Jackson and Anor and Whiticker and Anor
[2007] WASAT 41
•14 FEBRUARY 2007
JACKSON & ANOR and WHITICKER & ANOR [2007] WASAT 41
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 41 | |
| BUILDERS' REGISTRATION ACT 1939 (WA) | |||
| Case No: | CC:818/2006 | DETERMINED ON THE DOCUMENTS | |
| Coram: | MR C RAYMOND (SENIOR MEMBER) | 13/02/07 | |
| 14 | Judgment Part: | 1 of 1 | |
| Result: | Application for leave and review granted | ||
| B | |||
| PDF Version |
| Parties: | PETER JOHN JACKSON GAIL MAY JACKSON IAN SCOTT WHITICKER PATRICIA HELEN WHITICKER |
Catchwords: | Builders' Registration Act 1939 (WA) Application for leave to review and the review of decision of Building Disputes Tribunal Whether proceedings miscarried for failure to provide procedural fairness |
Legislation: | Builders' Registration Act 1939 (WA), s 12A, s 12A(1), s 12A(1)(b), s 12A(1a), s 12A(1a)(b)(ii), s 41(1) Home Building Contracts Act 1991 (WA), s 3 State Administrative Tribunal Act 2004 (WA), s 29(3)(c)(ii) |
Case References: | Lai & Anor and Costa [2006] WASAT 117 Nelson v Mardesic (1999) 22 SR 42 |
Orders | On the application determined by Senior Member Clive Raymond on 14 February 2007, it is ordered that:,1. Leave is granted to review the decision of the Disputes Tribunal reflected in the order to pay made on 11 May 2006 that the builder pay to the owner an amount of $2562.,2. The application for review is granted and the decision under review is set aside.,3. Pursuant to s 29(3)(c)(ii) of the State Administrative Tribunal Act 2004 (WA), the matter is sent back to the Disputes Tribunal for reconsideration in accordance with the following directions:,(a) The applicants/owners be afforded an opportunity to carry out all steps necessary to lodge a further complaint concerning any new workmanship issues not previously raised, and that complaint, if made, be consolidated in due course and heard at the same time as the current complaint.,(b) The reconsideration of the current complaint and any new complaint consolidated with it be heard by the Disputes Tribunal differently constituted to that which determined the reviewed decision.,(c) The chairperson who is to hear the matter conduct a directions hearing, or a series of directions hearings, by way of telephone conference, to ensure that the issues to be determined are identified and that there is an exchange of expert reports prior to any hearing. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDERS' REGISTRATION ACT 1939 (WA) CITATION : JACKSON & ANOR and WHITICKER & ANOR [2007] WASAT 41 MEMBER : MR C RAYMOND (SENIOR MEMBER) HEARD : DETERMINED ON THE DOCUMENTS DELIVERED : 14 FEBRUARY 2007 FILE NO/S : CC 818 of 2006 BETWEEN : PETER JOHN JACKSON
- GAIL MAY JACKSON
Applicants
AND
IAN SCOTT WHITICKER
PATRICIA HELEN WHITICKER
Respondents
Catchwords:
Builders' Registration Act 1939 (WA) - Application for leave to review and the review of decision of Building Disputes Tribunal - Whether proceedings miscarried for failure to provide procedural fairness
Legislation:
Builders' Registration Act 1939 (WA), s 12A, s 12A(1), s 12A(1)(b), s 12A(1a), s 12A(1a)(b)(ii), s 41(1)
Home Building Contracts Act 1991 (WA), s 3
(Page 2)
State Administrative Tribunal Act 2004 (WA), s 29(3)(c)(ii)
Result:
Application for leave and review granted
Category: B
Representation:
Counsel:
Applicants : Ms C White (Acting as Agent)
Respondents : Mr S Holme
Solicitors:
Applicants : N/A
Respondents : Simon Holme Barrister & Solicitor
Case(s) referred to in decision(s):
Lai & Anor and Costa [2006] WASAT 117
Nelson v Mardesic (1999) 22 SR 42
(Page 3)
Summary of Tribunal's decision
1 The applicants applied for a review of a decision of the Building Disputes Tribunal reflected in an order to pay made on 11 May 2006. The application for leave and the review were heard together.
2 The Tribunal found that the applicants were not provided procedural fairness in the way in which the hearing was conducted. The Disputes Tribunal proceeded with the hearing without appreciating the applicants' difficulties in advancing their case, because no regard was had to their request that the inspector of the Builders' Registration Board be present at the hearing. Without some qualified assistance it should have been appreciated that the applicants could not present their case properly because it was necessary to draw a clear distinction between defective work and work which was simply incomplete, in order to properly assess the quotations relied upon by the applicants. That difficulty was enhanced by the identification that there were new defects which required inspection.
3 In addition, the owners received no prior indication that the Disputes Tribunal would have regard to the builder's contractual claim for payment. As the contract was a Cost Plus contract, the Disputes Tribunal had no jurisdiction to deal with the contractual claim pursuant to the definition of "home building work contract" under the Home Building Contracts Act 1991 (WA). Further, a real question was raised from the transcript of the evidence as to the basis upon which the Disputes Tribunal formed a view that the quotations relied on by the applicants were unreasonable. The Tribunal held that in circumstances in which an owner declines to permit the builder to carry out remedial work, the measure of damages is to be established in accordance with the principles set out in Nelson v Mardesic (1999) 22 SR 42 at [49]; Lai & Anor and Costa [2006] WASAT 117. In accordance therewith, an owner is permitted to recover the reasonable cost of a third party builder carrying out remedial work where the refusal to allow the original builder to do so is justified.
4 The Tribunal, without deciding, because the issues had not been raised by the parties, made some observations as to the assessment of contractual items pursuant to s 12A(1a)(b)(ii) of the Builders' Registration Act 1939 (WA), where the work was not faulty, but had not been carried out in a proper and workmanlike manner, and also, whether under the legislation a set off could be effected in the manner undertaken in the decision under review.
(Page 4)
5 The Tribunal granted leave to review the decision of the Disputes Tribunal, granted the review, set aside the decision under review and, pursuant to s 29(3)(c)(ii) of the State Administrative Tribunal Act 2004 (WA), the matter was sent back to the Disputes Tribunal for reconsideration in accordance with the directions of the Tribunal. The directions were designed to ensure that the applicants were afforded an opportunity to carry out all steps necessary to lodge a further complaint concerning new workmanship issues, that the current and any new complaints be consolidated and be heard by the Disputes Tribunal differently constituted to that which had determined the decision under review, to ensure that the issues to be determined are identified and that there is an exchange of expert reports prior to the further hearing.
The application
6 On 25 May 2006, the applicants (owners) lodged an application with the Tribunal under s 41(1) of the Builders' Registration Act 1939 (WA) (BR Act) seeking the review of a decision of the Building Disputes Tribunal on 1 May 2006 [sic]. According to reasons for decision subsequently published on 31 May 2006, an order was issued on 11 May 2006 requiring the respondents (builder) to pay the owner an amount of $2562.
7 At the initial directions hearing on 29 June 2006, the Tribunal ordered that the application be amended to include an order seeking leave to review the decision of the Building Disputes Tribunal made on 11 May 2006.
8 The application was apparently prepared by the owners without any assistance, legal or otherwise. It was difficult to understand, but in essence appeared to assert that the compensation awarded by the Disputes Tribunal was too low and would be insufficient to allow the owners to engage a third party to carry out the repairs of the builder's faulty workmanship.
9 The matter was adjourned to a further directions hearing on 20 July 2006, which was subsequently vacated, and heard on 3 August 2006, pending receipt of a transcript of the evidence of the hearing before the Disputes Tribunal. At the directions hearing on 3 August 2006, and because the owners were unable to sufficiently clarify the basis of the proposed review, the Tribunal adjourned the matter to a preliminary hearing on 1 September 2006 to provide the owners with an opportunity to satisfy the Tribunal that the proceedings were not misconceived.
(Page 5)
10 As a result of further materials provided by the owners and submissions made during the hearing on 1 September 2006, the Tribunal made orders on that day setting the matter down on 3 November 2006 for a hearing of the application for leave and also amending the application to reflect 13 grounds of review as set out in the further material.
11 Prior to the hearing on 3 November 2006, the parties reached an understanding that it would be preferable for the matter to be referred back to the Disputes Tribunal. That proposal was debated before the Tribunal at the hearing on 3 November 2006 which resulted in the matter being further adjourned to 23 November 2006 to enable consideration to be given to whether the application for leave and the review could be heard together, based on the documents filed with the Tribunal and the transcript of the hearing on 1 September 2006. Agreement to that effect was reached by the parties and was reflected in an order made by the Tribunal on 23 November 2006. The matter is accordingly dealt with on that basis.
The grounds for review
12 The amended grounds are extremely lengthy but reflect in detail the criticisms made of the Disputes Tribunal's decision.
13 In view of the conclusions which this Tribunal has reached, and the position adopted by the parties that the matter should be referred back to the Disputes Tribunal, it is not necessary to set out the grounds for review in full. The bulk of the grounds fall into one or more of the following three categories:
1. Deviations from the contract drawings. Grounds 1, 2, 3, 4 and 9 all refer to deviations from the drawings in one form or another, from the omission to include a dog door, to the construction of a games room to the incorrect size, the incorrect location of a servery window and the inclusion of brick pillars not shown on the drawings.
2. The assessment of the value of the claim. Ground 11 raises complaints that the Disputes Tribunal penalised the owners by failing to recognise that they were justified in the decision not to permit the builder to carry out further work. In effect, this ground raises whether the measure of damage is correct and puts in issue whether the Disputes Tribunal assessed properly the cost of obtaining a third party to carry out the remedial work. Ground 10 raises
- similar issues. Ground 5 criticises the Disputes Tribunal for basing its assessment in part upon invoices issued by the builder as reflecting the value of works completed, subject to remediation, when the owners understood that contractual matters would have to be dealt with elsewhere. The owners' submissions clarified that this was based on an understanding that the Disputes Tribunal did not have jurisdiction to deal with contractual disputes in respect of a Cost Plus contract. Ground 9 identified the omission of a dog door and the incorrect installation of window frames which were not taken into account by the Disputes Tribunal in assessing compensation.
- 3. The failure to act on the owners' request for the inspector of the Builders' Registration Board to be available at the hearing. This is raised by grounds 6 and 7.
The reasons for decision and proceedings before the Disputes Tribunal
14 The Disputes Tribunal's reasons for decision (reasons for decision) reflect the very real difficulty which the Disputes Tribunal had, on the evidence before it, to assess the compensation to which the owners were entitled. This was primarily due to the house being incomplete. The contract was a Cost Plus contract and no evidence was proffered to suggest that any claim was being made for an increase in cost of completion of such work. The claim made related only to faulty workmanship or material. As the owners had declined to allow the builder to complete the works, it was necessary to distinguish between incomplete work and faulty work.
15 The reasons for decision reflect that the starting point for the Disputes Tribunal in its assessment was that s 12A of the BR Act empowered the Tribunal to order the builder to pay to the owner of the building such costs of remedying the building work that is faulty or unsatisfactory as the Disputes Tribunal considers reasonable. The Disputes Tribunal then went on to discuss particular items of complaint reflected in an order to remedy no 136/2005-06 made on 29 September 2005. Thereafter some items of complaint were identified as being contractual items. These were items which involved deviation from the contract drawings.
16 The Disputes Tribunal then noted that the builder had submitted an account for $19 438 for work done, that this had not been paid "but would have been due once the repairs had been completed". Accordingly, that
(Page 7)
- amount was taken into account and it was observed that the owners had that amount in hand to carry out remedial work. It was then stated that the quotations submitted by the owners were "extreme" and that in the opinion of the Disputes Tribunal "the owners are entitled to the amount owing by them to rectify the work and to an additional $2562 to bring the total to $22 000 to cover any contingencies". It was on that basis that an order to pay was made for an amount of $2562.
17 At the commencement of the hearing before the Disputes Tribunal, in accordance with its usual practice, the parties were provided with a book of documents (BOD). Included therein at page 66 is a letter dated 13 October 2005 from the Disputes Tribunal to the owners, reflecting that it was alleged (presumably by the owners) that the builder had failed to comply with the order to remedy. The letter proceeded to set out the terms of s 12A(1)(b) of the BR Act which, as already referred to above, permits the Disputes Tribunal to pay to the owner of the building such costs of remedying the building work that is faulty or unsatisfactory as the Disputes Tribunal considers reasonable. The letter requested a written summary of the costs claimed and/or copies of written quotations/costings be provided.
18 By letter dated 23 December 2005 (BOD77), the Disputes Tribunal informed the owners that all items listed in the order to remedy, other than three items, 8, 19 and 25, which previously had been referred to a hearing, were waitlisted for consideration via a Disputes Tribunal Hearing for consideration by the Tribunal for the issue of an order to pay, as outlined in its correspondence dated 13 October 2005. On 13 November 2005, the Disputes Tribunal received an undated letter from the owners attaching a quotation relied on by the owners. A further letter from the owners dated 26 November 2005 attached a quotation as well. These documents appear at pages 71 to 74 of the BOD.
19 On 13 March 2006, the Disputes Tribunal issued a notice of hearing to take place on 26 April 2006. The notice of hearing did not in any way change the effect of the above correspondence, in terms of the subject of the matters to be heard.
20 A transcript reflects that at the commencement of the hearing on 26 April 2006 the chairperson endeavoured to obtain some clarification of the matters for determination. Unfortunately, it is evident that there was some misunderstanding from the outset.
(Page 8)
21 The owners had written to the Disputes Tribunal/Builders' Registration Board on 10 April 2006 requesting that the Builders' Registration Board inspector attend the hearing. The letter also conveyed that Mr Jackson is unable to read. This letter was not included in the BOD.
22 In the course of identifying the matters for determination, Mrs Jackson noted that she had written a letter, which had not been included in the BOD, and provided it to the chairperson. No doubt, because at that stage Mr Jackson had been referring to further problems which were being experienced, the chairperson misconstrued the letter as constituting a request for the inspector to carry out a further inspection of the property. That question was put directly to Mrs Jackson who confirmed that a further inspection would be required.
23 Shortly thereafter, the chairperson raised that the cost of remedial work would be increased by having another builder carry out the remedial work. An exchange followed with Mrs Jackson who expressed a view that it was effectively necessary to start again. Mr Whiticker then interjected to state:
"Mr Whiticker: (INAUDIBLE) that's an issue of ... if, you know, if you want the roof sheeting removed and removed from site, you know, you still owe us $20,000 odd.
Mrs Jackson: No, that's an incorrect figure too thanks very much.
Mr Whiticker: For what ... that work has been done to date. This doesn't include any work that hasn't been done. This is work ...
Mr Jackson: We'll deal with the money side of it after this lot's finished." (Transcript pages 15/16).
24 The hearing then proceeded until, well into the hearing, the chairperson expressed a view that the owners could not expect to be awarded the amount set out in the quotations provided by them and invited the builder to make an offer to the owners to settle the claim (page 39). That resulted in the builder again asserting that an amount of $20 000 was outstanding for materials supplied and led to some debate on that topic. During that debate, the owners identified particular items
(Page 9)
- which had been wrongly included in the last account submitted by the builder.
25 At what appeared to be the conclusion of the hearing, the chairperson advised that the Tribunal would adjourn to determine the matter. It was indicated that the parties should return shortly thereafter, and although not expressly stated, the clear implication was that a decision would then be provided.
26 When the Tribunal reconvened, an exchange occurred between the chairperson and Mr Jackson, in which the chairperson indicated the Tribunal's conclusions without expressing the same as its reasons for decision.
27 The chairperson advised that the Tribunal had had "a hard look at" the quotations relied on by the owner, that the amount was ridiculous and stated that in circumstances, where owners do not allow the builder to go back onto the job, "then they have to take the consequences themselves of what they've got to do". The exchange continued:
"Chairman: But the builder has sent you a bill for $19,000 odd...$19,438, take off the parts of it that have been paid.
Mr Jackson: Yes.
Chairman: So in theory you owe the builder $19,438.
Mr Jackson: Yes, well whatever it is, yes. (Underlining added).
Chairman: Now we've looked hard at this and we've decided that if...that the builder should pay in addition a further $2,562, making it $22,000 that you will have in hand. With that $22,000 we feel that is the sum of money that is most reasonably...to be considered in the circumstances ..."
28 The chairperson then went on to make an order for payment of $2562 by the builder to the owner within 21 days and revoked the order to remedy.
(Page 10)
Considerations
29 The Tribunal considers that the owners were not provided with procedural fairness in the way in which the hearing was conducted for the following reasons.
30 No, or insufficient, weight or consideration was given to the owners' request for the inspector of the Builders' Registration Board to be present. The complexity of establishing the appropriate quantum of damages was readily appreciated and understood by the Tribunal.
31 The nature of the complaints were such that evidence from an appropriate expert building witness, such as the inspector of the Builders' Registration Board, was clearly needed in order to distinguish between what work was incomplete, what work was defective and the extent of remedial work required. Without that being clearly established in the evidence, it is inconceivable that any meaningful analysis could be applied to the building quotations relied on by the owners.
32 As the building inspector was not present, the owners were not in a position to proceed with the hearing (although that is something which they did not appreciate – but it was not clear that the inspector would not be called). That was all the more so once it was identified at the outset that there were new defects, not the subject of the present claim, which needed to be addressed.
33 In addition, the hearing which had been convened, was a hearing to determine, in accordance with s 12A(1)(b) the "costs of remedying the building work that is faulty or unsatisfactory as the Disputes Tribunal considers reasonable". The owners had received no notice that there would be any inquiry into the amount of money which might be owing to the builder under the Cost Plus contract. As reflected above, Mr Jackson was of the view that "the money side of it" would be dealt with after "this lot's finished".
34 The discussion which took place in relation to the amount payable to the builder took place in the context, firstly, of an invitation by the Disputes Tribunal to the builder to make an offer of settlement, and secondly, after the Disputes Tribunal had adjourned to determine the matter. The acknowledgment that an amount was payable to the builder was equivocal.
35 For the above reasons, the Tribunal considers that the decision under review miscarried by reason of a failure to accord the owners a fair
(Page 11)
- process for the adjudication of their complaint. However, in addition, it is appropriate to express a view as to the grounds of review raised by the owners relating to the assessment of compensation.
36 There is no doubt that if the owners had any notice that there was to be an inquiry into whether any amount was payable to the builder under the contract, the case would have been conducted quite differently. Before this Tribunal, a voluminous amount of documentation has been filed in relation to the costs of the building works. The correspondence between the parties shows that the owners were dissatisfied in general terms with the costs being charged and required a full and proper accounting.
37 In addition, the approach taken by the Disputes Tribunal, as evident from the transcript of evidence, rather than the reasons for decision, raise a real question as to the basis upon which the Disputes Tribunal formed the view that the quotations relied upon by the owners were unreasonable. In circumstances in which an owner declines to permit the builder to carry out remedial work, the measure of damages is to be established in accordance with the principles set out in Nelson v Mardesic (1999) 22 SR 42 at [49] as followed in Lai & Anor and Costa [2006] WASAT 117.
38 An owner will be permitted to recover the reasonable cost of a third party builder carrying out remedial work where the refusal to allow the original builder to do so is justified.
Conclusion and orders
39 Although not raised before the Tribunal, I have some concern as to the basis upon which the Disputes Tribunal assessed the owners' contractual claims and effected a set off between the amount it considered was accepted to be payable to the builder, and the compensation to which the owners were otherwise entitled. I express no final view on these matters. It would be inappropriate to do so without the issues having been raised in the proceedings, but they are mentioned so as to focus the attention of the Disputes Tribunal on the potential issue.
40 The Disputes Tribunal purported to assess the compensation payable to the owners under s 12A(1)(b). On its face, that requires the Disputes Tribunal to assess the reasonable cost of remedying the building work that is faulty or unsatisfactory. Yet, some of the work identified as relating to contractual items may not have been faulty or unsatisfactory in itself.
(Page 12)
41 If the Disputes Tribunal cannot give consideration to those contractual items, compensation might be awarded pursuant to s 12A(1a)(b)(ii), which permits compensation to be paid to the person for whom the building work was carried out which is not faulty, but where the work was not carried out in a workmanlike manner, in such sum of money as the Disputes Tribunal considers reasonable to compensate for the failure to carry out the building work in a proper and workmanlike manner.
42 The additional issue raised, however, is whether the above sections permit any set off. Ordinarily when a claim before the Disputes Tribunal involves contractual issues (which cannot be brought under s 12A of the BR Act), and workmanship issues, the Disputes Tribunal has jurisdiction in respect of the former under the Home Building Contracts Act 1991 (WA) (HBC Act), and in respect of the latter, under the BR Act. It may be that in dealing with a contractual claim under the HBC Act that account can be taken of monies found to be due under the contract to the builder in assessing compensation, or contractual payments payable to the owner. But, in this case, by reason of the definition of a home building work contract under the HBC Act (s 3), the Disputes Tribunal had no jurisdiction to deal with the builder's contractual claims. If all of that is correct, it raises squarely whether there is any basis upon which, what may well be an equitable set off, can be applied by the Disputes Tribunal when acting under s 12A of the BR Act. It may well be that there should be a preliminary determination of whether any account can be taken of the builder's claim to payment. If not, the builder is not without remedy because that can be raised as a defence to proceedings for the enforcement of any order of the Disputes Tribunal.
43 In any event, by reason of the lack of procedural fairness, and for the reasons given above, leave to review the decision of the Disputes Tribunal must be granted, the decision must be set aside and the matter requires to be re-heard. It would be in the interest of all parties that any further existing workmanship issues are identified and resolved at the same time, which would presumably require the commencement of fresh proceedings which could then be consolidated.
44 In circumstances in which the Disputes Tribunal does not have the benefit of pleadings, or in this case, any other means of clearly identifying the issues prior to the hearing, and in which the Disputes Tribunal, because of the pressure under which it operates, may have had very little opportunity to read and absorb the documents contained within the BOD, it can be understood how easy it may be for proceedings to miscarry.
(Page 13)
- Nevertheless, the owners have expressed concern as to how the Disputes Tribunal dealt with the matter and it is therefore desirable that the matter be heard before a differently constituted Tribunal. It is also desirable that the chairperson who is to hear the matter convene a directions hearing, or if need be more than one such hearing, to ensure that procedures are followed which will properly identify the matters in issue and ensure that expert reports are exchanged prior to the matter being heard. In view of the distance at which the parties reside from Perth, such a hearing should be convened by way of a telephone conference or other suitable means. It is difficult to conceive that the matter is capable of being dealt with properly unless such a course is followed.
45 The Tribunal accordingly orders:
1. Leave is granted to review the decision of the Disputes Tribunal reflected in the order to pay made on 11 May 2006 that the builder pay to the owner an amount of $2562.
2. The application for review is granted and the decision under review is set aside.
3. Pursuant to s 29(3)(c)(ii) of the State Administrative Tribunal Act 2004 (WA), the matter is sent back to the Disputes Tribunal for reconsideration in accordance with the following directions:
(a) The applicants/owners be afforded an opportunity to carry out all steps necessary to lodge a further complaint concerning any new workmanship issues not previously raised, and that complaint, if made, be consolidated in due course and heard at the same time as the current complaint.
(b) The reconsideration of the current complaint and any new complaint consolidated with it be heard by the Disputes Tribunal differently constituted to that which determined the reviewed decision.
(c) The chairperson who is to hear the matter conduct a directions hearing, or a series of directions hearings, by way of telephone conference, to ensure that the issues to be determined are identified and that there is an exchange of expert reports prior to any hearing.
I certify that this and the preceding [45] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER
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