Honest Holdings Pty Ltd and Loly and Anor
[2007] WASAT 246
•20 SEPTEMBER 2007
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: BUILDERS' REGISTRATION ACT 1939 (WA)
CITATION: HONEST HOLDINGS PTY LTD and LOLY & ANOR [2007] WASAT 246
MEMBER: MR C RAYMOND (SENIOR MEMBER)
MR T CAREY (MEMBER)
HEARD: 18 JUNE 2007
DELIVERED : 20 SEPTEMBER 2007
FILE NO/S: CC 3204 of 2005
BETWEEN: HONEST HOLDINGS PTY LTD
Applicant
AND
MICHAEL LOLY
KARLENE ANNE LOLY
Respondents
Catchwords:
Builders' Registration Act 1939 (WA) - Application for leave to review decision of Building Disputes Tribunal dismissed on all but three grounds - Building Disputes Tribunal invited to reconsider decision pursuant to s 31 of the State Administrative Tribunal Act 2004 (WA) in relation to the three grounds - Further reasons for decision inadequate in certain respects - Whether substantial injustice would result if leave refused
Legislation:
Builders' Registration Act 1939 (WA), s 12A(1)
State Administrative Tribunal Act 2004 (WA), s 31
Result:
Application dismissed
Category: B
Representation:
Counsel:
Applicant: Mr P Monaco
Respondents : Selfrepresented
Solicitors:
Applicant: Godfrey Virtue & Co
Respondents : Self-represented
Case(s) referred to in decision(s):
Honest Holdings Pty Ltd and Loly & Anor [2006] WASAT 189
Riley v The State of Western Australia [2005] WASCA 190
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The applicant sought leave to review a decision of the Building Disputes Tribunal to allow the respondents to recover the cost of replacement of an underground electrical cable which had failed. The cable had been moved by the applicant from its original incorrect location partly within a neighbouring property. This Tribunal invited the Building Disputes Tribunal to reconsider its decision in respect of three of 10 proposed grounds of review, relating to its finding on quantum, omission to find a failure cause, and its finding regarding the condition of the cable. In each case, the Tribunal considered the Building Disputes Tribunal's reasons were inadequate. The applicant challenged the Building Disputes Tribunal's decision on its reconsideration of the three grounds.
The Tribunal found that the Building Disputes Tribunal made no error in its finding on quantum nor its reasons for that finding. In relation to the other two grounds (which were dealt with by the Building Disputes Tribunal together), the Tribunal found that the Building Disputes Tribunal erred by failing to make a finding as to the actual cause of damage to the cable which was attributable to the applicant. However, as the evidence before the Building Disputes Tribunal supported a finding on the balance of probabilities that the damage resulted from a lack of care on the part of the applicant or its agent in the manner in which the cable had been moved from the neighbouring property, the Tribunal found that no substantial injustice would result from refusal of the grant of leave. Leave was therefore refused.
The application
This is an application for leave to review a decision of the Building Disputes Tribunal (Disputes Tribunal) made on 26 August 2005 which resulted in an order being made against the applicant (builder) to pay the respondents (owners) an amount of $6364 in respect of the replacement of an underground power cable and costs.
The application for leave was heard on 18 April 2006 and written reasons for decision were delivered on 10 July 2006. The application for leave was refused in respect of seven of 10 proposed grounds of review. In relation to three grounds, the Tribunal adjourned the application and provided the Disputes Tribunal with an invitation to reconsider the issues raised in those grounds, pursuant to s 31 of the State Administrative Tribunal Act2004 (WA) (SAT Act). The reason for doing so in each case was because the Disputes Tribunal's reasons for decision were inadequate and did not disclose the intellectual process by which it had arrived at the outcome relevant to each ground.
The Disputes Tribunal convened a further hearing of the matter on 18 December 2006. On 21 December 2006, the Disputes Tribunal published further written reasons for decision in respect of the three grounds.
Pursuant to s 31 of the SAT Act, if the decision‑maker varies the decision or sets it aside and substitutes a new decision, unless the proceeding for review is withdrawn it is taken to be for the review of the decision as varied or the substituted decision. The application was not withdrawn, and following a directions hearing on 3 May 2007, the builder was granted leave to file amended grounds of review, which the builder did on 25 May 2007. The builder also filed an affidavit from a director of the builder company, Mr Willem Vincent Marcolina, to which was attached the documents relied upon for the further review, which included a copy of a transcript of proceedings before the Disputes Tribunal on 18 October 2006 and a report obtained from Dr Armand Zurhaar of Zedcon Scientific Services dated 22 May 2007. The owners maintained their opposition to the application.
In summary, the amended grounds for review raised the following five grounds:
1)That the Tribunal was wrong at law and at fact insofar as the evidence supported that the compensation awarded of $6364 was excessive and the alleged fault could have been rectified for significantly less.
2)The Tribunal failed to find the cause of the alleged failure in the cable and therefore the owners failed to establish that the cause was as a result of the conduct of the builder and/or its subcontractors.
3)The Disputes Tribunal was wrong in law and fact as there was no evidence to support the finding that the cable was kinked and burned, and no evidence was led as to what caused the cable to allegedly fail or to establish that the cause was attributable to the applicant. It was against the weight of evidence that the entire cable required replacement.
4)The Disputes Tribunal was wrong in law and in fact, and it was against the weight of evidence that the relocation of the cable caused the alleged failure and particulars were given of other possible causes, and another matter, currently identified without scientific testing on the entire cable occurred during the last five years which affected the integrity of the cable and led to its alleged failure.
5)The Disputes Tribunal was wrong in law and fact went against the weight of evidence in finding the applicant responsible for the alleged failure when the evidence supported a finding that the cable was subjected to a current overload from increased use and the cable had a point of minor damage from the relocation which without advent of increased current by the respondents would have been inconsequential and allowed the cable to continue to operate without a fault.
A sixth ground was not pursued.
The further hearing of the leave application
The builder did not attempt to support some of the amended grounds of review at the hearing. All submissions made were expanding upon written submissions filed by the builder on 6 June 2007. Those submissions concentrated on the issue of causation and the inadequacy of the further reasons provided by the Disputes Tribunal on that issue. One of the owners, Mr Loly, addressed the grounds of review expansively.
It must be noted that the report from Dr Zurhaar is not relevant to, and no regard can be had to it for the purposes of determining whether any error on the part of the Disputes Tribunal is established. That question must be considered on the basis of the evidence which was before the Disputes Tribunal. As the Tribunal has found, however, Dr Zurhaar's report has some relevance to the further question of substantial injustice.
The Disputes Tribunal's further reasons
The three grounds which the Disputes Tribunal was invited to reconsider were the following. Firstly, ground 8 related to the quantum of compensation that was awarded and asserted the amount awarded to be excessive. Ground 9 claimed that the Disputes Tribunal had failed to find a cause of failure. Ground 10 alleged that there was no evidence to support a finding that the cable was kinked and burned. As stated, the Tribunal found that the original reasons for decision were deficient because they did not set out the intellectual process by which the Disputes Tribunal had come to its findings on these matters. In relation to ground 10, the Tribunal recognised that the issue raised was technical, because the Disputes Tribunal appeared to have simply overstated the evidence in finding that the cable was kinked and burned out at 4 metre intervals (original reasons for decision page 10). The evidence indicated that while the cable was kinked at 4 metre intervals, there was only one point at which the cable was burned.
The Disputes Tribunal dealt with grounds 9 and 10 together. The reasons are so short that it is appropriate to set them out in full.
"Grounds 9 & 10
The Tribunal found in favour of the Respondents on the balance of probabilities that:-
1.On the evidence before it from Mr Furmedge at first instance the cable was originally laid on the wrong property. Subsequently it was dug up, lifted on the bucket of a piece of earth moving equipment and moved horizontally on to the Respondents' property. The witness observed exposed wires in open joints in the conduit and the Tribunal finds that the conduit came unglued.
2.The cable ultimately failed.
3.The cable, on inspection was found to be kinked at 4 [metre] intervals consistent with joints in the conduit.
4.Photos produced at the original hearing (Exhibits 5 & 6) clearly showed kinking and at least one area where the insulation had failed and the wires had fused together.
5.At the hearing Exhibit 4 was produced, this being the wires that were fused, and a piece of burnt conduit. This Exhibit should have been produced at the State Administrative Tribunal hearing.
Based on the foregoing, the Tribunal finds faulty and unsatisfactory workmanship carried out by the Respondent or his subcontractors which justified replacement of the entire cable."
The Disputes Tribunal set out the basis upon which it arrived at the amount awarded. The reasons reflect that the amount actually awarded for electrical work was $5138, because an amount of $1000 had been deducted to account for an upgrade requested by the owners.
Indirect repair costs in an amount of $537 had been awarded relating to the making good of the areas affected by the repairs, and an amount of $689 was allowed in respect of interest, fault finding services, electrical inspection and the cost of an electrician giving evidence before the Disputes Tribunal as set out in an exhibit (exhibit 11).
While recognising that under normal circumstances it is desirable to allow a builder an opportunity to remedy faulty or unsatisfactory workmanship, the Disputes Tribunal found that, given the circumstances of the particular case, the owners were justified in affecting the repairs without reference to the builder.
In relation to the costings provided by the builder, the Disputes Tribunal noted that the cost of materials was obtained from other companies in the building trade "who would provide competitive rates on a trade basis". It was noted that the builder had not called a witness to support a document which set out the cost of obtaining materials and labour, according to the builder, and consequently, the costings could not be tested.
Whereas the builder had put forward prices based on calculations of the time taken, the owners' costs were actual costs, based on the actual time which it took for at least three people to complete the work.
Thereafter, the Disputes Tribunal addressed the question of the costs charged by the electrician, System Electrical Services Pty Ltd. It acknowledged that the builder considered the amount charged to be excessive, but the Disputes Tribunal accepted that the work had to be done urgently, that the owners were not electricians and could not assess whether the quotation was excessive. Bearing in mind the circumstances and the recommended rectification, the Disputes Tribunal found that this was not a situation in which the repairs could be postponed to obtain further quotations. The reasons then concluded in the following terms.
"Given the foregoing the Tribunal finds that it was not unreasonable in awarding the Complainant [owners] the total sum sought for:‑
(a)effecting the repairs;
(b)making good; and
(c)out of pocket expenses incurred in proceeding with their complaint against the Respondent [which totalled $6364] ..."
In order to fully understand the reasons for decision, it is necessary to have regard to the Disputes Tribunal's original reasons for decision and this Tribunal's earlier decision in Honest Holdings Pty Ltd and Loly & Anor [2006] WASAT 189.
Considerations
The Tribunal refers to the criteria for the grant of leave set out in the Tribunal's earlier decision and which the Tribunal incorporates. Having regard to this further hearing, the Tribunal emphasises that there is a broad discretion whether or not to grant leave based on the criteria stated.
As the authorities referred to in the earlier decision show, a more lenient approach should be taken to the decisions of the Disputes Tribunal because of the nature of the Disputes Tribunal. The Disputes Tribunal is intended to provide an expeditious process for resolving building disputes and proceedings before it are conducted with informality. Bearing this in mind, the Tribunal considers that the further reasons for decision are adequate to support the quantum of the amount ordered. The findings were open to the Disputes Tribunal on the evidence and the Tribunal is not satisfied that any error, or sufficient doubt, is demonstrated.
The Tribunal now turns to a consideration of grounds 9 and 10.
Mr Monaco was extremely critical of the Disputes Tribunal and submitted that it had simply not understood the principles in Riley v The State of Western Australia [2005] WASCA 190 to which it had been referred by this Tribunal. A reading of the reasons for decision in respect of grounds 9 and 10, alone, might be thought to support that submission, in that it appears that there are essential findings which the Disputes Tribunal should have made but which it omitted to include in its further reasons. However, a reading of the transcript of the hearing on 18 December 2006 shows otherwise.
It is necessary to say something about this hearing. The transcript shows that the parties were given an opportunity to put forward submissions about what evidence was previously before the Disputes Tribunal and its effect. It is not clear why the Disputes Tribunal thought it necessary to follow this process as opposed to simply closely re‑examining the transcript of evidence and formulating more complete reasons for decision. The transcript also shows that the learned chairperson and members made various statements as to their understanding of the evidence. When regard is had to those statements, it is apparent that the Disputes Tribunal never made, nor did it intend to make, any finding as to what actually caused the failure of the cable. By way of example, at pages 25‑26 of the transcript, the learned chairperson sets out her understanding of the evidence that was before the Disputes Tribunal. In summary, that was that the cable had to be relocated; it was moved by the builder's subcontractor (although not expressly stated at this point, by using a backhoe to pull the cable into position); moving the cable "caused whatever the ultimate cause - whether it was kinking, fusing, burning, water in the pipe, whatever it was ..."; and the cable was found to have kinking at regular spaces and to have fused.
This is consistent with the further written reasons for decision. In effect, it is a finding of causation on a "but for" basis: that had the cable not had to be moved, it would not have failed.
The Tribunal accept that it was unsatisfactory workmanship for the builder's subcontractor to use a backhoe to lift and move the cabling in a manner which caused the conduit joints to come apart at 4 metre intervals and to do so in a manner which caused kinking of the cable. However, it appears to be common cause between the parties that kinking alone could not have caused the failure. That was made clear in the submissions that were put to the Disputes Tribunal at the further hearing in December 2006, but it is also evident in the transcript of the original proceedings. (T:[52]) A finding that the manner of moving the cable was unsatisfactory workmanship, however, leads nowhere. Under s 12A(1) of the Builders' Registration Act1939 (WA) (BR Act), the relevant remedy is for the payment of the "costs of remedying the building work that is faulty or unsatisfactory". The movement of the cable cannot be undone. It is not physical work which can be repaired. Accordingly, for there to be any liability attaching to the builder, it must be demonstrated that the manner in which the cable was moved resulted in some damage to the cable which resulted in the supply of cable in that form constituting faulty or unsatisfactory building work. The Disputes Tribunal has made no such finding and has therefore again fallen into error, but not, this time, by reason of any deficiency in the written reasons provided - its written reasons reflect how the Disputes Tribunal saw the matter.
Now that the Disputes Tribunal has provided understandable reasons for its decision, the Tribunal can conclude, and does, that the decision is wrong. Without a finding going further in the manner suggested, the submission made on behalf of the builder to the effect that there is no causal link of loss established must be upheld.
This conclusion is a most unsatisfactory outcome given the evidence that was led before the Disputes Tribunal. When the Tribunal referred the matter back to the Disputes Tribunal under s 31 of the SAT Act for further consideration, it observed on this causation issue that "[a] reading of the Disputes Tribunal's summary of the issues and evidence suggests the likely basis of a finding in favour of the respondents, but there is no such finding. The reasons are deficient in this respect by reason of the principles set out in Riley v The State of Western Australia above". The exchanges between the members of the Disputes Tribunal, including the learned chairperson, and the parties at the further hearing in December 2006 suggests a lack of familiarity with the transcript of the earlier proceedings before the Disputes Tribunal. Indeed, nowhere in the transcript of the December hearing can the Tribunal find any specific reference to the earlier transcript. At page 52 of that earlier transcript, Mr Marcolina, the director of the builder, was cross‑examining the owners' electrician, Mr Giardina. Mr Giardina conceded that a bend in the cable would cause no difficulties. As the Tribunal has indicated, it is apparent that there is no issue between the parties that kinking in itself could not have caused the failure. On the following page of the transcript, Mr Giardina outlined his view that the cable must have been damaged during the course of it being re‑laid. That had to be the case, he said, to explain the damage, and he further outlined that it would explain why it could have taken some five years to elapse before the cable failed. He explained that where there was some damage to the cable, immersing it in water, which was accepted as likely when underground, could lead to failure. Mr Giardina stated as follows at pages 53‑54:
"Giardina:Wherever there's water that ... you'd be down to earth and it acts like a jug, it acts like an element. It would just fry and boil and boil. That's what it does.
Marcolina:So that would therefore melt this pipe I would imagine. If you put this in boiling water you've got a pretty soft shaped pipe.
Giardina:It would soften it."
Immediately prior to this exchange, Mr Giardina had indicated that if damaged during the laying, the failure could occur within a six day period, a six month period, or a six year period. If the damage was such that the cable was stripped bare, it would happen quickly, but if not stripped bare, it would take a period of time.
On the evidence that was before the Disputes Tribunal, in our view, the above evidence would have supported a finding, on a balance of probabilities, that the manner in which the cable was moved, with insufficient care to prevent the conduit joins to come apart resulting in the cabling becoming kinked at regular intervals, most likely caused some damage to the conduit in the vicinity of one of the kinks (the evidence showing that is where the cable fused out) which may ultimately have led to its failure. This is relevant to the question of leave, because there would be no substantial injustice, even though necessary findings to support those conclusions were not made, if the Tribunal is satisfied that the Disputes Tribunal's ultimate conclusions are correct.
In the amended grounds for review, and in submissions before the Tribunal, the builder claimed that one of the alternative possibilities was that the cable was damaged at a conduit join (where the kinking occurred) during the relocation, but that it was not until the owners increased the load usage beyond its intended capacity that the cable failed. Mr Monaco was unable to identify any evidence to support such a possibility and Mr Loly directed the Tribunal to the evidence at pages 71 and 72 of the transcript at which Mr Giardina related that the decision to upgrade the cabling was on the basis that if "down the track ... Mr Loly was to expand what he's using in the home whether it be [a] three phase air conditioner or build another garage, or workshop or what have you …" he would need cabling of greater capacity. There is nothing to suggest that any level of air conditioning, or additional garage or workshop, was overloading the existing cable.
The Tribunal mentions Dr Zurharr's report. While, as already indicated, the report from Dr Zurhaar is not relevant to demonstrating any error on the part of the Disputes Tribunal for the purposes of granting leave, it does serve to indicate what avenues of defence were available to the builder in the event that leave would be granted and a hearing de novo took place. Dr Zurhaar's conclusions in his report are as follows:
"It is more probable that either;
1.the cable was simply subjected to a current overload from increased user load and failed or
2.that the cable did have a point of minor damage from the relocation which without the advent of increased current would probably have been inconsequential and allowed the cable to continue to operate without fault. A change in operational conditions such as an increase in current load would explain why something that was stable for [five] years suddenly failed completely."
Dr Zurhaar did not address in his report the view of Mr Giardina that the cause of the failure must have been the damaging of the cable when it was moved. Dr Zurhaar's opinion is based on an assumption that the load has been increased and there is no evidence that is the case.
In these circumstances, the Tribunal considers that the conclusions by the Disputes Tribunal were correct and, therefore, that no substantial injustice would result if leave were to be refused.
Orders
For the above reasons, the Tribunal orders as follows:
1.The application for leave to review the decision of the Building Disputes Tribunal made on 26 August 2005 and reflected in an order to pay No 36/2005‑06 is refused.
I certify that this and the preceding [35] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR T CAREY, MEMBER
0
2
2