LOUDEN and CHANGEOVERS PTY LTD (ABN 18 146 623 190)
[2021] WASAT 164
•21 DECEMBER 2021
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: BUILDING SERVICES (COMPLAINT RESOLUTION AND ADMINISTRATION) ACT 2011 (WA)
CITATION: LOUDEN and CHANGEOVERS PTY LTD (ABN 18 146 623 190) [2021] WASAT 164
MEMBER: MS C BARTON, MEMBER
MS S CHURN, SESSIONAL MEMBER
HEARD: 10, 11 AND 12 AUGUST 2021
DELIVERED : 21 DECEMBER 2021
FILE NO/S: CC 227 of 2021
BETWEEN: ANTHONY MICHAEL LOUDEN
First Applicant
NATALIE O'NEILL
Second Applicant
AND
CHANGEOVERS PTY LTD (ABN 18 146 623 190)
Respondent
Catchwords:
Building service complaint - Home building work contract (HBWC) complaint - Whether irretrievable breakdown in relationship - Building remedy order - Monetary order - Compensation claimed for faulty or unsatisfactory building work - Compensation claimed for breach of contract - Failure to mitigate loss - Whether breach of HBWC contract - Whether HBWC remedy order justified
Legislation:
Building Services (Complaint Resolution and Administration) Act 2011 (WA), s 3, s 5(1), s 5(2), s 11(d), s 11(1)(d), s 36(1), s 36(1)(b), s 36(1)(c), s 36(2), s 38(1), s 38(1)(a), s 38(1)(b), s 41, s 41(2), s 41(2)(d), s 43, s 43(1), s 43(1)(b), s 49, s 49(7)
Building Services (Complaint Resolution and Administration) Regulations 2011 (WA), reg 5
Home Building Contracts Act 1991 (WA), s 3
State Administrative Tribunal Act 2004 (WA), s 9, s 87(1)
Result:
Applicants successful in relation to items identified by the Tribunal as faulty or unsatisfactory
Applicants otherwise unsuccessful
Category: B
Representation:
Counsel:
| First Applicant | : | In Person |
| Second Applicant | : | In Person |
| Respondent | : | In Person |
Solicitors:
| First Applicant | : | N/A |
| Second Applicant | : | N/A |
| Respondent | : | N/A |
Case(s) referred to in decision(s):
Brooks and Gransden Building Company Pty Ltd [No.2] [2021] WASAT 86
Gemmill Homes Pty Ltd v Sanders [2018] WASC 179
Hippydayze Pty Ltd and Mener Group Pty Ltd [2019] WASAT 92
Jennings and Howitt [2019] WASAT 133
Lewis and Waco Pty Ltd [2016] WASAT 127
Nelson v Mardesic (1998) 22 SR (WA) 42
Patersons Securities Ltd v Financial Ombudsman Service Ltd [2015] WASC 321
Robinson v Harman (1848) 1 Ex 850
Sanders and Gemmill Homes Pty Ltd [2017] WASAT 41 (S)
Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272
The Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1992) 174 CLR 64
Trengove and Celebration Nominees Pty Ltd [2012] WASAT 65
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
A dispute arose between the parties concerning a building service carried out at 96b McCourt Street, West Leederville (property) in relation to the renovation of two bathrooms.
The applicants in the proceeding are Mr Anthony Louden and Ms Natalie O'Neill (applicants) who are the owners of the property. The respondent in the proceeding is Changeovers Pty Ltd which was represented at the hearing by its director, Mr Dean Stanley (respondent).
On 9 July 2020, the applicants lodged a complaint relating to a regulated building service and a home building work contract (HBWC) with the Building Commissioner. On 16 February 2021, the Building Commissioner referred the complaint to the Tribunal under s 11(1)(d) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) (Act). The applicants allege 22 complaint items as faulty or unsatisfactory building work and four complaint items relating to a breach of the HBWC (complaint items).[1]
[1] The applicants prepared a Scott Schedule which itemised the complaints in a different sequence to those referred to the Tribunal under s 11(1)(d) of the Act. We have referred to the complaint items in the same order as they are listed in Exhibit 1, pages 150-167.
The applicants seek an order to pay under s 36(1)(b) of the Act in respect of the building service complaint items, and a HBWC remedy order under s 43(1) of the Act in respect of the HBWC complaint items. The applicants also seek a monetary order under s 36(1)(c) of the Act to compensate them for the respondent's failure to carry out the building service in a proper and proficient manner or for faulty or unsatisfactory building work.
The issues for determination
The issues for determination by the Tribunal in relation to the building service complaints are as follows:
1)Did the respondent carry out a regulated building service?
2)If the answer to 1) is in the affirmative, was the building work, the subject of each of the complaint items, faulty or unsatisfactory?
3)If the answer to 1) and 2) is in the affirmative, what is the appropriate form of the building remedy order (if any)?
The issues for determination by the Tribunal in relation to the HBWC complaints are as follows:
1)Did the parties enter into a HBWC?
2)Did the respondent breach the terms of the HBWC?
3)If the answer to 1) and 2) is in the affirmative, what is the appropriate HBWC remedy order (if any)?
The statutory framework
Section 5(1) of the Act relevantly provides that a person may make a complaint to the Building Commissioner about a regulated building service not being carried out in a proper and proficient manner or being faulty or unsatisfactory. A complaint made under s 5(1) of the Act is defined in s 3 of the Act as a 'building service complaint'.
A 'regulated building service' is defined in s 3 of the Act to include:
(a)a building service carried out by a registered building service provider or an approved owner-builder;
(b)home building work that is-
(i)carried out by a person for another person under a home building work contract or other contract or arrangement for gain or reward; and
(ii)not carried out for a person who is in turn obliged to perform the work under another contract.
(c)Any other service or work prescribed for the purposes of this definition[.]
Relevantly, 'home building work' has the meaning given in s 3 of the Home Building Contracts Act 1991 (WA) (HBC Act) and includes 'the whole or part of the work of altering, improving or repairing a dwelling'.
Regulation 5 of the Building Services (Complaint Resolution and Administration) Regulations 2011 (WA) (Regulations) imposes the limitation that only a person whose interests are being or have been adversely affected by the carrying out of a regulated building service may make a building service complaint.
Where a building service complaint is referred to the Tribunal by the Building Commissioner under s 11(d) of the Act, s 38(1)(a) of the Act enables the Tribunal to make a building remedy order where it is satisfied that the regulated building service has not been carried out in a proper and proficient manner or is faulty or unsatisfactory. The Tribunal may otherwise decline to make a building remedy order under s 38(1)(b) of the Act.
Under s 36(1) of the Act, a building remedy order made by the Tribunal may require a person who carried out a regulated building service to do one or more of the following:
(a)remedy the building service as specified in the order;
(b)pay to an aggrieved person such costs of remedying the building service as the Tribunal considers reasonable and specifies in the order; and/or
(c)pay an aggrieved person a sum of money specified in the order to compensate the aggrieved person for the failure to carry out the building service in a proper and proficient manner or for faulty or unsatisfactory building work.
A building remedy order may require that the order be complied with within a timeframe specified in the order: s 36(2) of the Act.
Section 5(2) of the Act relevantly provides that an owner may make a complaint to the Building Commissioner about a breach of a HBWC. A complaint made under s 5(2) of the Act is defined in s 3 of the Act as a 'HBWC complaint'.
Where the Building Commissioner refers a HBWC complaint to the Tribunal under s 11(d) of the Act, the Tribunal may, if satisfied that the order is justified, make a HBWC remedy order, or otherwise decline to make the order: s 43 of the Act. The HBWC remedy orders that may be made by the Tribunal are provided in s 41 of the Act.
Background to the dispute
Many relevant factual matters were not in dispute between the parties. We make the following findings of fact in relation to those matters:
1)On 21 February 2020, the respondent provided a quotation to the applicants for the renovation of two bathrooms at the property. The quotation for the renovation of the downstairs bathroom is in the sum of $7,210 (inc GST)[2] and the quotation for the renovation of the upstairs bathroom (ensuite) is in the sum of $11,557 (including GST).[3]
2)A 'Terms and Conditions - Customer Copy' comprising the terms of the HBWC was provided by the respondent to the applicants on or around 21 February 2020.[4]
3)On 3 March 2020, a revised quotation was provided to the applicants by the respondent[5] and the applicants instructed the respondent to go ahead with the job.[6] The respondent subsequently provided the applicants with a quotation for the coring of the slab.[7]
4)The respondent commenced works at the property on 23 March 2020 after the start date was rescheduled by the applicants on three occasions.[8]
5)As at 17 April 2020, the respondent has been paid 85% of the contract price under the HBWC, being a total sum of $15,951 (including GST). The balance of the contract price under the HBWC remains unpaid.[9]
6)The applicants provided the respondent with $12,151 in parts and fixtures for the bathroom renovation works.[10]
7)On 13 May 2020, the respondent left the property.[11] The respondent has not completed any work at the property since that date.
The conduct of the proceeding and expert evidence
[2] Exhibit 1, page 25.
[3] Exhibit 2, page 26.
[4] Exhibit 1, pages 23-24.
[5] Exhibit 1, page 35; Exhibit 1, page 243.
[6] Exhibit 1, email '50'.
[7] Exhibit 1, page 53.
[8] Exhibit 2, page 1; ts 41, 10 August 2021.
[9] Exhibit 2, page 1; ts 38, 10 August 2021.
[10] Exhibit 2, page 1. Witness statement of Anthony Michael Louden, dated 22 July 2021, para 25.
[11] Exhibit 1, page 35.
The applicants called Mr Rick Martelli, a registered builder with EcoVera Building Consultants, to give oral evidence at the hearing. Mr Martelli did not produce a witness statement or report but did conduct an inspection of the property and identified several complaint items in dispute. We found Mr Martelli to be an honest and reliable witness who was of assistance to us in our determination. The respondent did not rely on any expert reports or call any expert witnesses.
The Tribunal had the benefit of the reports prepared following assessments of the property conducted by a Building and Energy Inspector (BEI) from Building and Energy, Department of Mines, Industry Regulation and Safety (DMIRS), including BEI assessment reports dated 25 September 2020[12] and 16 November 2020.[13]
[12] Exhibit 1, page 129.
[13] Exhibit 1, page 150.
The hearing was heard between 10 and 12 August 2021 with the applicants', the respondent's representatives, and Mr Martelli attending the Tribunal in person.
At the conclusion of the hearing, the Tribunal ordered the applicants to file with the Tribunal and give to the respondent any further evidence in support of their claim for compensation. The Tribunal also ordered the parties to file any further evidence in respect of the costs to undertake the remedial work for each complaint item that remained in dispute.
Both parties submitted additional documents in accordance with the Tribunal's orders. Our decision was reserved from the date of receipt by the Tribunal of the final submission.
Purported breakdown in relationship
The applicants contend that there has been an irretrievable breakdown in the relationship between the applicants and the respondent. It is for this reason, amongst others, that the applicants seek an order, under s 36(1)(b) of the Act, for the respondent to pay the applicants a reasonable sum of money representing the work required to remedy the complaint items.
The respondent contends that the bathroom renovation works stalled because the applicants had a change of mind in relation to the height of the mixer taps in the ensuite.[14] The respondent says that the applicants engaged a third party to undertake the building work in the ensuite, including the location and size of the wall niche for a custom mirror cabinet (cabinet niche).[15] It is the respondent's position that it provided the applicants with a revised quote for $1,280 (including GST) to increase the height of the mixer taps, and for the partial bricking up and rendering of the cabinet niche which was made quite low and too large.[16] The respondent says that the applicants offered to pay 50% of the cost of the additional work which the respondent did not consider acceptable.[17]
[14] Exhibit 1, page 329.
[15] ts 29, 43, 45, 10 August 2021.
[16] ts 43, 46, 10 August 2021; Exhibit 1, page 329; page 472 and page 483.
[17] ts 43, 10 August 2021; Exhibit 1, page 329.
The applicants' position in support of a monetary order may be summarised as follows:
1)The applicants have no confidence that the respondent can undertake the remedial works in a proper and proficient manner. The applicants say that they do not want the respondent to return to their property to complete the remedial works because of the respondent's poor quality of workmanship and pattern of behaviour.
2)The applicants say that the respondent has been given ample opportunity to remedy the faults but has failed to do so.
3)Because the remedial works are not minor, it is the applicants' position that attempting to complete the remedial works without causing further damage is not possible.
4)The BEI inspection reports recommend that the respondent undertake remedial works, but the respondent has chosen not to undertake any work.
5)The Plumbers Licensing Board issued rectification instructions following an inspection on 2 June 2020, but the applicants say the respondent did not complete the plumbing works in a timely manner.
6)The applicants say that an order to remedy would not compensate them for the inconvenience, loss of amenity and distress that they have endured on account of the respondent's conduct.
7)The applicants have entered into a contract with another builder and made payment. The applicants say that the builder would not undertake the job unless it completed the full renovation because it could not provide a warranty for works completed by the respondent. On this basis, the applicants say that completion of the works by the respondent is no longer possible.
In contrast, the respondent's position in support of a remedial order may be summarised as follows:[18]
1)The respondent is happy to continue with the bathroom renovation works once it receives final payment from the applicants for the downstairs bathroom and to rebuild the cabinet niche. It would also require all of the applicants' fixtures and fittings to be available for installation.
2)The request by the applicants for a monetary order is unfair in circumstances where the respondent was forced off-site due to non-payment and the applicants' change of mind.
3)The respondent says it completed the bathroom renovation works requested by the Plumbers Licensing Board in a timely manner.
4)A monetary order in relation to the ensuite is premature. The respondent says it has never claimed that the ensuite was complete or practically complete.
5)The respondent has not caused any delay to the completion of the bathroom renovation works.
The Tribunal's consideration
[18] Exhibit 1, pages 485 and 488.
For a building remedy order to be made against a person who carried out the work the subject of the building service complaint, the relevant building work must be a 'regulated building service'. We will consider whether the respondent carried out a 'regulated building service' and, if so, whether the building work, the subject of each of the complaint items, was faulty or unsatisfactory.
Did the respondent carry out a regulated building service?
A 'regulated building service' is defined in s 3 of the Act to include home building work carried out by a person for another person under a HBWC. The expression 'home building work' for the purposes of the Act has the meaning given in s 3 of the HBC Act which includes 'the whole or part of the work of altering, improving or repairing a dwelling'.
There was no dispute, and we find, that the bathroom renovation works carried out by the respondent is 'home building work' as defined in s 3 of the HBC Act. There was also no dispute, and we find, that the respondent carried out the bathroom renovation works under a HBWC, being a contract between a builder and an owner for the performance by the builder of home building work.[19]
[19] See the definition of 'home building work contract' in s 3, HBC Act.
Accordingly, we find that the respondent did carry out a regulated building service which is the subject of the complaint items. Therefore, it is open to us to make a building remedy order against the respondent under s 36(1) of the Act if we are satisfied that the work which is the subject of the complaint items was faulty or unsatisfactory.
Was the building work, the subject of each of the complaint items, faulty or unsatisfactory?
For ease of reference, our findings in relation to each complaint item relating to a regulated building service are to be found in Annexure A to these reasons.
What is the appropriate form of the building remedy order?
The Tribunal may require a person who carried out a regulated building service that is faulty or unsatisfactory to be the subject of a building remedy order.[20] Section 36(1) of the Act confers discretion on the Tribunal as to the form of the building remedy order. The building remedy order may specify the work to be performed or require a sum of money to be paid to the aggrieved person to remedy the building service or as compensation for the work being faulty or unsatisfactory. It is not the case that any failure to carry out the building service in a faulty or unsatisfactory manner must result in the grant of a building remedy order.[21]
[20] Section 38(1) of the Act.
[21] See Lewis and Waco Pty Ltd [2016] WASAT 127 at [9].
The applicants have expressed a strong preference for a monetary order under s 36(1)(b) of the Act because they assert that there has been an irretrievable breakdown in their relationship with the respondent in the sense explained in Trengove and Celebration Nominees Pty Ltd [2012] WASAT 65 and, more recently, in Brooks and Gransden Building Company Pty Ltd [No.2] [2021] WASAT 86 (Brooks) .
The applicants have no right to elect the remedy sought under s 36(1) of the Act but are entitled to express a preference. In Gemmill Homes Pty Ltd v Sanders [2018] WASC 179 (Gemmill), Smith AJ, as her Honour then was, observed:[22]
133It must be borne in mind that the statutory limits on the exercise of the discretion to make a building remedy order are only those set out in s 38. The repository of the power conferred to make an order (the Tribunal) must form an opinion that the regulated building service (that is the subject of the building service complaint) has not been carried out in a proper and proficient manner, or is faulty or unsatisfactory.
134If the requisite opinion is formed, the Tribunal is required to make a building remedy order. It then has to exercise the discretion conferred in s 36(1) to make a particular order in the form of s 36(1)(a), (b) or (c). Thus, no 'right' or requirement on a party to a complaint to elect arises.
135I do, however, agree with the point made in Nelson that the Tribunal has no power to compel an owner or require an owner or a person who has the right to control entry to a property to allow access to a site to enable an amount of work to be carried out in accordance with a building service work order. If there is evidence that such access was likely to be denied, then that would be a relevant matter of fact that the Tribunal could take into account.
[22] Gemmill at [133]-[135].
It follows that the Tribunal cannot fetter its discretion by simply adopting the applicants' preference for a monetary order. The applicants' preference, and reasons for seeking a monetary order, however, are relevant matters for the Tribunal to consider when determining the type of building remedy order to make.[23]
[23] Gemmill at [147].
In Hippydayze Pty Ltd and Mener Group Pty Ltd [2019] WASAT 92 (Hippydayze), the Tribunal identified the following matters (which are not exhaustive) that may be relevant to the exercise of the Tribunal's discretion under s 36(1) of the Act, particularly when exercising its discretion to make a building remedy order in monetary terms:[24]
… [w]hether there has been an irretrievable breakdown in the relationship between the parties (Trengove and Celebration Nominees Pty Ltd [2012] WASAT 65 at [36]); whether an owner has justifiably lost confidence in the workmanship and skill of the respondent (Nelson v Mardesic (1998) 22 SR (WA) 42); whether the respondent has attempted to remedy the regulated building service previously unsuccessfully and whether the respondent has refused to perform remedial work when invited to do so[.]
[24] Hippydayze at [126]; see also Brooks at [18].
It is common practice to give a builder respondent an opportunity to remedy its own defective work. This is because an order to remedy compensates the owner while minimising the hardship to the builder who can usually carry out the work at substantially less cost than the amount charged by a third-party contractor.[25] However, the nature and extent of the complaints may raise concerns about the proficiency and competency of the builder and support a finding by the Tribunal that a monetary order is more appropriate than ordering a builder to perform remedial work.[26]
Findings - relationship breakdown and the cabinet niche
[25] Nelson v Mardesic (1998) 22 SR (WA) 42 at 46.
[26] Jennings and Howitt [2019] WASAT 133 at [31].
The respondent provided the applicants with a quotation for a 1800mm overhead custom mirror cabinet in the ensuite.[27] The quotation relevantly provides:
Design, Manufacture, Supply and Install Feature in built wall/mirror cabinet with box void to under mirror panel, abs finished board fronts and box - doors oversize re ceiling void.
…
Over Head Cabinet to be 1800 Long
[27] Exhibit 1, page 26.
It is the respondent's position that the work required to construct the cabinet niche was out of scope.[28]
[28] Exhibit 1, page 483; ts 43, 10 August 2021.
Ms O'Neill, the second applicant, stated that she had been given the contact details for 'Wall be gone' by the respondent and that representatives of both entities attended the site together on at least one occasion.[29] Ms O'Neill also stated that she gave instructions to a representative of 'Wall be gone' in relation to the location of the cabinet.[30] She stated that it was 'Wall be gone' that constructed the cabinet niche.[31] On 6 May 2021, Ms O'Neill asked the respondent to stop work on the manufacture of the cabinet because the niche was cut too big.[32]
[29] ts 62, 10 August 2021.
[30] ts 62, 10 August 2021.
[31] ts 62, 10 August 2021.
[32] Exhibit 1, page 124.
Based on the evidence of Ms O'Neill, which we accept, we find that the respondent recommended 'Wall be gone'.[33] However, we find that it was the applicants who engaged 'Wall be gone' to construct the cabinet niche because 'Wall be gone' sent a quotation to the applicants for the work[34] and the cabinet niche was deleted from the respondent's scope of work.[35] We further find that the cabinet niche constructed by 'Wall be gone' was more than 2000mm in length while the cabinet that the respondent had contracted to design and install was intended to be 1800mm in length.[36]
[33] Witness statement of Natalie O'Neill dated 22 July 2021, para 11; ts 13, 10 August 2021.
[34] Exhibit 3.
[35] Exhibit 5, email '35'; ts 62, 10 August 2021.
[36] ts 46, 10 August 2021.
Because the applicants engaged a third party to construct the cabinet niche for the custom mirror cabinet, we are not satisfied that the respondent carried out a regulated building service in relation to the cabinet niche.
The applicants are opposed to the respondent returning to the property to complete the remedial works, including the additional works to the ensuite. The applicants say that they have lost confidence in the respondent. The respondent says that it is not prepared to undertake the remedial works until it receives final payment for the downstairs bathroom and payment for the additional works. We find that the bathroom renovation works stalled because of the dispute between the parties about the incorrect size of the cabinet niche and that their difference of opinion on this matter is indeterminable. For this reason, we find that the parties' relationship has irretrievably broken down. We further find that due to the nature and extent of the complaint items in Annexure A that were not carried out by the respondent in a proper or proficient manner, or are faulty or unsatisfactory, a monetary order is more appropriate than a remedial order.
Consequently, we find that a building remedy order, in the form of an order to pay, should be made against the respondent under s 36(1)(b) of the Act.
Order to pay
The applicants engaged Altus Group to assess the scope of the remedial works. Altus Group prepared a report dated 25 August 2021 which included, in Appendix A, a cost breakdown in respect of each of the complaint items.[37] We are satisfied that the quotations provided by Altus Group represents the building works that are required to remedy the complaint items. The applicants also supplied quotations from WA Assett dated 7 April 2021 in respect of the cost of stripping out and redoing the ensuite and the downstairs bathroom.[38]
[37] Applicants' submission dated 27 August 2021 in response to order 2 of the Tribunal's orders made on 12 August 2021.
[38] Exhibit 1, pages 250-256.
The respondent relied on a quotation from Warehouse Direct Tiles Pty Ltd in relation to tiling and a quotation from Terkos Engineering to verify the coring of the slab.[39] Where the respondent's quotations are based on its own assessment of the scope of the remedial works, we do not find them to be independent and, therefore, we will not rely on them. However, where the remedial works are minor, and we consider the respondent's quoted figure is reasonable, we have accepted that figure.
[39] Respondent's submission dated 27 August 2021 in response to order 2 of the Tribunal's orders made on 12 August 2021.
Having regard to the quotations provided by the parties, we find that the respondent must pay to the applicants the total sum of $22,072.50 (excluding GST) in respect of the complaint items in Annexure A that we have found were not carried out by the respondent in a proper or proficient manner or were faulty or unsatisfactory.
Accordingly, we will make an order that the respondent must pay to the applicants the sum of $24,279.75 (including GST) within 21 days of the publication of our reasons.
Compensation
The applicants claim compensation from the respondent under s 36(1)(c) of the Act for the respondent's failure to carry out the building service in a proper and proficient manner or for faulty or unsatisfactory building work. The applicants say that they have incurred expenses and costs to the value of $9,535.82 (including GST). The compensation sought by the applicants comprises the following:[40]
1)water rates in the sum of $1,127.20 and Council rates in the sum of $1,918.42 due to the inconvenience and loss of amenity caused by the respondent leaving the applicants with two incomplete and defective bathrooms;
2)alternative accommodation expenses for Ms O'Neill - $2,950;
3)expert witness costs, including the attendance of Mr Martelli at the hearing - $1,094.50;
4)costs of engaging a locksmith to change the locks after the respondent left the property - $293.70;
5)DMIRS complaint fee - $238; and
6)Altus Group report - $1,914.
[40] Applicants' submissions dated 26 August 2021 in response to order 1 of the Tribunal's orders made on 12 August 2021.
The Respondent says that the delays were contributed to by the applicants by failing to provide fixtures and fittings in a timely manner, and to make payments in accordance with the terms of the HBWC.[41] The respondent also says that the applicants requested variations but did not accept the quotations for these variations or sought a third party to perform the works.[42]
[41] Exhibit 1, page 449.
[42] Respondent's submission dated 27 August 2021, page 4.
In Hippydayze,[43]the Tribunal considered whether an applicant seeking compensation under s 36(1)(c) of the Act is eligible to recover losses which it failed to mitigate. The Tribunal stated:
157It has long been the position that compensation or damages cannot be recovered for any loss that could have been prevented or reduced by the applicant undertaking reasonable mitigating action: Clark v Macourt (2013) 253 CLR 1; [2013] HCA 56 at [17]. In such circumstances the loss, or a proportion of the loss, is not caused by the breach, but rather is caused by the failure of the applicant to mitigate.
158Whilst the principle of mitigation arises primarily in the context of the law of contract, it is of useful application in the Tribunal's determination as to what is an appropriate amount to compensate an applicant who alleges that they have suffered loss as a result of a respondent's failure to carry out a building service in a proper and proficient manner or which is faulty or unsatisfactory building work. This is because the same principle applies, in that, an applicant is only entitled to be compensated for loss that can be attributable to the performance of the building service. This is clear when one considers the wording of s 36(1)(c) of the BSCRA Act as follows:
159An order that a person who carried out a regulated building service pay to an aggrieved person a sum of money specified in the order to compensate the aggrieved person for the failure to carry out the building service in a proper and proficient manner or for faulty or unsatisfactory building work.
(Emphasis added)
Therefore in this proceeding, the compensation must be for loss incurred due to the failure of the respondent to carry out the building service in a proper and proficient manner or which is faulty or unsatisfactory, and cannot be compensation for loss suffered by the applicant due to a failure by it to take reasonable steps available to it to reduce or mitigate the extent of the loss being suffered.
[43] Hippydayze at [157], [158] and [159].
In this proceeding, we find that the applicants did keep the respondent apprised of the status of their fixtures and fittings after the parties had entered into the HBWC.[44] However, we find that the applicants contributed to the delay in completing the works at the property because they engaged 'Wall be gone' in relation to the construction of the cabinet niche which was cut too large. There was no dispute, and we find, that the applicants were provided with a revised quotation to undertake the necessary remedial work to reduce the size of the cabinet niche. However, the applicants chose not to engage the respondent to undertake those works, for a number of reasons, including that they considered the quotation at $1,280 (including GST) unreasonably high and they had lost trust in the respondent.[45] There was no evidence before us that the applicants engaged a third party to modify the cabinet niche so that it would be suitable for the cabinet that they had contracted with the respondent to install. For these reasons, we find that the expenses and costs that the applicants say that they incurred could have been mitigated if the applicants had remedied the cabinet niche.
[44] Exhibit 1, page 459. Exhibit 5, email '52'.
[45] Witness statement of Natalie O'Neill dated 22 July 2021, para 17.
Consequently, we are satisfied that there was a failure on the part of the applicants to take reasonable steps available to them to reduce or mitigate the extent of their losses caused by the incorrectly sized cabinet niche. Because we are satisfied that there was a failure on the part of the applicants to mitigate their losses, we will decline to make an order for compensation under s 36(1)(c) of the Act. However, the applicants' expert witness costs, including reports produced for the purposes of a proceeding, are the subject of an application to the Tribunal under s 87(1) of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
Did the parties enter into a HBWC?
There was no dispute, and we find, that the parties entered into a HBWC at or around 3 March 2020. We further find that the terms and conditions of the HBWC are not in dispute.[46]
Did the respondent breach the terms of the HBWC?
[46] Exhibit 1, page 23.
The Tribunal can, if satisfied that a HBWC remedy order is justified, make one or more of the orders set out in s 41(2) of the Act.[47] This includes an order under s 41(2)(d) of the Act to pay specified compensation for loss or damage caused by any breach of the HBWC.
[47] Section 43(1) of the Act.
At common law, the general principle governing the measure of damages for breach of contract is that where a party sustains a loss by reason of a breach, he or she is to be placed in the same situation, with respect to damages, as if the contract had been performed according to its terms.[48] The innocent party cannot, however, be placed in a superior position by an award of damages upon breach, than the position they would have been in if the contract had been performed.[49]
[48] Robinson v Harman (1848) 1 Ex 850 at 855; see Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272. For the approach to measuring loss in this jurisdiction, see Patersons Securities Ltd v Financial Ombudsman Service Ltd [2015] WASC 321.
[49] The Commonwealth of Australia v Amann Aviation Pty Ltd [1991] HCA 54; (1992) 174 CLR 64 at 82.
The applicants claim that the respondent breached the terms of the HBWC as set out in complaint items 4, 5, and 6. The applicants seek compensation from the respondent of $2,500 for complaint item 4, $650 for complaint item 5 and $4,640 for item 6.[50]
[50] Applicants' submissions dated 27 August 2021 in response to order 2 of the Tribunal's orders made on 12 August 2021, page 2.
We will next consider whether the respondent has breached the terms of the HBWC as asserted by the applicants in respect of complaint items 4, 5, and 6.
Complaint item 4
The applicants contend that the respondent attempted to extract further monies from them under the HBWC by issuing invoices for works that were included as part of the original scope of work, required in any event to complete the job, and excessive and inflated for the proposed service or product. In contrast, the respondent says that the applicants had failed to pay the deposit and agreed progress payments on time which necessitated the re-scheduling of the job on more than one occasion. The respondent says that it issued revised quotations because the applicants had altered the original scope of works due to a change in mind regarding the size of the cabinet niche.
Clause 2 of the HBWC relevantly provides:
The price quoted for the work at the premises has been determined on the basis of information regarding the extent and nature of the work as provided by the client, and is quoted on the basis of existing costs of labour, fixtures and materials as at the date of the quotation.
Changeovers quotation are open for acceptance for a period of 30 days from date received. Acceptance of the tax invoice/contract must be confirmed in writing on the face hereof. Includes basic installation in the Perth Metropolitan Area, all other services/areas are price on application. Price includes up to two site attendances per Plumber and Electrician, additional attendances are Price on Application. Price includes isolation and installation of compatible service at existing location.
In the event that work is not commenced within 45 days of acceptance through no fault of Changeovers Pty Ltd, any increases in costs of labour or materials or both may be charged by Changeovers Pty Ltd to the client and the price increased accordingly.
We find that the respondent had issued a revised invoice to the applicants in respect of work required to modify the cabinet niche. However, based on the evidence before us, we do not consider that the price quoted was excessive or inflated. There was also no evidence before us that the applicants made any payments over and above the contracted price in response to the respondent's requests for payment. For these reasons, in respect of complaint item 4, we are not satisfied that the respondent breached clause 2 of the HBWC or the terms of the HBWC that relate to pricing or the payment of monies.
Complaint item 5
The applicants contend that 85% of the contract price was paid by them as at 17 April 2020 and that, under clause 4 of the terms and conditions of the HBWC, the remaining 15% was to be paid on completion. The applicants say that the respondent demanded the balance of the contract price notwithstanding the works were incomplete and faulty.
The respondent says that it sought from the applicants the 15% of the balance remaining in respect of the downstairs bathroom because it had located tradesmen for the work.[51]
[51] ts 191, 11 August 2021.
Clause 4 of the HBWC provides:
4.Payment Terms
…
Changeovers Pty Ltd is entitled to progress payments for that part or parts of the work that are completed from time to time at the following intervals mentioned on the face hereof as ''payment as follows'' Payment by the Client must be made at the Commencement of each location of Changeovers Pty Ltd unless specified project payment terms issued by Changeovers' Account Department … Bathrooms are payable as follows: 50% at least 7 days before isolation works, 35% Progress Payment is due on working Day 8, Final payment on completion of works[.]
(Tribunal emphasis)
Based on the evidence before us, we find that the respondent did seek the balance of the contract price for the downstairs bathroom in circumstances where the work at the property had not been completed. Consequently, we find that the respondent breached clause 4 of the HBWC which required final payment on completion of works and not before. However, we find that the applicants did not make any payment above 85% of the contract price. Because the applicants never paid the 15% remaining on the contract, we find that the applicants did not suffer any measurable loss from the respondent's request for final payment.
Complaint item 6
The applicants contend that there have been long delays in completing the works under the HBWC. The applicants further contend that the respondent used continuing delay tactics and suspended work for weeks at a time to try to force the applicants to pay monies that were not due under the HBWC.
The respondent did not dispute that it had removed itself from the property on 4 April 2020, five days after an agreed progress payment was due.[52] The respondent says that it left the property because of its previous experience with delayed project starts and because the applicants did not have all fixtures and fittings on site appropriate for the works.[53] The respondent contends that delays were also caused due to the incorrect size of the cabinet niche which was not within its scope of work. It is the respondent's position that it should not be responsible for any delays caused by any out of scope works, nor works undertaken by a third party.
[52] ts 325, 12 August 2021.
[53] ts 325, 12 August 2021.
Clause 16 of the HBWC relevantly provides:
16.Completion and Delays
Changeovers Pty Ltd will complete the work in good and workmanlike manner as soon as reasonably practicable. Changeovers Pty Ltd is not liable for any delay in completion or damages occasioned directly or indirectly as a consequence of any cause beyond the reasonable control of Changeovers Pty Ltd including (without limiting the foregoing) other contractors or service providers, weather conditions, labour disputes, accidents, fire, act of nature, civil disturbances, shortages of material, or difficulty securing labour.
(Tribunal emphasis)
Based on the evidence before us, we find that there was a delay in completing the works because of the incorrectly sized cabinet niche. We further find that the construction of the cabinet niche did not form part of the respondent's scope of works and, therefore, the delay caused by the incorrect size of the cabinet niche was not within the reasonable control of the respondent. For these reasons, we are not satisfied that the respondent has breached clause 16 of the HBWC.
If the answer to 1) and 2) is in the affirmative, what is the appropriate HBWC remedy order?
Having regard to our findings above, we are not satisfied that a HBWC remedy order is justified in respect of complaint items 4, 5, and 6 and will decline to make an order under s 43(1)(b) of the Act.
Costs application
At the conclusion of the hearing, the applicants made an application for their costs of the proceeding, including Mr Martelli's inspection fees and his attendance at the final hearing.[54] In support of their costs application, the applicants produced to the Tribunal and gave to the respondent the following invoices (including GST):[55]
1)expert witness costs for Mr Martelli - $1,094.50;
2)Altus Group report - $1,914;
3)costs of engaging a locksmith to change the locks - $293.70; and
4)DMIRS complaint fee - $238.
[54] ts 319, 12 August 2021.
[55] Applicants' submissions dated 26 August 2021 in response to order 1 of the Tribunal's orders made on 12 August 2021, page 3.
The respondent observed that the applicants had only paid one of two invoices from Mr Martelli but otherwise did not challenge the costs claimed by the applicants for his work. However, the respondent considered the costs claimed by the applicants for the Altus Group report were excessive. Because Ms O'Neill collected the key to the applicants' property, the respondent says the costs incurred by the applicants to engage a locksmith were unnecessary.[56]
The legal framework and principles
[56] Respondent's submissions dated 27 August 2021 in response to order 2 of the Tribunal's order 2 made on 12 August 2021, page 33.
Although the Tribunal is a 'no costs' jurisdiction, the Tribunal has power under s 87(2) of the SAT Act to order the payment by a party of all or any of the costs of another party unless otherwise specified in the enabling Act. The Tribunal's power under s 87(2) of the SAT Act is not limited by the enabling Act.[57]
[57] Section 49(7) of the Act.
It is relevant to the exercise of the Tribunal's discretion under s 87(2) of the SAT Act whether, and to what extent, the party who bears the onus on costs can establish that the other party's conduct has impaired the attainment of the Tribunal's objectives: Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 (Questdale).[58] One of the objectives of the Tribunal in s 9 of the SAT Act is achieve the resolution of disputes, fairly, and according to the substantial merits of the case. Another objective of the Tribunal is to act speedily and with as little formality and technicality as is practicable and minimise the costs to the parties.
[58] Questdale at [54].
In Questdale, the WA Court of Appeal observed that s 87(2) of the SAT Act is to be construed in the context that the legal rationale for an order for costs is to compensate the party in whose favour it is made and not to punish the party the subject of the order.[59] The discretionary power is to be exercised judicially, not arbitrarily or capriciously, or so as to frustrate the legislative intent.[60]
[59] Questdale at [51].
[60] Questdale at [48].
There are a range of factors that might contribute to the Tribunal making a costs order, including the non-exhaustive list set out in Sanders and Gemmill Homes Pty Ltd [2017] WASAT 41 (S) (Sanders). One such factor is where a party conducts itself unreasonably or inappropriately, particularly where the conduct leads to unnecessary costs to the other party. [61]
[61] Sanders at [8].
The question for the Tribunal is whether it is fair and reasonable in the circumstances of the case that a party should be reimbursed for the costs it has incurred. The onus of proof is on the party seeking an order in its favour.[62]
Exercise of discretion in this case
[62] Questdale at [51].
The fact that a party is unsuccessful or fails on a contention advanced during the course of the hearing, does not automatically support the making of a costs order unfavourable to that party. The presumptive position is that each party will bear its own costs in a proceeding before the Tribunal.[63]
[63] Section 87(1), SAT Act.
We find that the respondent did not act unreasonably or inappropriately in the conduct of the proceeding so as to impair the attainment of the Tribunal's objectives in s 9 of the SAT Act. There was no suggestion by the applicants that the respondent acted in a capricious or vexatious manner in its defence of the proceeding.
The conduct of the respondent prior to the commencement of the proceeding is not a matter that the Tribunal can properly have regard to when determining a costs application. For this reason, we will decline to make a costs order in respect of the costs sought by the applicant for engaging a locksmith to change the locks at the property or the DMIRS complaint fee.
The nature of the dispute is relevant to the Tribunal's exercise of discretion under s 87(2) of the SAT Act. In this proceeding, a dispute arose in relation to a building service carried out by the respondent in relation to 22 complaint items for faulty or unsatisfactory building work and four complaint items relating to a breach of the HBWC. The applicants did not suggest that the building service complaint items raised any issues of significant complexity. However, the expert evidence of Mr Martelli was of assistance to us in determining whether the building service was carried out in a proper and proficient manner or was faulty or unsatisfactory. We also relied on the itemised quotations set out in the Altus Group report in making a monetary order under s 36(1)(b) of the Act in respect of 17 complaint items.
In the circumstances of this proceeding, we consider it would be fair and reasonable for the applicants to be reimbursed for Mr Martelli's fees and the costs of producing the Altus Group report, which we find to be reasonable and not excessive.
Accordingly, in the exercise of our discretion under s 87(2) of the SAT Act and s 49 of the BSCRA Act, we will make a costs order in favour of the applicants. We will order the respondent to pay the applicants' costs in the sum of $3,008.50 (including GST) within 21 days of the publication of our reasons.
Orders
The Tribunal orders:
1.By 5.00 pm on 11 January 2022, pursuant to s 38(1), and s 36(1)(b) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) the respondent is to pay to the applicants the amount of $24,279.75 (including GST) in respect of complaint items 2, 8, 9, 10, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23 and 24.
2.Pursuant to s 46(1) of the State Administrative Tribunal Act 2004 (WA), the applicant has leave to withdraw complaint items 7 and 26 and those items are dismissed pursuant to s 46(2) of the State Administrative Tribunal Act 2004 (WA).
3Pursuant to s 38(1)(b) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) the Tribunal declines to make an order in respect of complaint items 1, 3, 11, and 25 and those items are dismissed pursuant to s 46(2) of the State Administrative Tribunal Act 2004 (WA).
4.Pursuant to s 43(1)(b) of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) the Tribunal declines to make an order in respect of complaint items 4, 5 and 6 and those items are dismissed pursuant to s 46(2) of the State Administrative Tribunal Act 2004 (WA).
5.By 5.00 pm on 11 January 2022, pursuant to s 87(2) of the State Administrative Tribunal Act 2004 (WA) and s 49 of the Building Services (Complaint Resolution and Administration) Act 2011 (WA) the respondent is to pay the applicants' costs of the proceeding fixed in the amount of $3,008.50 (including GST).
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
21 DECEMBER 2021
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