Melmint Pty Ltd v Cummings
[2008] WASC 225
•17 OCTOBER 2008
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: MELMINT PTY LTD -v- CUMMINGS [2008] WASC 225
CORAM: HASLUCK J
HEARD: 16 SEPTEMBER 2008
DELIVERED : 17 OCTOBER 2008
FILE NO/S: GDA 3 of 2008
BETWEEN: MELMINT PTY LTD (ACN 051 360 939)
Appellant
AND
RODNEY STUART CUMMINGS
ANNA CUMMINGS
Respondents
ON APPEAL FROM:
Jurisdiction : STATE ADMINISTRATIVE TRIBUNAL OF WESTERN AUSTRALIA
Coram :MR P McNAB (MEMBER)
Citation :MELMINT PTY LTD and CUMMINGS & ANOR [2008] WASAT 76
File No :CC 1369 of 2007
Catchwords:
Appeal - Application for leave to appeal from State Administrative Tribunal - Procedural and jurisdictional issues - Effect of provisional decision allowing leave to appeal - Builder's liability to rectify allegedly discharged by accord and satisfaction - Findings against builder - Provisional order allowing builder to appeal set aside and leave to appeal refused
Legislation:
Rules of the Supreme Court 1971 O 65 r 7
State Administrative Tribunal Act (WA), s 3, s 105
Result:
Leave to appeal refused
Category: B
Representation:
Counsel:
Appellant: Mr T H Brickhill
Respondents : Mr R E Lindsay
Solicitors:
Appellant: Brickhills
Respondents : iLaw
Case(s) referred to in judgment(s):
Adbooth Pty Ltd v City of Perth [2007] WASC 218
Lane v Esdaile [1891] AC 210
Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue of the State of Victoria (2001) 207 CLR 72
HASLUCK J:
Introduction
The appellant, Melmint Pty Ltd, seeks to set aside certain orders made by a member of the State Administrative Appeal Tribunal. The dispute underlying the proposed appeal concerns building work that was undertaken by Melmint over eight years ago. The manager of the building company at that time was Mr Charles Allia and the company was therefore trading as Charles Allia Homes.
Section 105(1) of the State Administrative Tribunal Act 2004 (WA) provides that a party to a proceeding may appeal from a decision of the Tribunal in the proceeding, but only if the court to which the appeal lies gives leave to appeal. By s 105(3) of the Act the term 'decision' includes any order, direction or determination of the Tribunal.
By s 105(2) of the Act an appeal can only be brought on a question of law. The appeal lies to the Court of Appeal if the decision was made by a judicial member or by the Tribunal constituted by members who include a judicial member. In any other case, the appeal lies to the Supreme Court exercising its other jurisdiction.
The matters in issue before me include certain procedural and jurisdictional issues bearing upon the validity of the proposed appeal. I will deal with these in due course. However, it will be useful to begin by looking at the background to the dispute between the parties. This dispute came before the Building Dispute Tribunal initially. The ruling made by that Tribunal (the 'BDT') was taken to the State Administrative Tribunal (the 'SAT') and is therefore under notice in the proceedings before me.
Background
The respondents, Rodney Stuart Cummings and Anna Cummings, entered into a building contract dated 5 November 1999 whereby the appellant was to construct a residential dwelling at 64 Thomas Street, Nedlands. The City of Nedlands issued a building licence in respect of the proposed work on 17 November 1999.
Work under the contract proceeded and gave rise eventually to various complaints by the respondents that the work had not been performed to the required standard.
One of their various complaints was that the plastering work performed by a sub‑contractor on behalf of the builder resulted in the plaster walls being too 'soft'. In September 2000 the walls were painted by the appellant's sub‑contracting painter, Tony Umfahrer, using a water‑based sealer provided to him by the respondents. According to a letter he wrote some years later dated 3 September 2006, this work was performed 'for the builder Charles Allia Homes' (AB 232).
The painting work was not completed and at a meeting in October 2000 between the appellant and the respondents it was apparently recognised by the parties that the plaster was too soft but this could be rectified by using a sealer to harden the soft plaster.
It emerges from evidence given later by the plasterer, Brett Ellis, that he did not accept that the plaster was soft. However, in order to keep the peace, he and his brother agreed to cover the outlay involved in purchasing the hardener by deducting the amount in question from their invoice to the builder. The relevant passages in the transcript refer to a figure of $2,500 and also to a figure of $1,500 but it seemed to be common ground at the hearing before me that the relevant figure is $1,500. It was agreed that JRC Contracting, being a painting firm brought in by the respondents, would harden the soft plaster in order to rectify the problem.
The October 2000 arrangements were apparently acceptable to all those with an interest in the matter at that time. It could be argued that the respondents had received a benefit of $1,500 in that the payment that they might otherwise have been obliged to make to the builder would have included that amount. On the other hand, in circumstances where there was apparently an acceptance by the builder that the plastering work was below standard, it might be said that the builder simply had no basis for charging the amount in question and thus no benefit had been conferred. I will return to this point later.
Subsequent events
It appears from a report dated 22 November 2006 written by Dr Armand Zurhaar that Australian Standard 2311 requires plastered walls to be sealed with an oil‑based sealer but this was not carried out on the subject site. The consequence was, according to the respondents, that their original complaint to the builder was never properly attended to because, even to this day, the plastering on the walls remains too soft or chalky with the result that as to that item of work the builder had not completed the contract to the required standard.
It appears from an expert opinion provided at a later stage by Dr Zurhaar, that if an oil‑based sealer had been used in the course of the painting work undertaken pursuant to the October 2000 arrangements, then this might have cured the soft plaster problem by consolidating the plaster to a greater extent. Dr Zurhaar said in his evidence before the Tribunal that 'I'm not saying it would have cured everything but it certainly would have hardened it and made it a more durable surface' (AB 281).
The appellant, as builder, disclaimed responsibility upon the basis that as a consequence of the October 2000 arrangements the painting work was ultimately performed by JRC Contracting who thereby assumed responsibility for the matter complained of.
It was against this background that on 6 October 2006 the respondents laid a complaint with the Builders Registration Board on the issue of the soft plaster. According to the respondents, the faulty work can now only be rectified by stripping out the plaster entirely and repainting the premises, and with provision for alternative accommodation for the respondents while the work is performed. This could give rise to costs and expenses in the vicinity of $100,000.
The BDT ruling
The BDT conducted hearings concerning the matters in issue. The Tribunal heard evidence from the plasterer (Mr Ellis), Dr Zurhaar, Mr Allia and the respondents. Evidence was not received from JRC Contracting as to how exactly the sealing and painting of the walls was carried out. However, having regard to the expert evidence, the Tribunal accepted that an oil‑based sealer had not been used and the problem was such that replastering was required.
In the course of the hearing, while under cross‑examination, Mr Cummings gave evidence to the effect that Mr Allia made it clear that his painter would not be available to complete the painting so Mr Cummings was left with no alternative but to engage another painter, namely, JRC Contracting. Mr Cummings denied that this amounted to acceptance of responsibility for the condition of the walls.
It might strike an observer with legal training that, in effect, the builder (the appellant) was seeking to deny liability for faulty workmanship on the basis that the October 2000 arrangements amounted to an agreement in the nature of an accord and satisfaction; that is, the builder's liability to fix the faulty work had been extinguished by the arrangements made at that time. However, to my mind, the nature of the plea was not spelt out with particularity.
In the end, in its reasons for decision, the BDT held that Mr Cummings could not be held responsible for the bad workmanship and an order should be made that the plastering be removed, that an appropriate plastering surface be restored and the decorative finishes already installed be reinstated.
The BDT found at [6] of its reasons that the plastering was done with a degree of workmanship which was not acceptable or to an appropriate standard of quality workmanship.
The builder's application to the SAT
By an application dated 29 August 2007 lodged with the State Administrative Tribunal the appellant sought leave for a review of the decision of the BDT and that the orders made by that Tribunal be dismissed.
It was said in the grounds seeking review that there was inconclusive evidence that the plaster works were defective so as to necessitate the removal and replacement of all plaster work in the residence.
Further, it was agreed prior to August 2001 by the parties that the respondents would take over the responsibility of completing the painting at the residence and that the respondents' painting contractor would apply a binding sealer so as to stabilise the plaster wall finish in areas where this was required.
It was said that by assuming this responsibility the respondents were responsible for not applying the binding sealer and as a consequence, should the plaster works be defective, then this was a result of the respondents' conduct in failing to provide the binder and refusing to accept that an oil‑based sealer initially be applied by the appellant's painter.
It was said in par 9 of the grounds of appeal that, further or alternatively, on 11 June 2002 the appellant and the respondents settled various disputes concerning the building works including disputes concerning the plaster work. I will call this the 'June 2002 settlement issue'.
I note in passing that the appellant's case in respect of the June 2002 settlement issue rests upon a letter signed by the parties dated 11 June 2002 purporting to reflect a final settlement of all past and future issues. This letter and the issue itself does not appear to have been brought before the BDT. Further, it was signed before it became apparent that the work carried out pursuant to the October 2000 arrangements had failed to cure the defective plaster work.
The SAT decision
The appellant's application for leave to review came before a non‑judicial member of the SAT, Mr P McNabb, on 18 and 19 March 2008. The SAT member noted in his reasons for decision that there was no question that the work was defective and had to be replaced but the issue related to who had responsibility for the problem. He noted also that the test for leave to appeal required the appellant to show either that the decision was wrong or that the decision was at least attended with sufficient doubt to justify the granting of leave and substantial injustice would be done by leaving the decision unreversed.
The appellant argued that the BDT had erred by not finding that when, pursuant to a private arrangement between the owners and the builder for the owners to finish off the plaster works, the owners thereupon took full responsibility for the works which, at that point, were defective.
In the end, the SAT member held that it was open for the BDT to find that the appellant, as builder, remained responsible for the faulty or unsatisfactory works; that is, the parties had agreed that the owners would finish the relevant work, not take over responsibility for the repair of defects in that work. Leave to appeal was therefore refused and the application was dismissed.
The SAT member indicated also that the Tribunal would not, in any event, grant leave in respect of complex matters of law that had never been raised or agitated in the BDT.
The SAT member's reasons for decision contain these observations concerning the alleged 'shift in responsibility':
The question before the BDT, as I have already indicated, and which was in substance agitated in this Tribunal for the purposes of deciding the leave question, was whether there was a shift or taking of responsibility by the owners sufficient to, in effect, discharge the statutory consumer protection obligations which parliament placed upon the builder. That question was, in effect, answered "no" below.
I have accepted the argument - and it may be inferred that the BDT also accepted this same argument - that when there is a proved taking of responsibility by the owner then liability is or may be subsequently reduced on the part of the builder.
Mr Brickhill here has attempted to show that full responsibility was so taken by the owners. There is no question that there were a long series of transactions, changes and discussions between the parties, and it is evident that that was happening right up to and during the hearing before the BDT; indeed the same happened in this Tribunal. Such discussions were concerned with who would take responsibility for various alleged faults. The parties are to be congratulated for continuing discussions, but in these circumstances it remains a question of what the owners actually took responsibility for. [28] - [30]
The Tribunal member went on to hold that there was sufficient expert evidence to indicate that quality workmanship required an oil‑based sealer to be applied before the point at which responsibility was accepted. However, there was no informed shifting of the primary responsibility that lay upon the appellant as builder to the respondents as owners. Accordingly, the relevant proceeding was dismissed by reason of the SAT's refusal to grant leave to review a decision of the BDT.
It is that refusal of leave which is the subject of the application brought before me pursuant to s 105 of the State Administrative Tribunal Act for leave to appeal from a decision of the State Administrative Tribunal in respect of a question of law.
It follows from s 105(2) of the Act mentioned earlier that in the case of an appeal against the Tribunal constituted by a non‑judicial member of the SAT the application for leave, and the appeal itself if leave be allowed, goes not to the Court of Appeal, but to a single judge of the Supreme Court as in the present case.
Leave to appeal
Section 105(5) of the State Administrative Tribunal Act provides that an application for leave to appeal has to be made in accordance with the rules of the Supreme Court within a prescribed time.
Order 65 of the Rules of the Supreme Court 1971 (WA) governs applications for leave to appeal to the General Division of the court and includes power for a judge to make any order that the judge considers may facilitate the appeal being conducted expeditiously.
More particularly, by O 65 r 4(2) a judge has jurisdiction to make a decision on the judge's own initiative on the basis of documents filed and without requiring the parties to attend a hearing. However, if a judge makes a decision on such a basis without requiring the parties to attend a hearing r 7 applies.
The effect of the latter rule is that if a decision is made in that manner a registrar must serve the parties with written notice of the provisional decision. By O 65 r 7(3) if a party wants a hearing, the party must file a request for a hearing within five working days after the date on which the party is served with a notice of the provisional decision (otherwise the provisional decision becomes the final decision on the matter).
By O 65r 7(5) if a party files a request for a hearing, a registrar must list the matter for hearing by the judge who made the provisional decision or, if he or she is absent, before another, and notify the parties.
Order 65 rule 8 provides that an appeal will be way of rehearing unless another written law provides otherwise.
The criteria bearing upon the grant of leave are not spelt out in the relevant statutory provision or in O 65. However, in the context of the present case, I am assisted by certain observations made by E M Heenan J in Adbooth Pty Ltd v City of Perth [2007] WASC 218.
The principles upon which a grant of leave to appeal should be given or refused are set out fully in a recent decision of the Court of Appeal in Paridis v Settlement Agents Supervisory Board [2007] WASCA 97 and in particular in the reasons for decision of Buss JA at [17] - [18] of that decision. I also draw attention to [53] - [57] which deal with what constitutes a question of law.
For leave to appeal to be granted the proposed appeal must be upon a question of law: State Administrative Tribunal Act, s 105(2). In their written submissions the applicant and the respondent both contend, in my respectful view, correctly, that leave to appeal should be granted if, in all the circumstances, it is in the interests of justice that there be a grant of leave. The Court of Appeal in Paridis v Settlement Agents Supervisory Board confirmed this principle and explained that the importance of the question of law sought to be raised, whether there was sufficient doubt about it to justify leave, and whether it would impose substantial injustice to allow any error to go uncorrected, are all considerations to be addressed when determining whether or not leave to appeal should be granted, although those factors are not rigid or exhaustive.
The respondent submitted, and I accept, that a question of mixed law and fact is not a question of law within s 105(2) of the State Administrative Tribunal Act; that a ground of appeal which asserts that a decision is against the evidence and the weight of the evidence does not raise a question of law; and, that an applicant who seeks to challenge a conclusion of the Tribunal because of deficiency of proof said to amount to an error of law must show, if it is to succeed, that there was no material before the Tribunal upon which a conclusion could properly be based. Equally clear, however, is the proposition that a finding of fact in the absence of evidence, or the drawing of an inference from known or found facts when no such inference could reasonably be drawn, are errors of law: Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321, 355 - 356, 359 - 360 (Mason CJ). [3] - [5]
Leave to appeal in the present case
In the present case the appellant's application for leave to appeal came before McKechnie J initially. His Honour proceeded to deal with the matter, in the manner allowed for by O 65 r 4(2) by making a provisional decision. This is evidenced by formal orders dated 22 May 2008. The effect of these orders was to allow to the appellant leave to appeal and to provide for an appeal book to be prepared.
Arrangements were made for these orders to be sent to the respondents and it seems that copies of the orders were sent to an address on the court file.
In the absence of any request for a hearing being received the matter was then listed for hearing before me upon the basis that leave to appeal had been granted with the result that the merits of the appeal could now be addressed.
However, it was put to me at the hearing that the provisional decision had not in fact been served upon the respondents in the manner contemplated by O 65. Their first knowledge that leave to appeal had been granted was when they received from the court a copy of the order on 11 September 2008 (immediately prior to the hearing before me).
This is verified by the affidavit of Anton Shuli sworn 12 September 2008 which refers to a change of address on the part of the respondents and the likelihood that documents had been forwarded to the wrong address.
The respondents promptly filed a request for hearing pursuant to O 65 r 7 dated 12 September 2008. They oppose any grant of leave to appeal (and thus oppose the provisional decision granting leave) and contend that, in the circumstances mentioned earlier, they should be afforded an opportunity to be heard in respect of the application for leave. This is put to me upon the basis that a request for a hearing was made within the prescribed time or otherwise, upon the basis that, in the circumstances, the time for making a request should be extended.
Having given directions concerning the provision of further materials, I reserved my decision in regard to that aspect of the matter.
In response to my directions, I then received written submissions from the appellant on the issue of leave to appeal and the affidavit of Trevor Howard Brickhill sworn 22 September 2008 in which it was said that in telephone conversations with the respondent's solicitor, Andrew Chelvathurai, on 31 July and 12 August 2008 the latter was informed that leave to appeal had been obtained. I then received the affidavit of Mr Chelvathurai sworn 25 September 2008 in which he said that at no stage was he aware that orders had been made in respect of the appeal.
Exhibited to this affidavit was a copy of the respondents' written submissions to SAT in which it was submitted, having regard to the evidence of Dr Zurhaar, that once the walls had been painted with an acrylic undercoat by the appellant's painter (contrary to Australian Standard 2311) they could not then be painted with an oil‑based sealer in order to rectify the problem. Further, the letter of 11 June 2002 was concerned solely with the finalisation of financial matters and did not purport to resolve breaches of warranty.
After giving careful consideration to the circumstances relied upon I am of the view that there has been no default on the respondents' side. To my mind, it cannot be said that the sending of the subject order mentioned earlier amounted to service. Likewise, it would not be sufficient simply to speak of orders being made in the course of a telephone call. I therefore consider that the request for a hearing made by the respondents should be treated as being made within time with the result that it is open to me to review the provisional decision previously made by McKechnie J concerning the grant of leave. Further, and in any event, I consider that time should be extended to allow for a review of the provisional decision.
I note in passing that both parties were afforded an opportunity to be heard in respect of the grant of leave issue in that counsel on both sides addressed that issue at the hearing before me (as a judge presiding in the absence of McKechnie J) and, as I have indicated, they were also afforded an opportunity to file further materials and written submissions.
It follows from my earlier review of the principles bearing upon leave to appeal that in determining whether leave is to be granted I must be satisfied that the proposed appeal is on a question of law. I must also give consideration to the appellant's prospects upon appeal and as to whether there is sufficient doubt about the question of law contended for to justify a grant of leave; that is, whether it would impose substantial injustice to allow the supposed error to go uncorrected. Accordingly, I must now turn to the proposed grounds of appeal.
I note in passing that by s 77 of the State Administrative Appeals Act the SAT is requested to give reasons for a final decision and they are to include the Tribunal's findings on material questions of fact.
The proposed grounds of appeal
The appellant's notice of appeal indicates that the appellant appeals to the Supreme Court (General Division) against a decision which is described in this way:
The Appellant was refused leave to have the State Administrative Tribunal review:
(a)the decision of the Building Disputes Tribunal given on 19 March 2007 as reflected in order to remedy no. 40/2007 - 08 dated 1 August 2007; and
(b)the decision of the Building Disputes Tribunal on 20 December 2007.
Put shortly, when the two rulings of the BDT are considered collectively, the essence of the orders is that the appellant was refused leave to have the SAT review orders made by the BDT whereby the appellant was to remove and remedy the soft plaster (ordered to remedy 40/2007 - 08) with orders also being made for the appellant to pay the respondents' accommodations costs whilst the rectification works were being carried out.
The notice of appeal contains six grounds of appeal. The first ground of appeal is expressed in these terms:
1.The learned Member erred in law in failing to find that:
(a)the Building Disputes Tribunal erred in fact or in law; or
(b)there was not sufficient doubt that the Building Disputes Tribunal erred in fact or in law,
in failing to find that the claim before the Building Disputes Tribunal had been previously compromised between the Applicant and the Respondents, and accordingly the learned Member should had [sic] granted the Applicant leave to review the decision of the Building Disputes Tribunal Order to Remedy No. 40/2007-08 dated 1 August 2007 and the decision of the Building Disputes Tribunal on 20 December 2007.
Particulars
(i)The Respondents' painter informed the Respondents that the plaster was soft.
(ii)The Respondent's painter identified that to rectify the soft plaster a hardener (an oil based sealer) would have to be applied over the plaster before it was painted and said that he (the Respondent's painter) would apply the hardener.
(iii)The Applicant and the Respondents reached an agreement where a credit of $1500 was provided to the Respondents to cover the cost for the Respondents' painter to apply the hardener so as to remedy the soft plaster.
I will return to the remaining grounds of appeal in due course. However, suffice it to say, that in various ways these grounds reflect a constant theme that the appellant was relieved from liability of the kind contended for by the respondents as a consequence of the October 2000 arrangements and the fact that the proposed remedial work which was supposed to involve the application of an oil‑based sealer or hardener over the soft plaster was performed by a contractor engaged not by the appellant but by the respondents. It is said that the respondents ought to have mitigated any loss arising from the original faulty plaster work and it would be unjust if effect were given to the BDT's orders whereby the appellant could be required to perform work which might cost in the vicinity of $100,000 in order to rectify a fault which could have been cured by the application of an oil‑based sealer estimated at the time to be worth $1,500.
The appellant's position was presented in summary form at par 14 and par 15 of its written submissions which read as follows:
14.For the sake of this Appeal, the Appellant acknowledges that it was open to the Building Disputes Tribunal to find that the plaster was soft at the time the owner's painter, Tony Umfaher, handed over the sealing and paint works to the Respondents' independent contractor, JRC Contracting. The issue is whether the evidence before the BDT was that the rectification works to harden the soft plaster was agreed to be undertaken by JRC Contracting, alternatively, whether the respondents were estopped from bringing their claim in the BDT or had failed to mitigate their loss.
15.It is submitted the SAT failed to apply the law to the facts presented to the BDT and failed to find:
15.1there had been a prior settlement by accord and satisfaction between the Appellant and the Respondents concerning the rectification works to harden the plaster;
15.2the Respondents were estopped from bringing the claim in the BDT; and
15.3the Respondents failed to mitigate their loss and damage.
Respondents' notice of contention
The respondents filed a notice of contention dated 4 September 2008 which raises a number of preliminary issues. First, it is said in ground 1 that by reason of the refusal of the SAT to grant leave to the appellant to appeal to the Tribunal, the Supreme Court has no jurisdiction pursuant to s 105 of the State Administrative Tribunal Act to determine this application for leave and the purported application to appeal to the Supreme Court is incompetent.
Second, it is said in ground 2 of the notice of contention that even if it be open to the Supreme Court to grant leave to appeal pursuant to s 105 of the Act, the application for leave to appeal is nevertheless beyond jurisdiction because each of the grounds relied on by the appellant cannot be regarded as raising a question of law.
As to the respondents' first contention, it was said that s 105 of the Act allows a party to a proceeding to appeal from a 'decision' of the SAT in the proceeding provided that the Supreme Court gives leave to appeal. The section does not address expressly a refusal by the SAT to grant leave to an appeal to be heard by it. Further, case law suggests that such a determination is not a decision of a kind contemplated by provisions such as s 105 of the Act. A decision under that provision would apply to a determination made in relation to the substantive matter in dispute but not to a procedural order where leave for an application for review to be heard by the SAT itself has been refused.
Previously decided cases such as Lane v Esdaile [1891] AC 210 per Lord Halsbury LC at 212 have been taken to indicate that a provision requiring the leave of a court to appeal will by necessary intendment exclude an appeal against the grant or refusal of leave, notwithstanding the general language of a statutory right of appeal against decisions of that court.
However, in dealing with this issue, I must take account of what was said recently by the High Court in Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue of the State of Victoria (2001) 207 CLR 72. Gaudron, Gummow, Hayne and Callinan JJ said at 80 that even if a general rule can be distilled from what was said in Lane v Esdaile, any such general rule must yield to the proper construction of the provisions which govern appeals in the particular case. In the end, what emerges from Lane v Esdaile may be little, if anything, more than the result of the particular application of the well‑known principle of statutory interpretation that constructions leading to absurd results are to be avoided, if possible.
By s3 of the State Administrative Tribunal Act the term 'decision' of the SAT is defined to include 'an order, direction, or determination of the Tribunal'. I consider that a broadly expressed provision of this kind is sufficient to embrace orders made by the SAT refusing leave to have the SAT review the determinations made by the BDT because the formal expression of the SAT's rulings in the present case have to be characterised as an order of that Tribunal and therefore fall within the definition of the term 'decision' of the Tribunal.
Accordingly, I am not persuaded that the Supreme Court lacks jurisdiction to detail with the appellant's notice of appeal in the present matter upon the basis proposed in the respondents' first ground of contention.
The respondents' second ground of contention proceeds from the premise that an appeal can only be brought to the Supreme Court on a question of law. Counsel for the respondents recognised that as a matter of form each of the appellant's seven grounds of appeal commenced with an assertion that the SAT member 'erred in law' in failing to make certain findings, but it was put to me that this was a matter of form only. In reality, the findings complained of concern matters of fact and matters of credibility which could not be characterised as giving rise to a question of law.
However, in dealing with this issue I must take account of the observations made by EM Heenan J in Adbooth's case that a finding of fact in the absence of evidence, or the drawing of an inference from known or found facts when no such inference could reasonably be drawn can be characterised as errors of law.
When I apply these principles to the appellant's first ground of appeal, I am of the view that the matter essentially in issue must be characterised as a question of law. The issue reflected in the first ground is whether the respondents' claim against the appellant in respect of faulty plaster work was extinguished by a compromise arrived at between the parties as a result of which it was not open to the respondents to pursue any further claim against the appellant. This central issue required that findings be made as to what exchanges took place between the parties and as to what was done. However, at the heart of the dispute lay an issue of law as to whether a valid compromise of the claim had been effected by way of an accord and satisfaction or otherwise. This central issue, as I have indicated, was reflected in the various grounds of appeal.
It follows from these observations that, in my view, a question of law was raised by the first ground of appeal, and the same can be said of the further grounds of appeal. Accordingly, notwithstanding the objections to jurisdiction raised by the respondents' second contention, I do consider that the proposed appeal concerns questions of law and the application for leave to appeal, or the appeal itself, cannot be ruled out on that ground alone.
General observations
I must now turn to the question of whether the SAT member erred in law in the manner attributed to him by the various grounds of appeal. Again, it will be convenient to begin by looking initially at the first ground of appeal and making some general observations concerning the issues raised by that ground as these observations will assist me to resolve the issues raised by the following grounds of appeal.
Put shortly, it is said in the first ground of appeal that the SAT member erred in law, as the BDT had erred, in failing to find that the respondents' claim had been compromised in that the appellant and respondents allegedly reached an agreement whereby a credit of $1,500 was provided to the respondents to cover the cost for the respondents' painter to apply the hardener so as to remedy the soft plaster.
I noted in earlier discussion that in the appellant's submissions it was said, in effect, that there had been a compromise or prior settlement by accord and satisfaction between the appellant and the respondents concerning the rectification works to harden the plaster.
It emerges from my earlier review of the relevant facts and matters that the October 2000 arrangements were made with a view to attempting to rectify an acknowledged lack of quality in the plaster work and that those arrangements involved a financial concession by the appellant and the undertaking of work by a painting contractor engaged by the respondents. However, in the end, the appellant cannot point to any document or compelling piece of evidence which establishes that anything discussed or done at that time was to be regarded as being in satisfaction of the respondents' prospective claim against the builder for faulty workmanship. The parties, and the appellant in particular, may well have hoped, or even imagined, that the work done by JRC Contracting, would be sufficient to cure the problem, but that is not the same as a promissory obligation being entered into for valuable consideration by the respondents to compromise their claim.
The conclusion that no compromise had been arrived at sufficient to extinguish the respondents' claim or, to use the language employed in the earlier hearings, to shift responsibility from the appellant to the respondents is reflected explicitly in the reasoning of the SAT member and, by implication, in the reasoning of the BDT. To my mind, this conclusion was consistent with the evidence brought before the BDT by the parties and thus it cannot be said that the BDT erred in failing to find that the claim had previously been compromised.
I note in passing that it was put to Mr Cummings by the cross‑examiner at the hearing before the BDT that once he had engaged the painter to do the painting then the rectification became his responsibility. In reply, Mr Cummings made it clear that although the painting was done by his contractor he was 'not accepting responsibility for the condition of the walls'. The respondents were forced to engage the painter because the other painter was no longer available and it seemed that otherwise the remedial work would not be done at all.
In the absence of any clear agreement or understanding that the October 2000 arrangements were to effect a compromise of the dispute between the parties it was open to the BDT to conclude that the appellant, as builder, was the party at risk if the painting work was not done in a way, including the use of an appropriate sealer, that would be sufficient to rectify the problem of the soft plaster. Further, and in any event, I am not persuaded that the appellant provided anything of value sufficient to support a compromise agreement. The concession concerning the $1,500 was illusory because that was not something he had been charged for by the plasterer. He could not be said to have dropped his price in order to settle the dispute in circumstances where there was an acknowledged fault and an acceptance that a certain portion of the work could not be charged for.
As to the June 2002 settlement issue it is material to note that this matter does not appear to have been pressed before the BDT and was not addressed in its reasons for decision. It therefore cannot be said that an error of law has been demonstrated in respect of this matter. Further, and in any event, the 11 June letter in its terms purports to settle only the financial payments to be made 'but not to accept liability'. It was not directed to and cannot be regarded as effecting a compromise of liability issues.
In my view, it follows from these observations that the appellant has no real prospect of success in respect of the first ground of appeal and nor can it be said that an error has been detected which would impose substantial injustice if it go uncorrected. I therefore consider that leave to appeal upon this ground should be refused. Even if leave to appeal were granted, for the reasons I have just provided, I consider that the appeal on this ground should be dismissed.
Further grounds of appeal
My general observations assist me in dealing with the remaining grounds of appeal.
The second ground of appeal raises essentially the same issues, albeit using the language of estoppel. I find it unnecessary to resolve a latent jurisdictional issue as to whether the BDT or the SAT member was empowered to deal with equitable issues of this kind. To my mind, it follows from my general observations that no plea of estoppel could be effectively raised against the respondents in circumstances where no agreement had been reached or action taken by way of compromise which could have led the appellant to assume that his liability to rectify the defective work had been extinguished or that nothing further would be required of him.
As to the third ground of appeal, it was said that the previous adjudicators erred in failing to find that the damage suffered by the respondents was a result of the respondents' independent contractor failing to apply an oil‑based sealer to harden the plaster.
It follows from my general observations that there was no assumption of responsibility by the respondents in that regard. Moreover, the evidence does not support such a conclusion.
As the SAT member said, the BDT found that the respondents were presented with a plastering job that was not up to an appropriate standard and there was no acceptable evidence that the owners were advised that a hardener could have been applied or that a sealer of an appropriate kind would have remedied the situation. It was Dr Zurhaar's evidence that an oil‑based sealer would have made a big difference but he was not prepared to say that it would have cured everything.
It appears from the transcript of the hearing before the BDT that Dr Zurhaar was employed originally by the appellant to report on the outside render of the house. However, at the hearing he was called as a witness by the male respondent and gave evidence concerning the external and internal walls.
As to the internal walls Dr Zurhaar said that the plaster set coat throughout the house was one‑third gypsum hard wall plaster and two‑thirds lime although the common practice for plasterers within the industry was to produce a 50/50 mix. He said that the plasterer should have used the 50/50 mix because an over abundance of lime meant that the plaster was softer than it ought to have been for a normal family house, although other factors may have contributed to the defect. It was clear that a water‑based sealer had been applied while an oil‑based sealer would have vastly improved the finish. The water‑based sealer 'adulterated' the surface, as did the subsequently applied paint, with the result that 'it's not a patchable system'. The plaster would have to be taken off.
To my mind, it follows from all of this that the fault lay with the work originally done by the plasterer and original painter, being sub‑contractors employed by the appellant, with the result that the responsibility to ensure that the work was performed in a workmanlike way rested with the appellant as builder. When differences arose between the parties as to the standard of work, and as to who had suggested that a water‑based sealer had been used, and as to how the problem with the soft plasterwork was to be fixed, it would have indeed been theoretically possible for the appellant as builder to have compromised the dispute upon the basis that the responsibility for rectification was transferred to the respondents in exchange for financial concessions as to price. However, it follows from my general observations that no such agreement was in fact made. The consequence of a degree of ambiguity as to the nature of the October arrangements was that responsibility (and thus potential liability) remained with the appellant as builder. The expert evidence of Dr Zurhaar is entirely consistent with this conclusion.
As to ground 4 it is contended that there was an error of law in that the BDT had said that the respondent's painter endeavoured to do remedial work. I noted in earlier discussion that another painter, JRC Contracting, was engaged by the respondents in an attempt to remedy the situation. However, it follows from my general observations that the appellant was the party that remained at risk if the October 2000 arrangements were not sufficient to rectify the problem.
As to the fifth ground of appeal it is said that the Tribunals erred in failing to find that the respondents had mitigated their damages. However, again, it follows from my general observations that there was not an acceptance of responsibility by the respondents.
As to the sixth ground of appeal, in my view, it cannot not be said that the damages claimed by the respondents were too remote and not within the reasonable contemplation of the parties in circumstances where damage of the kind under discussion in the course of the October 2000 arrangements eventuated. Again, the expert evidence of Dr Zurhaar is consistent with this conclusion.
As to the seventh ground of appeal, the appellant cannot be said to have suffered a substantial injustice if damage eventuates for which the appellant is properly held to have a continuing liability.
Summary
In summary, I consider that the respondents were at liberty to request a hearing in respect of the provisional decision concerning leave to appeal. I consider that the Supreme Court in the circumstances of this case, has jurisdiction to determine whether leave to appeal should be granted. I am of the view that the proposed grounds of appeal relied upon by the appellant give rise to questions of law with a result that the Supreme Court is required to determine whether leave to appeal should be granted. However, in the end, I am not persuaded on any of the grounds of appeal that errors of law were made of the kind contended for. It follows from this that leave to appeal should be refused as I do not consider that it is in the interests of justice that leave be granted. The provisional order for leave to appeal made by Justice McKechnie on 22 May 2008 will therefore be set aside.
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