Kapadia v Adrian Porto t/as AP Concreting and Landscaping
[2017] VSC 615
•27 October 2017
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
JUDICIAL REVIEW AND APPEALS LIST
S CI 2016 04795
| KAMALESH KAPADIA and RAJVEE KAPADIA | Plaintiffs |
| v | |
| ADRIAN PORTO t/as AP CONCRETING AND LANDSCAPING (ABN 84 539 905 373) | Defendant |
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JUDGE: | Ierodiaconou AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 21 August 2017 |
DATE OF JUDGMENT: | 27 October 2017 |
CASE MAY BE CITED AS: | Kapadia and anor v Adrian Porto t/as AP Concreting and Landscaping |
MEDIUM NEUTRAL CITATION: | [2017] VSC 615 |
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JUDICIAL REVIEW AND APPEAL – Natural justice – Self-represented parties before the Tribunal – Breach of contract claim – Tribunal concluded that the defendant accepted the plaintiffs’ repudiation of the contract – Sufficient opportunities given to the parties to put their cases – Procedural fairness afforded to the parties.
JUDICIAL REVIEW AND APPEAL – Claims under Domestic Buildings Contract Act 1995 – Defects in works – Whether the member is obliged to make findings as to defects as pleaded by the plaintiffs – Failure to make relevant findings – Error of law – Appeal allowed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr P Kelly | |
| For the Defendant | Mr J Korman | Belleli King & Associates |
HER HONOUR:
Kamalesh and Rajvee Kapadia engaged Adrian Porto t/as AP Concreting and Landscaping to construct concrete steps and retaining walls at the front of their home in 2015. A dispute arose during construction. In December 2015, the Kapadias made a claim against Mr Porto in the Victorian Civil and Administrative Tribunal (‘the Tribunal’). Mr Porto brought a counterclaim. In October 2016, the Tribunal dismissed the Kapadias’ claim. The Tribunal upheld Mr Porto’s counterclaim and ordered that the Kapadias pay Mr Porto $2,632.10. The Tribunal found that the Kapadias had repudiated the contract with Mr Porto, and that he accepted the repudiation. The Kapadias now wish to appeal the Tribunal’s orders.[1]
[1]The Tribunal’s orders made on 26 October 2016 and Reasons of the same date are contained in Exhibit ‘KK-16’ to the affidavit of Kamalesh Kapadia sworn 28 November 2016 (‘the Kapadia affidavit’).
I will give leave to the Kapadias to appeal the Tribunal’s decision, and allow the appeal.
The Kapadias’ proposed Notice of Appeal[2] contains seven grounds of appeal, including many particulars.[3] In summary, grounds 1 and 2 concern repudiation. Grounds 3, 4 and 6 concern defective work and breach of contract. Ground 5 concerns the Kapadias’ alleged damages. Ground 7 concerns the Tribunal’s calculation of damages. The grounds of appeal are dealt with below on an issues basis.
[2]Exhibit ‘KK-17’ to the Kapadia affidavit (‘the proposed Notice of Appeal’). Pursuant to paragraph 4 of the orders made by Ginnane J on 6 February 2017, the proposed Notice of Appeal shall stand as the Notice of Appeal if leave to appeal is granted.
[3]The proposed Notice of Appeal contains 8 grounds, however ground 8 is no longer pressed, nor is ground 7(d).
The issues for determination are as follows.
(1) Was the Tribunal bound to put the legal characterisation of repudiation to the parties before making a finding of repudiation?[4]
[4]Ground 1 of the proposed Notice of Appeal.
(2) Was it open to the Tribunal to find the following on the facts before it:
(a) the Kapadias repudiated a contract; and
(b) Mr Porto accepted the repudiation?[5]
[5]Ground 2 of the proposed Notice of Appeal.
(3) Did the Tribunal fail to make a finding on material facts, namely whether or not the building work carried out by Mr Porto was defective within the meaning of the Domestic Building Contracts Act 1995 (‘DB Contracts Act’), and whether or not Mr Porto breached the contract with the Kapadias?[6]
[6]Ground 3 of the proposed Notice of Appeal.
(4) Alternatively, if there were findings in respect of 3(a) and (b) above:
(a) were they open to the Tribunal; or
(b) were they so unreasonable that no reasonable tribunal would have made them; or
(c) was the pathway of reasoning to those findings disclosed?[7]
[7]Grounds 4 and 6 of the proposed Notice of Appeal.
(5) Was the finding the Kapadias were not entitled to damages:
(a) open on the evidence; or
(b) so unreasonable that no reasonable tribunal would have made the finding?[8]
(6) Did the Tribunal err in a calculation of quantum of Mr Porto’s counterclaim?[9]
[8]Ground 5 of the proposed Notice of Appeal.
[9]Ground 7 of the proposed Notice of Appeal.
The Tribunal’s Decision
The Tribunal held that there was a contract between the Kapadias and Mr Porto based upon a written quotation given by Mr Porto on 14 September 2015.[10] The quote concerned the removal of existing steps and building of new concrete steps from the front portico of their home to the footpath, and the construction of sleeper walls. The Tribunal found there was subsequently a substantial number of written variations to the quotation.[11]
[10]VCAT Reasons [3].
[11]VCAT Reasons [4].
The Tribunal found that by late November 2015, Mr Porto had built the Kapadias’ steps and the upper retaining wall, and that he was well on the way to finishing the bottom wall when a dispute developed.[12] Mr Porto had installed some posts for a retaining wall that Mr Kapadia demanded he remove. Mr Porto said he would only do so if paid an extra $3,000. Mr Kapadia refused. Mr Porto stopped work and did not return.[13]
[12]Ibid [6].
[13]Ibid [6],[28]-[29].
The Tribunal held the contract between the parties was terminated when Mr Porto left the site on 26 November 2015 saying he would only return to complete the works to Mr Kapadia’s instructions if the Kapadias pay the cost of removing posts for a retaining wall to be erected.[14]
[14]Ibid [30].
The Tribunal held that Mr Porto placed the posts for the retaining wall where instructed by Mr Kapadia. Further, that Mr Kapadia’s demand that Mr Porto accept a variation of the contract terms amounted to a refusal to be bound by the contract and constituted a repudiation of the contract.[15] Mr Porto accepted the repudiation by his conduct in refusing to return to the site to carry on with the contract works unless the Kapadias agreed to pay for the variation required by them.[16] As the Kapadias had repudiated the contract, Mr Porto was freed from his obligation to complete the contract works.[17] The Kapadias had claimed that Mr Porto’s work was defective and incomplete and claimed the costs of rectification and completion. Based upon the repudiation findings, the Tribunal dismissed the Kapadias’ claim for cost of completion of the contract works.[18]
[15]Ibid [34].
[16]Ibid.
[17]Ibid [35].
[18]Ibid [34]-[35].
The Tribunal allowed Mr Porto’s counterclaim in respect of the balance of the contract price on an estimation that 90 per cent of the works had been completed by him.[19] It ordered that the Kapadias pay Mr Porto $2,632.10.[20]
[19]VCAT Reasons [37].
[20]Ibid [45].
Leave to Appeal
The relevant principles concerning leave to appeal under s 148 of the Victorian Civil and Administrative Tribunal Act 1998 (‘VCAT Act’) are well-established.[21] I will grant leave to appeal on the basis that, in respect of Grounds 3 and 6 of the proposed Notice of Appeal, there are real or significant arguments that errors of law exist. As discussed below, they affected the Tribunal’s ultimate determination of the matter. This justifies leave to appeal being granted.
[21]Secretary to the Department of Premier and Cabinet v Hulls [1999] 3 VR 331, 335-337 [8]-[17].
Turning now to the substantive issues in the appeal.
1.Was the Tribunal bound to put the legal characterisation of repudiation to the parties before making a finding of repudiation?
The Kapadias say that the Tribunal failed to accord natural justice by raising the issue of repudiation with them when the matter had not been pleaded and was critical to the Tribunal’s finding.
Mr Porto says that the Kapadias were given a sufficient opportunity to present their case factually, and this is a factual issue. Mr Porto says that the facts and circumstances concerning the alleged abandonment of work by him were clearly put in issue on the pleadings. He says the entire facts and circumstances were before the Tribunal and so it cannot be really argued that there was no natural justice accorded to the Kapadias. The thrust of natural justice, Mr Porto submits, is that a party has a right to put its case.
Even if there was no natural justice accorded to the Kapadias, Mr Porto says that only questions of law can be appealed. The Court can then determine whether there was an error by the Tribunal.
Mr Porto submits the Tribunal is not obliged to forewarn parties of the characterisation it intends to put on the facts. His counsel says that proposition would be entirely unworkable. This is particularly the case where lay parties are writing their pleadings. They cannot expect to state accurate and precise characterisations of law.
Finally, Mr Porto says that the finding on repudiation would not have made a difference to the ultimate determination. He submits the facts only point in one direction: that it was not his fault the work for the Kapadias was not completed. The Tribunal found there was a variation to the contract to which he was entitled to be paid. He refused to do that work until he was paid.
Finding
The parties did not address the issue of repudiation in their written submissions before the Tribunal. On one occasion, the Tribunal raised the issue of repudiation in questions to Mr Porto during the hearing. The issue of repudiation was put by the Tribunal to Mr Porto at the oral hearing:
Member: …So effectively, that's saying I'm coming back, I'm making the job safe but I am repudiating the contract really?
Mr F Porto:[22] What does "repudiate" mean?
[22]Father of the respondent. Mr F Porto was initially also a respondent in the Tribunal proceeding. The Tribunal ordered he be removed as a respondent as he was not a party to the contract in dispute: VCAT Reasons [36].
Mr A Porto: Not doing it.
Member: So, I'm out of here.
Mr F Porto: We are waiting for VCAT's verdict on -
Member: Well, yes, it really seems to me - it's not really my favourite place in holding this job but after today's discussion you're not going to pay for the job, I'm going to come back, I'm going to make it safe. I think what you are telling him is that that's the end of the contract from your point of view.
Mr A Porto: No, no. I've got another letter that I sent him based on all this as well.
Member: Yep, okay, saying what?
Mr A Porto: Saying I wanted to see or get an actual end result for this rather than continue the way it is.
Member: All right, let's see that.
…
[reference to Mr Porto’s email to Mr Kapadia dated 1 December 2015[23], which is marked Exh 28]
[23]The email is contained in Exhibit ‘KK-7’ of the Kapadia affidavit.
Member: So what is it – this is going to be your general thoughts about it but does it tell me that you were prepared to go ahead and finish it?
Mr A Porto: Yes once we’d –
Member: Where?
Mr A Porto: Resolved the issue.
Member: Where does it say that?
Mr A Porto: In one of the highlighted bits I think.
…
Member: [Reads aloud the following parts of Exh 28]
[As] these moneys are outstanding I will not return to site until they have been paid… I [have made your] site safe and still have barrier tape up which is a sign I have not [walked] off your job and [do care what happens to the site no matter who I am working for.]
I believe a mediation [or VCAT hearing may] be the only way [of resolving] this [matter].
Member: Yeah, okay. Well, I will work out what all that means.
Okay, so in the event that I concluded that the job had been terminated when you walked – or not when you walked off, when you last left it, how much of the contract did you do?
…
Mr A Porto: I would say 90% of the contract…[24]
[24]Transcript of the Tribunal hearing, 8 September 2016, 159-160 (‘the Tribunal Transcript’). The transcript of the proceeding before the Tribunal forms Exhibit RK-1 of the Affidavit of Rajvee Kapadia sworn 16 December 2016.
However, I find that this conversation had no bearing upon the ultimate decision of the Tribunal that the Kapadias had repudiated the contract. Rather, this conversation was part of fact finding process of the Tribunal.
The Tribunal characterised the dispute as a breach of contract claim and proceeded on that basis. At the hearing, the Tribunal heard each party on their respective submissions and allowed tendering of all evidence that each party wished to put forward to support their case in relation to the agreement between the parties. The parties traversed in great detail of their dealings with one another.
Reviewing the transcript of the Tribunal hearing, as will be further expanded below, the finding of repudiation critical to the Tribunal’s decision is based entirely on the evidence and submissions put forward by the parties. The Tribunal concluded:
As the Kapadias had repudiated the contract, Mr Porto was freed from his obligation to complete the contract works. Accordingly, the Kapadias’ claim for the cost of completing the contract works is dismissed.[25]
[25]VCAT Reasons [35].
Pursuant to s 98 (1)(a) of the VCAT Act the Tribunal is bound by the rules of natural justice. A breach of the rules of natural justice by the VCAT involves a question of law for the purposes of s 148(1) of the VCAT Act. As Mason J held in Kioa v West, to determine whether natural justice is afforded to a party, in most cases, the critical question is ‘what does the duty to act fairly require in the circumstances of the particular case?’[26]
[26]Kioa v West (1985) 159 CLR 550, 584 [34] (Mason J). See also, Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd(1994) 49 FCR 576, 591.
Central to the minimum requirements of natural justice, is that a person affected by a decision must be told of material prejudicial to their case and be given a fair opportunity to respond.[27] In Kioa v West, the High Court held that an opportunity should be given to a person affected by a decision to deal with any adverse information that is ‘credible, relevant and significant to the decision to be made’.[28] In that case, the decision-maker in refusing the applicant’s application considered information solicited from other sources without affording the applicant any opportunity to respond to the information. In the circumstances, the Court held that the decision-maker should bring to the attention of the person the critical issue or factor on which the decision is likely to turn and give them an opportunity to deal with that issue.[29]
[27]See, eg, Kioa v West (1985) 159 CLR 550; SAAP v Minister for Immigration and Indigenous Affairs (2005) 228 CLR 294.
[28]Kioa v West (1985) 159 CLR 550, 629 (Brennan J).
[29] Kioa v West (1985) 159 CLR 550, 584 [40] (Mason J).
The fair hearing rule is enshrined in the VCAT Act, as s 102 states that the Tribunal must allow a party a reasonable opportunity to call or give evidence; to examine, cross-examine or re-examine witnesses, and to make submissions to the Tribunal.[30]
[30]There are other provisions of the VCAT Act that also embody the rules of natural justice: see ss 80(1), 97 & 99 VCAT Act.
The subject is entitled to have their mind drawn to the critical facts or issues in order to be able to respond or have the opportunity to respond to them.[31] However, a decision-maker is ‘generally not obliged to invite comment on the evaluation of the subject's case’.[32] The Tribunal gave both parties the opportunities to adduce evidence and make submissions supporting their respective claims, counterclaims and defences in relation to the agreement made by the parties. The conclusion that the Kapadias repudiated the contract was based on the evidence given by the parties in relation to their contractual dispute. A party, having the benefit of hindsight, may have produced further evidence to support or refute the conclusion drawn by the member. That however is not itself evidence of a lack of procedural fairness.
[31]Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd(1994) 49 FCR 576, 591.
[32]Ibid [28].
Given the above, the Tribunal acted consistently with the fair hearing rule and therefore accorded natural justice to the Kapadias. Ground 1 of the Notice of Appeal is not allowed.
2. Was it open to the Tribunal to find the following on the facts before it:
(a) the Kapadias repudiated a contract; and
(b) Mr Porto accepted the repudiation?
The Kapadias submit that it was not open for the Tribunal to find, on the facts before it, that they repudiated the contract and Mr Porto accepted that repudiation. They say the Tribunal misconstrued repudiation. On the other hand, Mr Porto says it was open for the Tribunal to find repudiation on the facts.
The main evidence referred to by the Kapadias concerning the issue of repudiation is contained in Exhibit KK-7 of the Kapadia affidavit. A summarised chronology of the communication between the parties as relevant to the issue of repudiation, is as follows:
25 November 2015 [marked Exh 25]- From Mr Kapadia includes reference to a text exchange claiming posts are too far away from the footpath - asks Mr Porto to fix mistake.
26 November 2015 [marked Exh 22]- From Mr Porto includes the following:
‘I can not [sic] complete the job without assurance that you will pay for the changes that you are now requesting, I am willing to carry out all works as stated on original quote, however I can’t continue to make changes for you and not charge you for them.’
‘At no stage have I verbally or in writing stated that I am walking away from the job. I am happy to do the job as long as the issues which are currently delaying the works are resolved.’
‘Last night when we spoke on the phone and discussed what is needed to be paid to complete the job you agreed you would send a receipt for me to sign and return, what you sent me was a contract to sign that was not part of our earlier discussions and contained so many points of contention that it proved to me that you can not [sic] be trusted on your word and everything from this stage forward must be documented and signed.’
‘I reiterate that at no stage have I claimed to be walking away from the job as this is not what I do, although everything has to be settled before the job is continued now we both seem to have lost trust in each other.
Further, please note that I am willing to place the sleepers today, however, once I turn up on the site with the sleepers you must settle your outstanding amounts, otherwise I will not place the sleepers or even take them off the truck. Last night you stated that you would not pay me unless the last four posts were excavated and realigned to your new requirement, and this is the entire issue at present, you are not prepared to sign a variation of works and I am not prepared to vary the works as per quote unless you pay me for the variations.’
Undated [marked Exh 23] - From Mr Kapadia includes the following:
‘I remind you that you are under a legal obligation to complete the job immediately. If you do not start putting in the concrete sleepers in by 12 noon today or advise me by email when you will start our agreement will be terminated and I reserve my right for another contractor to finish the job and make a claim for compensation from you. This could include total cost of what I need to pay the new contractor to complete the job plus damages and legal costs. Please note my overseas business trip is also being delayed as you are not finishing your job according to contract and I will seek compensation for that also.
It will save you a lot of money if you complete your contract immediately. Please note no further notices will be given.’
27 November 2015 [marked Exh 24]- From Mr Kapadia includes the following:
‘I would like to know when you will be finishing the rest of your job?
Contents of your email of 26th November are disputed however as you have now agreed to complete the job there is no need for further comment by me at this stage apart from requesting you to complete the wall ASAP and in any case all work to be completed by next Wednesday.’
27 November 2015 [marked Exh 25]- From Mr Porto includes the following:
‘As discussed yesterday, I have attached an alteration of works quotation based on all points we spoke about yesterday as to how design is to be completed.’ [Then the email discusses design]
28 November 2015 - From Mr Kapadia includes the following:
‘There is no alteration of work in as far as installation of the front sleeper wall is concerned.’ (emphasis original)
‘There is no reason why you should be charging me to rectify an error made by you.’
‘If you are not prepared to make the wall the way it should be and as per my original instructions than [sic] we only have one option. That is to get someone else to complete the wall for us and seek the cost difference between our contract price and the actual cost from you.’
‘Please let me know how you wish to proceed by 10am Monday 30th November by email so I can plan my next step. I reserve all my rights in this matter.’
1 December 2015 [marked Exh 30] - From Mr Kapadia includes the following:
‘I have had a brief discussion regarding this with my daughter who is a qualified practicing [sic] lawyer who attends court regularly representing people who have legal issues and have been advised that you are in breach of the Domestic Buildings Act 1995 (Victoria) [sic]. Under Section 8 there are a number of implied warranties and you are in breach of them. The Act also provides for work to be completed within a reasonable period of time in a proper and workman like manner. In this case it has not been done. It must also be done professionally to a high standard which your work has clearly not been done.’
‘The whole job is a disaster. I demand from you a complete refund on the job and will also be seeking demolishing costs and other costs in due course.’
‘If we cannot resolve this matter quickly, I will institute proceedings against you and seek from you all costs, damages and refund of all money paid to you. You could be liable for fines also if the court agrees with me that you are in breach of the legislation.’
‘I reserve all my rights and will be referring this matter to my lawyers with instructions to institute legal proceedings against yourself and Frank [Mr Porto’s father] without further notice and seek all costs and damages if I do not receive satisfactory response.’
1 December 2015 [marked Exh 28] - From Mr Porto includes the following:
‘Given the chronology of events I have outlined above, and that you had approved the location of the wall I am not sure why you are now disputing the position. If the wall is not in a position to your satisfaction I am able to alter the current position. As per the attached quote this alteration will cost a total of $2915 and an estimated 3 days. Please advise if you would like to proceed with these works.’
‘I note on numerous occasions you have stated that I have abandoned the job, please note I have not at any stage said I was abandoning or walking off your job as this is something I have never considered since I started this business.’
‘Further to your inference that I have abandoned the job I have at all times attempted to accelerate the works in a positive direction. For example, the retaining wall alignment previously outlined are only related to a short length of the retaining wall.’
‘You have withheld payment to me throughout the entire job and I have allowed it as I know I am doing the right thing by you, so to me there is no justification to not be paid.
Please note that aside from the retaining wall in dispute there is $1,768.10 which remains unpaid from [sic] the works completed to date.
As these moneys are outstanding I will not return to site until they have been paid.
If you continue to act with difficulty, I believe there is no way we will come to an agreement without third party intervention. I have made your site safe and still have barrier tape up which is a sign I have not walked off your job and do care what happens to the site no matter who I am working for.
I believe a mediation or VCAT hearing may be the only way of resolving this matter.’
16 December 2015 [marked Exh 10] - From Mr Kapadia includes the following:
‘It is noted that you have so far not made any effort to rectify the steps or the retaining wall. As per your request we have now instituted proceedings at VCAT and look forward to VCAT advising us and also you of the hearing date.’
‘I would like to request you and your associates that you must now not enter my property for any reason whatsoever without my prior approval by email.’ (emphasis original)
28 January 2016 [marked Exh 11] - From Mr Kapadia includes the following:
‘As the VCAT date is a long way away and we cannot leave our garden looking messy and steps unfinished I intend to start some rectification work immediately. If you would like the opportunity to do the rectification work yourself please advise me immediately otherwise I have another contractor willing to start work.’
31 January 2016 [marked Exh 12] - From Mr Porto includes the following:
‘As you are aware there is payment still outstanding for work done, if you pay me for the work completed to date $1,786.10 (not including extras you have added which are yet to be invoiced) then I will be more than happy to quote you for the works needed to be completed.’
‘Also until VCAT has issued a verdict on the matter you have lodged, I would not feel comfortable continuing work on your property.’
1 February 2016 [marked Exh 12] - From Mr Kapadia includes the following:
‘I dont [sic] know how you work out that $1786.10 is outstanding? You have not completed any of the works that you were contracted to do.’
‘I only wanted to give you an opportunity to rectify the problems as you may be able to get it done cheaper than I can.’
‘It would have been in your own interests to finish the job properly and resolve this matter.’
The Tribunal found that there was a unilateral variation of the contract terms.[33] This finding was made by its acceptance of the evidence of Mr Porto over that of Mr Kapadia. That was a factual finding based on the weighing of evidence that the Tribunal was entitled to make. Therefore, Mr Kapadia’s demand that Mr Porto accept a variation of the contract terms amounted to repudiation is a finding that is open to the Tribunal based on that evidence.
[33]VCAT Reasons [33]-[34].
The next finding by the Tribunal was that Mr Porto accepted the repudiation by his conduct in refusing to return to the site to carry on with the contract works unless the Kapadias agreed to pay for the variation required by them.
The acceptance of repudiation is made clear by words or conduct, that the innocent party is treating the contract as at an end.[34] Importantly, the acceptance of such repudiation must be clear and unequivocal.[35] Further, repudiation is ascertained by reference to the context of the conduct in the overall circumstances of the case.[36]
[34]Ryder v Frohlich [2004] NSWCA 472 [117]-[119].
[35]Ibid [117]-[118].
[36]Shevill v Builders Licensing Board [1981-1982] 149 CLR 620, 633 (Wilson J).
I do not accept that the Tribunal misconstrued the concept of repudiation. There were written communications, discussed above, that indicate that on 1 December 2015, Mr Porto conveyed to Mr Kapadia that he would not return to site until all outstanding monies had been paid, and indeed he did not. On 31 January 2016, Mr Porto expressly indicates that he wishes to treat the contract at an end, when he states that he will not return to the site because he would feel uncomfortable to do so when the Tribunal proceedings are on foot. Accordingly, there was evidence before the Tribunal that Mr Porto accepted the repudiation. It is for the Tribunal to weigh the evidence. It was open to the Tribunal to find that Mr Porto accepted the repudiation of the contract.
In conclusion, I find it was open on the facts to find the Kapadias had repudiated the contract, and that Mr Porto accepted the repudiation. Ground 2 is not allowed.
3.Did the Tribunal fail to make a finding on material facts, namely whether or not the building work carried out by Mr Porto was defective within the meaning of the DB Contracts Act, and whether or not Mr Porto breached the contract with the Kapadias?
The Kapadias say that the Tribunal failed to make a determination on whether or not the building work carried out by Mr Porto was defective within the meaning of the DB Contracts Act. They say the Tribunal dismissed their claim for defects in Mr Porto’s work without making a finding about whether there were defects.
The Kapadias say that the Tribunal did not make a determination as to whether or not Mr Porto had breached his contract with them. They concede they did not plead breach of contract, but say the Tribunal dealt with the matter as a contractual claim.
Mr Porto says that the decision is not vitiated because the Tribunal took a shortcut. That is, that it did not go into the rights and wrongs of whether there was a breach because in the absence of evidence of loss, there is no claim.
Mr Porto says there is no evidence of whether there is any loss by the Kapadias as to the alleged defects.
Finding
A purpose of the DB Contracts Act is to regulate contracts for the carrying out of domestic building work.[37] Section 5 refers to the building work to which the DB Contracts Act applies. Section 53 of the DB Contracts Act gives the Tribunal the power to make any order it considers fair to resolve a domestic building dispute. Section 54 defines a domestic building dispute.
[37]DB Contracts Act, s 1(a).
Mr Porto contended that the Act did not apply because the works were general gardening and landscaping.[38] During the VCAT hearing, at the outset, Mr Porto reiterated that the dispute was not a domestic building issue.[39] The Tribunal indicated it would deal with the matter as a contractual issue.[40]
[38]Points of defence filed with the Tribunal, paragraph 5. The points of defence are contained in Exhibit ‘KK-4’ to the Kapadia affidavit.
[39]The Tribunal Transcript, 4.
[40]Ibid 4-5.
The Tribunal’s only express references to the DB Contracts Act in its Reasons are in the context of whether the variations were enforceable by reason of s 38(6) of that Act.[41]
[41]VCAT Reasons [39]. The catchwords to the decision make the same type of reference.
The Reasons do not specifically state that the DB Contracts Act is applicable. It may be inferred from the reference above that the Tribunal considered that Act applicable.
The Kapadias’ points of claim filed with the Tribunal[42] say there was a contract and refer to the DB Contracts Act as being applicable to Mr Porto’s work. They do not allege a breach of the DB Contracts Act in relation to that work. Nor do they plead a breach of contract, although they do say retaining walls were not built ‘in conformance with the contract, and/or defective, and/or unusable’. Rather, they allege Mr Porto made them representations, and a verbal guarantee, and plead estoppel and negligence. In short, the points of claim are confused as to legal issues. However, they do contain a list of alleged defects in Mr Porto’s work.
[42]Exhibit ‘KK-4’ to the Kapadia affidavit.
Section 3 of the DB Contracts Act defines ‘defective’ in relation to domestic building work to include ‘(a) a breach of any warranty listed in section 8; (b) a failure to maintain a standard or quality of building work specified in the contract’. It was open to the Tribunal to deal with the issue of the defective work as a breach of contract. The purpose of the DB Contracts Act is to regulate contracts.[43]
[43]DB Contracts Act, s 1.
The next issue is whether the Tribunal made a finding about whether Mr Porto’s work was defective. Paragraphs 19 – 27 of the Tribunal’s Reasons are grouped under the heading ‘Defects’. The Tribunal outlined the allegations of the Kapadias’ concerning the particular defects and then considered the evidence concerning the defects. The Kapadias had engaged a third party to demolish and replace the steps constructed by Mr Porto. The Tribunal held that, on the basis of the Kapadias’ evidence, the alleged defects were not sufficiently serious to warrant the demolition of the steps. The Tribunal also considered there was evidence that the decision to demolish the steps was not necessarily made because of the seriousness of the defects.
Where there was a conflict in the evidence, the Tribunal preferred Mr Porto’s evidence to that of the Kapadias.[44] It characterised Mr Porto’s evidence ‘as either denying that an alleged defect was in fact a defect or saying that allegedly defective work had been built as directed by Mr Kapadia senior’.[45] This did not answer the question of whether there were any defects as it appears that the Tribunal did consider there were some, but Mr Porto’s evidence was that they were the fault of Mr Kapadia senior. The Tribunal found that the alleged defects were not sufficiently serious to warrant the demolition of the steps.[46]
[44]Reasons [18].
[45]Ibid [20].
[46]Ibid [25].
Nor did the following finding:
In view of Mr Porto’s evidence disputing the alleged defects and the absence of any evidence on behalf of the Kapadias about the cost of rectification, there is no evidence upon which a finding about the extent of the Kapadias’ loss, if any, can be based. Accordingly, the Kapadias’ claim in relation to defects is dismissed.[47]
[47]Ibid [27].
Perhaps it may be inferred from the above that the Tribunal held there were defects but they were not serious. This is unclear. It was however incumbent upon the Tribunal to make a finding as to whether or not there were defects. It was a material question of fact before it. The failure to make such a finding is a vitiating error of law.[48] It affected the ultimate determination of the decision because the allegation formed the basis of the Kapadias’ claim against Mr Porto. Although the Tribunal dealt with the dispute as a breach of contract claim, there was no express finding as to whether or not Mr Porto breached the contract by undertaking defective work. I do not think that the finding can simply be inferred from the Tribunal’s acceptance of Mr Porto’s evidence.
[48]See, for instance: Victoria v Turner (2009) 23 VR 110; 173 [240] (Kyrou J).
I find the Tribunal erred in law by failing to make a finding on the Kapadias’ allegations that Mr Porto’s work was defective and if so, whether he had breached his contract with the Kapadias. Ground 3 of the Notice of Appeal is allowed.
4. Alternatively, if there were findings in respect of 3(a) and (b) above,
(a) were they open to the Tribunal; or
(b) were they so unreasonable that no reasonable tribunal would have made them; or
(c) was the pathway of reasoning to those findings disclosed?
Given the above, a finding as to this alternative question is unnecessary.
5. Was the finding the Kapadias were not entitled to damages:
(a) open on the evidence; or
(b) so unreasonable that no reasonable tribunal would have made the finding?
The Kapadias submit that the finding there was no evidence as to their loss was either not open on the evidence or unreasonable. They refer to the evidence of quotes.[49] They say that in the absence of expert evidence, the Tribunal could rely upon it. The Tribunal could also make an assessment using the contract price or quotes in evidence.
[49]Those quotations are contained in exhibits ‘KK12’-‘KK15’ to the Kapadia affidavit.
The Kapadias also submit that even if there was no evidence of loss, the Tribunal could still have awarded nominal damages to them and that may have affected the costs of the proceeding.
On the other hand, Mr Porto says that there was no evidence as to loss. The question is how much it would cost to rectify any defects. Mr Porto says no amount of quotes can be evidence of the cost of rectification of any alleged defects.
Finding
The Tribunal considered the evidence of the Kapadias concerning loss.[50] It did not need to specifically refer to all the evidence before it. The Tribunal found that the expert report the Kapadias relied upon did not give any cost of rectification.[51] It was open to the Tribunal to weigh the evidence that was before it as to loss, if any, and to characterise it. Given this, it cannot be said the decision was so unreasonable that no reasonable tribunal could have made it.
[50]Reasons [21], [26].
[51]Ibid [24].
As to whether or not the Tribunal should have made a finding as to nominal damages, no such submission was before the Tribunal. It was not incumbent upon the Tribunal to consider this issue.
Ground 5 of the proposed Notice of Appeal is not allowed. I do however observe that the question of loss is not disconnected from the question of whether work is defective. As discussed above, no findings were made by the Tribunal on whether the work was defective. This issue will need to be reconsidered when the matter is remitted to the Tribunal to consider whether there was any defective work.
6. Did the Tribunal err in a calculation of quantum of Mr Porto’s counterclaim?
It is common ground between the parties that there has been an error in the calculation of the quantum of Mr Porto’s counterclaim. Given the findings above, and that the matter will be remitted to the Tribunal, it is unnecessary to make a finding about the degree of error in the quantum.
Ground 6 of the proposed Notice of Appeal is allowed although no finding is made by this Court in respect of the particulars to that ground, given the above.
Orders
Pursuant to s 148(7)(c) of the VCAT Act, orders will be made remitting this proceeding to the Tribunal differently constituted. As to whether the Tribunal allows any fresh evidence to be admitted by the parties, that is a matter more appropriately determined by it.
Conclusion
I will hear the parties on costs.
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