Onethree Pty Ltd v Seaman

Case •

[2018] NSWCATCD 83

•

19 December 2018

No judgment structure available for this case.

Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Onethree Pty Ltd v Seaman [2018] NSWCATCD 83
Hearing dates: 18 July 2018
Date of orders: 19 December 2018
Decision date: 19 December 2018
Jurisdiction:Consumer and Commercial Division
Before: D Goldstein, Senior Member
Decision:

1. Dayne Seaman and Danielle Corrigan must pay Onethree Pty Ltd the sum of $44,941.85 immediately.

 

2. Any costs application must be lodged in the Tribunal and served on the costs respondent within 14 days of the date of this order either attaching or referring to the documents relied upon in support of the application.

 

3. The costs respondent will have 14 days after the date it receives the application to lodge in the Tribunal and serve on the costs applicant its submissions, if any, in response to the cost applicant’s costs application, such submissions either attaching or referring to the documents relied upon.

 

4. The cost applicant will have 14 days after the date it receives the cost respondent’s submissions to lodge in the Tribunal and serve on the costs respondent its submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon.

 

5. The parties must state in their submissions whether they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

 6. Subject to considering the parties submissions regarding a hearing on costs, the Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal.
Catchwords: BUILDING AND CONSTRUCTION - Liquidated damages – Right to claim common law damages
Legislation Cited: Civil Liability Act 2002
Home Building Act 1989
Cases Cited: Amann Aviation Pty Limited v Commonwealth of Australia [1990] FCA 55; 22 FCR 527
Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99
Bailey v Champion Homes Sales Pty Ltd [2017] NSWCATCD 91
JJ Armstrong v Hope St Student Accommodation Pty Ltd [2017] VCC 1247
Moore v Scenic Tours Pty Limited (No.2) [2017] NSWSC 733
NSW v Ibbett [2005] NSWCA 445
Scenic Tours Pty Ltd v Moore [2018] NSWCA 238
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165
Tralee Technologies Holdings Pty Ltd v Yun Chen [2015] NSWSC 1259
Turner Corporation Limited (Receiver and Manager appointed) v Austotel Pty Limited 13 BCL, 378
Category:Principal judgment
Parties:

In HB 17/51783:
Onethree Pty Ltd (Applicant/Builder)
Dayne Seaman and Danielle Corrigan (Respondents/Owners)

  In HB 18/23200:
Dayne Seaman and Danielle Corrigan (Applicants/Owners)
Onethree Pty Ltd (Respondent/Builder)
Representation: A. Miranda (Builder)
R. Kelly (Owners)
File Number(s): HB 17/51783 & HB 18/23200
Publication restriction: Unrestricted

REASONS FOR DECISION

  1. In these proceedings the applicant builder sought an order that it be paid the last progress payment due under the contract.

  2. The respondent owners admitted that they owed the last progress payment. Instead of paying it they brought a cross application seeking payment of amounts which exceeded the amount of the progress payment they admitted was owing.

  3. These proceedings were heard in Wollongong in July 2018. The parties were given the opportunity to provide written submissions in support of their respective cases. The time for providing those submissions was extended on two occasions at the request of the respondent owners due to difficulties that they were encountering in the preparation of their submissions.

  4. At the hearing I admitted the following documents into evidence :

  1. Exhibit A, Statement of Danielle Corrigan;

  2. Exhibit B; Statement of Dayne Seaman;

  3. Exhibit C Statement of Michael Seaman;

  4. Exhibit D, owners documents 1 – 11;

  5. Exhibit 1, Bundle of builder’s documents; and

  6. Exhibit 2, Affidavit of Gary John Carson.

  1. In these Reasons I will call Onethree Pty Ltd the builder and Dayne Seaman and Danielle Corrigan the owners.

  2. There is no dispute that the builder’s and owners’ claims are building claims as defined in section 48A(1) of the Home Building Act 1989 (the ‘Act’) and that the Tribunal has the jurisdiction to hear this dispute and to determine those claims pursuant to the Act.

  3. The parties entered into NSW Residential Building Contract for New Dwellings dated 10 June 2016. The contract price was $361,241.00. The building period was stated to be 36 weeks after such period commenced, as referred to in the contract. Liquidated damages for delay were stated to be $1.00 per day calculated on a daily basis.

The builder’s claim

  1. The builder’s claim is in the sum of $41,491.80 made up of $36,124.10 for the practical completion payment and $5,367.70 for variations.

  2. In their written submissions the owners state that their concession of owing the amount claimed by the builder was subject to their cross application and set off.

  3. At the hearing the owners’ representative stated that the amount of $36,124.10 was conceded as was the amount claimed for variations, subject to the owners cross application.

  4. As regards set off, the owners filed a 10 page, 22 paragraph ‘Points of Defence to Builder’s Application’ dated 17 May 2018. The owners do not raise a defence of set off in their Points of Defence.

  5. In its written submissions the builder also claims interest pursuant to clause 33 of the contract. The submissions do not set out the precise basis of the claim by reference to the final account and when it should have been paid by the owners. Clause 33 states:

‘The builder may charge the owner interest at the rate stated in item 12 of Schedule 1 from the day on which an amount falls due to be paid to the builder up to and including the day that amount is paid’

  1. Item 12 of Schedule 1 of the contract stated that interest on late payment would be 15%.

  2. Clause 21 of the contract sets out the procedures to be followed in connection with practical completion, including service of a notice of practical completion and payment of the final progress claim. The builder’s evidence exhibits a large number of documents. Under Tab 11 is a final account breakdown dated 21 November 2017 in the amount of $41,491.80. Under Tab 4 is an email dated 27 November 2017 which I find serves the purpose of a notice of practical completion given under clause 21 of the contract.

  3. I find that the parties met at the premises on 1 December 2017 for the purposes of the inspection of the premises as referred to in clause 21.3 of the contract. I further find that the owners gave the builder a notice under clause 21.3(b) of the things that they required to be done in order to achieve practical completion. That notice was updated on 8 December 2017.

  4. I find that the builder did not attend to all the items notified to it by the owners. The builder stated that items raised by the owners did not prevent the building works being practically complete, as defined, and the owners concerns could be attended to during the defects liability period. As a result payment of the final progress claim was not made pursuant to the mechanisms contained in clause 21 of the contract.

  5. The owners took possession of the residence on 19 December 2017.

  6. I will find for the builder in the amount of $41,491.80 which is made up of $36,124.10 for the practical completion payment, $5,367.70 for variations as conceded by the owners.

  7. So far as interest is concerned, the contract clearly provided for interest of 15% on late payments due to be paid by the owners on a ‘working day’ basis. Working days as defined exclude Saturdays, Sundays and public holidays. Since the parties did not follow the contractual procedure set out in clause 21 relating to the final progress claim, I will allow the builder interest at the rate of 15% on the sum of $41,491.80 as and from the date of its application, 6 December 2017 to the date of these reasons 19 December 2018, namely 261 working days at the rate of $17.05 per day, namely $4,450.05.

  8. The total amount to be awarded in the builder’s favour is $45,941.85.

The owners’ application

  1. On 22 May 2018 the owners instituted proceedings in the Tribunal seeking an order that they did not have to pay $54,141.46.

  2. They served what I would describe as their Points of Claim in a document dated 17 May 2018 and signed by them titled ‘Owners Cross Application’. The relief they sought on page 7 was as follows:

‘$36,037 in damages for breach of contract and in compensation for breach of statutory warranty arising from the builders delay;

$7,104.16 in damages for breach of contract and in compensation for breach of statutory warranty arising from the unlawfully claimed progress claims;

$1,000.00 in compensatory damages for breach of contractual right of possession and the associated duty pleaded in paragraph 20;

$10,000.00 in exemplary damages for breach of contractual right of possession and the associated duty pleaded in paragraph 20 and for Trespass.’

  1. Paragraph 20 of the owners Points of Claim stated the builder had an associated duty with the contractual right to the site not to use its possession of the site for any purpose other than the carrying out of the works, and in particular not to use its possession of the site to damage the works or to cause harm to the owners’ interest.

  2. I will deal with the owners’ claims in the order in which they were set out in the Points of Claim.

Claim for delay damages

  1. The owners’ case was that the construction period commenced not later than 19 September 2016 with the result that the builder’s obligation was to bring the works to practical completion 36 weeks later, which was 29 May 2017.

  2. The owners submit that the builder failed to do that. I find that on 27 November the builder issued a notice of practical completion. As stated above, the parties attended at the site on 1 December 2017 to carry out the practical completion inspection. On that view of things the builder was it least six months late running in bringing the works to practical completion.

  3. The amount claimed by the owner under this head, namely $36,037.00 is broken up as follows:

  1. Rent at $400.00 per week for 29 nine weeks namely $11,600.00;

  2. The costs of travelling to and from rental premises to inspect the progress of the building works, $4,437.00; and

  3. General damages for loss of amenity loss of enjoyment, stress and financial pressure $10,000.00 for each of the owners namely $20,000.00.

  1. There is no evidence before the Tribunal that the builder applied for extensions of time to the building period of 36 weeks.

  2. An impediment to the owners’ claim is that the parties had agreed in clause 32 of the contract that if the building works did not reach practical completion by the end of the building period, the owners would be entitled to liquidated damages at the rate of $1.00 per day to and including the earlier of the date of practical completion, the date the contract was ended or the date the owner took possession of the site or any part of the site.

  3. This point which I raised with the owners’ representative at the hearing has generated a number of pages of submissions.

  4. So far as the rate of liquidated damages is concerned, the owners submissions state that the fact that the rate has been set at such a low amount should be seen as a factor which should allow the owners to avoid the consequences of having agreed that rate and to pursue common law rights as to damages arising on the builder’s failure to bring the building works to practical completion by the end of the building period.

  5. I reject that submission. In my view an owner should not be permitted to resile from a clear contractual provision because he or she may, with the benefit of hindsight, consider that the subject matter of what was agreed is not acceptable or in his or her best interests. I find that the owners should remain bound by their agreement in connection with liquidated damages.

  6. In Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 Gibbs J at [3]:

‘It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust.’ (emphasis added).

  1. The above passage supports my finding at [32], particularly the statement which I have emphasised. In addition it matters not that the owners may not have read and considered this provision. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 the High Court stated at [44] – [46]:

‘In Oceanic Sun Line Special Shipping Company Inc v Fay, Brennan J said:

"If a passenger signs and thereby binds himself to the terms of a contract of carriage containing a clause exempting the carrier from liability for loss arising out of the carriage, it is immaterial that the passenger did not trouble to discover the contents of the contract."

It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents, as Latham CJ put it, whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.

The statements in the above authorities accord with the well-known principle stated by Scrutton LJ in L'Estrange v F Graucob Ltd ("L'Estrange v Graucob") that "[w]hen a document containing contractual terms is signed, then, in the absence of fraud, or, I will add, misrepresentation, the party signing it is bound, and it is wholly immaterial whether he has read the document or not.’

  1. In Turner Corporation Limited (Receiver and Manager appointed) v Austotel Pty Limited 13 BCL at 378 Cole J was dealing with, among other things, a dispute about whether the owner was entitled to rely upon common-law rights in relation to defective work when the contract provided a defects liability procedure. After a lengthy consideration of the relevant clauses of the contract, Cole J found that the contract provided a code which did not permit the owner in the exercise of common law rights to bring third party contractors onto the site to rectify defective work by reason of the defects liability clause.

  2. In Amann Aviation Pty Limited v Commonwealth of Australia [1990] FCA 55; 22 FCR 527 the Federal Court dealt with an appeal from the judge at first instance in this well-known case. One of the issues was whether clause 2.24 of the contract which dealt with ‘Termination’ and which allowed the ‘Secretary’ as defined in the contract, in stated circumstances, to give the contractor a notice to show cause why the contract or any part thereof should not be canceled, was an exclusive procedure or regime for cancellation of the contract for breach.

  3. At [15] Davies J stated:

‘This being the agreed procedure for cancellation on breach, the Commonwealth was not entitled, of its own motion, outside the agreed procedure, to specify that a term was of the essence and to rescind forthwith for breach of that which, counsel has submitted, was an essential term going to the root of the contract.’

  1. At [15] of his judgment Sheppard J stated :

‘I am satisfied that clause 2.24 provided a comprehensive procedure for the termination of the contract, at least in the circumstances which applied here, and that, except in cases of true anticipatory breach, the provisions of the common law were intended by the parties not to apply. Accordingly, the purported termination of the contract by the Commonwealth was unlawful.’

  1. At [13] of his judgement Burchett J stated:

‘Clause 2.24 should therefore be construed as regulating comprehensively the Commonwealth's right to terminate the agreement for breach, but not as creating an additional ground for termination.’

  1. This aspect of the decision in Amann Aviation was not disturbed by the High Court in its decision.

  2. The contract entered into by the parties contained, as stated above, clause 32 which provided:

‘If the building works do not reach practical completion by the end of the building period the owner is entitled to liquidated damages in the sum specified in Item 11 of Schedule 1 for each working day after the end of the building period to and including the earlier of:

(a) the date of practical completion;

(b) the date this contract is ended; or

(c) the date the owner takes possession of the site or any part of the site.’

  1. The parties were free to complete item 11 of Schedule 1 in any amount that they saw fit. In this case the parties allowed $1.00 per working day as liquidated damages and initialled the relevant page of the contract.

  2. The contract defined the building period which I have stated was 36 weeks and obliged the builder to bring the building works to practical completion, which term was also defined, by the expiration of that period. The contract also allowed the builder to apply for extensions to the building period, which I have found the builder did not do. Clause 32 then stated that the owner would be entitled to liquidated damages at the pre-agreed rate if the builder failed to bring the building works to practical completion by the end of the building period. The liquidated damages were to run from the end of the building period to actual practical completion which clause 21 dealt with, or the date the contract was ended or the date the owner took possession of the site. The contract thus provided for the owners to be paid liquidated damages at the pre-agreed rate from date when the builder was contractually obliged to bring the building works to the state of practical completion to the date when the owners actually obtained possession of the site through any one of the alternatives referred to in clause 32, in the circumstances of this case, when the owners took possession of the site.

  3. Clause 32 is notable in that it does not give the owners an option as to whether they might claim liquidated damages or to claim damages at common law. In Turner Corporation Limited v Austotel the contract provided for contract administration by an architect. The clause in question relating to defects liability allowed the architect a discretion as to whether it would issue an instruction to the builder to rectify defects. The clause stated ‘The Architect may issue an instruction’. Despite this Cole J held that the contract was a ‘code’ in connection with the rectification of defects by the builder and the owner had no right to have defects rectified by others.

  4. I find that the contract in these proceedings is drafted in terms that make it clear that it provides a code so far as liquidated damages are concerned and if the building works do not reach practical completion by the end of the building period the owners’ only entitlement is to liquidated damages. Moreover the contract provides no indication that the owners’ common law rights to damages are in any way preserved or reserved. Another way of describing the position is a stated in Amann Aviation that the contract provided an agreed and comprehensive procedure for the owners’ damages in the event that the builder failed to bring the building works to practical completion by the expiration of the building period.

  1. The owners rely on a decision in the Victorian County Court which they contend supports their view that they are entitled to seek general damages consequent on the builder’s breach of contract in failing to bring the building works to practical completion by the end of the building period.

  2. That case is JJ Armstrong v Hope St Student Accommodation Pty Ltd [2017] VCC 1247. In that case the judge found that the heading of the liquidated damages provision ‘Liquidated damages may be payable’ was relevant as a guide to the meaning of the relevant clause. In the contract with which I am concerned clause 32 contains no such heading. In addition the relevant clause in JJ Armstrong v Hope St Student Accommodation was a ‘may’ clause. Clause 32 of the contract does not share these features and that I find is enough to distinguish JJ Armstrong v Hope St Student Accommodation and the reasoning therein contained from clause 32 of the contract. There is also the fact that in JJ Armstrong v Hope St Student Accommodation the proprietor had lost its right to liquidated damages because it conceded that those damages were unenforceable by reason of being a penalty, which is a further reason to distinguish that decision.

  3. The owners also rely on Bailey v Champion Homes Sales Pty Ltd [2017] NSWCATCD 91 in which there was a liquidated damages clause, referred to at [15] and a finding by the Senior Member at [58] that:

‘The builder knew through one of its representatives that the owners proposed to rent out the homes immediately on their completion. There was no restriction of the owners’ damages to those provided for in the contractual delay payment provisions.’

  1. The effect of that finding was that the owners were entitled to liquidated damages as found at [57] and general damages. There was no analysis or reasoning to support that finding. For that reason I decline to follow the decision.

  2. For the reasons provided I reject the owners’ claim for delay damages in the sum of $36,037.00.

The claim for $7,104.16

  1. This is a claim in damages for breach of contract and in compensation for breach of statutory warranty arising from the unlawfully claimed progress claims. As I understand the claim, the owners contend that they paid the builder’s claims earlier than they were required to under the contract with the result that they paid additional interest on those payments when they would not have, had the builder’s claims been made at the proper time.

  2. The owners rely on section 8A(2) of the Act which states:

‘A progress payment for residential building work under a contract to which this section applies is authorised only if it is one of the following kinds of authorised progress payments:

(a)  a progress payment of a specified amount or specified percentage of the contract price that is payable following completion of a specified stage of the work, with the work that comprises that stage described in clear and plain language,

(b) a progress payment for labour and materials in respect of work already performed or costs already incurred (and which may include the addition of a margin), with provision for a claim for payment to be supported by such invoices, receipts or other documents as may be reasonably necessary to support the claim and with payment intervals fixed by the contract or on an “as invoiced” basis,’

  1. Section 8A(4) of the Act prohibits demanding or receiving payment of an un-authorised progress payment and entering into a contract under which a party is entitled to demand or receive payment of an un-authorised progress payment. In addition a penalty is imposed for conduct which contravenes section 8A(4).

  2. The owners contend that the:

  1. construction start progress claim;

  2. frame and truss progress claim;

  3. internal linings progress claim;

  4. internal fix out progress claim; and

  5. practical completion progress claim

were all un-authorised by section 8A(2) of the Act.

  1. The contract contained two Progress Payment Schedules the first of which set out the payments to be made by the owners in stages which were described and the second which provided a description of the stages.

  2. The issue for determination is whether the builder has breached section 8A of the Act and if so what is the consequence of the breach. The Act makes it plain, in other provisions, if a contravention of the Act will have the effect that a claim is unenforceable, or if the contract is unenforceable. Thus section 10(1) of the Act states:

‘(1) A person who contracts to do any residential building work, or any specialist work, and who so contracts:

(a)  in contravention of section 4 (Unlicensed contracting), or

(b)  under a contract to which the requirements of section 7 apply that is not in writing or that does not have sufficient description of the work to which it relates (not being a contract entered into in the circumstances described in section 6 (2)), or

(c)  in contravention of any other provision of this Act or the regulations that is prescribed for the purposes of this paragraph,

is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person.’

  1. Section 94(1) of the Act provides:

‘(1)  If a contract of insurance required by section 92 is not in force, in the name of the person who contracted to do the work, in relation to any residential building work done under a contract (the uninsured work), the contractor who did the work:

(a)  is not entitled to damages, or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, in relation to that work, and

(b) is not entitled to recover money in respect of that work under any other right of action (including a quantum meruit).’

  1. I find that by reason of an absence of similar provisions as are set out in sections 10 and 94(1), section 8A of the Act does not prohibit, inter parties, a builder claiming and receiving money in connection with a progress payment which is not authorised under section 8A of the Act. As a result I find that the owners claim under this heading as pleaded and as developed in their submissions was misconceived.

  2. I find that the owners were not entitled by reason of section 8A of the Act to withhold payment to the builder until 19 December 2018.

  3. The owners claim as pleaded at [18] of their Points of Claim is dismissed.

The claim for $1,000.00

  1. This claim is for compensation for breach of contractual right of possession and the associated duty pleaded in paragraph 20 of the Points of Claim.

  2. This claim is developed at [63] – [67] of the owners’ submissions.

  3. Clause 13.1 of the contract stated:

‘The owner gives the builder exclusive possession of the site to carry out the building works’

  1. The owners’ submissions are that the builder’s licence as conferred by section 13.1 of the contract came to an end on 1 December 2017 when it asserted practical completion. I reject that submission based on the fact that the owners did not agree that practical completion had been achieved. They gave the builder notice of defects under clause 21.3(b) on 1 December 2017 which was updated on 8 December 2017. Plainly they did not accept that the building works had achieved practical completion. It follows I find that as at 1 December 2017 the builder’s right of possession under clause 13.1 of the contract remained in place because there was an expectation that the builder would carry out further work.

  2. Pursuant to clause 21.5(a) of the contract, on receipt of the owners 21.3(b) notice the builder was obliged to carry out the work required.

  3. The builder’s evidence is that after the practical completion meeting on 1 December 2017 he asked the owners to leave, secured the property and removed the service fuse as a safety precaution.

  4. The annexures to the builder’s evidence, exhibit 2, establish by his solicitor’s email dated 5 December 2017 that the builder had attended to work referred to in a report provided by the owners at practical completion. I therefore find based on this email that as at 5 December 2017 the builder’s right of possession to the site under clause 13.1 of the contract remained in place.

  5. On 11 December 2017 the builder’s solicitors again wrote to the owners stating that they had been given the owners’ notice dated 8 December 2017 as referred to at [64]. The solicitors stated that matters raised were not of a nature that would prevent practical completion, but were matters that would be attended to in the defects liability period. I find that this email fulfilled the requirements of clause 21.5 (b)(i) of the contract. Pursuant to clause 21.5 (b)(ii) of the contract the builder’s obligation to carry out work on the site was lifted. I further find that it was at this point that the builder’s right of possession under clause 13.1 came to an end.

  6. I further find that after this email the owners did not demand possession of the site until they gave Notice of Termination of the contract on 19 December 2017.

  7. I find that at its highest the builder remained in possession of the site without contractual justification from 12 – 19 December 2017 in circumstances where the owners did not put it on notice that it had no right to possession of the site or demand delivery of the site.

  8. At the same time the owners had the right to claim liquidated damages from the builder for its failure to achieve practical completion by the expiration of the building period.

  9. Nonetheless, I have found that the builder did improperly retain possession of the site for the relatively short period that I have referred to.

  10. It is on that basis that I will find for the owners in the amount claimed, $1,000.00.

The claim for $10,000.00 in exemplary damages for breach of contractual right of possession

  1. The owners claim $10,000.00 in exemplary damages for breach of contractual right of possession and the associated duty pleaded in paragraph 20 of their Points of Claim and for trespass

  2. The owners claim for exemplary damages for $20,000.00 based on the authorities cited, namely NSW v Ibbett [2005] NSWCA 445. The gist of the owner’s claim is that the builder acted in a manner that warrants an award of exemplary damages because it held possession of the premises in a period of time between as I have found 12 December 2017 to 19 December 2017.

  3. In connection with this period in December 2017 as referred to in the preceding paragraph, the builder was entitled to take the view that it had the right to possession of the site under clause 13.1 of the contract, even if that view was mistaken. I find that the owners did not disabuse the builder of that view on the basis now asserted and, as is the fact, on 8 December 2017 sent the builder a further notice under clause 21.3(b) of the contract listing work required to be completed before practical completion could occur.

  4. I have found that it was on 12 December 2017 that the builder’s right to possession of the site under clause 13.1 came to an end.

  5. The result is I find that the builder retained possession of the site 8 days longer than it was entitled to.

  6. I am unable to find that a breach of contract of that duration is sufficient to warrant an award of exemplary damages in the sum of $10,000.00 on the basis that the conduct complained of must be as illustrated by the numerous descriptions referred to by Spigelman CJ in NSW v Ibbett at [38] and following:

‘The authoritative statement in Australia of the purpose of an award of exemplary damages is that they are awarded to punish and deter. (Gray supra at [15], [31] and [32].) However, an equally authoritative statement is that such damages express the Court’s condemnation of objectively outrageous behaviour. (Lamb v Cotogno [1987] HCA 47; (1987) 164 CLR 1 at 10.) The joint judgment in that case at 8 quoted Pratt LCJ in Wilkes v Wood (1763) 98 ER 489 at 498-499 that exemplary damages are awarded:

“... as a punishment to the guilty, to deter from any such proceeding for the future, and as a proof of the detestation of the jury to the act on itself.”

This is the same as the threefold statement of purpose by Lord Devlin in Rookes v Barnard [1964] UKHL 1; [1964] AC 1129 at 1228:

“... to punish him for his outrageous conduct, to mark their disapproval of such conduct and to deter him from repeating it.” ‘

‘Subjective advertence to or knowledge of actual wrongdoing is not, in my opinion, essential before exemplary damages can be awarded.

This was the conclusion of Hodgson JA, with whom Sheller JA and Nicholas J agreed, at [9] and [147] in New South Wales v Riley [2003] NSWCA 208; (2003) 57 NSWLR 496, when his Honour said at [138]:

“In my opinion, as made clear in Gray, while ‘conscious wrong-doing in contumelious disregard of another’s rights’ describes the greater part of the field in which exemplary damages may properly be awarded, it does not fully cover that field. Similarly, malice is not essential: Lamb v Cotogno. Conduct may be high-handed, outrageous, and show contempt for the rights of others, even if it is not malicious or even conscious wrong-doing. However, ordinarily conduct attracting exemplary damages will be of this general nature, and the conduct must be such that an award of compensatory damages does not sufficiently express the court’s disapproval or (in cases where the defendant stood to gain more than the plaintiff lost) demonstrate that wrongful conduct should not be to the advantage of the wrong-doer.”

  1. I am unable to find that the builder’s conduct in remaining in possession of the site for the period of time that I have referred to was ‘outrageous behaviour’, ‘conscious wrong-doing in contumelious disregard’ of the owners’ rights to possession or high handed or outrageous conduct, which showed contempt for the rights of the owners such as to deserve the Tribunal’s condemnation of the conduct by an award of exemplary damages of $10,000.00.

  2. For these reasons the owners’ claim for exemplary damages is rejected.

Owners other claims not pleaded

  1. In their submission the owners refer to 16 issues.

  2. So far as set off is concerned, as matter of convenience and efficiency I will set off the amount found in the owners’ favour against the amount found in the builder’s favour without deciding the issue of set off in these proceedings, particularly when that defence has not been raised in pleadings.

  3. Insofar as the owners claim that the builder breached a statutory warranty in failing to achieve practical completion by the time required, I have found that it did fail to achieve practical completion.

  4. The owners’ submissions raise the issue of whether the owners were entitled to terminate the contract. I find that not having pleaded a claim for damages or relief based on a termination of the contract, the owners should not be permitted to raise such a claim in final written submissions. Although the Tribunal is not a forum in which the rules of pleadings are adhered to, I take the view that where a party takes the opportunity, as the owners have, to plead their case and their claims in in a detailed and organised way, they should not be permitted to raise claims not contained in their Points of Claim without leave and especially not in final closing submissions.

  5. The owners’ final written submissions raise a claim for loss of amenity and distress, not raised in their Points of Claim. Nonetheless Ms Corrigan’s statement, exhibit A foreshadows a claim for loss of enjoyment, loss of amenity, financial hardship and stress. She complains of considerable loss of income due to the extended delays in completing the building works. She also complains of stress caused by the delay in getting her house finished making it hard for her to cope in a high pressure environment, such as the one in which she works. She also complains of stress and anxiety and that she is furious regarding the delays and that the conduct of the builder has taken up so much of her time and that of her family. I find based on her evidence that her major complaints relate to financial hardship and stress and anxiety. I further find that her evidence does not provide a basis for loss of amenity.

  6. Mr Seaman also foreshadows a claim for damages for loss of enjoyment, loss of amenity, financial distress and hardship in his statement which is exhibit B in these proceedings. His evidence raises issues of strain caused by the builder’s delay and aggressive disputation at the end of the job which he states has affected him personally. He talks about constant stress and anxiety which has taken a toll on him emotionally mentally and professionally. He also talks of the emotional stress taken on his family life and that he finds it hard to sleep and the impact that it is having on his daughter. He also states that the building process has been one of the most horrible experiences in his life and fraught with anxiety and stress. I find that his evidence provides no basis for a claim for loss of amenity.

  7. In Scenic Tours Pty Ltd v Moore [2018] NSWCA 238 At [323] Sackville AJA (with whom Payne JA and Barrett AJA agreed) stated:

‘The primary Judge considered himself bound by authority to hold that a claim for damages for distress and disappointment not consequent upon physical injury or a psychiatric condition was a claim for “personal injury damages” for the purposes of the Civil Liability Act.[206] Such a claim was therefore within Part 2 of the Civil Liability Act. His Honour also considered himself bound by authority to hold that a claim for damages for disappointment and distress is a claim for “non-economic loss” for the purposes of s 16 of the Civil Liability Act. The primary Judge therefore concluded that:[207]

“the claim made by Mr Moore for damages for distress and inconvenience under s 267(4) is, subject to the issue of extra-territoriality which is dealt with below, otherwise caught by the provisions of Pt 2 of the [Civil Liability Act]. The evidence does not establish that the extent of Mr Moore’s disappointment and distress could reach the minimum threshold fixed by s 16 of the [Civil Liability Act] and, accordingly, this claim must fail because the Court could not make any award of monetary damages.”

  1. That view of the law was not overturned by the Court of Appeal.

  2. In Moore v Scenic Tours Pty Limited (No.2) [2017] NSWSC 733 Garling J. at [862] – [865] stated:

‘Barr AJ in Flight Centre Ltd t/as Infinity Holidays v Janice Louw [2011] NSWSC 132, was called upon to consider whether the Local Court had made an error of law in awarding damages to the plaintiffs in that court whose holiday was affected by construction noise and inaccessibility of parts of a resort by reason of construction activity. The Local Court had found that the plaintiff suffered loss, inconvenience, distress and disappointment as a result of that construction activity. An order in the Local Court was made for a sum of damages to reflect that loss.

The defendant in the Local Court, Infinity Holidays, sought relief in the Supreme Court pursuant to s 69 of the Supreme Court Act 1970 to quash the orders of the Local Court for error of law. The primary argument put to Barr AJ was that no award under that sum ought to have been given because s 16 of the CLA applied to it, and the relevant threshold was not reached. The central submission made by Infinity Holidays in the Supreme Court was that an award for inconvenience, distress and disappointment constituted “impairment of a person’s ... mental condition” and was therefore an award for personal injury as defined in s 11 of the CLA. Once so defined, the provisions of s 16 would apply.

Having referred to the relevant authorities, Barr AJ said at [31]:

“It seems to me that much assistance is to be gained from the several remarks of the members of the Court of Appeal in the cases cited. In my opinion, the inconvenience, distress and disappointment experienced by the first and second defendants constituted non-economic loss for the purposes of s 3 [of the Civil Liability Act], being pain and suffering. In my opinion, they constituted impairment of the mental condition of each of the first and second defendants and so amounted to personal injury. It follows that the assessor was obliged to ask himself, in accordance with s 16, whether the severity of the non-economic loss was at least 15% of a most extreme case. He did not do so. The plaintiff has established that there was an error of law ...”

Although I am not strictly bound by the decision of Barr AJ, it is appropriate that I follow it, unless I am persuaded that it is obviously wrong. I am not so persuaded.’

  1. In Tralee Technologies Holdings Pty Ltd v Yun Chen [2015] NSWSC 1259 Bellew J said at [54]:

54   Spigelman CJ re-visited the issue in Insight Vacations Pty Limited v Young [2010] NSWCA 137 (at [78]-[79]) and concluded that grief, anxiety, distress and disappointment were elements of pain and suffering within the definition of “non-economic loss” contained in s. 3 of the CLA. In the same case, Basten JA (with whose reasoning Spigelman CJ agreed) said (at [125]):

“It is undoubtedly true, as the Chief Justice noted in Ibbett at [21], that injury to reputation, deprivation of liberty and outrage, humiliation, indignity and insult are not commonly referred to as forms of personal injury; rather they usually derive from torts other than negligence, often intentional torts. Matters such as grief, anxiety, distress and disappointment, may fall into a different category. They can be elements of pain and suffering which are the subject of awards for non-economic loss. Similarly, as reflected in the definition of non-economic loss in the Civil Liability Act, an award may be made for “loss of amenities”, to cover the non-economic loss resulting from “the deprivation of the ability to participate in normal activities and thus to enjoy life to the full and to take full advantage of the opportunities that otherwise it might offer”: Teubner v Humble [1963] HCA 11; 108 CLR 491 at 506 (Windeyer J). … These, however, are heads of damage which fall within the general law understanding of non-economic loss and the statutory definition of that term. Accordingly, they are subject to the constraints imposed by s 16.”

  1. I find in accordance with the authorities referred to above that the owners claims for stress and anxiety, strain and emotional stress and loss of amenity, if the evidence establishes that state which in my view it does not, are impairments to their mental condition and therefore subject to the provisions of section 16 of the Civil Liability Act 2002. In addition I find that the activity of an owner attending site to view the progress of building works would be a normal occurrence, as frustrating as that may be in real life, and does not in my view constitute a loss of amenity for which an award for non-economic loss should be given. To the extent that loss or damage may be incurred after the building period has expired, such loss or damage arising from the builder’s delay, would in my view ordinarily come within the scope of liquidated damages provided for by the contract. The fact that the owners agreed to such a minimal amount for liquidated damages should not in my view allow them to an award of damages for loss of amenity. In any event I have found that a claim for loss of amenity is caught by section 16 of the Civil Liability Act 2002.

  2. As the owners have not established that the severity of their non-economic loss was at least 15% of a most extreme case, I dismiss their claim for damages for stress and anxiety, strain and emotional stress and loss of amenity.

Disposition of the proceedings

  1. I have found for the builder in the sum of $45,941.85 and for the owners in the sum of $1,000.00. As a result I will make an order in the builder’s favour in the sum of $44,941.85 which gives the owners a credit for the amount found in their favour.

  2. Finally I would observe that in these proceedings the owners’ have raised as many issues as possible in order to avoid payment of the builder’s final claim. With the benefit of hindsight, it would seem that the owners’ most prudent position would have been to have accepted practical completion between 5 and 11 December 2017, and for their concerns regarding defective work to have been addressed in the defects liability period of 13 weeks in accordance with the contract.

  3. It is difficult to form a view whether the owners’ conduct has been fuelled by their upset over the building process, or their desire to punish the builder by subjecting it to non-payment of the final claim and the process of these proceedings. In either case a more rational approach would have spared both parties the costs and stress of these proceedings.

Costs

  1. Any costs application must be lodged in the Tribunal and served on the costs respondent within 14 days of the date of this order either attaching or referring to the documents relied upon in support of the application.

  2. The costs respondent will have 14 days after the date it receives the application to lodge in the Tribunal and serve on the costs applicant its submissions, if any, in response to the cost applicant’s costs application, such submissions either attaching or referring to the documents relied upon.

  3. The cost applicant will have 14 days after the date it receives the cost respondent’s submissions to lodge in the Tribunal and serve on the costs respondent its submissions, if any, in reply, such submissions either attaching or referring to the documents relied upon.

  4. The parties must state in their submissions whether they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

  5. Subject to considering the parties submissions regarding a hearing on costs, the Tribunal will determine any costs application on the basis of the papers lodged in the Tribunal.

**********

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


Registrar

Decision last updated: 28 March 2019

Actions
Download as PDF Download as Word Document
Cases Citing This Decision

0