Metro Windows Pty Ltd v Commissioner of Fair Trading (No 2)

[2012] NSWADT 232

Administrative Decisions Tribunal

New South Wales

Medium Neutral Citation:

Metro Windows Pty Ltd & Ors v Commissioner of Fair Trading (No 2) [2012] NSWADT 232

Hearing dates:

5 and 6 October 2011 and 18 April 2012

Decision date:

08 November 2012

Jurisdiction:

General Division

Before:

P H Molony, Judicial Member

Decision:

1. Set aside the decision under review.

2. Within 28 days of these reasons the Applicants may make an application for costs and may file and serve submissions on costs (not to exceed 4000 words).

3. Within a further 28 days the Respondent shall file and serve submissions in reply (not to exceed 4000 words).

4. The issue of costs will then be determined on the papers.

Catchwords:

Home Building - residential building work - deposits - due diligence - reasonable time

Legislation Cited:

Home Building Act 1989
Administrative Decisions Tribunal Act 1997
Home Building Regulation 2004

Cases Cited:

AIM Partnership v Rathchime [2010] NSWSC 860
Collings Homes v Head & Ors [2002] NSWSC 1219
Commissioner of Fair Trading v Pobjie Agencies Ply Limited & Ors [2005] NSWSC 13
Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 142
Grygiel v Baine & Ors [2005] NSWCA 218
Commissioner for Fair Trading v Cruz [2009] NSWADTAP 51
Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409
Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303
Metro Windows Pty Ltd and Ors v Commissioner of Fair Trading [2009] NSWADT 60
Provincial Houses v Doyle & Ors [2004] NSWSC 624
Preston v Commissioner for Fair Trading [2011] NSWCA 40
Woolfe v Alexander Sussman t/as A Sussman Construction Consulting Services & Anor [2001] NSWSC 702

Category:

Principal judgment

Parties:

Metro Windows Pty Ltd (First Applicant)
Stephen Preston (Second Applicant)
Adriana Cruz (Third Applicant)
Commissioner of Fair Trading (Respondent)

Representation:

First Applicant - Ms Cruz
Second Applicant - in person
Third Applicant - in person
Respondent - W Maynard, Legal Officer

File Number(s):

083258

REASONS FOR DECISION

Introduction

1. Metro Windows Pty Ltd holds a licence to do residential building work under the Home Building Act 1989 (the HB Act) in the categories "Joinery (door and window fixing only), minor trade work (skylights) and minor maintenance (minor building maintenance, non-structural, contract less than $5,000). It operates a business that supplies and installs windows and glass doors. Ms Cruz is a director of that company. Stephen Preston, who holds a supervisors certificate, was employed by Metro Windows and was at all relevant times it's nominated supervisor.

1. On 30 June 2008, having completed a show cause process, in which each of the Applicants made submissions, the Commissioner decided to take disciplinary action under the HB Act against each of the applicants. This related to residential building work undertaken by Metro Windows at 55 Gould Street, Bondi Beach.

1. The Commissioner found that Metro Windows had:

• Failed to do that work with due diligence and within a reasonable time and had thereby breach the statutory warranty implied by s 18B(d) of the HB Act.
• Demanded and received a payment of $13,970 on account of the work before it commenced, and thereby breached s 8(1)(a) of the HB Act.
• These breaches amounted to improper conduct under s 51(1) and constituted grounds for taking disciplinary action against Metro Windows under s 56(c) of the Act.

As a consequence of those findings the Commissioner decided to take disciplinary action against Metro Windows and required it to pay, as a penalty, $1,500.00.

1. At the same time the Commissioner found Mr Preston guilty of improper conduct within the meaning of s 53(1)(b), because Metro Windows had breached a statutory warranty while he was its nominated supervisor. The Commissioner decided to reprimand him under s 62 of the HB Act.

1. The Commissioner also found Ms Cruz guilty of improper conduct in accordance with s 53, on the basis that she was an officer of a corporation (Metro Windows) that is the holder of a contractor licence and had breached a statutory warranty. She too was reprimanded under s 62 of the HB Act.

1. The applicants requested that those decisions be internally reviewed.

1. On 29 August 2008 Metro Windows, Mr Preston and Ms Cruz filed an application in this Tribunal to review the Commissioner's decision. Since then the proceedings have followed a long and tortuous path, which it is not necessary to set out in any detail. It is sufficient to note that:

• The Tribunal extended time for the Applicants to make their application for review given delays in completion of the internal review (of which only Metro Windows's was provided).
• The Commissioner raised a jurisdictional issue going to the Tribunal's power to hear and the determine reviews of the decisions with respect to Mr Preston and Ms Cruz, on the basis that the Tribunal did not have power to review a decision to reprimand or caution.
• On 23 March 2009 I found that the Tribunal did have jurisdiction to hear and determine the applications for review of the Commissioner's decisions to reprimand Ms Preston and Ms Cruz: see Metro Windows Pty Ltd and Ors v Commissioner of Fair Trading [2009] NSWADT 60.
• The Commissioner then successfully appealed that decision to an Appeal Panel of this Tribunal, which reached the contrary conclusion: see Commissioner for Fair Trading v Cruz [2009] NSWADTAP 51.
• Mr Preston then appealed the decision of the Appeal Panel to the Court of Appeal. The Court of Appeal set aside the decision of the Appeal Panel and found that the Tribunal did have jurisdiction to review the decision by the Commissioner to issue a reprimand. It remitted the application to the Tribunal for hearing: see Preston v Commissioner for Fair Trading [2011] NSWCA 40.

1. These reasons relate to the hearing of the substantive application on remittal.

Material and evidence considered by the Tribunal

1. In considering this matter I have had regard to the following material filed by the parties.

Filed by the Applicants

• Three original decisions dated 20 June 2008
• Application for review filed 29 August 2008 with attachments.
• The Commissioner's internal review decision with respect to Metro Windows dated 14 October 2008.
• Applicants' submissions filed 14 September 2011. These were a mixture of evidence and submissions, which it was agreed would be treated, when applicable, as the evidence of Ms Cruz and Mr Preston.
• Applicants' bundle of documents (1 folders) totalling 411 pages, of which 75 are their submissions referred to above.
• Applicants' supplementary submissions filed 20 March 2012
• Applicants bundle of authorities (1 folder).
• Applicants list of authorities (1 folder).

• Filed by the Commissioner
• The Commissioner's s 58 documents (2 volumes)
• Affidavit of Garry Christy, Building Inspector, NSW Fair Trading.
• Affidavit of Stanley Hurwitz, the owner of one of the units at 55 Gould Street, Bondi Beach.
• Respondent's submissions dated 14 September 2011.
• Respondent's submissions in reply to the Applicants' supplementary submissions dated 29 March 2012.

1. During the course of the hearing I heard sworn evidence from Ms Christy, Mr Hurwitz, Mr Preston and Ms Cruz, all of whom were cross-examined.

1. Section 63 of the Administrative Decision Tribunal Act 1997 (the ADTA) says that in determining an application for review the Tribunal is to make the correct and preferable decision having regard to the material before it, and any applicable written or unwritten law. It is well established that in considering an application for review the Tribunal is not constrained to have regard only to the material that was before the Commissioner, but may have regard to any relevant material before it at the time of the review: Drake v Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409.

Issues

1. The issues for consideration in this case are:

• Whether Metro Windows demanded and received a payment of $13,970 on account of the work before it commenced, and thereby breached s 8 of the HB Act.
• Whether Metro Windows failed to do that work with due diligence and within a reasonable time and had thereby breach the statutory warranty implied by s 18B(d) of the HB Act.
• If Metro Windows breached the statutory warranty implied by s 18B(d), whether Ms Cruz and Mr Preston are guilty of improper conduct as a result.
• If breaches are found, appropriate penalties.

Section 8 - the applicable law

1. Section 8 of the Home Building Act 1989 relevantly provides:

"(1) A person must not:

(a) demand or receive a payment on account before work is commenced under a contract to do residential building work, or

(b) enter into a contract under which the person is entitled to demand or receive a payment on account before residential building work is commenced, if the amount of the payment is prohibited by this section.

...

(2) The amount of the payment is prohibited if:

(a) the contract price is more than $20,000 and the payment is more than 5% of the contract price (or, where another percentage is prescribed by the regulations in respect of a particular kind of work, the percentage so prescribed), or

(b) the contract price is $20,000 or less and the payment is more than 10% of the contract price (or, where another percentage is prescribed by the regulations in respect of a particular kind of work, the percentage so prescribed).

(3) The regulations may make provision concerning how a contract price is to be determined for the purposes of this section."

1. 'Contract price" and "residential building work' are defined in s.3 of the Act:

"contract price means the total amount payable under a contract to do work or to supply a kit home and includes:

(a) the amount that the person contracting to do the work or to supply a kit home is to receive and retain under the contract, and

(b) the amount that the person is to receive under the contract for payment to any other person, and

(c) the amount any third person is to receive (or it is reasonably estimated will receive) directly from the person for whom the work is done or to whom the kit home is supplied in relation to the work done, or the kit home supplied, under the contract:

(i) for conveying to the building site or connecting or installing services such as gas, electricity, telephone, water and sewerage, or

(ii) for the issue of development or building consents.

...

residential building work means any work involved in, or involved in co-ordinating or supervising any work involved in:

(a) the construction of a dwelling, or

(b) the making of alterations or additions to a dwelling, or

(c) the repairing, renovation, decoration or protective treatment of a dwelling.

It includes work declared by the regulations to be roof plumbing work or specialist work done in connection with a dwelling and work concerned in installing a prescribed fixture or apparatus in a dwelling (or in adding to, altering or repairing any such installation).

It does not include work that is declared by the regulations to be excluded from this definition."

1. The meaning of the term "residential building work," and of its impact on the interpretation of s 8, and on the definition of the term "building claim" in s 48A (formerly s 84) of the HB Act has been the subject of considerable judicial consideration. This line of authority is important because it bears directly on whether Metro Windows breached s 8(1) by requiring and or receiving the check measurement payment. If the work it undertook before that payment was required or made is residential building work, then s 8 will not have been no breached. This is so because, in that event, Metro Windows will not have required or received an amount exceeding 5% of the contract price, before commencing to do residential building work under the contract.

1. In Woolfe v Alexander Sussman t/as A Sussman Construction Consulting Services & Anor [2001] NSWSC 702 considered the then Fair Trading Tribunal's jurisdiction to entertain, as a building claim under the then s 84 of the HB Act, a claim for the payment of money due to Mr Sussman for acting as "project consultant and supervisor" with respect to the potential development of a residential property. Section 84(1)(a) defined building claim as -

"s 84(1) In this Part:

building claim means a claim for:

(a) the payment of a specified sum of money, or

...

that arises from a supply of building goods or services, whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim."

1. Building goods and services were also defined -

building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services:

(a) supplied by the person who contracts to do that work, or

(b) supplied in such circumstances as may be prescribed to the person who contracts to do that work

1. McLellan J described the work done by Mr Sussman as follows -

"2 Apparently the plaintiff had been in discussion with a plumber and it was contemplated that an arrangement might be entered into between her and the plumber to effect the development. The first defendant was brought in to assess the feasibility of such a project and to give other advice. That project did not proceed but the first defendant continued to provide services by way of valuations, feasibilities, potential cash flows, inquiries as to finance and quotes from project builders. Generally, he was called upon, and did advise, in relation to the "best use" of the property. I have summarised the elements of the service which he provided from the description which he gave me in court today."

1. Having referred to the definition of residential building work His Honour said -

18 In my opinion, residential building work is, as the definition makes plain, confined to building work in pursuance of the physical construction or alteration of a dwelling. It does not extend to goods or services provided in the course of considering the feasibility of the re-development of a property or the means by which utilising suitable valuations and cash flow projections the re-development of a property may be financed.

19 In the present case I am satisfied that the work performed by the first defendant was not relevantly residential building work and accordingly the claim brought in the Tribunal was not one which could be determined by it. Section 89B being confined in the manner I have indicated, the Tribunal erred in holding that it had jurisdiction to determine the claim. It follows that the decision with respect to the original claim and the re-hearing made by the Tribunal must be quashed. That will leave the first defendant in the position where, if he elects to take such a course, he can bring proceedings in the Civil Claims jurisdiction.

1. That decision was followed in Collings Homes v Head & Ors [2002] NSWSC 1219. In that case Collings Homes designed homes that could be modified to meet individual requirements. As part of its service it provided consumers with costings, obtained development approval, introduced a builder willing to build under a fixed price contract, and procured the execution of a contract. It entered into a contract with the defendants and performed a substantial part of its work, when the defendants decided not to go ahead. They made a building claim to the Fair Trading Tribunal for the return of $20,000 paid to Collings Homes. The issue before Master Malpass was whether the Tribunal had jurisdiction to hear that claim as a building claim. He explained that -

23 The jurisdiction of the Tribunal to entertain a building claim is conferred by s 89B of the Act. The definition of a building claim is to be found in s 84. The terms of the definition require recourse to s 3.

24 For present purposes, it suffices to merely refer to those provisions contained in the definitions which are relevant to this matter. A "building claim" is any one of the remedies specified in (a) to (e) of subsection (1) of s 84 that arises from a supply of building goods or services whether under a contract or not. The section defines "building goods or services" as goods or services supplied for or in connection with the carrying out of residential building work supplied by the person who contracts to do that work. Section 3 defines "residential building work" as any work involved in or involved in co-ordinating or supervising any work involved in the construction of a dwelling.

1. Having referred to the decision in Woolfe the Master concluded -

27 There are inter alia two reasons why the application is not a "building claim". Firstly, the services to be provided by the plaintiff did not fall within the definition of "residential building work". Secondly, there was then no "residential building work" supplied by the person who had contracted to do that work.

28 To satisfy the definition of "residential building work", the work must be involved in or involved in co-ordinating or supervising any work involved in the construction of a dwelling.

29 In this case, the building of the dwelling was to be done by a licensed builder and it was to be done pursuant to a home building contract that had been executed by him. As a consequence of the conduct of the defendants, no building contract came into being and no building of a dwelling took place involving only work done by the plaintiff or that builder.

30 The relevant statutory provisions need to be construed having regard to their context, with regard also being had to the purpose of the legislation.

31 The Act is expressed to be a statute inter alia "to make provision concerning the residential building industry". The provisions appear in Part 5 (which deals with appeals and applications to the Tribunal).

32 The dictionary meaning attributed to "construction" connotes inter alia building and the way in which something is put together.

33 When regard is had to the literal meaning and matters of context and purpose I consider that it was intended that "construction" be seen as the building process itself.

34 Accordingly, I reached the view, that the services which were to be provided by the plaintiff did not fall within the definition of "residential building work". They are not work involved in the construction of a dwelling. They are not work involved in co-ordinating or supervising any work involved in the construction of a dwelling.

35 The services may be seen as work that preceded or was preliminary to work involved in the construction of a dwelling. There was no co-ordination or supervision of any such latter work required from the plaintiff.

1. In Provincial Houses v Doyle & Ors [2004] NSWSC 624 Wood CJ at CL considered the CTTT's jurisdiction to hear a building claim that the Tribunal had found arose from an "agreement reached by the parties [that] covered the entire process involved in the construction of a new dwelling, ranging from the design and approval process to the construction of the dwelling and as such came within the expansive definition of "residential building work" as defined under the HBA. At that time the definition of building claim and of building goods and services was to be found in s 48A, but in the same form as they had formerly appeared in s 81.

1. The agreement was terminated after the builder allegedly failed "to prepare the plans and specifications in a competent manner, or within a reasonable time, or to do all things necessary to have the plans approved by the Local Authority within a reasonable time." In the Tribunal the Doyle's successfully claimed loss and damage.

1. The CTTT distinguished Collings Homes on the basis that the present case involved the conduction of a dwelling and co-ordinating and supervising that work. Wood CJ said -

54 It is clear from the foregoing that while some of the relief which was given comprised damages assessed by reference to the additional costs of constructing a dwelling, the claim itself arose from the asserted inadequate and untimely supply of design and approval services. Those services were preparatory to the supply of any work that would have been involved in the construction of the dwelling, or in the co-ordination or supervision of any work involved in its construction.

55 It was the dissatisfaction of the Doyles, not with any construction work, but with the delays in preparing adequate plans and complying with Council requests, and in securing the necessary development approval, that led to the contract being terminated, and to the claims for recoupment of the moneys paid and for damages.

56 The critical question which arises in relation to the Tribunal's jurisdiction is whether the services which were supplied, and in respect of which the claim arose, were services that fell within the meaning of "building services" as defined by s 84(1) of the HBA.

57 In my view they did not fall within the meaning of that expression, which is defined to mean "services supplied for or in connection with the carrying out of residential building work". In this regard the authorities previously mentioned have, in my view correctly, confined the services that fall within that definition to those that relate to the carrying out of physical construction work. Preparatory design and approval work has been excluded, even thought its performance was a necessary precursor to a potential home owner having a dwelling constructed.

58 The present case is not on all fours with Collings Homes or Woolfe, however the interpretation of the legislation there adopted seems to me to bring about the same result. That follows from the circumstance that it is the categorisation of the claim, which must be one that "arises from a supply of building...services" that determines jurisdiction.

59 While it may be relevant to refer to any contractual arrangement between the parties to determine what services were to be supplied, the mere fact that the contract includes a commitment to construct a dwelling will not, of itself, be enough to attract jurisdiction. As I have observed, the touchstone for jurisdiction depends upon the services supplied from which the claim arises.

60 I do not consider that the words "supplied for or in connection with" the carrying out of residential building work, can properly be regarded as extending jurisdiction to claims that arise in relation to services that were supplied in relation to feasibility, design, procurement of approvals, and similar preliminary work, prior to the commencement of building. The legislative intent, in my view, was to regulate the building or construction phase and those services which are directly supplied for or in connection with its performance.

61 In those circumstances, I find that there was an error of law in that the Tribunal did not have jurisdiction.

1. Commissioner of Fair Trading v Pobjie Agencies Ply Limited & Ors [2005] NSWSC 13 was an action by the Commissioner under s 65 of the Fair Trading Act seeking, among other things, orders essentially prohibiting Pobjie from trading. Among the matters upon which the Commissioner relied was that Pobjie, "took advance payments (being deposits 'due' under execution of contract and payments 'due' upon 'check measurement') of a size in breach of s. 8 of the Home Building Act 1989."

1. Sully J discussed the form of the pre-2004 contracts used by Pobjie Agencies. He observed that the contracts uniformly provided for payment of a deposit followed by a second payment to be made on 'check measure.' He noted evidence that the "end result of the check measure process was effectively a bill of quantities and a set of drawings and measurements which were capable of being converted into something buildable" (at [123]). The Department argued that there was evidence that payment of the deposit and check measure payments was received before the residential building work commenced.

1. His Honour referred to the decision of Provincial House and continued (the emphasis is mine):

"128 I respectfully agree with that analysis; but for present purposes it is necessary to look more closely at the way in which section 8, rather than section 3, ought to be interpreted.

129 That question is answered correctly, in my opinion, by reading section 8(1) as though it read thus:

"(1) A person must not:

(a) demand or receive a payment on account of residential building work before that work is commenced under a contract to do that work; or

(b) enter into a contract under which the person is entitled to demand or receive a payment on account of residential building work before that work is commenced,

if the amount of the payment is prohibited by this section."

130 Such a construction seems to me best to accord with the legislative intent as discerned by Wood CJ at CL. I take the legislative intent to have been to catch by sub-section 1(a) a payment demanded or received independently of some specific contractual entitlement to the payment; and to catch by sub-section 1(b) a payment demanded or received pursuant to some specific contractual entitlement to the payment.

131 If that approach be correct, then any breach in each of the present eighteen cases would be a contravention of sub-section (1)(b). That raises the question: Is each of the "On Check Measure" payments a payment on account of residential building work? It seems to me that while ever the reasoning of Wood CJ at CL stands as good law, the answer must be: no.

1. Grygiel v Baine & Ors [2005] NSWCA 218 concerned the CTTT's jurisdiction to entertain, as a building claim, a claim against his client who was a solicitor, concerning advice given relating to the requirements for Home Owners Warranty insurance with respect to the construction of a dwelling. The CTTT had found it did not have jurisdiction referring to Woolfe and Provincial Homes.

1. Basten JA, with whom Mason P concurred, first considered the nature of the claim against the solicitor.

43 In order to understand the nature of the issues before the Tribunal, it is necessary to note the terms of the amended statement of claim which was sought to be filed in so far as it relates to the claim for breach of duty in giving legal advice. In that pleading, Mr Baine, the solicitor and joint homeowner, was identified as the first respondent and his firm was identified as the fifth respondents. The additional pleadings asserted that the first respondent was a legal practitioner and a partner of the fifth respondents (although he was also included as a fifth respondent). It was then alleged that there was a contract of retainer between the builder and Mr Baine and the firm for the provision of legal advice to the builder in relation to obligations under the Home Building Act in relation to the construction work. That retainer was said to have arisen in September 2001, when agreement was reached that building work would be done on a 'do and charge' basis. A further contract of retainer was alleged to have arisen in December 2001 in relation to homeowner's warranty insurance. Both a contractual and a common law obligation to exercise due care and skill in providing legal advice, and a breach of those obligations, were further alleged. The builder claimed an entitlement "to be indemnified" by the solicitor and the law firm for any loss suffered as a result of the negligent advice.

1. His Honour then referred to a number of the authorities discussed above, and to definition of building claim, building goods and services, and residential building work in the HB Act. He continued -

57 It is not necessary to determine whether, in relation to the first limb of the definition, services can be supplied "for or in connection with" the carrying out of residential building work, for the purposes of the definition of "building goods or services", where no residential building is in fact carried out. On one view, the definition of "residential building work" is not limited to activities, such as laying foundations and painting a building, on site, but extends to work of a preparatory nature. Alternatively, preparatory work could be said to have a sufficient connection with the carrying out of building work because its purpose was to give rise to residential building work and it had a sufficient causal nexus with such work: see generally, Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 47-48 (Brennan, Deane and Gaudron JJ). Accordingly, it is at least arguable that project management arrangements, of the kind address in both Collings Homes cases, would fall within the definition of "building claim". Were that not the case, distinctions would need to be drawn which might have an arbitrary result, at least from the perspective of the homeowner. Thus, where an architect or project manager provides plans and designs, locates a builder and coordinates and supervises the actual building work, any loss suffered as a result of inadequate coordination and supervision would fall within the building claim, but other conduct would not.

58 That is not to say that the jurisdiction of the Tribunal under the Home Building Act should be expanded beyond the proper construction of the terms used in Part 3A. The fact that the Tribunal has a jurisdiction under that Part up to $500,000, whereas its current jurisdiction under the Consumer Claims Act is limited to $25,000, demonstrates the need to maintain proper limits on the jurisdiction. Nevertheless, to the extent that the statutory terminology permits, those limits should not be arbitrary, nor should an unduly restrictive construction be given to the words of the statute, especially to the extent that they mirror the terminology of the Consumer Claims Act. Of particular concern would be a construction which meant that services of a project manager might fall within the definition of "building claim" where residential building works actually eventuated, but not otherwise. Such a distinction can be avoided if the phrase "the carrying out of residential building work" is treated as adjectival, in the sense that it is descriptive of the services with which a connection must be established, rather than being treated as a factual pre-condition to the necessary connection.

59 By reference to the first limb of the definition, the question in this case was whether the claim for damages might be said to "arise from" a supply of building services, in circumstances where the loss allegedly suffered flowed from the failure of the solicitor to advise that, without compliance with the statutory pre-conditions of the Home Building Act, the builder would not be able to recover for the services provided. Precisely how the claim is formulated is a matter of some importance. In the absence of any finding by the Tribunal as to the services in question, it must be dealt with on the basis of the "claim", which is to be found in the proposed pleadings before the Tribunal. The causal relationship between the legal advice and the supply of services for which a contractual price could not be recovered is apparent from those pleadings. Without establishing that causal relationship, the Claimant must fail. However, if the causal relationship is established, it is clearly arguable that the loss suffered would "arise from" the supply of building services.

60 If this reasoning is correct, the same result would presumably apply where the solicitors who advised the builder had nothing to do with the homeowner. It might also apply where the advice given did not relate to the Home Building Act, nor obligations under it, but rather concerned doubts the builder had as to the assets of the other contracting party and, for example, the failure of the solicitor to ascertain whether the other party in fact owned the premises on which the work was to be undertaken. If the builder is not paid for the supply of building services, it is equally possible to say that the claim will arise from the supply of the building services and from the negligent legal advice. In the case where, as a result of negligent legal advice, the contract under which the building services were supplied is not in writing the connection will be closer.

61 Similar questions will arise on the other side of the record. Thus, if a homeowner obtains legal advice in relation to a contract entered into with a builder, which does not allow for recovery in the case of defective work, the loss suffered by the homeowner may equally be said to arise from the defective work and from the negligence of the solicitor.

62 The question is whether each of these cases gives rise to a "building claim" for the purposes of s 48A. In my view, the cases in which the section is satisfied include those which specifically involve the terms of the contract between the homeowner and the builder. The case where the negligence of the solicitor was in failing to comply with a request to search the title to see if the occupant having the work done was in truth the homeowner, would not involve a "building claim" because, whilst the supply of building services provides the occasion on which the builder suffers a loss, the claim against the solicitor gives rise to no substantial dispute about the nature of the supply or the terms on which the building services were supplied. In such a case the claim should not be characterised as a claim for a specified sum arising from the supply of building services. This construction may be understood to flow from a reading of the definition of "building claim" as a whole and adopting a purposive approach, consistent with the objects and scheme of the Home Building Act.

63 Whilst such a line must be drawn in an appropriate case, in my view the claim in the present case is a building claim because, as pleaded, it related to the terms on which the builder supplied building services.

1. In AIM Partnership v Rathchime [2010] NSWSC 860 McDougal J was considering an application for costs of a transfer to the Supreme Court from the CTTT. That transfer had been made by consent without the Tribunal deciding whether it had jurisdiction over the building claim or not. The jurisdictional issue concerned whether or not the claim for the costs of performing demolition, sewer diversion, bulk excavation and associated works was a building claim and involved residential building work. Rathchime, relying on Provincial Homes and Woolfe, sought costs on the basis, inter alia, that AIM had commenced the proceedings in CTTT, which did not have jurisdiction, and thereby necessitated the transfer.

1. Mc Dougal J, at [17-20] pointed out that the services under consideration in those cases were of a vastly different type to that under consideration by him, which did not encompass feasibility, design, approvals, valuations, cash flow projections or similar matters. He referred to paragraphs 57 and 68 or Basten JA's judgment in AIM Partnerships and continued -

21 Thus, his Honour said, the Court should not take an unduly restrictive or arbitrary approach to the words whereby the jurisdiction of the Tribunal is conferred. In doing so, as it seems to me, his Honour expressed at least implicit disapproval of the somewhat more restrictive approach taken by Master Malpass in Collings Homes at [33] and [34].

22 The question in this case is one that requires consideration with a full understanding of the nature of the works undertaken by AIM. It does not seem to me to be possible to say, in some a priori way, that works that could be described as demolition, sewer diversion, bulk excavation and associated works are simply incapable of being residential building work. If that is so, then it cannot be said, again a priori, that the claim is not a building claim.

1. In my opinion this evolving chain of authority has now reached the point that when, considering whether work is residential building work within the meaning of the definition in s 3, it is necessary to closely consider the type and nature of work in issue, and then to determine whether it is of such a nature that, properly viewed, it forms part of and is a necessary incident of any work involved in (or involved in co-ordinating or supervising any work involved in) relevantly, the repairing, renovation, decoration or protective treatment of a dwelling: as opposed to being a non-essential precursor of or incidental to that work.

1. Mention should be made of one other decision that concerns the interpretation of s 8 of the HB Act. It is a decision of mine in Pobjie v Commissioner for Fair Trading, NSW Office of Fair Trading [2007] NSWADT 142, where this Tribunal considered the meaning of "contract price" in s 8, in the light of the decision in Commissioner of Fair Trading v Pobjie Agencies Ply Limited & Ors [2005] NSWSC 13. Specifically, the issue was whether Sully J had deducted the cost of work that was not residential building work from the total contract price, when considering the contract price for the purposes of s.8. I wrote, at [26] -

... What I am required to determine is whether, because of his finding that the payments to which s.8 relates are payments on account of residential building work, His Honour also found that contract price, for the purposes of that section, should be construed to mean "contract price for the said residential building work"?

27 Sully J's conclusion that there was no breach of s.8 is consistent with the view that the extended definition of contract price applies in the interpretation of that section, and that contract price for the purposes of the section should not be given the same restricted meaning as that given to it in s.92. The Commissioner in supporting my method of calculation submitted that it was not clear how his Honour had reached his conclusions, and that one should look at what he had said in determining the issue.

28 Sully J did not say that he was attributing a different construction to the meaning of contract price in s.8 to that required by the definition in s.3. This is to be contrasted with his consideration of the meaning of contract price in s.92. He did, however, express a clear conclusion as to how s.8(1) should be read, which impacts on how s.8(2) is read in order for the section to be interpreted consistently.

29 At minimum, his Honour's analysis requires that s.8(2) be read thus:

"(2) The amount of the payment on account of residential building work is prohibited if:

(a) the contract price is more than $20,000 and the payment on account of residential building work is more than 5% of the contract price (or, where another percentage is prescribed by the regulations in respect of a particular kind of work, the percentage so prescribed), or

(b) the contract price is $20,000 or less and the payment on account of residential building work is more than 10% of the contract price (or, where another percentage is prescribed by the regulations in respect of a particular kind of work, the percentage so prescribed).

30 Such an interpretation is consistent with his Honour's finding that no breach of s.8 had been demonstrated, and with the balance of his judgment. I have reached the conclusion that it reflects his Honour's findings.

31 I am reinforced in this conclusion by three things. First, by the more general nature of the maximum deposit provisions of s.8 when compared with the particular focus of s.92 on insuring residential building work. Secondly, by absence from s.8 of words such as the reference to "labour and materials" in s.92(3), which Sully J considered lent support to the conclusion that the extended definition of contract price did not apply to s.92. Finally, by my analysis of the use of the term contract price throughout the Act, which, I consider, points to there being no basis for an application of the maxim generalia specialibus non derogant, with respect to s.8. In this regard I do not think there is an irreconcilable conflict created by reading s.8(2) in the manner outlined, with the extended definition of contract price.

Outline of the evidence with respect to the s 8 issue

1. Alldis & Cox, as strata manager for the Owners Corporation SP 19306 of the building at 57 Gould Street, Bondi Beach, a block of six units, asked Metro Windows to prepare a quote for replacing the windows of the building. Between October 2004 and July 2005 representative of Metro Windows attended site meeting and discussions at the premises and prepared a series of quotes for Alldis & Cox. These traversed different options that were under consideration.

1. It is important that during those meetings Mr Preston explained to those attending that under an exclusive licensing arrangement with Oran Industries (the Canadian Manufacturer of the PVC doors and windows) Metro Windows is the sole distributor of their product, and only sells PVC doors and windows manufactured by Oran.

1. On 4 November 2005 Alldis & Cox advised Metro Windows that it would be proceeding with the work and requested final costs: the body corporate having decided to go ahead with Metro Windows. Relying on that go ahead the applicants' evidence is that a check measure of the windows and doors was carried out on 12 November 2005. An order was placed with Oran Industries (the Canadian Manufacturer) on 24 November 2005. Oran Industries required a 50% deposit from Metro Windows.

1. On or about 16 December 2005 Alldis & Cox accepted two final quotes prepared by Metro Windows describing the works and dated 2 December 2005 being -

• Job 18921 for the supply and installation of windows to the 6 units; and
• Job 18922 for the supply and installation of windows to the common areas, a door to unit 2, a front entrance door and extras,

at the total cost for material and labour of $69,850.00.

1. Job 18922 included the following under extras -

ANY LINTEL BARS you might have to replace we will do blocking up of opening and any preparation that is non structural ready for your person to replace lintel - Preparation charge $250.00 + GST per opening.

1. Metro Windows's terms and conditions were attached to the quotes. They included a term with respect to scaffolding which said -

2(e) Provision and cost of scaffolding , if required, is the responsibility of the buyer and must conform to the appropriate requirements.

4(h) Obtaining any council or other approval for the work is the responsibility of the Buyer.

1. Job 18921 required payment as follows: 5% deposit, 45% on check measure prior to manufacture, 10% on delivery, 20% on completion of units, and 20% on completion. Job 18922 required payment of a 10% deposit, 40% on check measure prior to manufacture, 25% on delivery and 25% on completion. This inconsistency has not been explained.

1. It was the uncontradicted evidence of the applicants that the "check measure before manufacture" referred to in the job quotes included -

• Conducting on site check measurements of each window and door on 12 November 2004 (removing and replacing furnishing and window fitting as necessary). This included repairing existing windows and removing and replacing architraves and angle trims to enable check measurement.
• Cutting to measure power coated aluminium extrusion and constructing the front entrance door.
• Completing final paper work including a detailed window and door schedule necessary to order and fit the windows.
• Ordering the windows and the doors from Oran Industries on 24 November 2005. By placing the order Metro Windows ensured that the windows were in the manufacturing cue.

1. Alldis & Cox signed the contract documents on 23 January 2006 although they were not provided to Metro Windows until 17 February 2006. On 14 February 2006 Alldis & Cox had faxed a list of accepted options/additions to Metro Windows.

1. On 21 December 2005 a first payment of $13,970.00 was made on Job 18291. This was paid following the receipt by Alldis & Cox of a Metro Windows Tax Invoice No 203729 for that amount being "20% deposit and progress payment, for the supply and installation of windows at the above address, in accordance with job 18921 dated 02/12/05" plus GST. Ms Cruz's uncontradicted evidence is that the tax invoice was sent to Alldis & Cox in response to a request from them for an invoice and not as a request for payment. She added that Metro Windows had no copy or record of the invoice being sent.

1. It is this tax invoice and subsequent payment that the Commissioner relies on to demonstrate a breach of s 8(1)(a) of the Home Building Act 1989.

Consideration of the s 8 issue

1. Relying on the decision in Commissioner of Fair Trading v Pobjie Agencies Ply Limited & Ors [2005] NSWSC 13 the Commissioner submits that the demand for and receipt of the payment of $12,700, being 20% of the total quoted price, breached s 8(1)(a) of the HB Act. This is so, the Commissioner submits, because the work Metro Windows had done before that payment, "being a check measure, development of a detailed window order, and the revising of final contract documents," was not residential building work. As a consequence the Commissioner argues that by demanding and receiving a payment of 20% of the contract price for job 18921 Metro Windows breached s 8(1)(a).

1. I do not accept this submission. To determine whether or not the work undertaken was or was not residential building work it is necessary to consider the type and nature of the work done in order to decide whether it formed part of, and was a necessary incident of, any work involved in (or involved in co-ordinating or supervising any work involved in), replacing the windows and doors in the building.

1. While work done for a "check measure" was considered and found to not to be residential building work in Pobjie, an analysis of the evidence before Sully J points to the check measurement there referring to substantially different work, than the term check measure does in Metro Windows's quotes. Importantly, the work in Pobjie consisted of the construction and erection of prefabricated structures at dwellings, such as extensions, bungalows and porches. The check measure in Pobjie resulted in "effectively a bill of quantities and a set of drawings and measurements which were capable of being converted into something buildable." Following check measurement the evidence before Sully J indicated that the following steps would then occur-

• Final plans were prepared and relevant planning permission sought.
• Costing would be checked and prices confirmed.

1. In contrast Metro Windows' check measure included (a) careful measurement on site, including minor repairs and removal of window furnishings as necessary to enable such measurements to be taken; (b) the preparation of a detailed window and door schedule necessary to order and fit the windows; (c) cutting to measure power coated aluminium extrusion and constructing the front entrance door; and (d) final paperwork. Unlike the situation with Pobjie Metro Windows did not require and had no obligation to obtain planning approval for the fitting of the new windows and doors. Any approvals for scaffold were the responsibility of the owners.

1. Moreover, and most importantly, the very nature of the renovation work that Metro Windows was contracting to undertake required careful and precise measurement of all replacement windows and doors prior to their manufacture, so that they would fit existing openings. The detailed window and door schedule produced during check measure was not a draft upon which further drawings were based, but contained precise details of sizes, materials and styles essential for the ordering, manufacture and supply of the replacement windows and doors required. The work Metro Windows undertook on check measure was neither a precursor to the work Metro Windows had contracted to do, nor incidental to that work. It was an essential and necessary step in the supply and fitting of doors and windows of the building. Without it, doors and windows that fit the building could not be supplied or installed. In my opinion, it was residential building work.

1. It follows that I am satisfied that as at the date of Metro Windows's tax invoice, 20 December 2005, and when Alldis and Cox paid it the next day residential building work for had commenced.

1. Additionally, as the date of that tax invoice Metro Windows had placed an order with the Canadian manufacture for windows and doors, and was under a contractual obligation to pay the manufacturer 50% of its contract price. Placing the order was essential to the work involved in replacing the windows and doors in job 18921.

1. Consequently I am not satisfied that Metro Windows breached s 8(1)(a) of the HB Act.

1. I note that in reaching the conclusion I have not addressed the applicants' submissions with respect to whether they made a demand for payment, or whether a tax invoice can constitute a demand for payment. Given the conclusions I have reached, I do not think it necessary to do so.

Section 18B(d) - due diligence

1. Section 18B(d) provides -

The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work:

...

(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,

1. What is meant by the term due diligence is unclear. In Hometeam Constructions Pty Ltd v McCauley [2005] NSWCA 303 McColl JA considered the issue -

171 In Re Stewardson Stubbs & Collett Pty Ltd & Bankstown Municipal Council, Moffitt J observed (at 1675 - 1676) that:

"... [T]he question of what precisely constitutes a failure to proceed with reasonable diligence is a matter of some difficulty. However, it is an allegation of a general failure to proceed with that degree of promptness and efficiency that one would expect of a reasonable builder who has undertaken a building project in accordance with the terms of the contract in question."

172 In Hounslow London Borough Council v Twickenham Garden Developments Ltd Megarry J considered a requirement that a building contractor "proceed regularly and diligently with the works" and said (at 269):

"[W]hat is the meaning of the words 'regularly' and 'diligently'? These are elusive words, on which the dictionaries help little. The words convey a sense of activity, of orderly progress, and of industry and perseverance: but such language provides little aid on the question of how much activity, progress and so on is to be expected. They are words used in a standard form of building contract in relation to functions to be discharged by the architect, and in those circumstances it may be that there is evidence that could be given, whether of usage among architects, builders and building owners or otherwise, that would be helpful in construing the words. At present, all that I can say is that I remain somewhat uncertain as to the concept enshrined in these words; and this necessarily increases the task of Mr. Harman in establishing a strong case that the contractor has failed to proceed regularly and diligently with the works, so that the architect's notice is good." (emphasis added)

173 In Hooker Constructions Pty Ltd v Chris's Engineering Co [1970] ALR 821 at 822-823, Blackburn J considered whether a head contractor had validly terminated a building sub-contract on the basis that the sub-contractor had failed "to proceed with the works with reasonable diligence" as required by the contract. After observing that the "onus is on the plaintiff to show the [sub-contractor] was in default in a way ... caught by this provision", his Honour said (at 822) that he had "not found it easy to construe this phrase 'reasonable diligence' in the context of this case". He concluded that "a sensible construction of the phrase is that the actual extent of work completed is of some significance" and that " 'diligence' in the contract means ... not only the personal industriousness of the defendant, but his efficiency and that of all who worked for him".

174 He also said (at 823) that he was entitled to accept as evidence that the defendant had not displayed reasonable diligence, "evidence that the work was, at the material time, seriously incomplete together with evidence that there were no circumstances preventing the defendant from overcoming this situation".

175 In Hooker the plaintiff led evidence that at the time it purported to terminate the sub-contract, the defendant's work was "seriously behind what could reasonably be expected [and] that the situation was not due to anything which was beyond the defendant's control". Although the defendant adduced evidence to show that "through no fault of his own, he was unable to get the necessary material to bring the work to the stage where it should have been at the material time", this did not convince Blackburn J who held the plaintiff had proved the contract was validly terminated.

176 In Australian Development Corporation Pty Ltd v White Constructions (ACT) Pty Ltd (1996) 12 BCL 317 Giles J (as his Honour then was) accepted that "where there was a specified future date for practical completion, whether [the builder] was prosecuting the project diligently was a question of fact, substantially determined by whether it was proceeding at a rate of progress according to which practical completion would be achieved by the specified date but with regard also to whether accelerative measures could bring achievement of completion by the specified date." His Honour considered competing expert evidence as to the time required to complete the building work but concluded it was unnecessary in the circumstances of that case to resolve the difference between those views.

177 As each of these cases demonstrates, "you cannot have diligence in the abstract. It must be related to the objective": Greater London Council v Cleveland Bridge and Engineering Company Ltd (1986) 34 BLR 50; see also Hick v Raymond & Reid [1893] AC 22 at 29 per Lord Herschell LC ("there is no such thing as reasonable time in the abstract"); Maynard v Goode [1926] HCA 4; (1926) 37 CLR 529 at 538 per Isaacs J ("[t]he question of what is 'reasonable time' is always relative; that is, it means 'a reasonable time under the circumstances' ").

1. Section 51(c) provides that the holder of a licence to do residential building work who breaches a statutory warranty is guilty of improper conduct. This, in turn, is a ground for the Commissioner to take disciplinary action against the licence holder (s 56(c)), the nominated supervisor (s 53) and an officer of a licensed corporation (s 54).

1. Section 51(3) provides -

(3) It is a sufficient defence to a complaint that the holder of a contractor licence has been guilty of improper conduct as referred to in subsection (1) (b), (c) or (d) in connection with work undertaken by the holder, if the holder proves to the satisfaction of the Director-General that the holder did all that could reasonably be required to ensure that a nominated supervisor for that work would exercise such degree of control over the doing of the work as would be necessary to prevent the occurrence of the improper conduct.

1. Section 53 provides that nominated supervisor has a sufficient defence if he or she proves "to the satisfaction of the Commissioner that the holder used all due diligence to prevent the occurrence of the improper conduct."

1. Section 54(3) provides a defence for officers of licensed corporations -

It is a sufficient defence to a complaint that an individual who is a member of a partnership, an officer of a corporation that is a member of a partnership or a director of a corporation (being a partnership or corporation that is the holder of a contractor licence) has been guilty of improper conduct if the individual proves to the satisfaction of the Director-General that:

(a) the improper conduct occurred without the individual's knowledge, or

(b) the individual was not in a position to influence the conduct of the other members of the partnership or other officers of the corporation, of which the individual was a member or an officer, so as to prevent the occurrence of the improper conduct, or

(c) the individual, being in such a position, used all due diligence to prevent the occurrence of the improper conduct.

The competing submissions

1. The position of the Commissioner with respect to whether the carried out the work with due diligence was simply outlined in written submissions -

9. The Respondent has filed and served statements from its Investigator and from a unit owner at the property. Those statements are evidence of the following:

(a) Mr Preston undertook to a unit holder to complete the work in a period of some eight weeks. In fact work did not even commence for some five months. (Statement of Hurwitz at paragraph 3). Once it did commence there were delays (Hurwitz at paragraph 6).

(b) The work remained substantially incomplete approximately one year after the contract to do the work had been signed. (Statement of Christy at paragraphs 12 and 13). The Respondent submits that the Applicants failed to meet any appropriate standard of due diligence.

10. It is not disputed that the work was incomplete at the time that work ceased in December 2006, although it may be disputed whether it ceased because of termination of the contract or otherwise. It is submitted that in either case the work was incomplete almost one year after the contract to undertake the work had been signed by both parties, and that this shows lack of due diligence.

1. In response the applicants assert that the contract did not provide for the work to be completed within a period of eight weeks. They argue that the work was carried out with due diligence, and that the delays in completing the work Metro Windows had contracted to do was as a result of factors over which it had no control. A large number of those intervening factors, they submit, were matters within the control of the Owners Corporation and its agents.

When were the works to be completed?

1. The written contract is silent with respect to when the works should be completed. It does contain a provision requiring that complaints about materials or workmanship be in writing (clause 9(a)).

1. Mr Hurwitz, an owner of a unit in the building and a member of the Owners Corporation executive, gave evidence of a meeting in November 2005 with four of the owners and Mr Preston on behalf of Metro Windows. His evidence was that Mr Preston had said that if an order were placed with Metro Windows for the supply of the windows and doors, there would be an 8-week delay while they came from Canada, and it would then take a week per unit to install them, and an additional week for the common areas. Mr Preston had said that if there were problems with lintels, he could easily arrange for their replacement at a cost of $100 per lintel, and that their replacement should not cause delay.

1. In cross-examination Mr Hurwitz -

• Accepted that this meeting had in fact taken place in May 2005.
• Accepted that he may have been late in attending the meeting.
• Denied the suggestion that Mr Preston had told the meeting to allow 16 weeks for delivery of the windows. He commented that if this had occurred someone would have told him.
• Agreed that there had been a delay in providing a variation for the door in his unit, which had delayed the manufacture and delivery the windows and doors.
• Accepted that in the circumstances an 8-week turnaround for delivery of the windows and doors was too short.

1. Mr Preston's evidence was that he had told the meeting in May 2005 that if an order was placed for windows and doors to be manufactured in Canada it would take a minimum of 11 to 12 weeks for standard size windows, plus an additional 3 to 5 weeks for special requirements, and an allowance of additional time for parts. He denied providing an eight-week time frame, and said the advice he had given was in accordance with his usual practice.

1. Ms Cruz in her evidence agreed with those usual time frames for the delivery of windows and doors.

1. Given Mr Hurwitz's hazy recollection with respect to the meeting and the precise evidence of Mr Preston, which accords with the usual time frames for the delivery of manufactured material from Canada, I prefer Mr Preston's evidence with respect to the time frame he gave for delivery of the windows.

1. In those circumstances I am satisfied that the contract between Metro Windows and the Owners Corporation required that the work be done within a reasonable time. In considering what a reasonable time is I am satisfied that the parties contemplated a period of 16 weeks for manufacture and delivery of the materials from Canada.

Was the work done with due diligence?

1. In order to determine this it is necessary to understand a number of important events that occurred under the contract.

1. First, there is no dispute that Alldis & Cox did not return signed contracts to Metro Windows until 18 February 2006. Alldis & Cox had confirmed the extras required by the Owners Corporation four days earlier, on 14 February 2006, having been warned that manufacture could not proceed without the extras being confirmed. The uncontested evidence of Ms Cruz and Mr Preston is that the Canadian manufacturer required details of those extras before manufacture could be commenced. I accept that was the case.

1. The manufactured windows and door arrived in Sydney on 3 May 2006 and were delivered to Metro Windows on 8 May 2006. Alldis & Cox were notified of this.

1. On 22 May 2006 Metro Windows commenced installation of the windows in unit 4, in accordance with instructions received from Alldis & Cox about the order in which the work was to be done.

1. In the course of doing that work it was found that a number of lintel bars were rusted. They required replacement and associated rectification works. Alldis & Cox were advised of this. As already noted the contract provided that Metro Windows would prepare for lintel replacement, but would not undertake that work. This is consistent with the conditions of Metro Windows' contractor licence which prohibited it from undertaking structural work.

1. Mr Preston's evidence was that, as he made his way through the building, more lintel problems were discovered. This severely disrupted the progress of the works. Metro Windows capacity to complete the works was dependent on the completion of necessary lintel work and provision of the scaffolding, both of which were the responsibility of the Owners Corporation under the contract.

1. Alldis & Cox engaged a firm called Inside Out to replace the lintels and supply necessary scaffolding on 10 July 2006. Mr Preston' evidence was that the pace with which Metro Windows could install the windows was dependant on Inside Out doing its work. Indeed, he said that a number of windows that Metro Windows has installed before 10 July 2006 had to be removed, so that Inside Out could do its work, and then reinstalled.

1. Mr Preston's evidence was that there were significant delays occasioned by Inside Out not attending to its work and delaying matters from the time it was first engaged, as well as in the provision of scaffolding. Inside Out were short of staff and had other jobs on which they were working. While they started in July, Inside Out's attendance was patchy, and further delayed Metro Windows. Mr Preston said that in his view the works were badly managed by Alldis & Cox.

1. Inside Out had not completed its work when Alldis & Cox terminated the contract with Metro Windows on 6 December 2006.

1. Mr Preston said other problems encountered by Metro Windows in undertaking the work were difficulties in gaining access to units, restrictions in the time at which units could be accessed, and the normal vicissitudes of weather. He said at no time did he receive complaints about the work Metro Windows had done. Ms Cruz supported Mr Preston's evidence about the extensive delays caused by the lintel work. She said that she could not recall any other job where Metro Windows had similar problems.

1. In his evidence Mr Hurwitz agreed that there were problems with the lintels. He said became aware that Inside Out was doing the lintel work when the Owners Corporation had to pay, "huge bills to them." His initial evidence was that he wasn't sure who Inside Out were working for, and that he presumed Mr Preston had arranged for him to do that work.

1. The documentary evidence clearly illustrates that Mr Hurwitz's understanding was incorrect. The written contract specifically provided that Metro Windows would not do the lintel work. Metro Windows was not licensed to do that work. There is clear evidence that Inside Out was engaged to do the work by Alldis & Cox on behalf of the Owners Corporation under a separate contract. Alldis & Cox sent Mr Preston a fax advising of this on 10 July 2006.

1. Mr Hurwitz's evidence was that Metro Windows started work on his windows in July 2006. He complained of delays in completing the work saying the Mr Preston "stopped and started work many times." He said that he had contacted Mr Preston "on multiple occasions" to try to get him to complete the work but had been met with excuses (including, "I can't come in, it's my birthday') and failures to attend as promised. He agreed that work on his until included the replacement of lintels.

1. In cross-examination Mr Hurwitz conceded that he had not spoken to Mr Preston in person until September of 2005. The excuses he referred to had been provided to his wife. He had not been a party to those conversations. He also agreed that Metro Windows had properly completed extra work Mr Preston has been asked to undertake with respect to the baby room.

1. While Mr Hurwitz maintained there had been numerous verbal complaints about delays made to Mr Preston and Metro Windows. Mr Preston and Ms Cruz denied this. Importantly, there were no written complaints from the Owners Corporation or Alldis & Cox to Metro Windows. Mr Preston denied providing excuses to Mrs Hurwitz and said he had worked on his birthday.

1. The uncontested evidence of Metro Windows evidence was that, once Inside Out was retained, Inside Out was responsible for inspecting and assessing each window opening in order to determine whether or not the lintels required replacement. Approval for recommended work was then required from Alldis & Cox. In the period from July to October 2006 Inside Out replaced a number of lintels, and Metro Windows then completed those windows. The copies of Inside Out's invoices, which appear to have been submitted as the work progressed, verify this.

1. In October 2006 Alldis & Cox rejected a quote from Inside Out to provide scaffolding to the perimeter of the building. The scaffolding was necessary so the lintels could be replaced in the upper stories of the building. At this time a scaffolding permit for the works had not yet been obtained. It will be recalled that the Owners Corporation was responsible for obtaining that permit. Further, the applicants have provided copies of correspondence from Alldis & Cox to National Building Maintenance (dated 8 November 2006) and DJE Building Services Pty Ltd (dated 15 November 2006) seeking quotes scaffolding the front of the building and obtaining necessary permits.

1. Alldis & Cox terminated Metro Windows's contract in writing on 6 December 2006. The letter advised that the Owners Corporation has decided that they did not wish Metro Windows to complete the work and "do not wish you to enter the site again.' The letter did not advise of any reason for this termination, and asked Metro Windows to send invoices for all windows, and variations, which would be paid.

1. The Owners Corporation subsequently sought to withdraw that termination, but Metro Windows treated the termination as discharging the contract.

1. On 26 February 2007 Mr Garry Christie a building inspector with NSW Fair Trading conducted a site meeting at the premises, following which he prepared an inspection report. Metro Windows was not represented at that meeting. There is extensive evidence and submissions made by Metro Windows going to Mr Christie's involvement in the matter and his conduct of his investigation. Given the issues relied on by the Commissioner before me, it is not necessary to consider many of those matters and some of the conclusion reached by Mr Christie with respect to the work done by Metro Windows.

1. The Commissioner did rely on Mr Christie's evidence to demonstrate that Metro Windows had not undertaken the work with due diligence. Mr Christie holds relevant qualifications in carpentry, joinery and building, and has extensive trade experience which was traversed in evidence. He has been a building inspector since 2002. I accept that by qualifications and experience he has the expertise necessary to be able to provide expert evidence with respect to the work Metro Windows contracted to undertake.

1. Mr Christie said he had only inspected the building once. He has been taken through the building, with the owners of each unit stating their issues. He had been shown the contract between Metro Windows and the Owners Corporation. He took photographs of matters of concern. He said he had formed the view the work had not been completed. He had never discussed the matter with Metro Windows. He had understood that the lintel work had been completed and verified that Inside Out had been paid, although he did not see an invoice from that work.

1. Mr Christie's evidence was that in his opinion, properly managed, the job of installing the windows, including erection of the scaffold and replacement of the lintels, should have been completed in a month.

1. In cross examination Mr Christie said -

• That while he had fitted many widows he had not been responsible for retrofitting windows.
• That if a window lintel is corroded it should be replaced.
• Lintel repairs should be competed before windows are fitted.
• He was not aware that Alldis & Cox had terminated Metro Windows's contract in writing. His impression was that the owners wanted Metro Windows to come back.
• He has not read Metro Windows's contract in detail.
• If Metro Windows were not to supply the scaffolding, delays in supplying the scaffolding would affect the time taken to complete the work.
• If separate contracts are entered into for the replacement of lintel bars, and for the replacement of windows, those contractors need to work together.
• Discovering lintels require replacement when fitting a window would "slow the window company down."
• Any variation to a window order would extend the time for delivery.
• Having been shown photos of the work, including lintel work, done in a number of units, he agreed that the work was extensive.
• External factors, outside Metro Windows's control, would result in the work taking longer.

1. The photo's relied on by the Commissioner from Mr Christie's report are at Items 5, 7 and 9 of the report.

1. Item 5 is a photograph of a window leaning up against a wall. According to the report it is the new kitchen window for unit 3. Mr Christie denied the suggestion that this was labelled incorrectly, and that it was the kitchen window for unit 6. Mr Preston said it was the kitchen window for unit 6 that had not been installed.

1. Item 7 had photographs of three existing windows to unit 6 (kitchen, dining room and bedroom) that had not been replaced. There was no dispute about this. Unit 6 is on the upper level.

1. Item 9 is a photograph of the entrance door to the building that had not been replaced. There was no dispute about this. The evidence of Mr Preston and Ms Cruz was that when the contract was terminated Metro Windows had not yet been given the go ahead to undertake that replacement.

1. The only relevant factual conflict between the evidence of Mr Christie and that adduced by Metro Windows, aside from the issue of delay, concerns the kitchen window photographed in item 5. Both Mr Christie and Mr Preston were clear in their respective views as to which unit it was destined for, with Mr Christie maintaining it was for unit 3 and Mr Preston that it was destined for unit 6. The photograph does not provide any context that would enable a conclusion to be drawn. On balance I prefer Mr Preston's evidence. His recollection of all the events in issue has been consistent and he was intimately involved in undertaking the works. In contrast, Mr Christie had only a single visit to the site. There is agreement that the all the windows in unit 6 have not been replaced, and there is no other complaint in respect to non-installation of windows in unit 3. That the new kitchen window was destined for unit 6 impresses me as more probable and likely.

1. Against that background it is necessary to determine whether Metro Windows undertook the contract work with due diligence and within a reasonable time in the circumstances. In my opinion the evidence before the Tribunal compels the conclusion that it was.

1. I am satisfied that factors beyond the control of Metro Windows are responsible for the time taken by Metro Windows to undertake the work up to the time the contract was terminated. Principle among those factors was the delays in completing the lintel repairs that had to be finished before Metro Windows could complete its obligations under the contract. For the lintels to be completed scaffolding had to be provided. The evidence demonstrates that three weeks before the contract was terminated Alldis & Cox were seeking quotes for the provision of scaffolding and necessary permits.

1. Under the contract the Owners Corporation was responsible for organising this work, and for the provision of scaffolding. Neither was a matter over which Metro Windows had authority or control. On the evidence I am satisfied that when the contract was terminated in December 2006, the scaffolding had not been erected and the work could not be completed.

1. With respect to the front door of the premises I accept the evidence of Mr Preston and Ms Cruz that Metro Windows was still waiting on the go ahead to undertake that installation.

Conclusion

1. It follows that I am satisfied that Metro Windows did not breach s 8 of the Home Building Act 1989 and has not breached the warranty implied by s 18B(d) of that Act. As a consequence I do not agree with the Commissioner's conclusion that Metro Windows, Mr Preston and Ms Cruz are guilty of improper conduct.

1. I conclude that the correct and preferable decision is to set aside the decisions under review.

1. I note that applicants have indicated that they will be seeking an order for costs.

1. Cost in the Tribunal do not necessarily go with the event and are governed by s 88 of the Administrative Decisions Tribunal Act 1997. The factors that the Tribunal must take into account when considering an application for costs are set out in that section. As the applicants have not been legally represented the guidance set out in the Tribunal's Costs Guideline is applicable to any application for costs made by them.

1. I will direct that any application for costs made by the applicants be made within 28 days of these reasons and supported by submissions (not to exceed 4000 words). Within a further 28 days the Respondent shall file and serve submissions in reply (not to exceed 4000 words). I will then determine the issue of costs on the papers.

I hereby certify that this is a true and accurate record of the reasons for decision of the Administrative Decisions Tribunal.

Registrar

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Decision last updated: 08 November 2012