Eugeniuz Malatynski as trustee for the Malatynski Trust t/as Ultra Modern Patios v Ranclaud
[2017] WADC 75
•9 JUNE 2017
EUGENIUZ MALATYNSKI as trustee for THE MALATYNSKI TRUST t/as ULTRA MODERN PATIOS -v- RANCLAUD [2017] WADC 75
| DISTRICT COURT OF WESTERN AUSTRALIA | Citation No: | [2017] WADC 75 | |
| Case No: | APP BUN:1/2016 | 8 MAY 2017 | |
| Coram: | GOETZE DCJ | 9/06/17 | |
| PERTH | |||
| 26 | Judgment Part: | 1 of 1 | |
| Result: | Appeal dismissed Cross appeal allowed Judgment in Magistrates Court set aside Judgment for the respondents in the sum of $10,743 | ||
| PDF Version |
| Parties: | EUGENIUZ MALATYNSKI as trustee for THE MALATYNSKI TRUST t/as ULTRA MODERN PATIOS LEN RANCLAUD ADELE RANCLAUD |
Catchwords: | Appeal Unregistered builder seeking payment for construction of patio Unjust enrichment Legal prohibition against recovery of construction costs |
Legislation: | Builders' Registration Act 1939 Building Act 2011 Building Services (Complaint Resolution and Administration) Act 2011 Home Building Contracts Act 1991 Magistrates Court (Civil Proceedings) Act 2004 |
Case References: | Ardon Enterprises Pty Ltd v Mizen [1999] WADC 83 Dowell v Custombuilt Homes Pty Ltd [2004] WASCA 171 Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASCA 264 Great City Pty Ltd v Kemayan Holdings Pty Ltd [1999] WASC 70 Holidaywise Koala Pty Ltd v Queenslodge Pty Ltd [1977] VR 164 Instant Transportable Offices Pty Ltd v BGC Contracting Pty Ltd [2012] WADC 99 Keller Constructions (WA) Pty Ltd v Builders' Registration Board of Western Australia [2011] WASCA 163 Myrine Pty Ltd v Mesiti [2006] WADC 106 Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221 Smith v Mandurah Auto Pty Ltd [2014] WADC 69 |
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
- IN CIVIL
- Appellant
AND
LEN RANCLAUD
ADELE RANCLAUD
Respondents
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram : MAGISTRATE MILLINGTON
File No : BUN CTC 754 of 2014
Catchwords:
Appeal - Unregistered builder seeking payment for construction of patio - Unjust enrichment - Legal prohibition against recovery of construction costs
Legislation:
Builders' Registration Act 1939
Building Act 2011
Building Services (Complaint Resolution and Administration) Act 2011
Home Building Contracts Act 1991
Magistrates Court (Civil Proceedings) Act 2004
Result:
Appeal dismissed
Cross appeal allowed
Judgment in Magistrates Court set aside
Judgment for the respondents in the sum of $10,743
Representation:
Counsel:
Appellant : Mr M J Joubert
Respondents : Mr J G Mazza
Solicitors:
Appellant : Emeris Lawyers Pty Ltd
Respondents : John Mazza
Case(s) referred to in judgment(s):
Ardon Enterprises Pty Ltd v Mizen [1999] WADC 83
Dowell v Custombuilt Homes Pty Ltd [2004] WASCA 171
Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASCA 264
Great City Pty Ltd v Kemayan Holdings Pty Ltd [1999] WASC 70
Holidaywise Koala Pty Ltd v Queenslodge Pty Ltd [1977] VR 164
Instant Transportable Offices Pty Ltd v BGC Contracting Pty Ltd [2012] WADC 99
Keller Constructions (WA) Pty Ltd v Builders' Registration Board of Western Australia [2011] WASCA 163
Myrine Pty Ltd v Mesiti [2006] WADC 106
Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221
Smith v Mandurah Auto Pty Ltd [2014] WADC 69
- GOETZE DCJ:
Introduction
1 The appellant, Mr Eugeniuz Malatynski, in his capacity as trustee for the Malatynski Trust trading as Ultra Modern Patios, constructs patios in Bunbury.
2 The respondents, Mr Len Ranclaud and his wife Adele Ranclaud, own a property in Bunbury. They discussed with Mr Malatynski the construction of a new patio superimposed around the existing patio at their home.
3 At trial, Mr Malatynski alleged that he entered into an oral agreement with Mr and Mrs Ranclaud to construct the new patio and that he would do so by supplying materials and labour in accordance with their instructions from time to time at his usual rates, alternatively at fair and reasonable rates, and in the further alternative, he claimed that Mr and Mrs Ranclaud had been unjustly enriched by reason of his construction of their new patio.
4 Mr and Mrs Ranclaud said they entered into an oral contract with Mr Malatynski to construct the patio for the fixed price of $60,000.
5 Work started on 24 August 2009 and, according to Mr Malatynski, it was completed on 27 August 2010. However, Mr and Mrs Ranclaud disputed this, saying that not all required work was completed and some work was defective.
6 Pursuant to the oral contract, Mr and Mrs Ranclaud paid a total of $45,000 to Mr Malatynski. They refused to pay any more. Accordingly, on 15 September 2014, Mr Malatynski made a claim against them in the Bunbury Magistrates Court.
7 The learned magistrate dismissed Mr Malatynski's open ended claim, finding that there was a fixed price contract. From $15,000 remaining unpaid by Mr and Mrs Ranclaud under that contract, the learned magistrate allowed a set-off and counterclaim. He entered judgment in favour of Mr Malatynski in the sum of $2,815. Mr Malatynski now appeals that judgment. Mr and Mrs Ranclaud have cross-appealed.
The claim
8 When Mr Malatynski made his claim, his solicitor, Mr M J Joubert, deliberately drafted the original and the amended statement of general procedure claim forms in terms of the claim being based on the oral contract between the parties for materials supplied and labour at Mr Malatynski's usual, alternatively fair and reasonable rates and in the further alternative, the claim was based on unjust enrichment. The original claim noted that Mr Malatynski was not a registered builder.
9 An amended claim was made on the basis that in the event that the first alternative claim for Mr Malatynski's fair and reasonable rates was 'held to be not justiciable', then the further and alternative claim was based on unjust enrichment to enforce an obligation which, whilst it arose from the performance of the contract, was separate and distinct from it, as set out in Pavey & Matthews Pty Ltd v Paul (1987) 162 CLR 221(227, 250 - 257) and Dowell v Custombuilt Homes Pty Ltd [2004] WASCA 171[94].
10 The rationale relied upon by Mr Joubert for the claim of unjust enrichment was that:
1. the oral contract to construct the patio was unenforceable because s 4(1)(a) of the Home Building Contracts Act 1991 required a home building work contract to be in writing; and
2. Mr Malatynski was not a registered builder and therefore, he could not lodge a complaint under the Building Services (Complaint Resolution and Administration) Act 2011.
11 Mr Joubert submitted that, given the unenforceable building contract, Mr and Mrs Ranclaud have an obligation to reimburse Mr Malatynski, by reason of the value of the benefit to them of the constructed patio, accepted and retained by them, at Mr Malatynski's expense.
The defence and counterclaim
12 By their defence, Mr and Mrs Ranclaud disputed Mr Malatynski's version of the oral contract. They claimed a fixed price contract which Mr Malatynski breached by failing to complete the patio and rectify defects.
13 Further, Mr and Mrs Ranclaud pleaded that Mr Malatynski was an unregistered builder, and that therefore, he was not entitled to rely on unjust enrichment.
14 Although not specifically pleaded by naming the legislation in the defence, s 4(1)(A)(c) Builders' Registration Act 1939,which was operative during construction, precluded Mr Malatynski from recovering anything on any form of building contract, whether oral or written, because he was not a registered builder.
15 Mr and Mrs Ranclaud counterclaimed seeking damages for the cost of completing the patio and making good defects in Mr Malatynski's work. They also sought the costs of plans for a submission to the City of Bunbury, obtaining a building licence, and a building inspection fee, all totalling $1,442.
16 Further, Mr and Mrs Ranclaud sought to set off the sum of $10,743, being monies owed by Mr Malatynski to their business, H & H Reticulation.
The defence to the counterclaim
17 Mr Malatynski argued that he performed work as a subcontractor and was directed in the doing of that work by Mr and Mrs Ranclaud who, he said, were owner/builders. They employed contractors, including himself, to construct the patio.
18 Mr Malatynski denied all of the costs claimed for completing or rectifying defective work. He denied the costs of plans and fees paid to the City of Bunbury. He disputed the debt to H & H Reticulation.
The issue identified by the learned magistrate
19 In his reasons for decision, the learned magistrate said:
What must be considered first, what was the status of the contract? There is no dispute that this was an oral contract. The question is was it fixed in the amount of $60,000 or was it to supply the materials and labour to the claimants in the usual or alternatively the fair and reasonable rates of Mr Malatynski.
The magistrate's findings
20 The learned magistrate made the following findings:
1. He did not accept the evidence of Mr Malatynski, both as to the terms of contract and generally.
2. The learned magistrate accepted the evidence of Mr and Mrs Ranclaud, even if that acceptance was expressed in only a general manner.
3. He found there was a fixed price contract in the sum of $60,000.
4. He found that Mr and Mrs Ranclaud had paid Mr Malatynski $45,000, leaving $15,000 remaining unpaid to Mr Malatynski.
5. He did not accept Mr Malatynski's evidence for a number of reasons, including that he:
a. was vague and unconvincing by reason of assumptions in relation to a lot of matters;
b. was inconsistent in his costings in both the exhibits, in particular exhibit 4, which was a handwritten schedule of dates, hours worked and a description of the work performed, and in his evidence generally;
c. did not cost the work as it progressed. Exhibit 4 was prepared before timesheets were located and therefore, his evidence regarding time worked was of little assistance;
d. was vague on the number of workers at the site and the rates at which he charged for those persons and vague on a number of other issues; and
e. ran his business poorly;
6. Mr Malatynski was in charge of the work being carried out on the patio. He inferred that it was Mr Malatynski's obligation as builder to have obtained the appropriate building licence from the City of Bunbury and that Mr Ranclaud was not an owner builder. The reasons for this include the following findings:
a. Mr Malatynski said he was an experienced builder;
b. Mr Malatynski trades under the name of 'Ultra Modern Patios'.
c. Mr Ranclaud expected plans and approval and relied upon Mr Malatynski to obtain the same. This was found to be a 'genuine reliability'.
In his evidence, Mr Ranclaud:
(i) said he would go to work each morning and come home at the end of the working day;
(ii) denied that he met with Mr Malatynski on a daily basis and discussed the patio. He never had long discussions with Mr Malatynski and he never had discussions regarding the work; and
(iii) referred to earlier works done at his home, including building the house, having a garage constructed and the construction of the earlier patio, for each of which matters, the relevant builder obtained a building licence.
d. Mr and Mrs Ranclaud were entitled to recover the cost of the preparation of building plans to submit to the City, together with the costs of a building licence from the City and its inspection fee, as being matters which were required before the commencement of construction and to which Mr Malatynski should have attended;
e. Mr Malatynski said in his evidence that he did not obtain the plans or the approval from the City of Bunbury because the costs of the patio involved more than $20,000. He was not a registered builder, however he 'was happy to go that way' ie, for the matter not to come to the attention of the council, but be 'something … done under the carpet'; and
f. Mr Malatynski arranged for the required workers to attend the premises to construct the patio. He engaged those workers and was responsible for them;
7. He allowed the set-off and counterclaim, but only in respect of:
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- 8. He accepted that the patio was incomplete and there was some rectification work to be done. He would have allowed the counterclaim for those costs, however there was no evidence of those costs and therefore such claim was not allowed.
9. He found the unpaid $15,000, less $12,135 above, left a balance of $2,815 owing to Mr Malatynski, for which amount judgment was then entered against Mr and Mrs Ranclaud. In fact, the balance was not $2,815, but $2,865.
21 On appeal, no error has been shown in the learned magistrate's reasons for accepting, or preferring, the evidence of Mr and Mrs Ranclaud over that of Mr Malatynski and no attempt was made to do so. That, no doubt, is because the learned magistrate had the opportunity to see and hear from all witnesses and to himself determine issues of witness credibility and reliability. On appeal, this court has not had that opportunity. Therefore, clear error needs to be demonstrated in the learned magistrate's findings on the facts based on the evidence of witnesses before any finding of fact can be set aside.
22 Clearly, the learned magistrate found Mr Malatynski to not be a credible witness.
The appeal
23 This appeal and the cross appeal are brought pursuant to the provisions of s 40 of the Magistrates Court (Civil Proceedings) Act by which:
(4) The District Court must decide the appeal on —
(a) the material and evidence that were before the Magistrates Court; and
(b) any other evidence that it gives leave to be admitted.
An appeal to the Court must be by way of a reconsideration of the evidence that was before the primary court unless the parties agree otherwise.
25 An appeal is by way of rehearing. That the court may grant leave to admit new evidence does not make an appeal a hearing de novo: Smith v Mandurah Auto Pty Ltd [2014] WADC 69.
26 It is necessary for an appellant to demonstrate error in the reasons for decision of the learned magistrate. It follows that the appellate powers of this court may only be exercised if an appellant has demonstrated that the learned magistrate's decision is the result of some legal, factual or discretionary error: Smith v Mandurah Auto Pty Ltd.
Legislative provisions relevant to this appeal
27 Before proceeding further it is appropriate to have regard to certain legislative provisions.
The Magistrates Court (Civil Proceedings) Act 2004
28 Relevantly, s 6(1) provides that the Magistrates Court has jurisdiction to deal with various civil matters, which the subsection then goes on to recite, but which need not now be repeated. Then s 6(5) provides that:
Despite subsection (1), the Court does not have jurisdiction to deal with —
…
(e) a claim that the Building Commissioner or the State Administrative Tribunal has jurisdiction to deal with under the Building Services (Complaint Resolution and Administration) Act 2011.
The Home Building Contracts Act 1991
29 Section 3 of the Home Buildings Contract 1991, relevantly, provides as follows:
builder means a person who carries on, … a business which consists of or includes the performing of home building work for others;
contract means a home building work contract;
home building work means the whole or part of the work of —
(a) constructing or re-constructing a dwelling including an existing dwelling …; or
…
(c) altering, improving or repairing a dwelling…; or
(d) constructing or carrying out any associated work in connection with —
(i) any work referred to in paragraph (a) or (b); or
(ii) an existing dwelling, …;
home building work contract means a contract between a builder and an owner for the performance by the builder of home building work, …
owner in relation to a contract means the person for whom or which home building work is to be performed under the contract;
30 Section 4(1) provides:
A contract —
(a) must be in writing —
(i) setting out all of the terms, conditions and provisions of the contract; and
(ii) showing the date of the contract;
and
(b) must be signed by the builder and the owner or their respective agents.
The Building Services (Complaint Resolution and Administration) Act 2011
31 The Building Services (Complaint Resolution and Administration) Act provides as follows:
3. Terms used
In this Act, unless the contrary intention appears —
builder, in relation to a home building work contract, has the meaning given in the Home Building Contracts Act 1991 section 3(1);
complaint means home building work contract complaint under s 5(2);
home building work has the same meaning given in the Home Building Contracts Act 1991 s 3(1);
home building work contract has the meaning given in the Home Building Contracts Act 1991 section 3(1);
…
5. Making complaint about building service or home building work contract matter
…
(2) An owner or builder under a home building work contract may make a complaint to the Building Commissioner about a matter referred to in the Home Building Contracts Act 1991 section 17 or 20 or Schedule 1 clause 5.
…
11. Action after report
(1) The Building Commissioner must consider any report given to the Building Commissioner under section 10 and may, subject to the other provisions of this section —
…
(d) refer the complaint to the State Administrative Tribunal for it to deal with under section 38 or 43, as the case requires.
32 Relevantly, this Act provides:
s 2 building means any building of a permanent nature used or intended to be used for residential … purposes ... and the term used as an abstract noun means the erection or structural alteration of any such building.
…
s 4(1) Subject to this section, a person who is not registered under this Act shall not —
A(b) enter into any contract or engagement to construct any building, or build any building for another in pursuance of any contract or engagement;
(c) be entitled to recover in any court any fee or charge under such contract or engagement;
…
(1b) In subsection (1) …
construct includes add to, alter, improve, renovate and repair.
33 Mr Joubert submitted that the issue of illegality arising from s 4(1)(A)(b) of the Builders Registration Act was not raised at trial and should not therefore be considered on appeal.
34 Both the original claim and the defence filed in the Magistrates Court specified that Mr Malatynski was an unregistered builder. The learned magistrate referred to this fact in his reasons. Therefore, although he may not have dealt with this other than to note that Mr Malatynski was not registered, the issue was raised sufficiently at trial and it is therefore open to proceed with the cross-appeal and make findings in respect thereof.
35 In Elvidge Pty Ltd v BGC Construction Pty Ltd [2006] WASCA 264 [43], McLure P said, with Roberts-Smith and Buss JJA agreeing, that a court will not entertain a defence of illegality which has not been pleaded, unless certain conditions are met, including that the contract sued upon is ex facie illegal. Here, the oral contract was ex facie illegal because it violated legislation:
1. prohibiting a person, who is not a registered builder, from entering a home building work contract or performing home building work – Builders' Registration Act s 4(1)(A)(1b); and
2. requiring only a registered builder to enter into a written home building work contract - Home Building Contracts Act 1991 s 4(4).
Offenders faced a penalty by way of a fine for these breaches – Holidaywise Koala Pty Ltd v Queenslodge Pty Ltd [1977] VR 164.
36 In any event, this court must follow the imperative of the legislation, which will be more fully dealt with below at [51].
Was Mr Malatynski a builder and was the patio a building?
37 Mr Joubert submitted that Mr Malatynski was not the builder of the patio, but a subcontractor to owner/builders and that the patio was not a building. These matters were not included in Mr Malatynski's grounds of appeal, but they are central to his appeal.
38 It was submitted by Mr J G Mazza, as counsel for Mr and Mrs Ranclaud, that Mr Malatynski carried out building work and that he should therefore have been registered as a builder. He was not.
39 First, there are the two concessions from Mr Joubert for the claim being based on unjust enrichment as outlined at [10] above.
40 Secondly, the statutory definition of a builder is set out in s 3 of the Home Building Contracts Act,as are the definitions of contract, home building work and home building work contract. These are set out at [29] above.
41 Thirdly, at all relevant times preceding and during construction of the patio, s 4 of the Builders' Registration Act precluded any person who was not registered under that Act:
1. from entering into any contract or engagement to construct or build any building;
2. building or constructing as set out in that Act; and
3. being entitled to recover in any court any fee or charge under such contract or engagement – see [32] above.
42 Mr Joubert referred to Keller Constructions (WA) Pty Ltd v Builders' Registration Board of Western Australia [2011] WASCA 163. He argued that this case is authority for the proposition that subcontractors are not required to be registered builders. There is no controversy about that. However, his submission was that Mr Malatynski was a subcontractor working under the supervision of Mr Ranclaud as an owner/builder. Mr Joubert relied on Keller as follows:
43 ... Most houses in Perth are constructed for a landowner under a contract or engagement with a registered builder to build the complete house. The registered builder then employs subcontractors to construct portions of the work to create the building. Many subcontractors will be paid a fee exceeding the prescribed amount. The respondent's argument means that a plumber carrying out the work of digging a trench, laying a sewer line and then connecting the sewer to a house (a building) which is under construction, would 'improve' the building and therefore at the moment that plumber enters into the subcontract with the builder to join up the plumbing line to the partially constructed building, he would be guilty of the offence of 'entering into a contract to construct a building' if he were not a registered builder and the fee payable was more than the prescribed amount.
44 That, in our view, is not a construction which accords with the intention of the Act. On the contrary, it is evident that it was never intended that any subcontractor involved in the construction of a new building had to be registered under the Act if the amount of their fee or charge exceeded the prescribed amount. In the first place, it appears from the Minister's second reading speech that the addition to the Act of the extended definition of 'construct' in s 4(1b) was simply intended to overcome what was seen as a loophole in the Act (Western Australia, Parliamentary Debates, Legislative Assembly, 15 November 1979, 4819). The loophole was that people entering into contracts to renovate an existing building had been held not to enter into a contract to construct a building, so that a person carrying out major renovations of an existing building for a fee in excess of the prescribed amount did not have to be a registered builder. As a result, s 4(1b) was added so that the word 'construct' was defined to include 'add to, alter, improve, renovate and repair'.
43 Here, there was an existing building, namely a house with a patio in respect of which Mr Malatynski carried out work. Mr Mazza described that work in his supporting submissions, which were not objected to during the hearing of the appeal, as follows:
5. The appellant's evidence was as follows:
(a) at paragraph 55 of his statement that all the materials referred to in a bundle of original invoices marked 'EM5' were used on the patio. Such materials included structural items, for example, 19 columns. …;
(b) at paragraph 28 of the statement:
'The patio roof was to be keyed into the existing roof so that it appeared to be part of the original house and not an add-on' (booklet at p 42)
(c) at paragraph 34:
'There was an alteration to the roof area at the kitchen side entrance that involved additional work by the installation of a ceiling, supporting beams and gutters.
The patio roof where it was keyed into the house roof was much higher than the edge of the existing house roof and required a special box gutter where the two roofs joined …' (booklet at p 43).
(d) at paragraph 37:
The original design was for the patio support beams to rest on top of the support columns but this was changed so that the top of the columns were specially cut to accommodated [sic] the beams so as to give a neater look.' (booklet at p 43)
- (e) at paragraph 61:
'The structure that was finally erected was about 180sq metres and made of wood and Hardy columns with colourbond bullnose sides and the main roof was gabled to blend in with the original house.' (booklet at p 44);
(i) The columns were filled with concrete the result being concrete columns (transcript at p 23);
(ii) The concrete columns were supports on the ground which kept the structure up (tr at p 29);
(iii) The patio included supporting beams (tr at p 39).
20. The patio built by the appellant is a 'building' within the meaning of s 4(1)(A)(b) of the Act and having regard to the definition of 'building' in section 2 and the extended meaning of 'construct' at s 4(1)(b). This is reflected by the following:
(a) the invoices, plans and evidence of the appellant reflect that the contract was to construct the patio by assembling, combining building materials and putting materials together and the patio was built in accordance with this contract.
(b) The contract was to construct a patio that was relatively complex and the building of the same was relatively complex as reflected in part by its structural features which included 16 concrete columns with concrete footings below the same and supporting beams;
(c) The patio contracted to be built and built was a building of a permanent nature used or intended to be used for residential purposes;
(d) The contract to construct the building, namely the patio, was to construct a building in itself. Alternatively, the extended definition of 'construct' at s 4(1b) of the Act is relied upon on the basis that the patio is an addition to, alteration or improvement to the house of the respondent's premises. As mentioned above, the appellants evidence was that the patio roof was to be keyed into the existing roof so that it appeared to be part of the original house and not an add on and the patio roof was in fact keyed into the house roof.
45 It is not a great step to find that the new patio was building work, which Mr Malatynski constructed, consistent with both s 2 and s 4(1)(A)(b) and (1b) of the Builders' Registration Act.
46 However, should this not be correct, the loophole referred to in Kellerat [44], resulting in the wider definition of the word 'construct' in s 4(1b), captures the situation in which Mr Malatynski found himself. On any view, the work done was 'building' and Mr Malatynski did 'construct' the patio as those words are defined in the Builders' Registration Act.
47 In Keller, the Court of Appeal further said that:
46. What, therefore, is required is that where the construction of a building (including the addition to, or the alteration, improvement, renovation or repair of an existing building) exceeds an amount of $20,000, the whole of the construction work must be managed and supervised by a registered builder. …
48 The reference to the sum of $20,000 in Keller was a reference to the prescribed amount, being the statutory threshold above which building work must be carried out by a registered builder.
49 The cost of the work specified in the claim was $132,110, or $136,893 plus GST according to Mr Malatynski's expert, reduced to $75,000 to remain within the jurisdictional limit of the Magistrates Court. This, in itself, gives some clue as to the magnitude of the work performed.
50 It was the learned magistrate's inferential finding that Mr Malatynski was the builder of the patio and not a subcontractor. This finding is not challenged by Mr Malatynski in his grounds of appeal. Accordingly, Mr Malatynski's status as the builder of the patio remains intact. Even if challenged as a ground of appeal, such ground could not succeed for the reasons that the magistrate's finding was based on witness credibility and reliability and by having regard to the nature of the work carried out.
The consequence of Mr Malatynski not being a registered builder
51 Mr Malatynski was not registered as a builder under the Builders' Registration Act For this reason, that Act precluded Mr Malatynski from:
1. entering into any contract to build or construct the patio - s 4(1)(A)(b);
2. engaging in the building or construction of it - s 4(1)(A)(b); and
3. making any recovery in any court of any fee or charge under any building contract or engagement in respect of the patio - s 4(1)(A)(c).
52 To overcome this difficulty, Mr Joubert sought to rely on Great City Pty Ltd vKemayan Holdings Pty Ltd [1999] WASC 70 [93], in which White J concluded that s 4 of the Builders' Registration Act did not preclude the availability of unjust enrichment.
53 However, there are two subsequent decisions of this court in Ardon Enterprises Pty Ltd v Mizen [1999] WADC 83 [63] – [77] and Myrine Pty Ltd v Mesiti [2006] WADC 106 [105] – [111], which both preclude any recovery for building and construction work by an unregistered builder, such as Mr Malatynski.
54 It does not seem that Great City was referred to Macknay DCJ in Ardon, but it was referred to Stavrianou DCJ in Myrine, but he did not follow White J, saying that [106] and [107].
White J's conclusion in Great City above was that s 4 of the Actbarred the plaintiff in that case from making a contractual claim in relation to the building work. However his Honour's view was that it did not preclude the plaintiff from recovering for work done in restitution based on the principles of unjust enrichment.
In my view as I have said the remarks of White J concerning s 4 were obiter dictum. His Honour said (at par 50):
This issue has become academic in view of the finding that the evidence does not establish any contract between the plaintiff and the defendant. However, in case I am wrong in that regard and this matter goes further I shall nonetheless deal with this issue.'
56 Mr Joubert also relied on Elvidge to the effect that there, the building contract was lawful, but it was performed in an unlawful manner, contrary to statute which rendered only conduct, but not the contract, an offence. However, the statute in Elvidge is distinguishable from the Builders' Registration Act precluding not only entry into the contract, but also the performance of building work and the recovery of any fee or charge under such contract for that work.
57 Ardon and Myrine are based on the Building Registration Act 1939, which was the relevant legislation until 2011, being after the time Mr Malatynski had ceased working on the patio. Even though Mr Malatynski did not bring his claim until 2014, the Builders' Registration Act governs his claim. It follows that whatever the findings of the learned magistrate might have been, any claim for the recovery of cost, based on a home building work contract, whether oral or written, fixed or open, cannot succeed and nor can a claim based on quantum meruit or for an unjust enrichment. Section 4(1)(A)(c) precludes any recovery whatsoever.
The jurisdiction of the Magistrates Court and the Building Commission
58 Mr Joubert submitted that s 6(5)(e) of the Magistrates Court (Civil Proceedings) Act removes from the jurisdiction of the Magistrates Court any claim on a building contract which the Building Commissioner or the State Administrative Tribunal has jurisdiction to deal with, as set out in s 5 and s 11 of the Building Services (Complaint Resolution and Administration) Act. Under s 5, an owner or builder under a home building contract may make a complaint about a regulated building service to the Building Commissioner.
59 Mr Joubert then submitted that because Mr Malatynski was not a registered builder, he could not make a complaint to the Building Commissioner, such that the Building Commissioner did not have jurisdiction to receive his complaint.
60 However, Mr Joubert's submission that where the Building Commissioner has jurisdiction, the Magistrates Court does not have jurisdiction on a home building contract, as in this matter, cannot be accepted.
61 The removal of jurisdiction from the Magistrates Court by reason of complaint to the Building Commissioner has been previously rejected by Stevenson DCJ in Instant Transportable Offices Pty Ltd v BGC Contracting Pty Ltd [2012] WADC 99.
62 As Stevenson DCJ determined in that case at [74], there was no complaint to the Building Commissioner. Therefore, the jurisdiction of the Building Commissioner was not, in fact, enlivened by s 5 of the Building Services (Complaint Resolution and Administration) Act. For this reason, s 6(5)(e) of the Magistrates Court (Civil Proceedings) Act2004 did not preclude the jurisdiction of the Magistrates Court. It is the same in this case. I respectfully adopt and follow his Honour's reasoning that the Magistrates Court did have jurisdiction.
63 Further, in the event of a dispute, there is no obligation on either an owner or a builder to make a complaint to the Building Commissioner. It is their choice whether they wish to do so or not. Even if such complaint be made, it is then up to the Building Commissioner to accept or refuse the complaint. If there is no complaint to the Building Commissioner, or one referred by the Commissioner to the State Administrative Tribunal, such that neither is seized of the complaint, then there is no limitation on the jurisdiction of the Magistrates Court, which is able to hear and determine the dispute.
64 It follows that the learned magistrate had jurisdiction to deal with this oral building contract.
65 In any event, for matters of construction of a contract or similar legal issues, it is better that they be dealt with in a court, whereas matters concerning quality of work or disciplinary matters might more appropriately be dealt with by the Building Commissioner or the State Administrative Tribunal upon referral by the Commissioner.
Appeal ground 1
66 The first ground of appeal is that the learned magistrate erred in finding there was a fixed price building contract between the parties.
67 Mr Joubert's written submission was that the Magistrates Court:
a quo was precluded by its own statute from determining or enforcing a building contract.
68 Mr Joubert therefore submitted that:
1. the finding of the learned magistrate as to a fixed price contract was beyond power and outside the jurisdiction of the Magistrates Court. It was tantamount to the enforcement of an unenforceable building contract; and
2. Mr Malatynski had no alternative other than to not proceed with a claim on the contract, but to bring a claim for for materials and labour supplied, alternatively for unjust enrichment, as being separate to the contract. In this way, Mr Malatynski was not seeking the enforcement of the oral contract, but the enforcement of an obligation being separate to that contract.
69 However, these submissions cannot be accepted and, for the reasons outlined above, the Magistrates Court did have jurisdiction to determine Mr Malatynski's contractual claim. However, also for the reasons outlined above, the learned magistrate should have dismissed that claim, whether based on contract or unjust enrichment.
70 As an unregistered builder, Mr Malatynski was not entitled to make any recovery whether his claim be based on oral contract or unjust enrichment.
71 If, as Mr Joubert submitted, Mr Malatynski was a subcontractor to Mr and Mrs Ranclaud, as owner/builders, he would not have been engaged in a home building work contract under the Home Building Contracts Act because such a contract is, by definition, between a builder and an owner.
72 If Mr Malatynski had been found to be a subcontractor, then the requirement for a written home building contract would fall away and the claim could then have been dealt with in the Magistrates Court squarely on the basis of the oral contract, being either open ended as alleged by Mr Malatynski, or a fixed price contract as alleged by Mr and Mrs Ranclaud. Of course, the learned magistrate found that there was a fixed price contract and this finding, based on the evidence and the credibility of the parties, has not been challenged on appeal.
73 However, if Mr Malatynski had been found to be a subcontractor with an enforceable claim based on contract then, he could not have made a claim for unjust enrichment – Pavey (256).
Appeal ground 2
74 The complaint here is that Mr Malatynski's expert gave evidence as to the cost of labour and materials. His evidence was not contradicted.
75 The first difficulty with this ground of appeal is that once the learned magistrate had found there to be a fixed price building contract between the parties then, the evidence of Mr Malatynski's expert as to the cost of the patio was no longer relevant.
76 The second difficulty is that the learned magistrate was critical of the expert's evidence by reason that he had never been to the subject premises to inspect the patio. Further, his opinion was based entirely on Mr Malatynski's advice to him and, as noted above at [20], the learned magistrate was critical of Mr Malatynski's evidence regarding a number of matters that directly impact on the cost of the patio. The learned magistrate did not accept the expert opinion.
77 The third difficulty is that even if the learned magistrate was wrong in finding a fixed price contract, Mr Malatynski is not entitled to make any recovery in this action for the reasons outlined above.
Appeal ground 3
78 The complaint here is that the learned magistrate erred by not fully considering the evidence relating to the alternative claim for unjust enrichment. This is particularized as being that the learned magistrate dealt with issues of credibility relating to whether the contract was open ended as to price or a fixed price contract. He erred in not considering the alternative claim for unjust enrichment. In this way, Mr Joubert argued that the learned magistrate missed the point of the trial as based on Pavey as set out at [9] above.
79 However, the claim for unjust enrichment cannot succeed because first, the learned magistrate found that there was a fixed price oral contract and that factual finding, which was within the jurisdiction of the Magistrates Court, cannot be upset on appeal unless error can be shown on the part of the learned magistrate.
80 Secondly, even if this finding as to a fixed price contract could be overturned, the learned magistrate did not accept the evidence of cost from Mr Malatynski and his expert.
81 Thirdly, any attempt by Mr Malatynski at recovery, whether based on an open ended or fixed price oral contract or on unjust enrichment which concerns building and construction, as defined in the Builders' Registration Act,simply cannot succeed at all by reason of s 4(1)(A)(1c) of the Builders' Registration Act,as outlined above.
82 This ground cannot succeed.
Conclusion on the appeal
83 None of Mr Malatynski's grounds of appeal can succeed. The appeal must be dismissed.
The cross-appeal
84 Mr and Mrs Ranclaud have cross-appealed. Their notice is out of time, but Mr Joubert consented to proceeding with it. Essentially, the grounds of the cross appeal rely upon s 4(1)(A)(b) of the Builders' Registration Act as set out above.
Cross appeal ground 1
85 This ground complained that the learned magistrate erred by finding that notwithstanding Mr Malatynski was an unregistered builder, he entered into an oral contract for a fixed sum of $60,000 and he was therefore entitled to recover the outstanding $15,000 under that oral contract.
86 This ground is particularized by reason that the oral contract or engagement to construct the patio was to construct a building as defined in s 2 and in the extended meaning of construct, as set out in s 4(1)(A)(1b) of the Builders' Registration Act, including to add to, alter, improve or renovate.
87 Mr Mazza submitted that the patio was a building within the meaning of s 4(1)A(b) of the Builders Registration Act. His supplementary supplementary submissions included a description of the building work as set out above at [43].
88 Section 4(1)(A)(b) precludes an unregistered builder from entering into such a contract and from performing such contract. Then, s 4(1)(A)(c) precludes such unregistered builder from recovering in any court any fee or charge under such contract. Therefore, Mr Malatynski is not entitled to recover in any court any fee or charge under such contract or engagement.
89 It is obvious from Ardon and Myrine that this ground must succeed, such that the learned magistrate erred by finding Mr Malatynski could recover $15,000 under the fixed price contract. This finding should be set aside.
Cross appeal ground 2
90 This ground observed that the learned magistrate found that Mr and Mrs Ranclaud had paid $45,000 to Mr Malatynski towards the fixed price amount of $60,000, but complained that it was an error of law to set off $45,000 already paid.
91 That this ground has been made out is also obvious for the same reasons set out in cross-appeal ground 1. However, nothing turns on this ground.
Cross appeal ground 3
92 This ground complained that it was an error to not order Mr Malatynski to repay the $45,000.
93 The first thing to be noted is that s 4(1)(A)(c) prevents recovery by an unregistered builder in any court of any fee or charge. It does not however, go so far as to require an unregistered builder to repay any money voluntarily paid to that builder by an owner.
94 Mr Mazza referred to Cheshire & Fifoot, Law of Contract in Australia 10th Aust ed[26.3] that:
A party who pays money to another as a result of a mistake is prima facie entitled to its restitution. Such claims were previously classified as belonging to the genus 'money had and received'. It follows that where a payment has been made by a contracting party on the mistaken assumption that it was required by an existing and valid contract, its retention may constitute an unjust enrichment.
95 However, he also conceded from the same passage in the text that:
The inference of unjust enrichment that arises from payment under a contract mistakenly thought to be valid may be rebutted by evidence that its retention is not unjust, for example, because good consideration was in fact received …
96 Here, Mr and Mrs Ranclaud have received good consideration, namely the new patio, even if some work remained to be performed and there was a need for remedial work. There is no evidence to suggest that this sum was an overpayment to Mr Malatynski. Accordingly, the claim for reimbursement of $45,000 should not be allowed.
Cross appeal ground 4
97 This ground complained that the learned magistrate erred by finding that $10,743 was owed by Mr Malatynski to Mr and Mrs Ranclaud trading as H & H Reticulation and then setting that amount off against the $60,000 fixed price contract.
98 This claim was independent of the building contract and was conceded by Mr Joutbert on appeal.
99 For the reasons set out in cross appeal ground 2, the set-off should not proceed. Rather, the claim of $10,743 should be allowed in its own right.
Cross appeal ground 5
100 This ground complained that the learned magistrate erred in law by allowing the claim for $60,000 and setting off the amount owed to Mr and Mrs Ranclaud by Mr Malatynski ($10,743) and other expenses incurred by Mr and Mrs Ranclaud, leaving a balance owing to Mr Malatynski of $2,815 – see [20.7] and [20.9] above and for which amount judgment was entered against Mr and Mrs Ranclaud.
101 It was conceded by Mr Mazza that Mr and Mrs Ranclaud are not entitled to recover damages in the sum of $1,442 for breach of contract from Mr Malatynski by reason that the oral building contract was illegal, void and unenforceable. However, the correct total is $1392 made up as follows:
| $520 |
| $622 |
| $250 |
$1,392 |
102 For the reasons set out with respect to Ardon and Myrine regarding s 4(A)(1)(c) of the Builders' Registration Act, Mr Malatynski is not entitled to any recovery for any work performed by him and therefore, there should not be any judgment against Mr and Mrs Ranclaud. That judgment for $2,815 should be set aside.
Cross appeal ground 6
103 This was an alternative cross ground in the event of cross appeal grounds 1 – 5 not succeeding. However those grounds have succeeded, there is no need to consider this ground.
Conclusion
104 Mr Malatynski's appeal should be dismissed. The orders of the learned magistrate should be set aside.
105 Leave should be granted to Mr and Mrs Ranclaud to cross appeal. That cross appeal should be allowed and there should be judgment for Mr and Mrs Ranclaud in the sum of $10,743.
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