Provincial Homes v Doyle

[2004] NSWSC 624

CITATION:	Provincial Homes v Doyle & Ors [2004] NSWSC 624
HEARING DATE(S):	3 May 2004
JUDGMENT DATE:	15 July 2004
JURISDICTION:	Common Law Division Administrative Law List
JUDGMENT OF:	Wood CJatCL at 1
DECISION:	I order that the orders of the Consumer Trader and Tenancy Tribunal in this matter, made on 31 March 2003, be set aside. I order the first and second respondents to pay the appellant's costs. In the event of the legislation applying, I direct that those respondents are to have a certificate under the Suitors Fund Act.
CATCHWORDS:	Appeal from Consumer Trader and Tenancy Tribunal - Tribunal's jurisdiction to hear application - categorisation of building claim under s 89B Home Building Act 1989 - definition of building services within s 84 - breach of contract.
LEGISLATION CITED:	Consumer, Trader and Tenancy Tribunal Act 2001 - 67(8) Home Building Act 1989 -s s 7, 10, 84, 89B, 89B(1)
CASES CITED:	Booker Industries Pty Limited v Wilson Parking (Qld) Pty Limited (1982) 149 CLR 600 Coal Cliff Collieries Pty Limited v Sijehama Pty Limited (1991) 24 NSWLR 1 Collings Homes v Head & Ors [2002] NSWSC 1219 Masters v Cameron (1954) 91 CLR 353 at 360 Perri v Coolangatta Investments Pty Limited (1982) 149 CLR 537 Randwick City Council v Nancor Trading Co Pty Limited [2002] NSWCA 108 Woolfe v Alexander Sussman t/as Sussman Construction Consulting Services & Anor [2001] NSWSC 702
PARTIES :	Provincial Homes Pty Limited (A) Anthony Doyle (R1) Stephanie Doyle (R2) Consumer Trader and Tenancy Tribunal (R3)
FILE NUMBER(S):	SC 30038/03
COUNSEL:	Mr I Faulkner SC (respondents)
SOLICITORS:	Dr D Doyle (Applicant)

- 29 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
ADMINISTRATIVE LAW LIST

WOOD CJ at CL

Thursday 15 July 2004

30038/03 Provincial Homes Pty Limited v Anthony Doyle, Stephanie Doyle, Consumer Trader and Tenancy Tribunal

JUDGMENT

1 HIS HONOUR: These proceedings have been brought by Provincial Homes Pty Limited (“Provincial”) in the Administrative Law List. They involve an appeal from the decision of the Consumer, Trader and Tenancy Tribunal (“the Tribunal”), which ordered Provincial to pay to the present respondents (“the Doyles”), the sum of $31,003.90 plus costs. The appeal is brought under s 67(1) of the Consumer, Trader and Tenancy Tribunal Act 2001, which permits an appeal to be made to this Court on a question which was decided by the Tribunal with respect to a matter of law. By reason of s 67(8) of the Act, a matter of law includes a matter relating to the Tribunal’s jurisdiction.

The Proceedings Before the Tribunal

2 The reasons of the Tribunal, delivered on 25 March 2003 record the following background to the dispute between the parties:

“5. It is common ground that around 27 June 1999, the applicants and the respondent entered into negotiations and that in August 1999, the applicants accepted the respondent’s ‘Acceptance of Tender’ document headed ‘Re Construction of Dwelling of Lot 114, No. 43 Bereen (sic) Street, Strathfield’ which the respondent issued with a 3 ½ page building quotation.
6. Further, that as a result of these transactions the respondent was to prepare building plans to construct a dwelling for the applicants and submit them to Strathfield Council (the Council) for approval. Following approval by the Council the respondent was to construct a ‘sovereign design home’ at a price of $280,039.00 non inclusive of finishes at 43 Barina (sic) Street, Strathfield (the premises). The respondent’s ‘quotation to build’ confirmed, among other things, that the parties would enter into a particular form of standard home building contract.
7. It is not in issue that the applicants were to engage other builders to demolish the existing home on the premises and a pool.
8. The applicants say that they terminated the agreement in September 2000. It is common ground that as at that date the Council had not determined the application for approval of the plans.”

3 After dealing with the preliminary jurisdictional issue which is at the heart of this appeal, the reasons recorded that the applicant’s case was pursued in the following way:

“THE APPLICANT’S CASE
28. It is the applicant’s case that the respondent led them to believe that it would construct a new dwelling at the premises by mid 2000.
29. The applicants say that the respondent assured them that it had previously dealt with the Council. This was one of the reasons why they engaged the respondent to carry out the building work.
30. The applicant’s say that it was an express or an implied oral term of the contract that the respondent would prepare all necessary drawings, specifications and drainage plans for submission to the Council and Sydney Water in a competent manner and within reasonable time.
31. In the alternative the applicants argue negligence. The applicants allege that the respondent was negligent in failing to prepare all necessary drawings, specifications and plans for Council approval in a proper and workmanlike manner and within a reasonable time.
32. As a result of these breaches or negligence the applicants allege that considerable delays occurred which entitled them to terminate the contract and seek the damages now claimed.
33. Although much of the applicants’ case went to the representations, negotiations and discussions they allege took place prior to the tender being accepted in around August 1999, it is not their case that these matters give rise to any action under the Fair Trading or Trade Practices legislation. The applicants’ solicitor confirmed on several occasions throughout the hearing that their cause of action is confined to one of breach of the contract and in the alternative, negligence. The applicants had amended their damages claim to $63,586 plus interest but advised in their written submissions that this was reduced to $58,118 plus interest.”

4 The issues as determined by the Tribunal, assuming that it had jurisdiction, were framed in the following terms:

“ISSUES
On the evidence before and matters put to the Tribunal, in order to determine the applications before me I must address the following issues:
1. Did the respondent fail to carry out the work within a reasonable time and in a competent and reasonable manner?
2. If the respondent failed to carry to the work within a reasonable time and in a competent and reasonable manner did this amount to a breach of the contract or negligence?
3. Are the applicants by virtue of their own conduct precluded from alleging that the delay in obtaining Council approval was the result of a contractual breach by the respondent?
4. Were the applicants entitled to terminate the agreement?
5. If the applicants were entitled to terminate the contract, to what damages are they entitled?
6. Is the respondent entitled to the amount sought under the cross claim?”

5 The following findings of fact were made in relation to the history of the transaction following execution of the original documentation:

“THE SEQUENCE OF EVENTS
39. For ease of convenience and clarity I have divided this period into the various phases set out below.
Acceptance of the tender in August 1999 to the lodgement of the plans with Council in November 1999
40. It is common ground that around 2 August 1999, the respondent received a $2,000.00 payment from the applicants with their acceptance of tender. In a letter of 2 August 1999, the respondent acknowledges acceptance of the tender and payment of this fee.
41. By acceptance of the respondent’s tender the applicants authorised the respondent to prepare all necessary drawings and specifications for submission to the Council and Sydney Water for approval, including the structural engineer’s design and drawings. They further acknowledged and agreed to the signing of a formal building contract once approval was obtained from the Council.
42. In a document dated 18 October 1999, the applicants authorised the respondent to redraw the drawings and acknowledged that a further payment of $600.00 would be added to the final tender. This document appears to have been executed by the applicants on 29 October 1999.
43. The respondents prepared the plans for Council which are dated 3 November 1999.
44. By letter dated 1 December 1999 the Council wrote to the respondent acknowledging receipt of the development application and noting the date of lodgement as being 30 November 1999.
Lodgement of the plans in November 1999 to Council’s response of 14 December
45. From 30 November 1999 (the date acknowledged by Council as being the date of lodgement of the plans) to 14 December 1999 the matter remained in Council’s hands.
46. On 14 December 1999 the Council wrote to the respondent requesting further information in relation to:
(i) site coverage, noting that site coverage is not to exceed 65% of the total site area; and
(ii) the requirement for external boundary walls not to exceed 10 metres or 40% of the length of the boundary.
Council notes that the northern wall of the premises did not comply with this later requirement. It would therefore be necessary either to amend the plan or provide written submission justifying a departure ‘from the code’ (any variations to this requirement would be considered on merit). This letter also states that further consideration of the development application would be deferred for a period of 28 days pending submission of the requested information.
Council’s letter of 14/12/99 to the lodgement of the amended plans on the 1/2/00
47. On 24 January 2000, the respondent sent a facsimile to the Council requesting ‘perusal and comment re amended plans’.
48. On 27 January 2000, the respondent faxed to the applicants the letter to the Council and the amended plans and a facsimile requesting them to make their decisions with regard to the general site landscaping. In particular the respondent required decisions relating to the position of paths, barbeque areas, clothes lines and paved or concrete areas etc, to calculate ‘the overall percentage’.
49. On 31 January 2000, the applicants faxed the respondent with a plan noting ‘site coverage. We need to discuss paths.’
50. On 1 February 2000, builders by the name of Bassett Demolitions wrote to the applicants advising of the cost of demolition of the premises.
51. On 1 February 2000, the respondent wrote to the Council in response to the Council’s letter of 14 December 1999, enclosing amended plans.
The period from 1 –23 February 2000
52. During this period the amended plans were in the hands of Council.
The period from 23 February to May 2000
53. On 23 February 2000, the Council wrote to the respondent to submit a drainage plan to indicate all proposed roof and paving areas. This letter notes that:
(i) Under Council’s ‘Storm Water Management Code’ the storm water was to drain all roof and paved areas to street by gravity. Under the subject plans drainage was at the rear of the premises. The owners were therefore required to have an easement to drain the site.
(ii) An alternative ‘pump out system’ would not be assessed unless a letter was submitted indicating an attempt to acquire an easement from the relevant neighbour (including an offer of reasonable compensation) had been unsuccessful. The letter states ‘if evidence of such an unsuccessful attempt has been submitted, a pump out system, on site storm water detention and a backup absorption trench designed to Council’s Storm Water Management Code will be considered.’.
54. On 29 February 2000, the Council advised the applicants that they had consented to the demolition of the premises.
55. In an undated letter the applicants’ neighbours advised that they would not consent to an easement.
56. On 14 March 2000, the applicants wrote to the Council advising of their neighbour’s refusal, referring to an alternative proposal and noting ‘Provincial (the respondent) will be putting forward the proposal to you’.
57. On 30 March 2000, the applicants personally attended the Councils’ premises to discuss the storm water issue. This is documented in a memorandum of 4 April 2000, from a Council officer.
58. On 26 April 2000, the applicants enclosed and forwarded a cheque to the respondent for $1,000 to engage a hydraulics engineer.
59. On 28 April 2000, Greg Timewall signed a document headed ‘Hydraulics Design Certification’.
60. On 3 May 2000, the respondent wrote to the Council attaching for Council’s approval ‘storm water details including hydraulics design certification’.
61. On 10 May 2000, the applicants received development approval for an in-ground swimming pool on the premises.
62. On 26 May 2000, the Council wrote to the respondent advising that the stormwater details were not acceptable in their current form for a number of reasons, including the need for an application for an exception to the disposal of water by gravity and the failure of the drainage plans to comply with Council’s requirements in the ‘Stormwater Management Code’. The letter notes that the application cannot be processed further ‘until the above details are supplied. Your consultant was advised of these reasons on 19 May 2000.’
The period from 26 May 2000 until September 2000
63. On 31 August 2000, the applicants’ solicitors wrote to the respondent requesting a meeting to discuss delays, financial losses suffered by the applicants and ‘where we proceed from here’. The letter states ‘in the meantime we are instructed to request that you do not incur any further expenses in this matter on behalf of our client without prior written consent.’
64. On 6 September 2000, the Council wrote to the respondent for submissions on amended shadow diagrams to assess the impact of overshadowing.
65. On 11 September 2000, the respondent wrote to the applicants confirming a telephone conversation of 8 September 2000 ‘that you have instructed us not to proceed with Council approval’.”
Jurisdictional Issue

6 A critical issue in the proceedings before the Tribunal was whether the Tribunal had jurisdiction to entertain the Doyles’ application. This issue turns upon whether or not the application fell within the definition of a “building claim” under s 89B (as in force at the time of the application) of the Home Building Act 1989 (“the HBA”). The HBA as it applied at the time of the application, relevantly provided:

89B
(1) Subject to this Division, the Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Division, whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section.

7 The Act further provided:

84 Definitions
building claims means a claim for:

(a) the payment of a specified sum of money, or
(b) the supply of specified services, or
(c) relief from payment of a specified sum of money, or
(d) the delivery, return or replacement of specified goods or goods of a specified description, or
(e) a combination of two or more of the remedies referred to in paragraphs (a) – (d),
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.

8 “Building goods or services” are defined in the same section as:

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.

9 “Residential building work” is defined in section 3 as:

any work involved in, or involved in coordinating 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.

10 Before the Tribunal, and again in these proceedings, Provincial submitted that the agreement between the parties was essentially one for the preparation by it of design plans for the Doyles’ home, and for obtaining approval from the Local Council of those plans, without any obligation to construct a home in accordance with those plans. It was submitted, accordingly, that it had not supplied “building services” of the kind which would bring the claim within the s 84 definition, and hence within the Tribunal’s jurisdiction under s 89B(1) of the Act.

11 This submission did not find favour with the Tribunal, which found, by way of a preliminary jurisdictional ruling, that:

“the agreement reached by the parties 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".

12 This ruling was adhered to in the final judgment, by which time the Tribunal's attention had been drawn to the decision of Master Malpass in Collings Homes v Head & Ors [2002] NSWSC 1219.

13 Collings Homes was a case in which the plaintiff carried on business as a designer of project homes which could be modified to meet individual requirements, and which also provided costings for building work, obtained development approvals, introduced its clients to a licensed builder who would enter into a building contract for a fixed price, and also procured the execution of such contracts. It entered into such an arrangement with the defendants, in return for an expected fee for its services.

14 Certain of the services were provided, in that applications had been made to the Council, and a licensed builder had been procured, who had entered into a contract. A sum of $20,000 had been paid to the plaintiffs by the defendants, before they decided not to proceed. The Council was asked not to process the development application, and the defendants sought a refund of the moneys which they had paid to the plaintiff. When the plaintiff refused to meet any repayment, the defendants brought an application to the Tribunal.

15 The plaintiff objected to the Tribunal entertaining the application upon the basis that the defendants’ claim was not a "building claim" within the meaning of s 84 of the Act. The Tribunal found that it had jurisdiction, and the orders which were then made for the repayment of moneys, led the plaintiff to institute the proceedings, which came before Master Malpass.

16 The Master concluded that the Tribunal had erred in determining that the application was a "building claim" under the Act, and set aside the decision and orders, which had been made by it. In coming to this conclusion reference was made to be decision of McClellan J (as he then was) in Woolfe v Alexander Sussman t/as Sussman Construction Consulting Services & Anor [2001] NSWSC 702, where his Honour had observed:

"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 redevelopment of a property or the means by which utilising suitable valuations and cash flow projections the re-development of property may be financed".

17 The Master thereafter observed:

"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.
36. In the circumstances, it was my view, that the plaintiff was entitled to have the determination as to jurisdiction disturbed and the decisions and orders of the Tribunal set aside. Accordingly, I have so ordered.”

18 In the present case, while accepting that Collings Homes narrowed the definition of "residential building work", the Tribunal held it to be distinguishable, upon the basis that the plaintiff’s work, in that case, could properly be regarded as "preceding or preliminary to work involved in construction of a dwelling". It did not involve either the construction of the dwelling or work involved in coordinating or supervising any such work.

19 By way of contrast, the Tribunal found that the present agreement was one that encompassed the entire construction process, starting with the design and ending with the construction of the home. In this regard, the Tribunal observed:

"21. On my findings (which are elaborated on below) when the applicants accepted the respondent's tender and paid $2,000.00 the agreement between parties was for the respondent to design plans in accordance with the "sovereign" home the applicant had selected, submit the relevant plans for approval and then subject to receiving approval, build that home. While the parties did not proceed to the construction phase to argue that the agreement can be dissected so as to encompass only the design and approval phase places an artificial and implausible interpretation on the agreement reached.

22. Not only had the applicants selected the "sovereign" home which was one of the style of homes the respondent was in the business of designing and building, they had also agreed to the particular residential building work written contract that they were going to enter into and to the price the applicants were to pay the respondent for building the home (subject to alterations, additions and variations).

“23. To suggest that the applicants would invest money and time required in plan preparation and approval process without intending to go onto the construction phase with the respondents or that the respondent would allow them to engage another builder to construct the ‘sovereign’ home defies logic. How, one may ask, were the applicants to arrange for another builder to construct the ‘sovereign’ home over which the respondent presumably has copyright and other rights?

24. Indeed the respondent’s cross-claim is founded on the basis that ‘due to the wrongful repudiation of the agreement by the applicants...(the respondent)...has lost the benefit of and has lost the cost (sic) to perform its obligations under the agreement’.

25. The respondent’s submissions go on to state ‘theoretically a claim might be made for the loss of profit which would normally be expected to flow to the builder on completion of a project home in the value of some $150,000’ and that ‘there can be no doubt that there was here a lost contract which went - on the evidence - to another more expensive competitor’.

26. Thus it seems the respondent itself recognises that it was a builder and that the agreement it entered into with the applicants was to design plans, organise the approval process and construct their home and that having completed the design and undertaken the approval process, it was the applicant's actions that prevented the respondent from proceeding with the construction phase.

27. As such it is my view that this matter comes within the ambit of the HB Act which, as noted by Master Malpass is ‘to make provision concerning the residential building industry’. I reject therefore the respondents submissions that the Tribunal is precluded from determining the matter on the basis of the Collings case."

20 The documents which appear to have constituted the agreement between the parties, are the tender dated 17 June 1999 and an acceptance letter being dated 20 July 1999.

21 The tender contained the following provisions of relevance:

"Dear Tony and Stephanie
Further to your recent visit to our display homes we are pleased to submit our quotation to build your new Provincial home.

We confirm your selection as being a "Sovereign" with R.H.S garage at Lot 114 No. 43 Bareena Street Strathfield.

Our price is fixed at $280,394.00 subject to your acceptance, and the payment of $2000.000 commencement fee within 14 days of the Tender date.

…

BASIC HOUSE PRICE 154,950.00

INCLUDED IN THE PRICE IS THE FOLLOWING : -

· Preparation of plans and specifications

· Submission of plans to Council for approval of Building Application

· Payment of fees to relevant authorities

· Submission to Sydney Water and payment of standard fees for water service and sewer inspection

· Surveyor to position home on your land

· Engineer new designs and certificates

· Raft slab construction"

22 The document proceeded to itemise the fixed site costs and provisional allowances included in the tender, as well as the client variations which were allowed for above the basic price. It detailed the Sovereign finishes, indicated the items for which provision had not been made, and advised under the heading "general information":

“

· We use the HIA Plain English Building Agreement

· Contract construction time is approximately 30 weeks"

23 It concluded:

“ HOW TO ACCEPT THIS TENDER AND PROCEED TO CONSTRUCTION

This tender is for 90 days and is subject to: -

1. A commencement fee of $2000.00, together with your signed acceptance being received within 14 days of the tender date.
2. Plans being approved by local council and Sydney Water.
3. Evidence of ownership of land
4. The owner producing written authority from the lending body that construction may commence and outlining lending criteria for payment of progress claims (this is issued after council approval and when mortgage documents have been signed)
5. Completion of all colour selections.
6. Signing of formal HIA Plain English Building Agreement…"

24 The acceptance form signed by the Doyles was in the following terms:

“ ACCEPTANCE OF TENDER
RE: CONSTRUCTION OF DWELLING AT
LOT 114 NO. 43 BAREENA STREET STRATHFIELD
Tender date: 17 June 1999
Tender price: $280 394.00

I/We hereby accept your tender for the construction of a dwelling at the above address.

You are hereby authorised to prepare all necessary drawings and specifications for submission to Council and Water Board for approval, including architectural working drawings, structural engineer design and drawings.

I/We acknowledge and agree to the signing of a formal building contract, namely the Housing Industry Association edition eleven agreement, as soon as formal building approval is obtained from Council.

As consideration for the above I/we enclose the commencement fee of $2000.00. This fee will be deducted from the contract price at first progress payment stage. I/we acknowledge that this fee does not cover Council damage deposits which will be my/our responsibility.

Should the construction not proceed for any reason, the commencement fee will not be refunded."

25 Provincial submits that properly construed, the agreement between the parties involved a preliminary contract to prepare plans and specifications for the proposed home, and to obtain the necessary approvals from the authorities, and an agreement to agree to enter into a formal building contract once the building approval was obtained from Council.

26 So far as appears from voluminous material which has been tendered, the Doyles did not execute a “formal building contract” of the kind referred to in the tender and acceptance documents.

27 During the hearing before me, Provincial sought to argue that, since there had been no Council approval or entry into a building agreement within the period of 90 days mentioned in the tender, the agreement established between the parties on 20 July 1999 lapsed. It followed, so it was submitted, that all of the work which it undertook after that date was of a design or preliminary kind, and for the reasons that were determinative in the cases of Woolf and Collings Homes it did not fall within the definition of “residential building work”. Its case, in effect, was that once approval was obtained, the parties would then need to re-negotiate a contract for the building or construction work, at a price that might take into account any variations which were required, by reason of conditions imposed under the development approval, as well as any movements in building costs (including GST) occurring between the time of acceptance of the tender and the obtaining of the development approval.

28 The respondents submitted, correctly in my view, that such submission was not open to Provincial since it had not conducted its case upon that basis before the Tribunal.

29 Irrespective of that consideration, it appears to me that any such argument based on the 90 day tender period was misconceived. As I read the documents, the 90 days was the period for acceptance of the tender. It was not a date for performance of the several events which were listed in the tender under the heading “How to Accept this Tender and Proceed to Construction”.

30 That this is so is confirmed by the fact that the acceptance form, proffered by Provincial to the Doyles, called for an acknowledgment and agreement, on their part, to sign “a formal builders contract, namely the Housing Industry Association edition eleven agreement, as soon as formal building approval is obtained from Council”.

31 There was nothing in the tender, or acceptance of document to suggest that performance of these various events, within the 90 days, was a condition precedent to the existence of a contract: see Perri v Coolangatta Investments Pty Limited (1982) 149 CLR 537 at 552 per Mason J.

32 In any event, it is clear that each of the parties continued to act after the 90 day period, upon the basis that the contract remained on foot.

33 Provincial next contended that so far as the agreement called upon the Doyles to enter into a formal building contract, it was only an agreement to agree, which was not legally enforceable, being one which fell into the third of the three classes of case referred to in Masters v Cameron (1954) 91 CLR 353 at 360 to 362. There Dixon CJ and McTiernan and Kitto JJ said:

“Where parties who have been in negotiation reach agreement upon terms of a contractual nature and also agree that the matter of their negotiation shall be dealt with by a formal contract, the case may belong to any of three cases. It may be one in which the parties have reached finality in arranging all the terms of their bargain and intend to be immediately bound to the performance of those terms, but at the same time propose to have the terms restated in a form which will be fuller or more precise but not different in effect. Or, secondly, it may be a case in which the parties have completely agreed upon all the terms of their bargain and intend no departure from or addition to that which their agreed terms express or imply, but nevertheless have made performance of one or more of the terms conditional upon the execution of a formal document. Or, thirdly, the case may be one in which the intention of the parties is not to make a concluded bargain at all, unless and until they execute a formal contract.
In each of the first two cases there is a binding contract: in the first case a contract binding the parties at once to perform the agreed terms whether the contemplated formal document comes into existence or not, and to join (if they have so agreed) in settling and executing the formal document; and in the second case a contract binding the parties to join in bringing the formal contract into existence and then to carry it into execution. Of these two cases the first is the more common. Throughout the decisions on this branch of the law the proposition is insisted upon which Lord Blackburn expressed in Rossiter v Miller when he said that the mere fact that the parties have expressly stipulated that there shall afterwards be a formal agreement prepared, embodying the terms, which shall be signed by the parties does not, by itself, show that they continue merely in negotiation. His Lordship proceeded: ‘ . . . as soon as the fact is established of the final mutual assent of the parties so that those who draw up the formal agreement have not the power to vary the terms already settled, I think the contract is completed’
…
Cases of the third class are fundamentally different. They are cases in which the terms of agreement are not intended to have, and therefore do not have, any binding effect of their own: Governor & c of the Poor of Kingston-upon-Hull v Petch . The parties may have so provided either because they have dealt only with major matters and contemplate that others will or may be regulated by provisions to be introduced into the formal document, as in Summergreene v Parker or simply because they wish to reserve to themselves a right to withdraw at any time until the formal document is signed. These possibilities were both referred to in Rossiter v Miller . Lord O’Hagan said: ‘Undoubtedly, if any prospective contract, involving the possibility of new terms, or the modification of those already discussed, remains to be adopted, matters must be taken to be still in a train of negotiation, and a dissatisfied party may refuse to proceed. But when an agreement embracing all the particulars essential for finality and completeness, even though it may be desired to reduce it to shape by a solicitor, is such that those particulars must remain unchanged, it is not, in my mind, less coercive because of the technical formality which remains to be made’” (References omitted).

34 It is well established, as was confirmed in Booker Industries Pty Limited v Wilson Parking (Qld) Pty Limited (1982) 149 CLR 600 at 604 and Coal Cliff Collieries Pty Limited v Sijehama Pty Limited (1991) 24 NSWLR 1 that the courts will not lend their aid to the enforcement of an incomplete agreement, that is one which is no more than an agreement to agree at some time in the future. The position was succinctly stated by Handley JA in Coal Cliffe Collieries at 40, thus:

It is established law both in England and Australia that agreements to agree or contracts to make contracts containing terms which have not yet been ascertained are not legally enforceable. The principle was stated clearly by Lord Wensleydale in Ridgway v Wharton :

‘... An agreement to enter into an agreement upon terms to be afterwards settled between the parties is a contradiction in terms. It is absurd to say that a man enters into an agreement till the terms of that agreement are settled. Until those terms are settled he is perfectly at liberty to retire from the bargain.’

See, also, Von Hatzfeldt-Wildenburg v Alexander; Chillingworth v Esche and May & Butcher Ltd v The King where Lord Buckmaster said:

‘... It has long been a well recognized principle of contract law that an agreement between two parties to enter into an agreement in which some critical part of the contract matter is left undetermined is no contract at all.’

In the same case Viscount Dunedin said:

‘... To be a good contract there must be a concluded bargain, and a concluded contract is one which settles everything which is necessary to be settled and leaves nothing to be settled by agreement between the parties. Of course it may leave something which still has to be determined, but then that determination must be a determination which does not depend upon the agreement between the parties.’


See, also, Sudbrook Trading Estate Ltd v Eggleton .

In Australia this has been treated as settled law: see Masters v Cameron ; Godecke v Kirwan and Booker Industries Pty Ltd v Wilson Parking (Qld) Pty Ltd .” (References omitted).

35 In my view the present agreement was one that constituted more than an agreement to agree, in so far as it provided for the parties to enter into the formal building contract which was referred to in the tender and acceptance documents.

36 That contract was identified as the current form of Housing Industry Association Plain Language Building Contract and there was no suggestion that the parties had in contemplation further negotiations in relation to any of its terms. The tender was both comprehensive, and on its face, complete, in relation to the price, which was an inclusive price encompassing the preparation of plans and specifications, the submissions of plans to the relevant authorities, the procurement of a survey as well as of engineering designs and certificates, and the construction of a “Sovereign” home and garage with the variations and finishes that were specified in the tender documents. There was no allocation of costs between these items.

37 I consider the case to be one that, in relation to the construction aspect, fell within the second limb of Masters v Cameron, being one where the parties had agreed on all of the terms of their bargain and intended no departure from, or addition to, their terms, but had made the performance of the building work conditional upon execution of the formal HIA contract. In that regard it was of a similar nature to that which came before the Court of Appeal in Randwick City Council v Nancor Trading Co Pty Limited [2002] NSWCA 108.

38 If I am in error in that regard then, in my view, it fell, at least, in the so-called “fourth category” of the Masters v Cameron cases, in so far as the building phase was concerned. That category was conveniently described by Stein JA in Nancor Trading at para 37, thus:

“That is, that a legally binding preliminary agreement has been concluded but the parties expect to make a further agreement which, by consent, might include further terms. However, in the interim the parties are to be bound by what they have agreed. See Sinclair Scott & Co v Naughton , Baulkham Hills Private Hospital Pty Limited v G R Securities Pty Ltd . More recently see Handley JA in Brunninghausen v Glavanics , with whom Priestley JA and I agreed.” (References omitted).

39 Upon either formulation, the agreement would have allowed for variations to be made and costed in accordance with the HIA Plain Language Contract in relation to any additional work that might have become necessary to construct the home in accordance with Council or Sydney Water requirements, or in accordance with any additional changes desired by the Doyles.

40 It was submitted by Provincial that as the contract constituted by the tender and acceptance documents did not conform to the requirements of the Home Building Act 1989, as set out in s 7, that this was a further indication that the parties did not, as at 20 July 1999, enter into a contract to do any residential building work. In that regard it pointed to the somewhat draconian provisions of s 10 which, in the absence of a s 7 compliant contract, would have prevented it from making any claim for damages, or from enforcing any other remedy in respect of any breach of the contract by the Doyles, although preserving its liability to them for any breach on its part, and would also have exposed it to prosecution (s 7A).

41 As I understand the submission, which was advanced in this respect, it was to the effect that such were the potential consequences for Provincial, that it should not be lightly inferred to have conveyed an objective intention to be bound immediately to a contract to build the relevant home, that was not compliant with the Act, particularly since the documents envisaged the subsequent execution of a formal contract that would comply.

42 I am not persuaded that this submission has any validity. The intention of the parties is, in my view, to be determined by reference to the documents which were proffered and signed. Upon their face the agreement included an obligation “to build” the relevant residential building, once the necessary approval and other requirements were satisfied, as well as an obligation to supply the preliminary services identified.

43 As I read the relevant legislation, which I have set out earlier, the jurisdiction of the Tribunal is not enlivened by, nor does it depend simply upon, the existence between the parties of a contract to construct a dwelling. Rather, for the Tribunal to have jurisdiction, there must be a claim which is of the kind referred to in s 84 that is a claim which arises from “a supply of building goods or services”.

44 As I have also noted earlier, residential building work means, relevantly “any work involved in…the construction of a dwelling”.

45 Since, it is by reference to the nature of the claim, and the services supplied that the question of jurisdiction is to be determined, rather than the nature of the contract between the parties, it is necessary to focus upon the precise basis of the claim which the Doyles brought. That claim was originally particularised in the following terms:

“The respondent caused the applicants significant distress and financial loss amounting to approximately $41,500.00 by:
1. Failing to meet the requirements of money paid by the applicants for the preparation of Council approved building plans;
2. Failing to exercise proper care in the preparation and submission of plans to Strathfield Council.
3. Failing to exercise proper care in their advice to the applicants concerning projected commencement dates;
4. Failing to exercise proper care and due diligence in responding to the Council’s requirement.
The Applicant’s loss was made up of:
1. $3000 paid to the respondent for Council approved plans;
2. Loss of rent caused by 3. above amounting to approximately $8,500;
3. Additional building costs cased by the GST of approx $30,000 caused by 2. and 4. above.”

46 An amended claim was lodged, on 10 September 2001, in the following terms:

“ APPLICANTS AMENDED CLAIM
1. The applicant entered a contract with the respondent to build a residence at 43 Bareena Street Strathfield, in June 1999. It was a term of the contract that the respondent would prepare plans and specifications for the Council and Sydney Water;
3. It was an implied term of the contract that the respondent would prepare the plans and specifications for the Council and Sydney Water in a competent manner, and within a reasonable time, and do all things necessary to have the plans approved by the Local Authority, within a reasonable time;
4. It was an express term of the contract that the Applicants would sign a further contract namely the Housing Industry Association edition eleven agreement, as soon as formal building approval was obtained from Council;
5. The respondent 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;
6. As a result, the Applicants terminated the building contract;
7. The applicants have suffered loss and damage as a result, and claim that there has been a complete failure of consideration under the contract, or alternatively claim damages for breach of the contract.”

47 The particulars supplied of the financial loss included claims for:

a) Payments made to Provincial, namely the commencement fee of $2000 and the $1000 paid for drainage plans;
b) additional cost of constructing a comparable dwelling by another builder, that is, the difference between the value of the contract with Provincial and the replacement value of the contract in the open market at the time of Provincial’s alleged breach.
c) loss of rent;
d) additional cost of building a swimming pool;
e) additional cost of related building work;
f) additional land tax;
Plus interest.

48 That the Tribunal dealt with the matter as one based upon contractual breach, and in the alternative, negligence, appears from paragraphs 28 to 33 of the reasons for its decision.

49 In whatever way that the cause of action was formulated, it involved an assertion that Provincial failed to prepare the necessary drawings, specifications and drainage plans for submission to the Council and Sydney Water in a competent manner and to obtain development approval within a reasonable time, leading to delays which entitled the Doyles to terminate the contract and to recover damages (see paras 30 to 32 of the reasons set out above).

50 The first of the issues which the Tribunal identified (that is, whether Provincial failed to carry out the work within a reasonable time and in a competent and reasonable manner) was resolved in favour of the Doyles (paras 66 to 85 of the reasons).

51 This failure was held to amount to a breach of contract (see paras 119 to 125 of the reasons). The findings concerning the existence of the breach were to the following effect:

“87. On the sequence of events I have outlined above I have found that at the time the applicants accepted the respondent’s tender in August 1999, it was to prepare the plans, seek approval and construct the dwelling.
88. I am satisfied that this was a contractual agreement which as I found in my previous jurisdictional rule, was for the supply of building services in relation to residential building work as defined under the HB.
89. As such, there were implied into that contractual agreement under the HB Act, statutory warranties that the respondent do the work within a reasonable time and in a proper manner (s 18B(a) and (d)).
90. In view of my findings in 1 (sic) above I find that the respondent was in breach of those implied statutory warranties.
91. Even if this were not the case and these statutory warranties were not implied into the contractual agreement I am satisfied that the respondent’s failure to have obtained a determination from the Council some 13 months after the applicants accepted the tender amounts to a breach of the agreement between the parties.
92. The respondent submits that if time is of the essence the party desiring same must give clear notice of that fact. It is not my understanding that the applicants allege time to be of the essence. Rather, that the respondent was obliged to carry out the approval process with Council within a reasonable time and failed to do so.
93. Where the contract does not specify the time within which the works are to be completed, a term will be implied which binds the contractor to complete within a reasonable time: Cahrnock v Liverpool Corp [1968] 3 All ER 473; Perri v Coolangatta Investments Pty Ltd (1982) 139 CLR 537 per Brennan J at 567; Woolcock Engineering Pty Ltd v SWF Joists and Industrial Equipment Pty Ltd (2001) 17 BCL 28.
94. I have found for the reasons given above that 13 months without a formal determination of the approval process by Council was not a reasonable period of time and that the blame for this ultimately rests with the respondent.
95. I further find that this amounts to a breach by the respondent of the contract.
96. In view of these findings it is not necessary that I deal with the alternative cause of action of negligence raised by the applicants.”

52 It is clear from the foregoing that the claim which the Doyles made, and which was determined by the Tribunal, related to the performance by Provincial of the preliminary design and approval services which it was obliged to supply, and which it was held not to have supplied in a competent and timely manner.

53 If it were not otherwise clear, that is made perfectly obvious in the Tribunal’s summary of findings as follows:

“ Summary of Findings
1. The Tribunal has jurisdiction to determine the proceedings
2. The parties entered into a contractual agreement under which the respondent was required to design, seek statutory approval for and construct a new dwelling for the applicants.
3. The respondent breached the contract by failing to carry out the statutory approval phase within a reasonable time and in a competent manner.
4. This breach amounted to a repudiation of the contract by the respondent which the applicants were entitled to and did accept.
5. As a direct result of the respondent’s repudiation the applicants are entitled to damages of $28,00319.30 (sic) for the additional cost of building and $3,000.00 for money paid to the respondent for which they received no benefit.
6. As I have found that the applicant (sic) were entitled to accept the respondent’s repudiation the cross-claim is dismissed.”

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.

62 In those circumstances it is unnecessary to consider the remaining grounds of appeal, which relate respectively to whether or not, by its conduct, Provincial repudiated the contract, and to whether the Doyles were entitled to recover damages referable to the additional costs of having a comparable dwelling constructed by another builder.

63 I order that the orders of the Consumer Trader and Tenancy Tribunal in this matter, made on 31 March 2003, be set aside. I order the first and second respondents to pay the appellant’s costs. In the event of the legislation applying, I direct that those respondents are to have a certificate under the Suitors Fund Act.

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Last Modified: 07/16/2004