J-Corp Pty Ltd and Collins and Anor
[2007] WASAT 88
•28 MARCH 2007 (Edited reasons delivered extemporaneously )
J-CORP PTY LTD and COLLINS & ANOR [2007] WASAT 88
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 88 | |
| BUILDERS' REGISTRATION ACT 1939 (WA) | |||
| Case No: | CC:1605/2006 | 28 MARCH 2007 | |
| Coram: | MR C RAYMOND (SENIOR MEMBER) MS J HAWKINS (MEMBER) | 28/03/07 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application for leave to review granted Application to review upheld | ||
| B | |||
| PDF Version |
| Parties: | J-CORP PTY LTD GEOFFREY MARK COLLINS ANDREA ELIZABETH COLLINS |
Catchwords: | Builders' Registration Act 1939 (WA) Application for leave to review Building Disputes Tribunal decision Construction of building contract Effect of liquidated damages clause Whether liquidated damages clause applied |
Legislation: | Builders' Registration Act 1939 (WA) |
Case References: | BGC Construction and Vagg & Anor [2006] WASAT 367 BGC Residential Pty Ltd and Parker [2006] WASAT 281 Commodore Homes (WA) Pty Ltd and Deegan & Anor [2007] WASAT 45 KC Nominees Pty Ltd and City of Armadale [2005] WASAT 297 Lai & Anor and Costa [2006] WASAT 117 Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119 |
Orders | The orders the Tribunal makes, therefore, are as follows:,1. Leave is granted to the applicant to file this application out of time.,2. Leave is granted to review the decision of the Building Disputes Tribunal made on 20 December 2005.,3. Orders 1 and 2 of the Building Disputes Tribunal's Order to Pay No 110/2005-06, made on 20 December 2005, be set aside.,4. The respondents shall pay to the applicant the sum of $2080 within 14 days. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDERS' REGISTRATION ACT 1939 (WA) CITATION : J-CORP PTY LTD and COLLINS & ANOR [2007] WASAT 88 MEMBER : MR C RAYMOND (SENIOR MEMBER)
- MS J HAWKINS (MEMBER)
- Applicant
AND
GEOFFREY MARK COLLINS
ANDREA ELIZABETH COLLINS
Respondents
Catchwords:
Builders' Registration Act 1939 (WA) - Application for leave to review Building Disputes Tribunal decision - Construction of building contract - Effect of liquidated damages clause - Whether liquidated damages clause applied
Legislation:
Builders' Registration Act 1939 (WA)
(Page 2)
Result:
Application for leave to review granted
Application to review upheld
Category: B
Representation:
Counsel:
Applicant : Mr SD Pentony
Respondents : No appearance
Solicitors:
Applicant : Hotchkin Hanley
Respondents : No appearance
Case(s) referred to in decision(s):
BGC Construction and Vagg & Anor [2006] WASAT 367
BGC Residential Pty Ltd and Parker [2006] WASAT 281
Commodore Homes (WA) Pty Ltd and Deegan & Anor [2007] WASAT 45
KC Nominees Pty Ltd and City of Armadale [2005] WASAT 297
Lai & Anor and Costa [2006] WASAT 117
Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119
(Page 3)
Summary of Tribunal's decision
1 The State Administrative Tribunal heard an application for leave to review a decision of the Building Disputes Tribunal and the review together.
2 The Tribunal found that the Building Disputes Tribunal had erred in its interpretation of cl 11 of the standard building contract between the parties. The Tribunal considered the reasons of the Building Disputes Tribunal to be inadequate. The Tribunal considered that as a result of the delay by the builder in completion of the construction, cl 11.1 and cl 11.9 of the standard building contract between the parties governed the calculation of liquidated damages.
3 Leave to review the decision was accordingly granted and the review was upheld. Orders were made substituting the correct amount to be paid and setting aside the Order to Pay made by the Building Disputes Tribunal.
The application
4 In this matter the applicant (builder) has applied, by way of an application lodged on 9 October 2006, for the review of a decision of the Building Disputes Tribunal (Disputes Tribunal), made on 20 December 2005. The relief sought includes an application for leave to extend the time for the making of the application. The Tribunal indicated at the commencement of the hearing that it was not necessary to hear counsel on that point.
5 The Tribunal is satisfied that the delay is solely attributable to the delay of the Disputes Tribunal in providing reasons for decision. The reasons for decision were provided, or published, only on 18 September 2006, and the application for the leave to review, and to review the decision, was lodged on 9 October 2006. Although technically that is a long delay, because the decision takes effect on the date on which the order is issued by the Disputes Tribunal, the Tribunal accepts that it is reasonable for a proposed applicant before the Tribunal to wait until reasons for decision are provided in order to properly assess whether or not to proceed with an application for leave to review the decision.
6 The Tribunal is satisfied that the criteria as set out in KC Nominees Pty Ltd and City of Armadale [2005] WASAT 297 are met.
(Page 4)
7 The application itself raises, in effect, a single point of the proper construction of cl 11 of the builder's standard form of contract (contract). The decision in relation to which these proceedings are commenced is an order which required that the builder pay to the owners an amount of $2660:
"To reflect compensation for rent of $200 per week for 19 weeks, less liquidated damages of $1140, paid in error."
- We were informed that the amount of $2660 has been paid pursuant to the Order to Pay.
8 Clause 11.1 of the contract provides:
"The builder shall commence the works by the time specified in item 7A of the schedule, and shall complete the works within the time specified in item 7B of the schedule, provided that … "
- Item 7 of the Schedule to the contract provides:
"Commencement and completion:
(a) 45 Time to commence (working days)
(b) 150 Time to complete work (working days)
from the date on which work commenced, or should have commenced under clause 11."
Clause 11.2 of the contract then sets out that:
"The builder shall not be responsible for any delays in commencing the works, or completing the works after commencement, over which the builder has no control, including, without limiting the generality thereof … "
Clause 11.9 of the contract then provides:
"If the builder breaches subclause 11.1, it shall be liable to pay the proprietor liquidated damages at the rate of $20 per day for each day beyond the due date for practical completion, until practical completion is deemed to have taken place."
(Page 5)
10 In the Disputes Tribunal's reasons for decision, it states as follows, at the bottom of page 3 of the reasons:
"There is no provision in clause 11, or elsewhere in the contract, as to how damages are to be calculated if the respondent, that is the builder, fails to reach practical completion on time, where the delay occurs after the date of commencement."
11 That statement, together with six findings which are set out below are, in fact, the totality of the rationale for the Disputes Tribunal's reasons for decision. The six findings are as follows:
"Findings:
(1) The respondent (builder – parenthesis added) exceeded the contractual date of completion by a total of 166 working days. We add that that is a matter which was common cause between the parties.
(2) The respondent was able to justify 80 working days of the delay, pursuant to clause 11.2.6, and therefore was liable to compensate the owners for an additional delay of 86 working days.
(3) By strict interpretation of clause 11, and application of clause 11.9 to clause 11.1, the payment of liquidated damages did not arise as, clearly, clause 11.1 had been complied with by the respondent.
(4) The owners produced unchallenged evidence that between 2 December 2004 and 2 August 2005, they had paid an extra 19 weeks' rent at $200 per week, ie from 31 March 2005 to 7 August 2005, bearing in mind that they still had to give notice from that date.
(5) The owners were entitled to recover the sum of $3800 from the respondent.
(6) As the respondent had paid the owners in error, pursuant to clause 11.9, the amount of $1140, this was to be deducted from the amount paid in rent, and the respondents was to pay the owners the balance, that being $2660, to be paid within 14 days."
(Page 6)
12 Counsel for the builder submitted that the reasons for decision were nonsensical, and that try as he might, he could not make any sense of them. The Tribunal cannot understand the conclusion of the Disputes Tribunal as expressed at the foot of page 3 of the decision, as set out above.
13 Clause 11.1 of the contract has two elements to it. It provides that the builder shall commence the works by the time specified, and shall complete the works within the time specified in the particular items of the schedule. That must be read conjunctively.
14 The Tribunal is simply at a loss to understand how the Disputes Tribunal had concluded that there is no provision in cl 11 of the contract to deal with the question of delay after the date of commencement. If there is a delay in the completion of the works, which did occur in this case, and if the builder is in breach by reason of that delay, it can only be because there is, and has been, a breach of cl 11.1 of the contract.
15 The Disputes Tribunal's finding no (4) is, in itself, inconsistent with finding number (2). In finding no (2), the Disputes Tribunal found that the respondent was liable to compensate the owners for an additional delay of 86 working days. Yet, in finding no (4), compensation had been awarded for a total of 133 calendar days (19 weeks) without taking into account the 80 day period referred to in finding no (2), for which it was stated that the builder was not responsible.
16 The reasons for decision are, in our view, entirely inadequate and, in itself, the failure to provide adequate reasons for decision constitutes an error of law. The Tribunal dealt fully with the need for adequate reasons in the matter of Lai & Anor and Costa [2006] WASAT 117, published on 12 May 2006.
17 On the accepted findings, the builder is liable for an additional 86 days' delay. On the basis that such a delay must be a breach of cl 11.1 of the contract, because it was a delay in completing the works within the time specified in item 7(b) of the Schedule of the contract, cl 11.9 of the contract applies. Clause 11.9 provides that if the builder breaches subclause 11.1 of the contract, the builder is liable for liquidated damages at a rate of $20 per day. This Tribunal has, in previous decisions, determined that the reference to the word "day" in a similar clause, means a working day: see BGC Residential Pty Ltd and Parker [2006] WASAT 281, BGC Construction and Vagg & Anor [2006] WASAT 367,
(Page 7)
- and Commodore Homes (WA) Pty Ltd and Deegan & Anor [2007] WASAT 45.
18 It follows that the builder was liable to the owners, not in the amount for damages found by the Disputes Tribunal, but in an amount of $1720 in respect of the 86 days' delay. The builder has paid to the owners an amount of $2660, pursuant to the order of the Disputes Tribunal. In addition, the builder, as is common cause, had provided the owners with a credit of $1140, thereby meeting the liability as determined by the Disputes Tribunal to pay a total of $3800. As it is clear that the builder should have only had to pay liquidated damages in an amount of $1720, it follows that the builder is now entitled to a refund of $2080.
Conclusion
19 In view of the above findings, the Tribunal is satisfied that the criteria for leave, as set out in Tangent Nominees Pty Ltd and Edwards& Anor [2005] WASAT 119, have been met. Leave to review the decision of the Disputes Tribunal will accordingly be granted and the review will be upheld.
Orders
20 The orders the Tribunal makes, therefore, are as follows:
1. Leave is granted to the applicant to file this application out of time.
2. Leave is granted to review the decision of the Building Disputes Tribunal made on 20 December 2005.
3. Orders 1 and 2 of the Building Disputes Tribunal's Order to Pay No 110/2005-06, made on 20 December 2005, be set aside.
4. The respondents shall pay to the applicant the sum of $2080 within 14 days.
- I certify that this and the preceding [20] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER
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