was for an amount of $133,379.30. Edwards was successful in recovering $79,938.30. Of this amount, the most significant component was the repayment of the sum received by Sovereign from QBE Insurance in respect of the two weather events. Although the learned member found that most of the hearing time was spent on issues other than Sovereign’s claim, it should be noted that Sovereign was successful in respect of its claim.
It might be said Edwards was fortunate, in light of the extent to which Sovereign succeeded, that the learned member awarded Sovereign only 70% of its costs of the application. In light of the extent to which Edwards was successful and noting that a very significant part of the amount awarded in respect of the counter claim related to the insurance payment, the allowance by the learned member of 30% of the costs of the counter application was not unreasonable or plainly unjust.
Edwards has filed to establish any ground upon which leave to appeal the costs decision should be granted. Leave to appeal the costs decision is refused.
Interest
In the costs decision Sovereign and Edwards were each awarded interest on damages.
The grounds of appeal do not raise a challenge to the learned member’s findings in relation to interest or the awards of interest.
In respect of the interest on the award to Sovereign the learned member held:
[8] In my opinion an interest rate of 18% is reasonable and I allow that on the full amount owing. It is suggested that I should set off the amount allowed for defects. However, the contract provides that interest at the rate agreed may be charged on the amount outstanding from when it fell due for payment. That amounts to $46,155.20. Mr Edwards says interest should be calculated from18 December 2014, being 5 working days after receipt of the final claim. I accept that. On my calculations, interest from 18 December 2014 to 30 November 2018 at 18% amounts to $32,770.63.
In respect of the interest on the award to Edwards, the learned member held:
[9] Mr Edwards then claims interest at 18% on the amounts he has been awarded. That rate of interest in clause 32 is for the benefit of the contractor and not the owner. He makes the claim on the amounts that were paid to the insurer being the Hail Event and the Rain Event. Section 77 of the Queensland Building and Construction Commission Act 1991 permits this Tribunal to make orders in relation to a building dispute dealing with interest “at the rate, and calculated in the way, prescribed under a regulation". Section 34B of the Queensland Building and Construction Commission Regulation 2003 provides for the calculation of interest at a rate agreed by the parties or at the rate of 10%.
[10] The substantial Hail Event claim was paid to Sovereign on 15 September 2015. It has had the benefit of those funds being $64,954.002 since that date. Although, Sovereign submits it was ready, willing and able to carry out the work from 9 August 2016 that does not detract from the fact that it had the benefit of the funds from that earlier date. It also had the benefit of the funds paid on 6 November 2015 for the Rain Event agreed at $1,344. Together, they amount to $66,298.00. With the defects claim the amount totals $79,983.30.
[11] Interest calculated at 10% from 15 September 2015 to date at 10% amounts to $25,625.27.
In his submissions, Edwards says that the learned member erred in awarding interest to Sovereign in respect of periods for which it was responsible for delay. Edwards says that the learned member failed to take into consideration evidence of 12 months of delay attributable to Sovereign.
Edwards submits that the learned member erred in not awarding interest on the damages awarded in respect of the counter application from the Date of Practical Completion. Edwards asserts that, at the very least, he should have been awarded interest on the amount allowed for defective work (being $13,640.13 excluding GST) from the Date of Practical Completion.
The grounds of appeal do not refer to the decision in relation to the awards of interest. Leave has not been sought by Edwards to amend the grounds of appeal to include the decision in relation to the award of interest.
It would be procedurally unfair to permit Edwards to expand his grounds of appeal in relation to the costs decision beyond those set out in the application for leave to appeal or appeal. In responding to the appeal, Sovereign was entitled to rely upon the grounds of appeal set out in the application. Edwards has, without leave, sought to expand the grounds of appeal well beyond those articulated in the application.
Accordingly, we confine our consideration and determination to the grounds of appeal set out in the application for leave to appeal or appeal. It follows that we will not consider further the submissions by Edwards relating to the awarding of interest.
Conclusion in appeal APL356-18
Leave to appeal is refused.
Costs of the appeals
We will make directions for the parties to file and exchange submissions on the costs of the appeals. The question of costs will thereafter be determined on the papers.
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