PETER STANNARD HOMES PTY LTD and NG

[2007] WASAT 301

JURISDICTION	:	STATE ADMINISTRATIVE TRIBUNAL
STREAM	:	COMMERCIAL & CIVIL
ACT	:	BUILDERS' REGISTRATION ACT 1939 (WA)
CITATION	:	PETER STANNARD HOMES PTY LTD and NG [2007] WASAT 301
MEMBER	:	DR B DE VILLIERS (MEMBER)
HEARD	:	23 OCTOBER 2007
DELIVERED	:	23 NOVEMBER 2007
FILE NO/S	:	CC 846 of 2007
BETWEEN	:	PETER STANNARD HOMES PTY LTD Applicant
AND
MAY CHEN NG Respondent
Catchwords:

Building disputes review - Error in law - What is meant by a delay in construction - Intent of the parties is clearly expressed in contract

Legislation:

Builders Registration Act 1939 (WA), s 41(1)

Result:

Application for leave to review the decision of the Building Disputes Tribunal succeeds

[2007] WASAT 301

Category: B

Representation:

Counsel:

Applicant	:	Mr S Pentony
Respondent	:	N/A

Solicitors:

Applicant	:	Hotchkin Hanly
Respondent	:	N/A

Case(s) referred to in decision(s):

Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119
Wilson v Metaxas (1989) WAR 285

[2007] WASAT 301

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

1              The applicant sought leave to review a decision of the Building

Disputes Tribunal (BDT) pursuant to s 41(1) of the Builders Registration
Act 1939 (WA) (BR Act).

2              The applicant contended that the BDT erred in law in its decision

that the respondent was not liable to pay an additional sum due to the delay in commencement of construction of the house. The error would, if unreversed, cause a substantial injustice to the applicant.

3              The respondent contended that the BDT did not err in law and that

the delay was caused by the actions of the applicant. The applicant can therefore not claim an additional sum due to the delay. The respondent further contended that if it was necessary for the BDT to clarify its reasoning in regard to what caused the delay, the matter should be referred back to the BDT.

4              The Tribunal found that the BDT erred in law since the construction

it gave to the contract could not be substantiated. The contract allowed for the builder to increase the contract sum if a delay is suffered and the delay cannot be attributed to the failure of the builder to comply with an obligation arising under the contract.

Background

5              The application was lodged on 29 April 2007 and the first directions

hearing took place on 14 June 2007. At the first directions hearing, the Tribunal ordered the BDT to provide its reasons for decision, particularly in regard to the issue under consideration. The next directions hearing took place on 8 August 2007 at which further programming orders were made for the leave to review application to be heard.

6              The Tribunal explained to the parties that the application for leave to

review would be progressed in two phases. This was done in particular to assist the respondent who was not legally represented. The first step of the review process is aimed solely on the question whether leave to review should be granted. If leave is granted, the parties will be invited to make further submissions regarding the merit of the matter. The second step would be a hearing de novo. If leave to review the decision is refused, the matter is concluded and the decision of the BDT stands. It is only when leave is granted that additional evidence and information may be submitted to the Tribunal.

[2007] WASAT 301

7              Both parties made detailed written submissions, and further oral

submissions were made during the hearing which took place on
23 October 2007.

8              The Tribunal indicated to the parties at the closure of the hearing that

it was of the view that leave to review the decision of the BDT should be granted since the BDT may have erred in law. The Tribunal reserved the reasons for its decision and encouraged the parties to make further attempts to find common ground and to settle the dispute so as to save them time and costs. The parties notified the Tribunal that they were unable to reach agreement.

1. These are the reasons for the decision to grant leave to review.

Factual background

1. The facts, as set out in the BDT reasons for decision, giving rise to the dispute can be summarised as follows.

11            The parties entered into a lump sum building contract on

22 November 2005. It was a term of the contract that if there was a delay in commencement of the works beyond the period of 45 working days after the signing of the contract, the applicant may increase the contract price on the basis of an established formula.

1. Any increase in contract price was, however, subject to two qualifications, namely:

   (i)       if the delay is caused "solely by the failure of the Owner to comply with a condition imposed on the Owner by this Contract"; or

   (ii)      if the delay occurs "without any failure on the part of either the owner or the Builder to comply with his or her obligations under the Contract."

13            The 45 day period expired on 27 January 2006 by which time work

had not commenced. The applicant increased the contract sum
by $10 437.

14            The respondent lodged a complaint with the BDT and it found that

"there can be no basis in this case for the price increase claim made by the
builder."

[2007] WASAT 301

1. As a result of the finding, the BDT ordered that the increased amount need not be paid.

2. The applicant is seeking a review of the decision.

Grounds for and against giving leave for review

1. The applicant contended, in short, that leave for review should be granted on the following grounds:

• The BDT erred in finding that cl 6 of the building contract had not been met and that as a result thereof, the applicant could not levy the increased construction amount.

• The BDT erred in finding that the "mere effluxion of time is not a delay" and that "delay" as per cl 6(b) of the building contract should be interpreted to mean a delay "caused by an intervening event/circumstance or third party action or inaction that makes it impossible to commence the building works."

• The BDT should, on proper construction, have found that the works did not commence within 45 days after the date of the contract, that the reason for delay could not be attributed to either party being in breach of its contractual obligations, and that the delay was due to the fact that variations sought by the respondent had not been finalised by 27 January 2007.

• Leave for review should therefore be granted for the matter to be heard de novo.

1. The respondent contended, in short, that leave for review should be refused on the following grounds:

• The evidence before the BDT was that only minimal variations to the contract had been sought and that, in any case, those variations did not cause any delay. Even if variations caused a risk of works being delayed, the applicant could have rejected the variations.

• The applicant should not be allowed to benefit by deliberately or through its own negligence not commencing with the works, and as a result, increase

[2007] WASAT 301

the contract sum. The applicant caused through its actions the delay in construction; for example, it failed to deliver the final building plans on time and it failed to properly check the final building plans.

• Even if the applicant were justified in increasing the contract sum, the amount should be less than what it claimed. The exact amount would be determined if the application for review was successful.

• The respondent agreed, under duress, to a price increase merely to ensure that her home was completed as soon as possible.

• The respondent also raised several other concerns about the ethics of the applicant's conduct but those allegations do not relate directly to the leave for review sought.

Principles for successful review

19            The Tribunal explained to the parties during the directions hearing

that the following principles must guide the decision of the Tribunal in regard to an application for leave to review. These principles are set out in Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119 and it follows the Supreme Court decision in Wilson v Metaxas (1989) WAR 285 at 294.

1. The principles are:

(a)	It must be shown that the decision in respect of which review is sought is wrong or at least attended with sufficient doubt to justify the grant of leave; or
(b)	Substantial injustice would be done if the decision is unreversed. What constitutes substantial injustice depends on the circumstances of each case; or
(c)	If there is a significant question of law to be considered; and
(d)	Account must be taken by the Tribunal that the intent and purpose of the legislation may be frustrated if ordinary principles of appeal are applied and that the Tribunal must therefore be slow to grant leave unless in cases

[2007] WASAT 301

where there is no discernable basis for the decision or

where the rules of natural justice have been breached.

Relevant contractual provisions

1. The relevant provisions of the contract are as follows.

2. Clause 6(b):

   "If there is a delay in the commencement of the Works beyond the period of FOURTY-FIVE [sic] (45) working days after the date of this Contract being a delay:

(i)	that is caused solely by the failure of the Owners to comply with a condition imposed on the Owner by this Contract …; or
(ii)	that occurs without any failure on the part of either the Owner or the Builder to comply with his or her obligations under the Contract

then the consequences to, and the rights and remedies of,
the parties are set out in clause[s] 22(d) and (e)."

1. Clause 22(d):

"(i)  The Builder may by notice in writing to the owner:

(a) increase the Contract Price by an amount set out in the notice; …"

Consideration

1. The Tribunal will consider the evidence and submissions of the parties under the following headings:

• was there a delay in construction commencing;

• if yes, can the delay be attributable to the failure of the respondent to comply with a condition of the contract or did the delay occur without any failure on the part of the applicant or respondent;

• did the BDT err in its finding.

25            The parties are in agreement that the construction did not start within

45 days from the date upon which the contract was signed. The final day

[2007] WASAT 301

for construction to have commenced was 27 January 2006 and it is agreed
that it had not commenced.

26            The parties are also in agreement that the failure to commence

construction was not attributable to any failure of the respondent to
comply with a condition of the contract.

27            That brings me to the possibility that the delay was caused due to a

failure on the part of the applicant to comply with its contractual
obligations.

28            The BDT found that the mere fact that a delay in construction has

occurred does not necessarily mean there is a "delay" in a manner provided for by the contract. According to the BDT, if the delay in construction is not caused by either of the parties as foreshadowed in cl 6(b)(ii), it "must therefore be a delay caused by an intervening event/circumstance or third party action or inaction that makes it not possible to commence the building works." (par 29 BDT reasons). Following this construction of the contract, the BDT concluded that the applicant has "failed to point to any such event/circumstance or third party" as the reason for not commencing with the construction within the 45 day period. The BDT therefore found that there "has not been in the sense of the Contract a delay" and therefore there can be no basis for the price increase.

1. The Tribunal does not find the analysis of the BDT convincing and believes that it may have erred in law.

30            The BDT does not explain why it has come to the conclusion that the

ordinary meaning attributed to the word "delay" should in this matter not be given its plain English interpretation of "to impede the progress of" (The Macquarie Concise Dictionary Third ed, Macquarie University, 2004).

31            If the contract had provided that a "delay", which is not due to an act

or omission of the builder or the owner, could also be attributable to an intervening event or circumstance or third party action, the interpretation given by the BDT may have withstood the scrutiny. But the contract does not provide for such a qualification. There is no need for the Tribunal to go beyond the words agreed to by the parties in cl 6(b)(ii) since their intention is clearly expressed.

32            Clause 6(b)(ii) of the contract anticipates that if a delay is caused

"without any failure on the part of either the Owner or the Builder",

[2007] WASAT 301

the increase in contract price may be charged. Although the Tribunal understands the concerns expressed by the respondent, namely, that such a general provision may be abused, the Tribunal is limited to what the parties have agreed to.

33            There is nothing in the contract that supports the interpretation of the

BDT that a delay for purposes of cl 6(b)(ii) is only taken to have occurred due to an external event or circumstance or intervention by a third party.

34            Clause 6(b)(ii) merely requires that a delay had occurred without the

failure of the applicant or the respondent to comply with an obligation under the contract. The BDT did not find that the applicant was at failure to comply with a provision of the contract. If the BDT had found that the builder was at failure to comply with a provision of the contract, the builder would not have been allowed to increase the contract sum.

35            The Tribunal notes that the respondent contended during the hearing

that the variations it had sought to the contract were not of such a nature that it could have delayed commencement of construction. The respondent was of the view that the applicant was solely responsible for the delay and that the respondent should therefore not be required to pay the increased sum. The Tribunal explained to the parties, and particularly to the respondent, that if leave for review is granted, the question of whether the actions of either party could be interpreted as to constitute a failure to comply with its obligations under the contract would be considered.

36            The parties agree there was a delay. The BDT did not find the delay

was due to a failure of the applicant to comply with an obligation arising from the contract. As a result of the delay, the applicant may therefore increase the construction sum in a manner provided for in the contract.

37            The Tribunal therefore finds that the BDT erred in its conclusion that

a delay had not occurred and as a result there could not be a price

increase.

1. Leave for review should therefore be granted.

Orders

1. Leave is granted to review the decision of the Building Disputes Tribunal decision dated 1 May 2007 (Complaint No 16906/1&2).

[2007] WASAT 301

2.        The matter is adjourned to a directions hearing on 6 December 2007 at which programming orders for the hearing will be finalised.

I certify that this and the preceding [38] paragraphs comprise the reasons for decision of the State Administrative Tribunal.

___________________________________

DR B DE VILLIERS, MEMBER