Marriott v Smith

[2007] TASSC 1

[2007] TASSC 1

CITATION:              Marriott v Smith [2007] TASSC 1

PARTIES:  MARRIOTT, Phillip Scott
  v
  SMITH, George Vaughan

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  APPELLATE
FILE NO/S:  LCA 54/2006
DELIVERED ON:  15 January 2007
DELIVERED AT:  Hobart
HEARING DATE:  21 September 2006
JUDGMENT OF:  Tennent J

CATCHWORDS:

Magistrates - Appeals from and control over magistrates - Tasmania - Motion to review - The hearing - Generally - Housing Indemnity Act 1992 - Housing Indemnity Regulations 1993 - Application of provisions to owner-builders.

Aust Dig [272]

REPRESENTATION:

Counsel:
             Appellant:  S J Bender
             Respondent:  A B Walker
Solicitors:
             Appellant:  Director of Public Prosecutions
             Respondent:  Dobson Mitchell & Allport

Judgment Number:  [2006] TASSC 1
Number of paragraphs:  34

Serial No 1/2007
File No LCA 54/2006

PHILLIP SCOTT MARRIOTT v GEORGE VAUGHAN SMITH

REASONS FOR JUDGMENT  TENNENT J

15 January 2007

1. The respondent was charged with an offence under the Housing Indemnity Act 1992 ("the Act"), s11(a).  The allegation was that he performed building work without insurance.  The particulars of the offence were:

"That the defendant, George Vaughan SMITH, between on or about the 16^th August 2004 and on or about the 30^th October 2004, being a builder within the meaning of the Housing Indemnity Act 1992, did perform building work to which Division 1 of Part 3 of the said Act applied, to wit the performance of building works at a residential building at 8 Nietta Road, Lindisfarne in Tasmania when a policy that complied with the said Division was not in force in relation to that building work, contrary to Section 11(a) of the said Act."

1. Following a hearing, a magistrate dismissed the charge.  The State has now sought a review of that dismissal.  The grounds of review are as follows:

"1        The Learned Magistrate erred in fact/ and or in law in failing to find that a building work contract was entered into by the complainants and the defendant prior to 11^th August, 2004, ie; on or by 30^th June, 2004, and pursuant to the said contract the defendant performed building work as a builder for and on behalf of the complainants.

2         The Learned Magistrate erred in fact and/or in law in failing to find that GV and LM Smith Pty Ltd was the undisclosed principal of the defendant at all relevant times prior to 11^th August 2004.

3         The Learned Magistrate erred in fact and/or in law in finding that it was open to the complainants 'to reject the terms of work and purported principal' on or about 11^th August, 2004, by then having entered a building work contract with the defendant.

4         The Learned magistrate erred in fact and/or in law in finding that the defendant was not seeking to act in his own right in his dealings with the complainants.

5         The Learned magistrate erred in fact and/or in law in finding that the complaints (sic) were owner/builders.

6         The Learned magistrate erred in law in giving consideration to the Second Reading speech dated the 21^st October, 1992 of the Housing Indemnity Bill when there was either no basis for such consideration to be given, within the terms of s8B(1) of the Acts Interpretation Act1931, or alternatively, the Learned magistrate failed to consider the matters set out in s8B(2) of the said Act, in determining whether to give consideration to the said speech or determining what weight should be given to it."

1. The charge arose out of a project to substantially renovate a residential property at 8 Nietta Road, Lindisfarne ("the property").  The registered proprietor of the property was a Mr Craig Eadie, although it was his wife who was most directly involved in the project.  On 7 April 2004, Mrs Eadie signed a Clarence City Council application for a building/plumbing permit in relation to the property.  That disclosed her and her husband as the owners of that property and under the heading "Builder's details" she wrote "Not yet determined (Will advise)".  On 21 April 2004 Mrs Eadie crossed out those words and inserted the words "Owner Builder" and initialled and dated the alteration.  Her explanation for the alteration was in effect that, if they had a builder, until they had housing indemnity insurance, they would not get any council permits, but if they were shown as owner-builders, they could get permits without insurance. 

1. Mrs Eadie had approached the Master Builders' Association to obtain the names of builders.  She was given the name of G V & L M Smith Pty Ltd ("the company") and the respondent was her main contact point for the company.  On or about 30 June 2004 the Eadies met with the respondent to discuss the proposed work.  The respondent gave the Eadies a document headed "Terms of Work" dated 29 October 2003.  It provided as follows:

"GV & L M Smith Pty Ltd
ABN: 20 005 569 479
22 Osborne Esplenade [sic],
Kingston Beach

Tasmania 7050

Phone and Fax : [phone]

Mobile :         [phone]

Terms of Work

Planning, supervision and design undertaken by George Smith - $50:00 per hour

Carpenters on Site                   $39:60 per hour

- with all necessary equipment (excluding scaffold)

Joinery workshop time  $50:00 per hour

- including machine time

Labourers  $30 per hour (Casual basis)

Material cost (Client to get 50% of builder's normal discount)
           - if material is a net figure, 10% will be added

- subcontractors: net amount plus 8% on cost

Account with times, material invoices and subcontract amounts will be rendered weekly.

Payment to be within 5 days.

The builder reserves the right to cease work until terms cited above are met.

These costs include GST

29-October-2003"

1. At the same time the respondent gave the Eadies a hand written document which opened with the words "This is not a quote but a guide to the approx costs.  The work will be done upon the basis agreed ie cost plus."  Both documents had the company name and details printed across the top. 

1. On 6 August 2004 Mrs Eadie submitted a start works application to the Clarence City Council in which she named herself and her husband as owner-builders.  An arrangement was made to meet with the respondent on 11 August 2004 to finalise details before the actual start of work.  At that meeting the respondent provided a second copy of the Terms of Work document with the October date.  On 16 August 2004 work began.  On 23 August, after the respondent started work, he gave Mrs Eadie a second document headed "Terms of Work" dated July 2004.  It was in almost the same terms as the first save for rates for charging. 

1. During the course of the respondent doing work for the Eadies on the property, he rendered accounts.  Some had attached to them invoices from suppliers.  Of the documents of this nature tendered to the learned magistrate, almost all were in the name of the company.

1. At no stage did the company or the respondent take out a housing indemnity insurance policy pursuant to the Act in respect of the project.

The law

1. The Act provides for certain warranties on the part of builders to be implied in building work contracts.  The Act defines a number of terms.  A "building work contract" is defined to mean "a contract between a builder and another person for the performance by the builder of building work, but does not include a subcontract for the performance of building work".  A "builder" means "a person or firm engaged by an owner or owner's agent to manage or perform building work".  "Subcontract" means "a contract for the performance of building work for a builder who is obliged to perform work under a building work contract".

1. "Building work" means:

"… work performed on, or for the purposes of, a residential building" and includes -

(a) the erection, re-erection, construction, underpinning or alteration of a residential building and the addition to, or demolition or removal of, a residential building; and

(b) the making of any excavation, or filling for, or incidental to, the erection, re-erection, construction, underpinning or alteration of a residential building and the addition to, or demolition or removal of, a residential building;"

1. An "owner-builder" is defined to mean "a person, other than a builder, who owns land or a residential building and performs building work on that land or building".

1. "Perform" in relation to building work includes causing building work to be carried out or managing or arranging the carrying out of the building work.

1. The provision pursuant to which the charge has been laid is contained within the Act, Div 1 Pt 3.  Part 3 is headed "Housing Indemnity".  Division 1 is headed "Builders".  Section 10 provides:

"10       This Division applies to building work that is, or is to be, performed by a builder under a building work contract or on the builder's own behalf."

1. The Act, s11, then provides:

"11      A builder must not perform building work to which this Division applies unless –

(a) a policy that complies with this Division is in force in relation to that building work; and

(b) in the case of building work to be performed by a builder under a building work contract, the owner has been furnished with a certificate in accordance with a form approved by the Minister that evidences the taking out of that policy."

Section 12 then outlines the requirements for the insurance polices.  In effect, the policies are provided for to cover a person who may become entitled to the benefit of the implied warranties.

1. However, the Housing Indemnity Regulations 1993, reg10, provides for an exemption from the insurance requirements.  It provides:

"10      (1)  Building work performed by, for or on behalf of an owner-builder is exempt from the application of section 11 of the Act."

1. As far as that exemption is concerned, it is apparent that it is irrelevant whether building work is done pursuant to a building work contract or otherwise.  If building work is done for an owner-builder, the builder commits no offence pursuant to s11 if he does not have housing indemnity insurance. 

Issues raised by grounds of review

1. Counsel for the State identified the principal issue as whether it was open to the learned magistrate to find the Eadies were owner-builders.  However, a more basic issue identified by the learned magistrate in his reasons was whether the State had even prosecuted the right defendant.  He found that it had not and that, for that reason alone, the prosecution must fail.  However he went on regardless to consider the issue of whether the Eadies were owner-builders, finding they were, and that the exemption was available to the respondent. 

The right defendant?

1. The respondent was the sole director and shareholder of the company.  Physically, he was the person who did the building work on the renovation project.  The learned magistrate, while making no specific finding, appeared to take the view there was no contract of any type prior to 11 August 2004.  He formed that view because "This was the first on site meeting, at which time terms of work headed with the company name were handed to the complainant." It is clear that was an erroneous finding because on Mrs Eadie's own evidence, the first Terms of Work document, and another, both headed with the company name, were given to her on 30 June 2004.  The evidence of the respondent was also that he got the job about the middle of June.

1. Counsel for the State submitted that the Eadies did not become aware the respondent was operating under a company structure until they received that first Terms of Work document and by then it was too late because the work had already begun.  He submitted that by then, and contrary to the learned magistrate's finding at page 131 line 32 of the judge's papers (made, of course, by reference to the contract date of 11 August), it was not open to the Eadies to reject the Terms of Work and "purported principal".  He further submitted that, if I were satisfied that a contract was entered into in the middle of June, that occurred at a time when the Eadies were unaware of the company structure and hence the respondent was the agent of an undisclosed principal and liable to be prosecuted in his own name.

1. In support of this submission, counsel for the State referred to Siu Yin Kwan (Administratrix of the Estate of Chan Ying Lung, Decd) and Another v Eastern Insurance Co Ltd [1994] 2 AC 199 where, at 207, Lord Lloyd of Berwick said:

   "The main features of the law relating to an undisclosed principal have been settled since at least at the end of the 18th century.  A hundred years later, in 1872, Blackburn J said in Armstrong v Stokes (1872) LR 7 QB 598, 604 that it had often been doubted whether it was originally right to hold that an undisclosed principal was liable to be sued on the contract made by an agent on his behalf, but added that 'doubts of this kind come now too late'.

   For present purposes the law can be summarised shortly.  (1) An undisclosed principal may sue and be sued on a contract made by an agent on his behalf, acting within the scope of his actual authority.  (2) In entering into the contract, the agent must intend to act on the principal's behalf.  (3) The agent of an undisclosed principal may also sue and be sued on the contract.  (4) Any defence which the third party may have against the agent is available against his principal.  (5) The terms of the contract may, expressly or by implication, exclude the principal's right to sue, and his liability to be sued.  The contract itself, or the circumstances surrounding the contract, may show that the agent is the true and only principal."

   Counsel submitted by reference to this case that clearly an agent who enters into a contract without disclosing his principal can be sued personally and it follows that the agent can also be prosecuted.  Counsel for the respondent submitted the doctrine of undisclosed principal, while relevant in a civil dispute, had no relevance to what was in fact a quasi-criminal prosecution.

1. I do not, in my view, need to decide that issue because the evidence discloses Mrs Eadie was aware of the existence of the company and that the respondent was its agent from the time she obtained the name from the Master Builders' Association.  A statement made by her to the Consumer Affairs Council was tendered into evidence, that statement having been made in February 2005.  In that she clearly acknowledges that the name given to her was the company name and that its main contact point was the respondent. 

1. In the same statement she sets out that work commenced on 16 August 2004.  By that time she had received a number of documents headed with the company name and had had ample opportunity to say she would not deal with the company.

1. On the face of it, therefore, the "builder" for the purpose of the Act, irrespective of the argument about whether or not the Eadies were owner-builders, was the company and any prosecution should have been mounted against it.  The only factor which might affect this is whether the definition of "builder" includes a company.  If it does not and, for example, any builder operating under a corporate umbrella is required to have a nominated individual as the responsible person for insurance purposes, and in this case that person was the respondent, the situation may be different.

1. There was no evidence about this.  Counsel for the respondent submitted that the term "builder" in the Act was defined as "a person or firm".  By virtue of the Acts Interpretation Act, s41(1), the expression "person" included a body corporate. There was nothing in the Act to the contrary. This submission is, in my view, correct and is supported by the definition of "insolvent" which appears in the Act, s3. In that section, both natural persons and body corporates are referred to, indicating clearly that builders may be either.

1. I am satisfied that the correct defendant in the initial prosecution should have been the company and not the respondent.  As a consequence of that finding grounds 1, 2 and 4 of the notice to review must fail. 

1. Had the correct defendant been the respondent, ground 1 of the notice to review would have succeeded.  There can be no doubt on the evidence that a contract was entered into between the Eadies and the respondent/the company and that that contract was entered into well prior to 11 August 2004.  The most likely date was 30 June, although it may have been earlier.  The evidence does not allow a final conclusion.  There can be no doubt the respondent/the company performed building work for the Eadies.  I am also satisfied that that work was performed pursuant to a building work contract.  However as I have already indicated, the existence of a building contract was never the determining factor given the exemption provided for in reg10.

1. Grounds 2 and 4 would therefore have failed in any event.  Ground 3 would have succeeded given the factual errors made by the learned magistrate upon which he based that finding. 

1. Ground 5, of course, was what underpinned the whole argument.  Whether the Eadies were owner-builders or not is a question of fact.  For this ground to have succeeded, the State needed to establish that it was not reasonably open on the evidence before the learned magistrate to make the finding that he did, namely that the Eadies were owner-builders.  With respect, I am satisfied that finding was reasonably open, notwithstanding factual errors made by the learned magistrate. 

1. The evidence disclosed:

·the Eadies (or at least Mr Eadie) were the owners of the property.

·prior to engaging the respondent/the company, they had carried out some demolition work on the site.

·on or about 21 April 2004 they lodged a building/plumbing permit application with the local council in which they were described as "owner-builders" knowing that they could not get a permit if they used a builder's name without producing a certificate of housing indemnity insurance.

·on 6 August, after engaging the respondent/the company the Eadies lodged a start work application with the local council in which they described themselves as owner-builders.

·the Eadies allowed the respondent/the company to start building work on the property without there being in place any certificate of housing indemnity insurance.

·the Eadies allowed the respondent/the company to continue work in the absence of any certificate of insurance even though Mrs Eadie gave evidence she was pursuing the respondent about it.

·the respondent's insurance broker said the issue of housing indemnity insurance was not raised with him by Mrs Eadie in their discussion once the project was well underway.

·Mrs Eadie did engage people to do work on the site on more than one occasion other than the respondent or his company, being an electrician, a bricklayer and the engineer.  She also engaged a joiner to design and construct the kitchen.

·in her letter to the respondent in reply to his letter in late September 2004, Mrs Eadie said "I have not been in the position of being owner/builders before …".

·there was clear evidence of a very hands-on involvement of Mrs Eadie, in particular in overseeing how the project was running.

1. There was no doubt an agreement pursuant to which the respondent physically performed building work and engaged subcontractors to assist him with that building work.  However, that is not inconsistent with a finding that as far as the overall project was concerned, the Eadies were owner-builders and I am satisfied that finding was open to the learned magistrate.  It follows that the respondent/the company would have been entitled to the benefit of the exemption allowed by reg10.  Ground 5 would therefore have failed in any event.

1. As to ground 6, in his reasons the learned magistrate dealt with the issue of the correct defendant and then said that the complaint should be dismissed.  He then said, "Nevertheless, I turn to the facts and before doing so make short reference to the second reading speech in relation to the Legislation under consideration." He then read from it and made some comments about what the legislation was for.

1. The Acts Interpretation Act, s8B(1) and (2), provides:

   "(1) Subject to subsection (2), in the interpretation of a provision of an Act, consideration may be given to extrinsic material capable of assisting in the interpretation –

   (a) if the provision is ambiguous or obscure, to provide an interpretation of it; or

   (b) if the ordinary meaning of the provision leads to a result that is manifestly absurd or is unreasonable, to provide an interpretation that avoids such a result; or

   (c) in any other case, to confirm the interpretation conveyed by the ordinary meaning of the provision.

   (2) In determining whether consideration should be given to extrinsic material, and in determining the weight to be given to extrinsic material, regard is to be given to –

   (a) the desirability of a provision being interpreted as having its ordinary meaning; and

   (b) the undesirability of prolonging legal or other proceedings without compensating advantage; and

   (c) other relevant matters.

   …

   'ordinary meaning' means the ordinary meaning conveyed by a provision having regard to its context in the Act and to the purpose or object of the Act."

1. The learned magistrate made no mention at all as to this Act or any reasons why he had regard to the second reading speech.  He was obliged to do so if he intended to rely on extrinsic material as an aid to interpretation.  This ground would have succeeded.

Conclusion

1. The notice to review will be dismissed.