Kumar v SMJ Construction Group Pty Ltd

Case •

[2024] NSWCATCD 56

•

08 October 2024

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Kumar v SMJ Construction Group Pty Ltd [2024] NSWCATCD 56
Hearing dates: 13 May 2024
Date of orders: 08 October 2024
Decision date: 08 October 2024
Jurisdiction:Consumer and Commercial Division
Before: D Robertson, Senior Member
Decision:

(1) The sum of $13,900 is not due or owing by Sumit Kumar to SMJ Construction Group Pty Ltd.

(2) The application is otherwise dismissed.

(3) The applicant is to pay the respondent’s costs of and incidental to the proceedings from 17 January 2024, as agreed or assessed.

Catchwords:

BUILDING AND CONSTRUCTION – Authority to enter into contracts – Ostensible authority – Ostensible authority not established by use of letterhead or truck bearing company logo

AGENCY – Authority of agent – Ostensible authority

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Civil and Administrative Tribunal Rules 2014 (NSW)

Home Building Act 1989 (NSW)

Cases Cited:

Wilh. Wilhelmsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32

Category:Principal judgment
Parties: Sumit Kumar (Applicant)
SMJ Construction Group Pty Ltd (Respondent)
Representation: Solicitors: Invictus Legal (Respondent)
File Number(s): 2023/00406056 (formerly HB 23/10975)

REASONS FOR DECISION

Introduction

  1. This is an application by a homeowner for compensation for allegedly defective concreting work which the applicant claims the respondent contracted to carry out on the applicant’s property at Baulkham Hills NSW. The respondent disputes that the applicant entered into a contract with the respondent.

  2. The respondent maintains that a Mr Hassan Sleiman, a former employee or contractor of the respondent, calling himself Hassan Saadat, had represented himself to the applicant as a principal or manager of the respondent, purported to enter into a contract on its behalf, and carried out the concreting work which the applicant alleges is defective. The respondent maintains that Mr Hassan Sleiman had no authority to bind the respondent to any contractual obligation and also denies that Mr Hassan Sleiman had any ostensible authority to do so.

Procedural chronology

  1. It is convenient to set out the procedural history of the proceedings.

  2. The applicant filed his application on 7 March 2023 seeking orders:

  1. That he does not have to pay the sum the respondent sum of $13,900;

  2. For the payment of compensation for breach of statutory warranty in the amount of $33,600;

  3. For the payment of compensation in respect of other items such as repairs to damaged clothesline, paintwork, car, door and balcony balustrade, and the cost of an expert building report in the amount totalling $2250

  1. The $33,600 claimed in respect of breach of statutory warranty was the amount the applicant claims to have paid to the respondent. The amount of $13,900 which the applicant sought not to pay was the balance of the contract price ($40,000 plus an agreed variation of $7,500 for additional work).

  2. The Tribunal file records that, at a directions hearing on 13 April 2024, the respondent was represented by Mr H Sleiman who foreshadowed a cross application in respect of the $13,900 balance of the contract price. The Tribunal made directions requiring the respondent to file a cross application by 27 April 2024 and for the exchange of documents.

  3. The applicant filed a bundle of evidence on 2 May 2023. That bundle included a Scott schedule in which the applicant assessed his claims for compensation in the total amount of $51,956.50.

  4. At a further directions hearing on 14 July 2023, the respondent was represented by Mr Sam Saadat, a solicitor, and the parties were given leave for legal representation. The time for filing a cross claim was extended to 28 July 2023 and time was extended for the respondent to file its evidence. The proceedings were referred for hearing on a date to be fixed. It appears from other documents (the set aside application dated 12 December 2023 referred to below) that Sam Saadat, solicitor, is also known as Houssam Saadat. Without disrespect, for clarity and ease of reference I will refer to him as Houssam Saadat or Houssam. It also appears from other documents that Houssam Saadat is a “Principal Lawyer” with Invictus Legal.

  5. In August 2023 Houssam Saadat sent an email to the applicant confirming that he acted for the respondent and seeking an electronic copy of any documents he had filed. The applicant responded on 28 August 2024 stating that he had already spent over $100 (implicitly on copying and/or postage) and had supplied a hard copy to “Sam Saadat and Hassan Saadat (Director: SMJ Construction Group Pty Ltd) via Australia Post”. The applicant suggested that Houssam Saadat obtain a copy of his documents from “Sam Saadat (Director - SMJ group/your client)” or contact the Tribunal and obtain a copy, noting that the Tribunal would charge $2 per page for copying.

  6. The applicant asked Houssam Saadat to confirm if he was a brother or brother-in-law of “Has Saadat and Sam Saadat”.

  7. Houssam Saadat responded the same day, pointing out that he had only sought an electronic copy of the documents requested. He stated:

“SMJ Constructions has never employed or had any person by the name of Hassan Saadat as its director or officeholder. We are unsure of who this person is and what the reference to a ‘Hassan Saadat’ is.

For the record, I am not the brother of Mr Sam Saadat nor am I his ‘brother-in-law’, I am however a relative of his and also the solicitor acting on behalf of SMJ Constructions.”

  1. The applicant responded the same day stating that he had received a confirmation from Sam Saadat that he had received the binder with the applicant’s documents and stating:

“Also, I got a confirmation from Hassan Saadat that he and his brother Sam are business partners, and also he got his cousin a solicitor/lawyers which he was threatening me with all the time.

Also, Sam Saadat confirmed via the phone call and a text message that Hassen Saadat is his brother, so seriously still you are saying you guys don’t know Hassan Saadat (Hass).”

  1. Houssam Saadat responded the same day:

“I confirm that Mr Slemian [sic] (Sam) Saadat does not have any brother named Hassan or ‘Hass’ Saadat”.

  1. No cross-claim was filed.

  2. On 4 September 2024 the Tribunal issued a Notice of Hearing informing the parties that the proceedings were listed for hearing on 4 December 2023.

  3. On 16 November 2023 Houssam Saadat Informed the Tribunal that he was instructed to act for the respondent.

  4. The respondent did not appear at the hearing on 4 December 2023. The Tribunal was satisfied that the respondent had notice of the hearing and proceeded with the hearing in the absence of the respondent.

  5. The Tribunal ordered the respondent to pay to the applicant the sum of $38,573.70 and ordered that the applicant be relieved of any liability to pay the sum of $13,900 to the respondent. The Tribunal published written reasons which included:

“6. A notice of hearing dated 8 May 2023 was posted to the builder’s registered office for a directions hearing on 4 July 2023. That hearing was vacated on 13 June 2023 and a notice dated 13 June 2023 was posted to the builder’s registered office on for a revised directions hearing date of 14 July 2023. On that revised date the builder appeared by a solicitor. Revised dates for filing and serving the builder’s claim and the builder’s documents including in response to the applicant’s documents filed and served about 2 May 2023 were made: claim to be filed and served by 28 July 2023; documents by 25 August 2023. Leave for legal representation was granted to both parties but the applicant continued to represent himself. Those directions including grant of leave were posted to the builder’s registered office.

7. According to the Tribunal file the builder filed no claim or documents and sought no extension of time to do so. The applicant said that he had received no documents for final hearing from the builder.

8. A notice of hearing dated 4 September 2023 was sent to the builder’s email address notified on the original application, for the hearing on 4 December 2023. By email 16 November 2023 3.22pm the firm of the solicitor who had appeared on 14 July 2023 confirmed to the Tribunal that the firm was acting for the builder. The applicant gave sworn evidence that, in addition to providing the builder with the documents filed 2 May 2023, he had emailed a set of those documents to the solicitor at the solicitor’s request and had confirmed the hearing date of 4 December 2023 with the solicitor.”

  1. On 12 December 2023 Houssam Saadat filed an application on the respondent’s behalf to set aside the decision of 4 December 2023.

  2. The application stated that the respondent had never received notice of the hearing on 4 December 2023. The application noted that the notice of hearing had been sent to an email address [email protected], which the respondent maintained was not an address known to the respondent. I note that, contrary to the statement of the Tribunal in paragraph 8 of the decision of 4 December 2023, that email address was not the email address notified in the original application (which was [email protected]).

  3. The set-aside application explained the case which the respondent would have raised if present at the hearing, both challenging the building inspection report relied upon by the applicant, and stating as follows:

“9   The person who is alleged to have done the works, has never been an ‘owner’ or ‘director’ of the respondent and was an employee only for a limited time. He was not authorised and was never authorised to enter into the works; and

10   It appears that Mr Huss Soliman [sic] has used an SMJ Construction document and altered its appearance providing his direct phone number, bank account details and other information related to him personally.”

  1. On 18 December 2023 the orders of 4 December 2023 were stayed and directions were made for the exchange of submissions concerning the set-aside application. The applicant filed a further bundle of documents on 2 January 2024 responding to the set-aside application.

  2. On 17 January 2024 the Tribunal set aside the decision of 4 December 2023 and directed that the proceedings be listed for directions.

  3. The matter was listed before the Tribunal for directions on 13 February 2024. On that occasion the Tribunal noted that the applicant relied upon the documents filed on 2 May 2023 and 2 January 2024 and directed the applicant to serve a further copy on the respondent’s solicitor, although no timeframe was fixed for that to occur. The respondent was directed to file its evidence by 12 March 2024.

  4. On 16 April 2024 the Tribunal issued a notice of hearing to take place on 13 May 2024.

  5. On 22 April 2024 the Tribunal issued further orders in response to a request for re-listing filed by the applicant. The Tribunal confirmed the hearing date of 13 May 2024 and noted that:

“The respondent cannot rely upon documentary evidence if those documents have not been filed and served in accordance with the directions of the Tribunal dated 13 February 2024 without leave of the Tribunal; or an extension of time granted”.

  1. The Tribunal noted that the respondent had not sought leave to rely upon further documents or evidence or an extension of time, and that the obligation to seek an extension of time or leave to rely upon late evidence lay upon the respondent, not the applicant.

  2. On 1 May 2024 the respondent filed an affidavit of Sleiman Saadat dated 29 April 2024. Mr Saadat, who is also known as Sam Saadat, is the sole director of the respondent. Again, without disrespect, for clarity and ease of reference I will refer to him as Sleiman Saadat or Sleiman.

  3. At the hearing before me on 13 May 2024 the applicant appeared in person. The respondent was represented by Houssam Saadat.

  4. The applicant’s bundles of evidence filed on 2 May 2023 and 2 January 2024 were received in evidence and marked as exhibits A1 and A2. Mr Kumar took an oath and verified the truth of the statements of fact in his bundles of evidence. He also answered questions from Mr Houssam Saadat and the Tribunal.

  5. The applicant objected to the respondent’s reliance on the affidavit of Sleiman Saadat. Sleiman Saadat’s explanation for the delay in the filing of the evidence was as follows:

“4    The applicant served a bundle of documents on my legal representatives on or about 5 March 2024.

5    The bundle of documents was served some two (2) weeks outside of the time required in the orders of 13 February 2024.

6   The bundle served by the applicant included notices issued by NSW Fair Trading. I was unaware that these notices had been issued.

7   On [x date] I instructed my solicitor to contact NSW Fair Trading in order to request further information in respect of those notices.

8   Attached and marked as annexure 'A' are copies of the email correspondence between my lawyer and NSW Fair Trading

9 On or about 20 March 2024, I instructed my solicitor to make a GIPA application requesting further information.

10 On or about 17 April 2024, NSW Fair Trading provided a response to the GIPA application.

11 Attached and marked as annexure 'B' is a copy of an email from NSW Fair Trading in response to the GIPA request.

12 After receiving the bundle of documents and the information requested in the GIPA application, I attended Bass Hill Police Station on or about 26 April 2024 and made a complaint in relation to fraud.

13   I was instructed by NSW Police to make the fraudulent complaint against Hassan Sleiman by electronic form.

14    Attached and marked as annexure 'C' is a copy of complaint made to police.

15    I was also overseas between 15 February 2024 to 1 March 2024.

16   The applicant Sumit Kumar has been on notice from the outset that SMJ Construction denies liability for these works and that it denies ever having engaged with him for the works.

17   Attached and marked as annexure 'D' is a copy of correspondence between my solicitor and Mr Kumar dated 28 August 2023, which evidences our position in respect of the works.

18   Mr Kumar has been aware of this position since on or about 23 August 2023 and the contents of this affidavit confirm that same position. Nothing in this affidavit brings about any surprise position or prejudices the applicant in any way.”

  1. This explanation was not persuasive. In particular, there is no explanation why no evidence was filed prior to 1 May 2024 or why no application was made for an extension of time for the filing of evidence.

  2. However, the applicant was unable to point to any prejudice arising from the late service of the affidavit. Specifically, the applicant did not identify any further evidence he would have filed, or any investigation he would have undertaken, if the evidence had been served earlier.

  3. Accordingly, consistently with the Tribunal’s obligation pursuant to s 36 of the Civil and Administrative Tribunal Act 2013 (NSW) to give effect to the guiding principle, “to facilitate the just, quick and cheap resolution of the real issues in the proceedings” and the obligation pursuant to s 38(6)(a) of that Act “to ensure, as far as practicable, that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings”, I gave the respondent leave to rely upon Sleiman Saadat’s affidavit and it was admitted into evidence. Sleiman Saadat took an oath and answered questions from the applicant and from the Tribunal.

  4. The issues which arise on the evidence filed by the parties are:

  1. Whether the respondent is responsible for the concreting work carried out on the applicant’s property;

  2. Whether the concreting work carried out on the applicant’s property is defective, that is carried out in breach of the statutory warranties implied into any contract for the carrying out of the residential building work by s 18B of the Home Building Act 1989 (NSW); and

  3. If the concreting work is defective, what is the appropriate remedy and, if not an order for rectification, what is reasonable cost of rectification.

Is the respondent responsible for the concreting work carried out on the applicant’s property?

  1. The only contractual document in evidence was a quotation dated 30 September 2022 setting out a scope of works for concreting work at the applicant’s address. The scope of works included:

  1. Supplying and placing concrete to approximately 80 m² of the rear outdoor area;

  2. Supplying, placing and finishing a 110 mm thick slab to approximately 60 m² of the driveway area; and

  3. Construction of a vehicle crossing, that is, access to the applicant’s property from the street across the council kerb side.

  1. The amount of the quotation was $40,000 inclusive of GST. The applicant included in Exhibit A1 a copy of the quotation bearing his signature dated 2 November 2022.

  2. The applicant did not suggest that he had had any direct communication with Sleiman Saadat, the director of the respondent. The applicant acknowledged that he had only spoken with the person known to him as Hussan Saadat, who also referred to himself as Hass.

  3. In those circumstances, in order that a contract have come into effect between the applicant and the respondent, the applicant must establish that Hussan Saadat had authority from the respondent, either actual authority or ostensible authority, to enter into a contract on behalf of the respondent.

  4. I note that Sleiman Saadat stated in his affidavit that the correct name of the person who the applicant had known as Hussan Saadat was Hassan Sleiman. For clarity and ease of reference, I will refer to him as Hassan.

  5. The applicant relied upon a number of matters as establishing that he had entered into a contract with the respondent for the carrying out of concreting work on his property.

  6. The applicant relied upon:

  1. The fact that the quote provided by Hassan which the applicant signed was on letterhead which Sleiman Saadat did not dispute bore the name, ABN and logo of the respondent.

  2. The fact that the covering email attaching the quote was sent from [email protected]. I note that the applicant did not include that email in his evidence, but the respondent did not dispute the applicant’s assertion to that effect.

  3. The fact that Hassan or his workers had attended the work site in a vehicle bearing the respondent’s logo. The applicant stated in evidence that this had occurred both when Hassan had attended the property before providing the quote and during the construction.

  4. The fact that Hassan provided to the applicant a copy of a certificate of currency in respect of a business insurance policy issued by NRMA Insurance to the respondent.

  5. The fact that Hassan had appeared to engage in a telephone conversation with “Sam” during discussions with the applicant. The applicant gave evidence that Hassan had referred to Sam Saadat as his business partner.

  6. The fact that, after the applicant had complained to Fair Trading New South Wales about the work carried out on his property, Fair Trading New South Wales had issued a fine to Sleiman Saadat on 20 November 2023, which he had paid.

  1. In the course of cross examination by Houssam Saadat, the applicant indicated that the invoices he had received in relation to the work had been issued from [email protected], apparently a third-party invoicing service.

  2. The applicant also stated that he had made payments to two accounts in the name of SMJ Construction Group Pty Ltd, one at Bendigo Bank, the other at a bank identified only by the BSB number 082-356. Neither party had sought to identify the branch or the bank identified by that number. Sleiman Saadat denied that those accounts belonged to the respondent.

  3. Sleiman Saadat’s evidence included the following:

“20    I have reviewed the purported quote or agreement dated 22 November 2022 and say the following:

(a)   Although the quote utilises the SMJ Construction logo and ABN, the quote has been altered and amongst other things includes the phone number and details of another person not authorised by SMJ Construction;

(b)   The quote is not a quote that was generated from our system;

(c)   I have never met with Sumit Kumar or ever attended the property located at [address] Baulkam Hills NSW 2153;

(d)   I have never authorised any person to quote or enter into any contractual relationship with Sumit Kumar for works at [address] Baulkham Hills NSW 2153, on behalf of SMJ Construction;

(e)   I have never authorised any person on behalf of SMJ Construction to commence any works at [address] Baulkham Hills NSW 2153;

and

(f)   The purported agreement is fraudulent.

…

24   The GIPA application reveals that Hassan Sleiman was the person in communication with both Sumit Kumar and NSW Fair Trading.

25   Hassan Sleiman was never an authorised representative of SMJ Construction and was never authorised to communicate or act on its behalf.

…

30   Hassan Sleiman is married to my sister Fatima; however, we do not have any contact or communication. He is not a direct member of my family and to the best of my knowledge has never been known as or referred to as Hassan Saadat.

31   Any reference to being Hassan Saadat is to the best of my belief fraudulent and I have only ever known him to be Hassan Sleiman.

32   At no time was Hassan Sleiman ever a director, shareholder or authorised officer of SMJ Construction.

…

34   Hassan Sleiman was never employed by SMJ Construction. SMJ Construction had used Hassan as a contractor between the period of 18 February 2021 and 23 June 2022.

35   Hassan Sleiman has not worked for SMJ Construction since on or about 23 June 2022.

36   Further to the issues raised by the applicant, I have since uncovered that Hassan Sleiman fraudulently used SMJ Construction accounts with suppliers to run up massive bills and debts.

37   I am currently in the process of also fixing these issues and have made NSW Police aware of these fraudulent supplier transactions in my police complaint.”

  1. Sleiman Saadat also stated that the telephone number appearing on the quote belonged to Hassan.

  2. Under cross-examination Sleiman Saadat acknowledged that he had paid the fine issued by Fair Trading NSW. His explanation was that he received notice of the fine in November 2023 and thought it was a parking fine. He stated that he had paid the fine when he received a reminder in March 2024.

  3. Sleiman Saadat attached to his affidavit an exchange of text messages with the applicant in March 2023 in which Sleiman Saadat informed the applicant:

“[M]y name is Sam I am the director and owner of SMJ construction group I have received a NCAT letter saying I have done a job for you. Please call me to discuss I think there has been a misunderstanding.”

  1. The applicant responded asking Sleiman Saadat to “share your full contact details”.

  2. On 2 May 2023 the applicant texted Sleiman Saadat:

“Hi Sam, this is Sumit from [address] Baulkham Hills where your brother/business partner Haasan Saadat did a concrete project which we spoke about last time.”

  1. The applicant sought to confirm the address for delivery of the applicant’s evidence, noting that Hassan had been present at the first hearing in the Tribunal.

  2. Sleiman Saadat responded that the address identified as the registered office for the respondent was his, Sleiman’s, address, not Hassan’s, and that Hassan did not live at that address.

  3. The applicant told Sleiman Saadat that he (Sleiman) could give the documents to Hassan, to which Sleiman responded “I don’t see him I told you last time.” Sleiman Saadat confirmed in that message that he had received the documents.

  4. Sleiman Saadat stated in his affidavit that that was the only contact he had had with the applicant. He also stated that Hassan was “never an authorised representative of SMJ construction and was never authorised to communicate or act on its behalf.”

  5. Sleiman Saadat’s evidence was that he had received the applicant’s documents but had not looked at them. His explanation was that: “I thought it is not my issue”.

  6. Although Sleiman Saadat’s version of events leaves open a number of questions, such as why his solicitor (Houssam Saadat) attended the second directions hearing on 14 July 2023 and obtained an extension of time for the filing of a cross claim, the exchange of text messages in March 2023 does tend to corroborate Sleiman Saadat’s assertion that, in undertaking work for the applicant, Hassan was not acting on behalf of the respondent.

  7. The explanation proffered for Houssam Saadat’s failure to raise the issue of absence of authority at the directions hearing in July 2023 was that Mr Saadat had not had an opportunity to familiarise himself with the documents which, as is apparent from his exchange of emails with the applicant in August 2023, he did not receive until some time later. However, that does not fully explain why Houssam Saadat did not immediately take steps to notify the Tribunal of his details so as to ensure that he received correspondence from the Tribunal (including the notice of hearing issued in September 2023), or take steps to inspect the Tribunal’s file to identify the nature of the claim against his client.

  8. However, the Tribunal is not tasked with the assessment of Houssam Saadat’s competence or diligence. I am not persuaded on the balance of probabilities that Hassan was authorised by the respondent, that is by Sleiman Saadat as the sole director of the respondent, to enter into contracts on the respondent’s behalf.

  9. Having seen and heard Sleiman Saadat give evidence, I accept that he is as careless of his own and his company’s interests as he claims. In particular, I accept that his payment of the fine issued to him by Fair Trading NSW for breaches of the Home Building Act in relation to the work on the applicant’s property was not an acknowledgement that he or the respondent had in fact been guilty of such breaches.

  10. However, that is not the end of the issue as, if Hassan was cloaked with ostensible authority to enter into contracts on the respondent’s behalf, the respondent is bound by the contract entered into by Hassan with the applicant and is responsible for the work carried out pursuant to the contract.

  11. The principles governing the question whether a party purporting to act on behalf of another has ostensible authority so to act were set out by Beazley ACJ in Wilh. Wilhelmsen Investments Pty Ltd v SSS Holdings Pty Ltd [2019] NSWCA 32 at [74] – [86]:

“74   In Freeman & Lockyer v Buckhurst Park Properties (Mangal) Ltd [1964] 2 QB 480, Diplock LJ, at 503, described ostensible authority in the following terms:

‘An ‘apparent’ or ‘ostensible’ authority … is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the ‘apparent’ authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.’

75   This passage was endorsed by the High Court in Crabtree-Vickers Pty Ltd v Australian Direct Mail Advertising & Addressing Co Pty Ltd (1975) 133 CLR 72; [1975] HCA 49 at 78 as compendiously stating the principles governing ostensible authority.

76   As Diplock LJ explained in Freeman & Lockyer, ostensible authority operates as an estoppel, preventing a principal from denying an agent’s authority: see generally K R Handley, Estoppel by Conduct and Election (Sweet & Maxwell, 2nd ed, 2016) at 149 and the cases cited therein.

77   In SEB Trygg Liv Holding AB v Manches [2006] 1 WLR 2276, Buxton LJ referred, at 2291, to two types of situations where ostensible authority would arise:

‘… ostensible authority covers two types of case: where the agent has been permitted to assume a particular position that carries a usual authority; and where a specific representation is made as to the agent’s authority. If either type of conduct on the part of the principal gives rise to an estoppel, that is because of the understanding that it creates in the mind of the … representee. An alteration on the principal’s part of the relationship between himself and the agent cannot, once the estoppel has been created, alter or withdraw the representation if the alteration … is not communicated to the representee.’

78   However, ostensible authority is not confined to those two types of cases. A course of conduct or dealing may constitute a relevant representation. Diplock LJ said as much in Freeman & Lockyer, at 503–504:

‘The representation which creates ‘apparent’ authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal’s business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal’s business has usually ‘actual’ authority to enter into.’

79   In terms of estoppel, ostensible authority arising out of a course of dealing is a form of conventional estoppel. This form of estoppel was described in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226; [1986] HCA 14 at 244 as:

‘… a form of estoppel founded not on a representation of fact made by a representor and acted on by a representee to his detriment, but on the conduct of relations between the parties on the basis of an agreed or assumed state of facts, which both will be estopped from denying … [T]here is no estoppel unless it can be shown that the alleged assumption has in fact been adopted by the parties as the conventional basis of their relationship.’ (citations omitted)

80   Diplock LJ further observed in Freeman & Lockyer, at 505, that when dealing with a corporation, a person:

‘… can rely only upon a representation by a person or persons who have actual authority to manage or conduct that part of the business of the corporation to which the contract relates.’

81   Of particular relevance to the present case is the decision of Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35, in which the principal had conferred a title or status on its agent and had provided her with the means to communicate as if on behalf of the principal. In that context, the High Court observed:

‘[40]   … Commercial documents, such as the letters of indemnity in the present case, are commonly relied upon, and intended to be relied upon, by third parties who act upon an assumption of authenticity created or reinforced by their mode of execution, and by the fact and circumstances of their delivery. Within a commercial enterprise, such as a bank, there will normally be internal lines of authority, and procedures, designed to ensure that, when documents issue to third parties, appearances are reliable. Such an enterprise might induce or assist an assumption, not only by the representation conveyed by its organisational structure, and lines of communication with third parties, but also by a failure to establish appropriate internal procedures designed to protect itself, and people who deal with it in good faith, from unauthorised conduct.

…

[42]   Pacific’s reliance upon the letters of indemnity was based upon their form and contents, the signature of a person who appeared to be (and was) an officer of the bank, the stamp or ‘chop’, and the fact that Pacific was sent copies of the documents, directly or indirectly, by BNP. The stamp was probably more significant to Pacific than the signature, which was indecipherable. It was designed for use on letters of credit, and it allowed the person who was authorised to use it to give an appearance of authenticity to documents to which it was applied. The organisational structure of BNP in Sydney at the time was such that Ms Dhiri was the bank officer to whom Pacific’s request, would be, and was, communicated by NEAT. She was the person who dealt with the request, and who communicated BNP’s response to Pacific. That response, involving her signature of the letters of indemnity and fixing the bank's stamp to them, would signify to a reasonable third party, and signified to Pacific, agreement to what was requested. The stamp was not BNP’s common seal, but placing it on a commercial document which named the bank as a party strongly enhanced the appearance that the document was signed on behalf of BNP. Ms Dhiri was given the stamp without any instructions as to how she should use it.’

82   Similar observations were made by the Court in Clarey v Permanent Trustee Co Ltd [2005] VSCA 128, where the question was whether a conveyancer had ostensible authority to receive, on behalf of a vendor, monies paid at the settlement of a real property transaction. The Court accepted, at [107], that a representation of authority could be implied from a number of circumstances, including equipping an agent with a particular title, status or position.

83   However, the Court did not consider that the facts of the case attracted the operation of that principle. It pointed out that Pacific Carriers v BNP Paribas was different in that, there, a relatively senior bank officer who had express authority to sign documents in one capacity was found to have ostensible authority to sign documents in a different capacity. The Court also noted that in Crabtree-Vickers, it was found that a managing director with unlimited actual authority had ostensible authority to delegate powers to others. The Court concluded in respect of the case before it that:

‘It is, however, quite another thing to conclude that the appointment of someone as a ‘conveyancer’ and instructing him to arrange for the preparation of conveyancing documents and settlement, implies that he has authority to receive the purchase price in the form of a cheque drawn payable to himself. That was not so at common law in the case of solicitors, and in the absence of compelling evidence that it is so in the case of ‘conveyancers’, we are unable to see why it should be so.’

84   The authorities make clear that the representation of authority must come from the principal. It follows that a representation of authority made by an agent is an insufficient basis upon which to found ostensible authority. In Armagas Ltd v Mundogas SA [1986] AC 717, Lord Keith stated, at 777, that:

‘Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question. Ostensible general authority may also arise where the agent has had a course of dealing with a particular contractor and the principal has acquiesced in this course of dealing and honoured transactions arising out of it.’

85   However, this principle is not unqualified. This was explained by Lord Sumption in Kelly v Fraser [2013] 1 AC 450 at 459-460, where his Lordship said:

‘An agent cannot be said to have authority solely on the basis that he has held himself out as having it. It is, however, perfectly possible for the proper authorities of a company (or, for that matter, any other principal) to organise its affairs in such a way that subordinates who would not have authority to approve a transaction are nevertheless held out by those authorities as the persons who are to communicate to outsiders the fact that it has been approved by those who are authorised to approve it or that some particular agent has been duly authorised to approve it. These are representations which, if made by some one held out by the company to make representations of that kind, may give rise to an estoppel.’ (emphasis in original)

86   The same point was made in Crabtree-Vickers at 78:

‘There are circumstances where the actual representation of authority may be made by the agent but in such cases it will be found that the relevant representation is made by the principal (or by the person to whom the principal has given actual authority) either by a previous course of dealing or by putting the agent in a position or by allowing him to act in a position from which it can be inferred that his actual representation of authority in himself is in fact correct. It is therefore always necessary to look at the conduct of the principal (or the person to whom he has actually delegated authority).’”

  1. In this case, there was no direct representation by the respondent that Hassan had authority to bind it. Any ostensible authority could only arise through the conduct of the respondent. Clearly, any such conduct must have occurred before the applicant signed the quotation on 2 November 2022. The matters occurring prior to that date on which the applicant relied in forming the belief that Hassan was authorised to bind the respondent were: the use of letterhead bearing the respondent’s logo; the use of an email address including the respondent’s name; the use of a truck bearing the respondent’s logo; the supply by Hassan to the applicant of a certificate of currency respect of a policy of insurance in the respondent’s name; and the fact that Hassan appeared to conduct a telephone conversation with “Sam” who the applicant understood to be Hassan’s business partner.

  2. I am not persuaded that those acts, together or separately, constituted any representation by the respondent that Hassan had authority to enter into contracts on behalf of the respondent.

  3. The creation of an apparently genuine letterhead is not difficult with modern computers and printers. The fact that Hassan was able to produce a quote on a letterhead bearing the respondent’s logo might have suggested to the applicant that Hassan was acting on behalf the respondent, but the evidence does not suggest that the respondent was itself in any way responsible for Hassan being able to produce that letterhead.

  4. Sleiman Saadat did not dispute that the domain name smjconstructions.com.au belonged to the respondent. Sleiman Saadat did not give direct evidence to explain how Hassan might have had access to an email account using that domain name, but the report lodged by Sleiman Saadat with the NSW Police alleging fraud by Hassan Sleiman asserted that “Hassan has also hacked into the crazy domains account and changed details to gain access to the email he was using to continue working falsely under my company name smj constructions”. The applicant did not seek to test that proposition or suggest that it was not correct. I find that the respondent did not allow Hassan to use the email address [email protected] and that the use by Hassan of that email address was not a representation by the respondent that Hassan was authorised to enter into contracts on its behalf.

  5. A similar conclusion must be reached in relation to the fact that Hassan came to the applicant’s premises in a vehicle bearing the respondent’s logo. Even if the evidence had established that that vehicle belonged to the respondent and that the logo had been attached to the vehicle by the respondent, the fact that Hassan arrived in the vehicle did not suggest in any way that Hassan had authority to enter into contracts on behalf the respondent.

  1. Although it might be assumed that in the ordinary course, certificates of currency for insurance policies held by a company would not be provided to persons not associated with the company, the fact that Hassan was able to obtain a copy of such a certificate of currency in order to provide it to the applicant was not suggestive or indicative that Hassan had been provided with such a document in order to enter into contracts on behalf the company.

  2. The fact that Hassan purported to carry on a conversation with “Sam” in the applicant’s presence could not constitute any representation by the respondent that Hassan was actually speaking to “Sam” (ie Sleiman) and had the respondent’s authority to enter into a contract on its behalf.

  3. Accordingly, I find that the applicant has not established that the respondent is liable for any defective work carried out by Hassan pursuant to the quote provided to the applicant dated 30 September 22.

  4. That is sufficient to dispose of the applicant’s claims to compensation from the respondent, which must be dismissed. A corollary of that conclusion is that the applicant does not owe any money to the respondent and the applicant is entitled to an order that he does not owe the sum of $13,900 to the respondent. I will make that order and otherwise dismiss the application.

  5. However, against the possibility that my conclusion that the respondent is not bound by the contract is found to be incorrect, I will consider whether the applicant has established that the work is defective as alleged, and if so the appropriate relief, including, to the extent appropriate, the measure of compensation.

Is the work defective as alleged?

  1. The applicant relied upon a report from Mr Tremlett of Jim’s Building Inspections dated 6 March 2023. Mr Tremlett did not identify his qualifications in his report. Nevertheless, it may be inferred from the nature of the report that Mr Tremlett has building qualifications. Mr Tremlett suggested at the conclusion of the report (clause D4) that the applicants seek an “additional specialist inspection” from a qualified structural engineer. From that it may also be inferred that Mr Tremlett does not have structural engineering qualifications. Mr Tremlett did not refer to the Tribunal’s code of conduct for expert witnesses or agree to be bound by it.

  2. Mr Tremlett identified that:

  1. The rear deck area lacked an anti-slip finish;

  2. The driveway gradient was excessive, that is in excess of 11%;

  3. There were distinct cracks in the external concrete paving;

  4. There was a crack in the concrete slab on a stair landing, considered category 2, which Mr Tremlett suggested required monitoring;

  5. Formwork timbers had been left in position;

  6. The paving at the rear had insufficient fall away from the house;

  7. There was a bulge in a retaining wall;

  8. There was damage to the paint on the house in a number of locations; and

  9. In various respects the works were incomplete.

  1. Mr Tremlett also identified defects in other areas of the building which could not be attributable to the concreting contractor.

  2. The respondent was highly critical of Mr Tremlett’s report, suggesting that the building report does not reference any specific breach of any Australian Standards, the Building Code or the Guide to Standards and Tolerances.

  3. It is true to say that Mr Tremlett’s report is quite inadequate as expert evidence for a building claim of the amount sought by the applicant. It would not require much contradiction to render it irrelevant. However, there was no contradictory evidence from the respondent. Thus, although the weight which can be given to the report is limited, it is entitled to some weight.

  4. In the absence of contrary evidence, I consider it appropriate to accept the parts of the report which explicitly identify defective work which has not been carried out with due care and skill. I also take into account the applicant’s own evidence that his car had “bottomed out” when he tried to utilise the driveway to access his garage.

  5. Mr Tremlett’s recommendation in relation to the cracking was that it be monitored. This does not amount to evidence that the cracks are a consequence of the concreting work not having been carried out with due care and skill or that there has been any failure to comply with any applicable law, including the Australian Standards and the Building Code.

  6. The only defects which I accept are established on the evidence, including the applicant’s evidence and Mr Tremlett’s report, are that the slope of the driveway is excessive, that there is insufficient fall in the rear deck area adjacent to the house, and that a nonslip surface needs to be applied to the rear deck.

What would be the appropriate remedy, and the reasonable cost of rectification?

  1. The applicant provided in his exhibit A1 two quotations for the removal and reconstruction of the backyard slab and driveway. High End Asphalting Pty Ltd quoted $32,549 and VRK Formwork & Concrete quoted $34,650.

  2. I am not satisfied on the evidence that rectification of the issues I have found established warrants or requires the complete removal and replacement of the driveway or the rear deck/backyard slab. Mr Tremlett’s evidence did not go so far.

  3. The applicant did not provide any evidence of the cost to undertake a lesser extent of rectification.

  4. Section 48 MA of the Home Building Act provides:

48MA   Rectification of defective work is preferred outcome in proceedings

A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.

  1. The applicant did not submit that, in the event I found the respondent liable for defective work, an order requiring the respondent to repair the defective work would not be appropriate.

  2. Had I found the respondent liable for the quality of the concreting work performed on the applicant’s property, I would have made orders requiring the respondent:

  1. To undertake such work on the rear backyard slab as is necessary to ensure a fall away from the building by a minimum of 25 mm in the first metre;

  2. To apply a non-slip surface to the backyard slab; and

  3. To undertake such work on the driveway as is necessary to ensure that the maximum gradient does not exceed 11% and, to the extent that a grade steeper than 11% is necessary to accommodate the change in levels between the boundary of the property and the entrance to the garage, to install a transition zone at either end of the steep section to prevent vehicles bottoming out.

  1. The respondent did not challenge the applicant’s evidence that a clothesline, balustrades, fence, paint and a sewer line had been damaged in the course of the laying of the backyard slab and driveway and that a gate to the backyard had been removed and not re-installed. Had I concluded that the respondent was liable for the concreting work, I would have ordered the respondent to pay the applicant the following amounts claimed by the applicant, in respect of which the applicant had provided invoices or quotations:

(a) Replacing the clothesline

$1281.50

(b) Replace damaged balustrades

$9100.00

(c) Repainting areas where the paint had been damaged

$1850.00

(d) Cleaning and painting the fence

$1000.00

(e) Rendering damaged areas    

$400

(f) Rectification of the sewer    

$4000.00

(g) Re-installation of rear backyard gate

$500.00

  1. The total of the above amounts is $18131.50.               

  2. The cost of Mr Tremlett’s report is properly characterised as costs of the proceedings and should be addressed as such.

  3. Because the making of the above orders would be predicated upon a finding that the respondent was bound by the contract upon which the applicant relied, it would be necessary, in assessing the applicant’s loss, to allow for the extent to which the applicant has not paid the contract price. Accordingly, if I had found the respondent liable to the applicant, I would have reduced the amount payable to the applicant by $13,900, leaving a net amount of $4,231.50.

Costs

  1. Because the amount in issue in the proceedings exceeds $30,000, I do not need to find there are special circumstances before making an order for costs: rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW).

  2. As the application has been dismissed it is appropriate that the applicant be ordered to pay the respondent’s costs.

  3. The fact that the applicant has obtained an order that he is not liable to pay the respondent $13,900 is entirely ancillary to and consequential upon the dismissal of the applicant’s money claim.

  4. However, I do not consider it appropriate to order the applicant to pay any costs the respondent incurred in relation to the proceedings before their reinstatement in January 2024. Although the Tribunal reinstated the proceedings, it cannot be said that the respondent was without fault in failing to be aware of the hearing on 4 December 2023. Houssam Saadat attended the directions hearing all 14 July 2023. On that occasion, leave was granted for Houssam Saadat to represent the respondent. Any failure of the Tribunal to notify Mr Saadat of the date of the hearing on 4 December 2023 was entirely Mr Saadat’s responsibility.

orders

  1. Accordingly, I will order:

  1. The sum of $13,900 is not due or owing by Sumit Kumar to SMJ Construction Group Pty Ltd.

  2. The application is otherwise dismissed.

  3. The applicant is to pay the respondent’s costs of and incidental to the proceedings from 17 January 2024, as agreed or assessed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.


Registrar

Decision last updated: 07 April 2025

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