KBE Contracting Pty Ltd and Mawer & Anor
[2007] WASAT 210
•23 AUGUST 2007
KBE CONTRACTING PTY LTD and MAWER & ANOR [2007] WASAT 210
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2007] WASAT 210 | |
| BUILDERS' REGISTRATION ACT 1939 (WA) | |||
| Case No: | CC:1602/2006 | 23 MAY 2007 | |
| Coram: | MR C RAYMOND (SENIOR MEMBER) MS J HAWKINS (MEMBER) | 23/08/07 | |
| 26 | Judgment Part: | 1 of 1 | |
| Result: | Application for review successful in part | ||
| B | |||
| PDF Version |
| Parties: | KBE CONTRACTING PTY LTD MARK MAWER PAULA SAMIOTIS |
Catchwords: | Builders' Registration Act 1939 (WA) Review of Building Disputes Tribunal decision Section 15A of Home Building Contracts Act 1991 (WA) Representations made by builder's salesman Effect of disclaimer in building contract Whether conduct of builder's salesman constituted misleading and deceptive conduct of builder Whether competent for Building Disputes Tribunal to award damages for emotional stress |
Legislation: | Builders' Registration Act 1939 (WA), s 13 Home Building Contracts Act 1991 (WA), s 15, s 15A, s 17, s 17(2), s 17(3), s 17(4), s 17(4)(c), s 17(4)(c)(i) Interpretation Act 1984 (WA), s 18 Small Claims Tribunal Act 1974 (WA) State Administrative Tribunal (Conferral of Jurisdiction) Amendment Act 2004 (WA) State Administrative Tribunal Act 2004 (WA), s 27 Trade Practices Act 1974 (Cth), s 52, s 82, s 84(2) |
Case References: | AL Underwood Ltd v Bank of Liverpool; AL Underwood Ltd v Barclays Bank [1924] 1 KB 775 Baltic Shipping Co v Dillon (1993) 176 CLR 344 Boncristiano v Lohmann [1998] 4 VR 82 Builders' Registration Board and Ongarezos [2006] WASAT 53 Butcher & Anor v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592 Hadley v Baxendale (1854) 9 Exch 341 Hall Brothers SS Co Ltd v Young [1939] 1 KB 748 Mustac v Medical Board of WA [2007] WASCA 128 Parker v South Eastern Railway Co (Ticket Case) (1877) 2 CPD 416 Phoenix Assurance Co Ltd v Berechree (1906) 3 CLR 946 Tame v State of New South Wales; Annetts & Anor v Australian Stations Pty Ltd (2002) 211 CLR 317 Tangent Nominees Pty Ltd and Edwards & Anor [2006] WASAT 245 Thorpe v Lochel & Ors [2005] WASCA 85 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Vernon & Anor v Ashmy Pty Ltd (Unreported, Western Australian District Court; D970022; 23 January 1997) Walplan Pty Ltd v Wallace (1985) 8 FCR 27 Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445 |
Orders | 1. The decision of the Building Disputes Tribunal reflected in an order to pay No 37/2006-07 dated 13 September 2006 is varied by deleting par 1 and substituting the following:,"1. That KBE Consulting Pty Ltd within 14 days pay:,(a) to Mark Mawer and Paula Samiotis the sum of $1572.00 being:,repayment of deposit $1500.00,interest thereon from 20 December 2005 to 12 September 2006 at 6% $72.00,(b) to Mark Mawer damages $500.00,in relation to patio contract 30199;",and the application for review is to that extent upheld.,2. The application for review is otherwise dismissed. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDERS' REGISTRATION ACT 1939 (WA) CITATION : KBE CONTRACTING PTY LTD and MAWER & ANOR [2007] WASAT 210 MEMBER : MR C RAYMOND (SENIOR MEMBER)
- MS J HAWKINS (MEMBER)
- Applicant
AND
MARK MAWER
PAULA SAMIOTIS
Respondents
Catchwords:
Builders' Registration Act 1939 (WA) - Review of Building Disputes Tribunal decision - Section 15A of Home Building Contracts Act 1991 (WA) - Representations made by builder's salesman - Effect of disclaimer in building contract - Whether conduct of builder's salesman constituted misleading and deceptive conduct of builder - Whether competent for Building Disputes Tribunal to award damages for emotional stress
(Page 2)
Legislation:
Builders' Registration Act 1939 (WA), s 13
Home Building Contracts Act 1991 (WA), s 15, s 15A, s 17, s 17(2), s 17(3), s 17(4), s 17(4)(c), s 17(4)(c)(i)
Interpretation Act 1984 (WA), s 18
Small Claims Tribunal Act 1974 (WA)
State Administrative Tribunal (Conferral of Jurisdiction) Amendment Act 2004 (WA)
State Administrative Tribunal Act 2004 (WA), s 27
Trade Practices Act 1974 (Cth), s 52, s 82, s 84(2)
Result:
Application for review successful in part
Category: B
Representation:
Counsel:
Applicant : Mr Gannon
Respondents : No appearance
Solicitors:
Applicant : Solomon Brothers
Respondents : No appearance
Case(s) referred to in decision(s):
AL Underwood Ltd v Bank of Liverpool; AL Underwood Ltd v Barclays Bank [1924] 1 KB 775
Baltic Shipping Co v Dillon (1993) 176 CLR 344
Boncristiano v Lohmann [1998] 4 VR 82
Builders' Registration Board and Ongarezos [2006] WASAT 53
Butcher & Anor v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592
Hadley v Baxendale (1854) 9 Exch 341
Hall Brothers SS Co Ltd v Young [1939] 1 KB 748
(Page 3)
Mustac v Medical Board of WA [2007] WASCA 128
Parker v South Eastern Railway Co (Ticket Case) (1877) 2 CPD 416
Phoenix Assurance Co Ltd v Berechree (1906) 3 CLR 946
Tame v State of New South Wales; Annetts & Anor v Australian Stations Pty Ltd (2002) 211 CLR 317
Tangent Nominees Pty Ltd and Edwards & Anor [2006] WASAT 245
Thorpe v Lochel & Ors [2005] WASCA 85
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Vernon & Anor v Ashmy Pty Ltd (Unreported, Western Australian District Court; D970022; 23 January 1997)
Walplan Pty Ltd v Wallace (1985) 8 FCR 27
Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445
(Page 4)
Summary of Tribunal's decision
1 The applicant applied for review of a decision of the Building Disputes Tribunal in which the Disputes Tribunal had ordered the repayment of the portion of the Contract sum paid by the respondents and had awarded damages for misleading and deceptive conduct in breach of s 15 of the Home Building Contracts Act 1991 (WA).
2 Leave to review the decision was granted on limited grounds. The first of these related to the authority of the applicant's salesman who had made the representation in question. The Tribunal rejected the applicant's argument that the terms of the Contract constituted notice to the respondents limiting the salesman's authority. The Tribunal found that the salesman had acted within the scope of his apparent authority in making the representation relied upon by the respondents.
3 The applicant had also been granted leave to review the decision insofar as damages for emotional stress had been awarded to the respondents. The Tribunal accepted that the second named respondent was not entitled to damages as she was not a party to the Contract. However, the Tribunal declined to follow an earlier decision of the District Court in which it had been held that the Disputes Tribunal lacked jurisdiction to award damages for anxiety and injured feelings. The Tribunal found that the Disputes Tribunal had jurisdiction to award loss or damage for misleading and deceptive conduct which included emotional stress, further that the Disputes Tribunal had jurisdiction to award a claim for physical inconvenience and stress flowing therefrom for breach of contract.
4 The Tribunal accepted the applicant's argument that damages should not be awarded for the cancellation of a wedding and christening, as a result of delay in carrying out the building work, because such damages were too remote. However, the Tribunal found that damages should be awarded in favour of the first named respondent for stress as a result of the manner in which the applicant performed, or failed to perform, the Contract and as a result of the manner in which its representatives dealt with the respondents.
The application
5 The applicant (the builder) has applied for leave to review a decision of the Building Disputes Tribunal (BDT) made on 13 September 2006 and
(Page 5)
- reflected in an order to pay issued on that date. The BDT published written reasons for the decision on 1 November 2006. The order to pay was in terms that required the applicant (builder) to repay to the respondents (who are referred to hereafter either together as the owners, or individually as Mr Mawer or Ms Samiotis, unless the context requires otherwise) an amount of $1500 being part of the Contract sum which they had paid for the supply and erection by the builder of a prefabricated patio, together with interest of $72 and an amount of damages of $500. The damages were awarded for emotional stress suffered.
6 Leave to review the decision of the BDT was sought on a number of grounds. However, leave was refused in respect of all but three grounds, namely grounds 1.1, 3 (in relation to the Ms Samiotis only) and ground 4.
7 Ground 1.1 raises that the BDT had erred in fact and law in finding that the applicant had engaged in misleading or deceptive conduct in contravention of s 15A of the Home Building Contracts Act 1991 (WA) (HBC Act) which should be compensated. This is because any "misleading representation" made by the builder's salesman was not binding on, or a representation of, the builder, as any such representation was not made in his actual or apparent authority "on behalf of the applicant of which the first named respondent (owner) was aware (and acknowledged)" and as the Contract for the patio provided that it was not in the salesman's "actual or apparent authority to vary the terms of the contract or provide any estimate as to the time for performance of the Works required by the Contract (the Works)".
8 Ground 3 raises that the BDT erred in fact and in law, in finding that the owners were induced by any conduct of the builder's salesman given that Ms Samiotis was not a party to the Contract and Mr Mawer's failure to address evidence, alternatively any cogent evidence explaining how he was misled into entering into the Contract. During the hearing of the review, the builder's counsel advised that this ground was not pressed.
9 Ground 4 raises that the BDT had erred in fact and law in finding that the owners had suffered emotional stress caused by the builder which should be compensated based on grounds 1 to 3 as originally numbered, and of which having regard to the terms of leave granted is now restricted to ground 1.1 above. A further reason was that the Ms Samiotis was not a party to the Contract and therefore had no possible cause of action. Yet a further reason was that it was stated that the BDT should have applied common law principles of causation to compensation payable pursuant to s 17(4)(c)(i) of the HBC Act and that damages were not recoverable for
(Page 6)
- emotional distress; alternatively that any emotional distress suffered was too remote and further, because damages for mental stress were not recoverable because the owners had not produced any evidence of a diagnosed psychiatric injury justifying an award of damages.
The decision under review
10 The reasons for decision reflect that originally a complaint was made to the BDT concerning two contracts entered into individually by each of the owners. One of the contracts was for an amount less than $6000 and therefore it was held that the BDT did not have jurisdiction to deal with the claim because of the monetary limits prescribed and within which the BDT has jurisdiction. The Tribunal therefore went on to deal in detail only with the one contract which was for the supply of material for and erection of a patio at the owners' property.
11 The BDT outlined the evidence which had been provided by the owners. It was to the effect that they had negotiated for the builder to provide the patio with the builder's servant or agent, a salesman whom they knew only as "Eddy". The BDT refers, throughout the reasons, to the salesman simply as Eddy. He has been identified in these proceedings as Edward Mario Dobosz and will hereafter be referred to as Mr Dobosz. Although not expressly stated in the reasons for decision, when read with the transcript of evidence, it is evident that it was during a discussion on 9 November 2005 that the owners made it known to Mr Dobosz that they required the patio to be completed by mid-January. The summary of evidence continues to reflect that the owners planned to hold their wedding at their home in February 2006 utilising the patio. Further, they also planned their son's christening at home, in mid-March. The reasons for decision do not state that this information was conveyed to Mr Dobosz, although the reasons can be read in that way. It is then further stated that Mr Dobosz advised the owners that the patio would be provided in six weeks, by mid-January 2006. The owners then entered into the Contract to provide the patio.
12 The patio was not supplied within the six week time frame. The builder was ready to install the patio in early May, some 24 weeks after the signing of the Contract which was well past the January date, and the dates of the wedding and christening, both of which were postponed.
13 In April 2006, the owners put the home on the market. They advised the builder that they intended to do so. The selling price of the house had been set on the basis that the patio would be installed but the Contract
(Page 7)
- price was ultimately reduced by $8500 at settlement to take account of the fact that the patio was still not installed. Settlement occurred in late May.
14 It is stated that the owners gave evidence that the representation made by Mr Dobosz prior to the Contract was crucial to their decision to enter into the patio contract with the builder. The owners relied on the representation as to the date of completion. As a consequence of the builder's failure to provide the patio in the time frame represented, the owners could not hold their wedding or their son's christening functions as they had planned.
15 The owners sought rescission of the Contract, together with the return of the deposit, and progress payments made, which totalled $1500. They also sought compensation for the emotional stress arising from the interruption of their family functions as a direct consequence of the failure of the builder to complete the Contract in accordance with the representations made.
16 The BDT then referred to the builder's evidence. The reasons for decision reflect that reliance was placed by the builder on the terms of the Contract itself. The relevant clause of the Contract is set out in the reasons and provides:
"Acceptance of contract
Delivery is anticipated but not guaranteed to be 6 – 12 weeks from date of payment of the deposit under this contract ...
I/we being over the age of 18 years, hereby accept the above contract and acknowledge that I/we have read and understood the contents of this contract including the conditions on the reverse side and that I/we understand that no other agreements, verbal or otherwise, are binding on the parties hereto and that the same contains the entire agreement and understanding of the parties." (Emphasis added by the BDT)
17 It should however be noted that when regard is had to the Contract as signed by Mr Mawer, the words "acceptance of contract" are in bold capitals. Further, after the first sentence set out in bold above, which is printed in capitals, not in bold type, the clause continues, also in capitals, to state "[a]ny queries regarding installation or service should be made to the service department" and a telephone number is then provided.
(Page 8)
18 The reasons for decision reflect that the builder chose not to call Mr Dobosz to give evidence.
19 Evidence from Mr Tom Hartwig, a director of the builder, established that, amongst other matters, the necessary shire approval had been received on 19 December 2005; the owners were notified of shire approval on 23 December 2005 and were required to make a progress payment; by the end of January 2006 there were "several hundred jobs in the pipeline"; at the time that the owners signed their contract in November 2005, there was still a backlog of work to be completed and a shortage of labour; this backlog was still affecting completion of contracts at the time the owners' Contract was to be completed.
20 The DBT then outlined its reasons for the conclusions reached. It commenced by setting out the relevant provision of the HBC Act as follows:
"Misleading or deceptive conduct.
Section 15A HBCA provides:
'A person who is a builder or an owner must not, in connection with —
(a) the formation or execution of a contract;
(b) negotiations to vary a contract after execution; or
(c) the circumstances in which a contract or variation of contract is entered into,
engage in conduct that is misleading or deceptive'. "
22 The BDT went on to state that the owners had instructed Mr Dobosz, the builder's servant or agent, at the time of signing the Contract that they required the work to be completed by mid-January, in order to utilise the area for their wedding in mid-February and that Mr Dobosz, as the
(Page 9)
- builder's servant or agent, represented to them that the patio would be provided by mid-January. We have already noted that it is not clear that the BDT found that Mr Dobosz was told the reasons for requiring the completion by mid-January. The reasons are equivocal and may reflect only that this was the owners' reason for stating that completion was required by mid-January.
23 It was held that implicit in the representation made by Mr Dobosz is a further statement that Mr Dobosz had a reasonable basis to make the representation. The reasons for decision reflect that Mr Dobosz was or should have been aware of the backlog of work from June that had still not been cleared, the continued shortage of labour and the intervening Christmas period. The BDT found that in reliance on the statement by Mr Dobosz, the owners signed the Contract in November 2005. It was found that Mr Dobosz had no reasonable grounds upon which to make the statement that the work would be completed by mid-January and was recklessly indifferent as to whether there was any basis to what he said. It was therefore concluded that by its representative, Mr Dobosz, the builder engaged in misleading conduct at the time the Contract was made by making the representation that the patio would be ready by mid-January, in contravention of s 15A of the HBC Act and thus a provision of Part 2 of the HBC Act. The reasons then proceed:
"The Tribunal is also satisfied that the owners did their utmost to make their concerns about the delays known to the builder. They also requested that the contract be assigned when they sold the house. Their behaviour was at all times aimed at getting the patio built and their stress at not having so done in time for their important family events is understandable."
24 Based on those findings, the BDT stated that the orders it considered appropriate were for the refund of the deposit and progress payments made, interest thereon at the Supreme Court rate and payment by the builder of a sum of money to compensate for the emotional stress arising from the fact that the very important family wedding and family christening could not go ahead as planned, which it assessed at $500.
The review hearing
25 For the purposes of the review, the Tribunal had before it all of the material which had been filed in support of the leave application. That included a transcript of the evidence of the proceedings before the BDT, an affidavit of Thomas George Hartwig, sworn 28 January 2006, and two affidavits of Edward Mario Dobosz, sworn respectively on 28 and 29
(Page 10)
- November 2006. At the application for leave it was conceded that regard could not be had to these affidavits insofar as they purport to put new evidence before the Tribunal, which was not relevant to determining whether or not the decision of the BDT was wrong or attended with sufficient doubt. There was also a response from the owners.
26 Counsel for the builder informed the Tribunal at the commencement of the review hearing that the builder no longer sought an order against the owners for costs. During the course of submissions, counsel also advised that the builder did not pursue ground 3.
27 The owners did not appear at the hearing. The builder's counsel relied upon the written submissions filed in support of the leave application which were supplemented by oral argument. That argument focussed on two issues. Firstly, whether having regard to the terms of the Contract, the BDT had erred in attributing whatever representation had been made to the builder. Secondly, on the question of whether the BDT could have awarded damages for mental stress. We consider those submissions in further detail below. For the purposes of the review, consistent with the principles established in Tangent Nominees Pty Ltd and Edwards & Anor [2006] WASAT 245, the review is limited to the grounds in relation to which leave has been granted. Consequently, the findings of the BDT stand in all other respects and are not subject to review.
28 It is not clear to the Tribunal as to the extent and purpose for which the builder placed reliance upon the above affidavits of Mr Dobosz in the review. Mr Dobosz's evidence is clearly relevant to par 4.3.2 of ground 4 which asserts that Mr Dobosz was not informed about the intention to use the patio for the wedding and christening, prior to execution of the Contract. We note that the original grounds of review 1.2 and 1.3, which were expressed to be in the alternative to par 1.1, raised expressly issues as to the question of inducement based on the terms of the representation made by Mr Dobosz. Leave in respect of those grounds was refused and we therefore consider that ground 1.1 above can only be read properly as raising the issue of authority to make the representation. Accordingly, the terms of the representation as found by the BDT stand and are not subject to review. We shall revert to this topic further below.
Ground 1.1: authority
29 The builder submits that the principal is only liable for conduct performed within the scope of the agent's actual apparent authority: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165.
(Page 11)
30 We accept that submission.
31 It is further submitted for the builder that where a principal, in conferring authority upon an agent to act on the principal's behalf, imposes conditions or limitations on its exercise, no act done by the agent in excess of the conditional or limited authority is treated as the act of the principal as regards persons who have notice of the excess of authority, or have had notice of an irregularity placing them upon enquiry as to whether the agent's authority was being exceeded: Phoenix Assurance Co Ltd v Berechree (1906) 3 CLR 946; AL Underwood Ltd v Bank of Liverpool; AL Underwood Ltd v Barclays Bank [1924] 1 KB 775 and other authorities referred to in the submissions.
32 We also accept that submission.
33 It is then submitted that the Contract entered into between the parties provided that it was not in Mr Dobosz's actual or apparent authority to vary the terms of the Contract or provide any estimate as to the time for performance of the works required. Further, that the owners were put on notice of Mr Dobosz's lack of authority by reason of the clause, as referred to in the decision of the BDT headed "ACCEPTANCE OF CONTRACT" and also by virtue of the General Conditions of Contract cl 3 and Terms of Trade cl 7, printed on the reverse of the one page Contract entered into by the parties. Clause 3 of the General Conditions provides that the Contract together with the General Conditions of Contract and the Terms of Trade thereunder constitute the entire Contract between the parties and any variation to the Contract must be recorded in writing signed by both parties. Clause 7 of the Terms of Trade provides that the Customer acknowledges that no other agreement, verbal or otherwise, exists or has been agreed to by the contractor or his representative and therefore no other conditions, understanding or promises are applicable.
34 On that basis, it is submitted that the parties have contracted on the above terms, that is, their bargain, and that the parties must be kept to their bargain: Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd as referred to above. We were referred in particular to pars [42], [43], [46], [47], [64] and [67] of that decision.
35 With respect, we do not consider that Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd is relevant to this matter. That was what is commonly referred to as a "ticket" case which turned on the principles stated in Parker v South Eastern Railway Co(Ticket Case) (1877) 2
(Page 12)
- CPD 416. It was held that a person who signed a document which was intended to affect legal relations and knew that it contained contractual terms, and where there was no suggested vitiating element, such as misrepresentation, duress or mistake and no claim for equitable or statutory relief, that person was bound by those terms and it was immaterial that the person had not read the document. This case does not turn on the parties' contractual obligations. It turns on whether or not misleading and deceptive conduct was engaged in prior to entry into the Contract.
36 The transcript of the evidence, read with the BDT reasons for decision, reflects that the case was based squarely on a breach of s 15A of the HBC Act. Although the owners might have arguably made time of the essence, by giving the builder notice on 30 April 2006 that the Contract had to be completed by 12 May 2006, otherwise they would terminate the Contract, there is no evidence that they did terminate. Indeed, they endeavoured to arrange an assignment of the Contract to the purchasers of their property.
37 We accept that by Mr Mawer signing the Contract, having regard to the prominent way in which the first two sentences of the acceptance of contract terms are set out in capitals, it is likely that at the time of signature he was aware of the terms set out in the Acceptance of Contract clause. It is improbable that the Contract could have been signed without him being aware of those terms. It does not follow that Mr Mawer was actually aware of the terms printed on the reverse side of the Contract form. No evidence touches upon whether Mr Mawer actually read the terms on the reverse side. It is necessary to consider whether the effect of the terms of the Acceptance of Contract clause was to put Mr Mawer on notice that Mr Dobosz had no authority to say when the works would be completed.
38 A portion of the clause provides that any queries regarding installation or service should be made to "Service Department 9493 1515". In our view, this provision means no more than that queries in relation to the progress of the job would, after signature of the Contract, be made to the service department. It is obvious, as discussed further below, that until the Contract was presented the only person who could provide information as to completion of the works to the owners was Mr Dobosz. We find that the above provision does not operate as notice affecting any authority which Mr Dobosz had to make the representation which he did.
(Page 13)
39 The clause also provides that no other agreements, verbal or otherwise, are binding and the Contract is the entire agreement and understanding of the parties. Reference was made also in argument to the effect of General Conditions of Contract cl 3 and Terms of Trade cl 7, on the reverse side of the Contract as described above. As we understand the builder, it is submitted that these provisions also affect any apparent authority being reposed in Mr Dobosz to make the representation he did. If the question of inducement was being reviewed the effect of those clauses would have to be assessed in the light of the principles expressed by the High Court in Butcher & Anor v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592. Inducement is not in issue. For the same reasons as given above in respect of the first mentioned Acceptance of Contract provision, and because of the conduct referred to further below relating to the apparent authority issue, we do not consider any of the provisions can affect any apparent authority Mr Dobosz had when he made the representation prior to entry into the Contract.
40 The BDT did not in its reasons for decision give any consideration to the effect of the Acceptance of Contract Clause. It was for that reason and because of the additional argument raised by builder, that in the absence of a provision in the HBC Act similar to s 84(2) of the TP Act specific findings had to be made on common law principles as to the authority of the agent, that leave to review in respect of this ground was granted. We turn to deal with the second basis upon which leave was granted in relation to this ground.
41 Section 84(2) of the TP Act provides:
"(2) Any conduct engaged in on behalf of a body corporate:
(a) by a director, servant or agent of the body corporate within the scope of the person's actual or apparent authority; or
(b) by any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant or agent of the body corporate, where the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the director, servant or agent;
shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate."
(Page 14)
42 As explained by Lockhart J in Walplan Pty Ltd v Wallace (1985) 8 FCR 27, this subsection is an enlarging provision of general application which extends to proceedings both civil and criminal, and is designed to eliminate the necessity to apply the various, and at times, divergent tests of the common law relating to a corporation's responsibility for the acts of its servants or agents. It extends those common law principles in order to facilitate proof of a corporation's responsibility.
43 Mr Dobosz was employed as a salesman and was therefore authorised to deal with customers. He met the owners on site and arranged for a plan to be drawn of the patio (all of which was incorporated in the large single page which comprised the Contract). He was the only person dealing with the owners in respect of all aspects of the Contract. He was engaged in negotiating building work. He was not simply a salesman selling a mass-produced product over the counter, who might not be expected to have much knowledge about the product. He was selling a service and it is almost inevitable that someone in his position would be asked questions about when work would commence and how long it would take to complete the work. In our view, notwithstanding any express limitation which may or may not have been placed on Mr Dobosz, he was clothed with apparent authority by the builder. He was sent out to deal exclusively with the clients, and the evidence establishes that he dealt with pricing and when he expected that the works could be completed. By making a representation of his expectation he was not varying the Contract. The contractual term remained to the effect that delivery was anticipated but not guaranteed to be six to 12 weeks from date of payment of the deposit.
44 In other words, on analysis, Mr Mawer entered into the Contract and was bound by its terms. Those terms reflected that there was no warranty as to when the works would be completed. But, the unchallenged evidence (save for reliance on the terms of the Contract) was that but for the advice from Mr Dobosz that the work could be completed by mid-January, the owners would have gone elsewhere and would not have entered into the Contract. We consider the representation made by Mr Dobosz was within the apparent authority granted to him by the builder by presenting Mr Dobosz as the person to deal with all aspects of the negotiation of the Contract.
45 For the above reasons, we conclude that ground 1.1 is not made out.
(Page 15)
46 We turn to refer to the possible uncertainty as to whether or not reliance can be placed in respect of ground 1.1 on the affidavits of Mr Dobosz filed in the review proceedings. For the reasons already given above, we have concluded that reliance cannot be placed on them. However, if we are wrong in that view, and if Mr Dobosz's evidence is accepted, the representation that he made is that he anticipated that the works could be performed by mid-January 2006 so long as there were no hold-ups or delays with shire approval. He further stated that he was aware of no reason why the works could not be completed within that time frame.
47 The finding of the BDT is unchallenged that the shire approval had been obtained by 19 December 2005. Even if one assumes that shire approval could have been obtained on the very next day after signature of the Contract, on 9 November 2005, that allowed nine weeks for the works to be completed according to Mr Dobosz's expectation. While there is no evidence to suggest that shire approval was delayed, by obtaining it by 19 December 2005, even if one assumed that constituted a delay, the works, according to Mr Dobosz's expectations, should have been competed by late February 2006. The works had not even commenced by 30 April 2006 when the owners notified the builder in writing that the works had to be completed by 12 May 2006 against threat of termination.
48 On the facts found by the BDT, which have not been challenged on review, the evidence of the backlog of work, the continued shortage of labour and, a factor not referred to by the BDT, namely Mr Hartwig's evidence that he never undertook to complete Contracts by Christmas because at that time of the year "things can be very interesting", there is a more than sufficient basis to conclude as we do, that no reasonable basis existed for the representation made by Mr Dobosz as referred to in his affidavit. For the same reason, we agree with the decision of the BDT that no reasonable basis existed for the representation as found by the BDT.
Ground 4: damages for emotional stress
49 A preliminary point raised within this ground is that Ms Samiotis is not a party to the Contract, yet the orders made were in favour of both owners and she should not be awarded compensation as no cause of action exists. That is clearly so and we find accordingly.
50 The builder advances three bases upon which it is contended that damages for emotional stress could not properly be awarded to Mr Mawer. Firstly, it is contended that the BDT had no jurisdiction to do
(Page 16)
- so relying upon Vernon & Anor v Ashmy Pty Ltd (Unreported, Western Australian District Court; D970022; 23 January 1997). Secondly, it is contended that damages for emotional distress as a result of cancellation of a planned wedding and christening did not fall within either branch of the rule in Hadley v Baxendale (1854) 9 Exch 341 at 354. Thirdly, on the authority of Tame v State of New South Wales; Annetts & Anor v Australian Stations Pty Ltd (2002) 211 CLR 317, it is submitted that damages for mental stress are not recoverable because the owners had not produced any evidence of a diagnosed psychiatric injury justifying an award of damages. We shall address each of these contentions in turn.
51 The DBT erred in awarding damages for emotional stress because Vernon & Anor v Ashmy Pty Ltd, above, is authority which is binding upon the BDT and expressly held that the BDT did not have jurisdiction to award loss or damages for anxiety and injured feelings. It is binding on the BDT because the BDT is required to apply the law as enunciated by a court in the appellate structure above the BDT – see Mustac v Medical Board of WA [2007] WASCA 128 at [48]. However, having so decided, the matter is before us by way of a review de novo. Whereas previously appeals from the decisions of the BDT lay to the District Court, since 1 January 2005, by virtue of the State Administrative Tribunal (Conferral of Jurisdiction) Amendment Act 2004 (WA), the right to review the decisions of the BDT, subject to leave being granted, was transferred to this Tribunal. We accordingly stand in the same position in the appellate hierarchy as that previously occupied by the District Court. Consequently, this Tribunal is not bound by previous decisions of the District Court in relation to decisions of the BDT made under the HBC Act and BR Act. However, unless we are convinced that a decision of the District Court, on appeal from a decision of the BDT, is wrong, we should follow that decision. With the greatest of respect for the learned Commissioner who decided Vernon & Anor v Ashmy Pty Ltd, we have concluded that it was wrongly decided.
52 The learned Commissioner set out the provisions of s 17 of the HBC Act and in particular, s 17(4), which provides upon the making of an application the BDT (then the Building Disputes Committee) may:
"(c) order the payment of compensation for loss or damage -
(i) caused by any breach of the Contract or of a provision of Part 2; or
(ii) referred to in Schedule 1;"
(Page 17)
53 Schedule 1 deals with the consequences of non-fulfilment of certain conditions. Part 2 deals with specific requirements of a home building works contract and relevantly includes s 15A which prescribes that a person who is a builder or an owner must not in connection with either the formation or the execution of the contract, negotiations to vary a contract after the execution, or the circumstances in which a contract or a variation of contract is entered into, engage in conduct that is misleading or deceptive.
54 The learned Commissioner concluded that:
"[I]t is obvious that the words – loss or damage – in s 17(4)(c) do not expressly include personal injury. Do they include personal injury by necessary implication? In my opinion, they do not."
55 In support of that conclusion the learned Commissioner set out a reference to the short title as being an act for the regulation of contracts between consumers and builders for the performance of certain home building work, to amend the Small Claims Tribunals Act 1974 (WA) and for connected purposes. After referring to the monetary jurisdictional limits which apply, the learned Commissioner then referred to the provisions under s 17(2) and s 17(3) of the HBC Act providing for a preliminary notice. The learned Commissioner then found that there was some significance in the requirement that a preliminary notice must be in writing setting out the matters of which the intending applicant complains and calling on the other party to (a) rectify them; or (b) otherwise attempt to settle any matters that are in dispute. The learned Commissioner held that, in his opinion, these provisions illustrate that the HBC Act is intended to regulate Contracts between consumers and builders for the performance of certain building work and that the words "loss or damage" in s 17(4)(c) must be read in the context of the HBC Act as a whole; that they relate to loss or damage occurring in the performance of certain building work and do not include personal injury specifically, the learned Commissioner held that this was not a case in which s 18 of the Interpretation Act 1984 (WA) should lead to a different conclusion.
56 We have come to a different conclusion for the reasons which follow. The words "loss or damage" are words of wide import and are used in many different contexts to include loss or damage arising from breach of contract, the general law or breach of a statutory obligation. In Words or Phrases Legally Defined, 3rd ed, Butterworths, Sydney, 1988-1990, the commentary on damages includes a reference to Hall
(Page 18)
- Brothers SS Co Ltd v Young [1939] 1 KB 748 at 756, CA, where Greene MR stated:
" 'Damages' to an English lawyer imports this idea, that the sums payable by way of damages are sums which fall to be paid by reason of some breach of duty or obligation, whether that duty or obligation is imposed by contract, by the general law, or legislation."
58 In Blacks' Law Dictionary, 8th ed, Thomson West, the meaning of "damage" is given as follows:
"adj of or relating to monetary compensation for loss or injury to a person or property ...
n. loss or injury to person or property."
59 We consider that misleading or deceptive conduct has a similar meaning in s 15A of the HBC Act to the meaning given to those terms in s 52 of the TP Act. A similar approach was taken by this Tribunal to the meaning of "misleading or deceptive" as that phrase is used in s 13 of the Builders' Registration Act 1939 (WA) (BR Act): see Builders' Registration Board and Ongarezos [2006] WASAT 53. Section 82 of the TP Act provides that a person who suffers "loss or damage" by conduct of another person that was done in contravention of various provisions, including s 52 within Part V of the TP Act, may recover the amount of the loss or damage by action against the person involved in the contravention. There are many cases in which compensation for loss or damage for mental stress has been awarded for breach of s 52 of the TP Act: see Millar's Annotated Trade Practices Act: Australian Competition and Consumer Law, 26th ed Thompson Lawbook Co, 2005 at par 1.82.68. One such case was Zoneff v Elcom Credit Union Ltd (1990) 94 ALR 445, in which compensation was awarded for distress, inconvenience and anxiety by reason of misleading conduct in relation to information provided as to the effect of an insurance policy.
60 Further, the law recognises that based on the principles expressed in Baltic Shipping Co v Dillon (1993) 176 CLR 344 there are circumstances in which damages may be awarded for mental suffering which is a direct
(Page 19)
- consequence of physical inconvenience resulting from a breach of contract. Numerous examples of the circumstances in which such damages have been awarded are set out in the dissenting judgment of Steytler P in Thorpe v Lochel & Ors [2005] WASCA 85. The dissent did not relate to the principles relating to award of damages for physical inconvenience and stress but to the application of those principles to the facts. One of the cases referred to, Boncristiano v Lohmann [1998] 4 VR 82, was a case concerning a building dispute. The Victorian Full Court determined that it was accepted in England and in Australia that awards of general damages can be made to building owners who have suffered physical inconvenience, anxiety and distress as a result of a builder's breach of contract.
61 Section 19 of the Interpretation Act 1984 (WA) permits regard to be had to material not forming part of the written law, which is capable of assisting the ascertainment of the meaning of a provision, either to confirm, or to determine the meaning of the provision if it is ambiguous or obscure, or the ordinary meaning conveyed by the text of the provision in context and having regard to the purpose of the written law, would lead to a result that is manifestly absurd or unreasonable. We do not consider that the ordinary meaning of s 17(4)(c) of the HBC Act is ambiguous, obscure, or would lead to a result that is manifestly absurd or unreasonable. However, regard to the second reading speech when the Home Building Contracts Bill was read for the second time, in our view confirms the meaning which we attribute to the provision. The Honourable Minister for Consumer Affairs stated (Hansard, 9 May 1991, p 1646 and following):
"The Home Building Contracts Actwill ensure that for the first time new home buyers and those undertaking home building work on an existing house will have adequate Contractual protection. At the same time, builders will be secure in the knowledge that public confidence in the building industry cannot be adversely affected by the irresponsible actions of a very small section of that industry ...
In order to ensure that home owners are not involved in unnecessary expense or delay in relation to a home building dispute, builders and owners will be required to approach the Building Disputes Committee (as the Disputes Tribunal was then called – parentheses added) rather than the court system if the dispute is within the jurisdiction of the Home Building Contracts Act. An important feature of this specialised disputes
(Page 20)
- committee is that it will have the power to deal with both workmanship and Contractual matters relating to home building work throughout the State. This provision will be of considerable assistance to consumers who have previously been required to refer workmanship disputes to the Builders' Registration Board while dealing with the Ministry of Consumer Affairs, the Small Claims Tribunal or the court system on Contractual matters."
62 When the HBC Act was enacted, amendments were also made to the Builders' Registration Act 1939 (WA) (BR Act) by the Builders' Registration Amendment Act 1991 (WA). This is cognate legislation and a complete understanding of the powers and jurisdiction of the BDT could be fully appreciated without regard to both the BR Act and the HBC Act. We accordingly consider that it is appropriate to have regard to the second reading speech in relation to the above amending legislation.
63 In the second reading speech of the Builders' Registration Amendment Bill (Hansard, 28 March 1991 at 747) the Minister for Consumer Affairs stated as follows:
"This Bill deals with the amendments to the Builders' Registration Act 1939which will establish the Building Disputes Tribunal. The Tribunal will form the disputes resolution procedure provided for in the Home Building Contracts Bill 1991 which provides protection for consumers who are building a new home or undertaking building work on an existing residence. It will also provide certainty for both the consumer and the builder entering into a contract. The Building Disputes Tribunal will have the specialised function of dealing with home building disputes. The Tribunal provides, for the first time in this State, a single entity which can deal with all aspects of a home building dispute. In the past, consumers and builders were required to seek redress in different forums depending on the type of dispute. ...
Often a single dispute is both workmanship and contractual aspects, and consumers or builders are advised to pursue his or her grievance through separate forums involving additional expense. Often the issues are technical and difficult to separate. This leads to additional frustration for the persons involved. ...
(Page 21)
- By establishing a single body to hear all home building disputes, the amendments represent a major improvement over the present system. They remove the frustrating and costly necessity for a consumer to pursue separate remedies for different aspects of a home building related grievance. ..."
64 Section 18 of the Interpretation Act 1984 (WA) provides that in the interpretation of a provision of a written law, a construction that would promote the purpose or object underlying the written law (that is where that purpose or object is expressly stated in the written law or not) shall be preferred to a construction that would not promote that purpose or object.
65 A claim for stress or inconvenience would be usually a relatively incidental claim to the principal issues in a building dispute, more often than not, associated with delay. In practical terms if such a claim could not be advanced by an owner before the BDT it is likely that either the owner would abandon any claim, or would have to face "the frustrating and costly necessity" of pursuing "separate remedies for different aspects of a home building related grievance". It is of course conceivable, that in an extreme case, the consequences of the stress may be such as to result in a more significant claim. If so, that should be a matter for election by the owner, as to whether to proceed before the BDT or, if it more appropriate, to commence proceedings in a court of competent jurisdiction.
66 We do not consider that the requirement to give a preliminary notice affects the meaning to be given to the words "loss or damage". The preliminary notice includes the option of calling the builder to settle any matters in dispute. Those words are capable of a wide meaning, including settlement of a claim for physical inconvenience or emotional stress.
67 In all the above circumstances, we find no reason to read down the words "loss or damage" as used in s 17(4)(c) of the HBC Act, in the manner in which the learned Commissioner has done. We consider the learned Commissioner erred in commencing his consideration of the meaning of "loss and damage" from the point that the words do not expressly include personal injury. The correct enquiry, with respect, is to approach the issue from the point of what type of claims might arise from a home building contract, or from a breach of Part 2 of the HBC Act and then to determine whether compensation therefore falls within the meaning of "loss or damage" as used in s 17(4)(c) of the HBC Act.
68 We find that it is open to the BDT, and within its jurisdiction, to award compensation for loss or damage arising from physical
(Page 22)
- inconvenience and stress for breach of contract, or for loss and damage flowing from a breach of s 15A of the HBC Act, including emotional stress, all of which is within the ordinary meaning of "loss and damage" as referred to in s 17(4)(c) of the HBC Act. That meaning promotes the purpose of the legislation by avoiding litigation of home building related disputes in more than one jurisdiction. The extrinsic material to which we have referred confirms that meaning.
69 The builder's next contention is that damages suffered as a result of the planned wedding and christening are too remote to be compensated because Mr Dobosz was not informed prior to execution of a contract that the owners planned to hold their wedding or son's christening at their home and was not reasonably foreseeable. Mr Dobosz's affidavits, to which we have already referred, are properly before the Tribunal in respect of this issue. In Mr Dobosz's affidavit sworn on 28 November 2006, he states at par 7 that Mr Mawer informed him prior to the Contract being entered into that he intended to "do up the house" and put it on the market for sale. He required the patio to be constructed to add value to the property. Further, that neither of the owners informed him that they required the patio so that they could hold a wedding or christening at their property or that holding such events was the purpose for which the patio was required. No such statement by the owners is reflected in the transcript of evidence given at the hearing before the BDT. On the other hand, the response filed by the owners includes an affidavit by Ms Samiotis in which she states:
"I made Eddy aware we were planning on marrying under the patio, holding a christening reception and Marks [sic] family were coming in early February from New Zealand and as we had no shade and very little outside as it was a new home, we needed something so we could use outside. Eddy was fully aware as to our intention was to sell the Beckenham house around April 2006. In the both [sic] meetings we discussed that the projects would be completed by mid-January. This is why we pursued the contract with Heritage aka KBE Contracting."
70 The above evidence is at best equivocal. There is no clear statement that Mr Dobosz was informed that the reason the works had to be completed by mid-January 2005 was because of the planned wedding and christening.
71 Our obligation under s 27 of the SAT Act is to produce the correct and preferable decision at the time of the decision upon the review. We
(Page 23)
- note that the complaint form and attachments lodged with the BDT by the owners, which were filed as part of the owners' response to the application, do not specifically limit the claim for stress to the cancellation of the wedding and christening. These consequences of delay were stressed in the evidence before the BDT but it was part of the body of evidence as a whole. In the document headed "Builders Disputes Tribunal – Complaint" attached to the complaint form, no specific reference is made to the cancellation of these events. There is a recital of the Contracts that were entered into and then of the various attempts which followed to communicate with, and obtain information from, the builder. Complaint was made of being given different answers on each occasion that the builder was telephoned concerning progress. The document then states:
"I seek to be released from both contracts (30199 and 29725) and refunded the monies paid to Heritage Outdoor Building Systems in full. I would like to be compensated for the emotional distress this matter has caused. I further seek that the public are warned about this company."
73 Reference was made in evidence before the BDT to the cancellation of the wedding and christening. Ms Samiotis was asked if compensation was being sought in respect of the cancellation, to which she responded "no, that's ... But that's just over and above information".
74 Mr Mawer then stated:
"That's just a personal plight we wanted to be made known so that if Heritage Homes ever did this again, please take into people's personal perspective as to what they want the items for." [T:21] (17 July 2006)
(Page 24)
75 It should be noted that all parties were sworn together at the commencement of the hearing. The hearing then proceeded informally, with parties interposing comments from time to time.
76 It is therefore evident that the claim for emotional stress was for the entire experience resulting from the delay and frustration in dealing with the builder in attempting to get information as to when the works would be carried out.
77 In these circumstances, we consider that the BDT erred in awarding damages as it did for emotional stress "arising from the fact that the very important family wedding and family christening could not go ahead as planned" (page 10 of reasons for decision), although whether any award can take those events into account must depend upon the extent to which recovery may be limited by remoteness or causation considerations.
78 The builder submits that remoteness should be assessed on contractual principles in accordance with the rule in Hadley v Baxendale, above. In claims under s 52 of the TP Act it is often stated that damages should be awarded using a tort measure but it is also said that the most appropriate measure should be used which will best compensate for the wrong suffered: see Miller's Annotated Trade Practices Act aboveat par 1.82.21. As there discussed, as a matter of statutory construction s 82 of the TP Act, which provides for the recovery of loss or damage, permits a scope for recovery of damages, once a causal connection is established, without the limits of remoteness applying in contract or in tort. There is no equivalent to s 82 of the TP Act in the HBC Act.
79 It may be, although we have some doubt, having regard to the circumstances in which misleading and deceptive conduct is proscribed in s 15 of the HBC Act, related to the negotiation, formation, entry into a contract or variation of a contract, that in an appropriate case, principles of remoteness in tort should be applied to misleading and deceptive conduct in breach of s 15 of the HBC Act. But, in the circumstances of this case, without any opposing submission from the owners, we are prepared to assume, without deciding, that remoteness for misleading and deceptive conduct in breach of s 15 of the HBC Act should be tested against similar rules as that applying for a breach of contract in accordance with Hadley v Baxendale above. We consider that a protracted delay and an inability to provide reliable information to owners as to when contracted building works will be carried out is likely to cause emotional stress and flows as a natural and consequence from the misleading representation made in this matter.
(Page 25)
80 The builder's further contention is that emotional stress cannot be awarded because the owners have not produced any evidence of a diagnosed psychiatric injury justifying an award of damages. The case of Tame v State of New South Wales; Annetts & Anor v Australian Stations Pty Ltd, above, does stand as authority for that proposition in respect of a claim made in tort. That is not the case here, in respect of a claim made for breach of s 15A of the HBC for misleading and deceptive conduct. In Zoneff v Elcom Credit Union Ltd, above, in relation to a comparable claim made under s 52 of the TP Act, there was no evidence to support a claim for damages for distress, inconvenience and anxiety, other than a brief reference to some correspondence which had caused upset. On this evidence, which the Court itself described as scant, an amount of $1000 was awarded for damages under that head. Furthermore, if a claim were to be advanced for breach of contract, not a breach of s 15A of the HBC Act, it is evident from the authorities discussed in Thorpe v Lochel & Ors, above, that no diagnosed psychiatric injury is required, but any stress suffered must result from physical inconvenience in respect of a breach of contract.
81 Because the owners did not attend the hearing and did not make themselves available to give oral evidence to resolve the issue of whether or not Mr Dobosz was informed prior to his making the representation as to when the works would be completed, that the works were required for the planned wedding and christening and because of the equivocal affidavit evidence from Ms Samiotis to which we have referred, we must resolve that factual issue in favour of Mr Dobosz. While we find stress suffered as a result of the manner in which the builder performed, or failed to perform the Contract, and as a result of the manner in which its representatives dealt with the owners is compensable, we accept that stress caused by cancellation of the wedding and christening arrangements is too remote.
82 Nevertheless, Mr Mawer suffered considerable frustration as a result of the builder's conduct, which would have been avoided but for the misleading misrepresentation which resulted in entry into the Contract. We consider that an award to him alone of $500 for emotional stress is justified. In any event, it is clear that the BDT was aware that it was determining only the patio contract; yet all orders including repayment of the Contract monies were made in favour of both owners. This was an obvious error and it is probable that the BDT intended only to award what it did in favour of Mr Mawer. Nevertheless, it is not an error we can correct by making all orders payable to Mr Mawer only, as the review is
(Page 26)
- concerned only with the damages order. The damages order can and should be varied so that it does not operate in favour of Ms Samiotis.
83 It follows from the above findings that the review application falls to be upheld only insofar as the order made for payment of damages is expressed to be made in favour also of Ms Samiotis, the order should be varied accordingly, and the application should otherwise be dismissed.
Orders
84 We will accordingly make orders as follows.
1. The decision of the Building Disputes Tribunal reflected in an order to pay No 37/2006-07 dated 13 September 2006 is varied by deleting par 1 and substituting the following:
"1. That KBE Consulting Pty Ltd within 14 days pay:
(a) to Mark Mawer and Paula Samiotis the sum of $1572.00 being;
repayment of deposit $1500.00
interest thereon from 20 December 2005 to 12 September 2006 at 6% $72.00
(b) to Mark Mawer damages $500.00
in relation to patio contract 30199;"
and the application for review is to that extent upheld.
2. The application for review is otherwise dismissed.
I certify that this and the preceding [84] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR C RAYMOND, SENIOR MEMBER
5
10
7