Robinson v Homemakers Pty Ltd ACN 620 949 555 Trading as Concord Building
[2020] ACAT 27
•22 April 2020
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
ROBINSON v HOMEMAKERS PTY LTD ACN 620 949 555 TRADING AS CONCORD BUILDING (Civil Dispute) [2020] ACAT 27
XD 726/2019
Catchwords: CIVIL DISPUTE – whether there was one contract or two – right to withhold final payment
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 15,16
Cases cited:Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499
Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337
Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226
Elketron v Rabbi Benzion Milecki [2018] NSWCA 141
Taylor v Johnson [1983] HCA 5
Tribunal: Senior Member A Anforth
Date of Orders: 22 April 2020
Date of Reasons for Decision: 22 April 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL XD 726/2019
BETWEEN:
JAMES ROBINSON
Applicant
AND:
HOMEMAKERS PTY LTD TRADING AS CONCORD BUILDING ACN 620 949 555
Respondent
TRIBUNAL:Senior Member A Anforth
DATE:22 April 2020
ORDER
The Tribunal orders that:
The respondent is to pay to the applicant the amount of $5,598.91 plus the tribunal lodgement fee in the amount of $156.
The total amount of $5754.91 is to be paid by 31 May 2020.
………………………………..
Senior Member A Anforth
REASONS FOR DECISION
Introduction
The applicant is a licensed bricklayer in the ACT. The respondent is a property development and building company.
The respondent contracted with the applicant to undertake bricklaying at two sites in Taylor in the ACT, these will be described as 9/14 Taylor and the other as 17/17 Taylor. There was no written contract, most dealings between the parties were oral.
The applicant completed the work at 9/14 in December 2018 and was paid in full by the respondent in the sum of $21,155.09, which was calculated on a ‘per brick rate’ and labour set out in the invoice. The respondent did not withhold any part of the invoiced amount.
The oral contract for the work at 17/17 Taylor was entered between the parties in January 2019 on similar terms. The work was completed and invoiced on 21 February 2019 in the sum of $ $21,098.99. The respondent paid this invoice minus the sum of $5,598.99 (the retained amount).
After the brick work at 17/17 Taylor was finished and the invoice was paid minus the retained amount, the respondent engaged a third party to clean the bricks at both sites.
The respondent asserted that after the high-pressure brick cleaning by the third party was completed, defects in the brickwork and damages to a wall became apparent.
The respondent claimed that the defects and damage were caused by the “poor workmanship and substandard skill” of the applicant. The applicant denied this and asserted that it is common and well known in the industry that high-pressure cleaning may cause damage to the brickwork. Regardless, the applicant agreed to the respondent’s request to repair those defects, subject to first being paid the retained amount.
The respondent refused to pay the outstanding amount and had a second third party rectify the defects and damage. The cost of rectifying the defective brickwork was said to be $2,200 and the damage to the wall at $55.
The respondent still did not pay the applicant the residue of the retained amount after deducting these amounts.
The applicant commenced the present proceedings in ACAT on 13 July 2019 claiming the whole of the retained amount. The matter did not resolve through the tribunal mediation process and was listed for hearing on 13 December 2019 and orders were made for the filing of evidence and submissions relied upon. Neither party complied with those directions.
At the hearing the applicant appeared in person and Mr Grady Lee, who is the only shareholder of the respondent, appeared for the respondent.
There was a general discussion in an attempt to define and narrow the issues and to reach a resolution to the matter. The invoices and emails between the parties were reviewed and the calculations checked. Documents from NSW Fair Trading on building standards were tendered.
The Tribunal noted that in the absence of a written contract or documents recording the agreement. The Tribunal would need to infer or imply the terms of their agreement from the parties’ own oral evidence, conduct, other indirect written sources and industry practice.
There was no independent expert evidence of the nature the defects in the brickwork and the cause thereof. This made it difficult for the Tribunal to determine whether the applicant or the third party were at fault.
The parties had adopted an entrenched and highly adversarial position. Each made a range of statements and accused the other of lying. It was not practicable to conduct the hearing in the normal judicial mode. No formal cross examination process occurred.
The applicant’s case was that there were two distinct contracts, one for each site. He completed the work on the first site and was fully paid. He did not later refuse to return to the site and repair the defects of the brickworks at that site. He was prepared to do so after he was fully paid on the second site. The respondent had no right to without payment on the second site contract for alleged defective work on the first site.
The work on the first site was at an agreed rate per brick which the respondent did not challenge and paid. Approximately the same rate was charged on the second site. At no point had the respondent questioned this rate, moreover, the minor difference between the invoices seems reasonable.
It was only after the applicant commenced proceedings in ACAT that the respondent raised the allegation of defective work and the brick rate.
The respondent’s explained the reasons for withholding the retained amount as follows:
(a)There was only one contract that covered both sites and so the respondent was entitled to withhold the retained amount for defects on either site.
(b)The applicant was contractually obligated to make good any defects, but refused to do so.
(c)The respondent at no time agreed to rate per brick on either site.
(d)The respondent asserted the right to deduct from the retained amount the following:
The outstanding amount $5,598.99 Cost of repairs -$2,200 The difference due to wrong invoice $1,178.54 Back charging for damages to the wall -$55 Total of deduction $2,165.45
At the end of the hearing, the Tribunal offered the parties three options:
(a)They come to a negotiated resolution.
(b)The hearing be adjourned for the parties to file and serve relevant expert report(s), whether it be one agreed expert or an expert for each party.
(c)Leave the matter to the Tribunal’s judgement on the evidence before it; fully accepting and acknowledging that the Tribunal is in no position to evaluate the technical claims raised in the submissions.
Both parties preferred alternative 3. The Tribunal emphasised that the parties must each understand, accept and acknowledge that the Tribunal shall make its judgment with no particular knowledge of evaluating the technical aspects of bricklaying, building quality, material and the usual standard of workmanship or skill. The parties said this option continued to be their preference and they accepted the limitations.
The jurisdiction of ACAT
The matter is within the jurisdiction of the Tribunal under the ‘civil dispute’ section of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act).
Section 16 of the ACAT Act defines a ‘civil dispute’ as follows:
In this Act:
civil dispute means a dispute in relation to which a civil dispute application may be made.
civil dispute application means an application that consists of 1 or more of the following applications:
(a) a contract application;
(b) (…)
(c) a debt application;…
Section 15 of the ACAT Act adds definition to the above:
contract application means an application in relation to a contract, and includes an application for damages for breach of contract.
…
debt application means an application for the recovery of a debt.
The debt was generated by the oral contract between the parties. As such the relevant body of law is contract law.
The relevant law
There are several essential elements to the formation of a legally valid and enforceable contract:
(a)Intention – the parties must intend their exchanged promises to create legally enforceable obligations.
(b)Agreement – there must be an offer by one party and an acceptance by the other party on the mutually understood subject matter of the contract.
(c)Consideration – there must be an exchange of something of value from each party to the other.
(d)Essential terms – contracts of different kinds have different terms which are essential to their existence. In the present instance the essential terms include the specifications of the work to be done, the basis of the remuneration and the time for payment.
In the present case there is a shortage of written evidence of the contract. In Taylor v Johnson [1983] HCA 5 the High Court said that a court/tribunal may look at the external actions of the parties to determine whether a contract existed and the terms thereof. In Adnunat Pty Ltd v ITW Construction Systems Australia Pty Ltd [2009] FCA 499 at [39] per Sundberg J:
A contract may in certain circumstances be inferred from conduct, even where no offer and acceptance can be identified…However the existence or otherwise of an enforceable agreement depends ultimately on the manifest intention of the parties, objectively ascertained…Where mutual promises are sought to be inferred, the conduct relied upon must, on an objective assessment, evince a tacit agreement with sufficiently clear terms. It is not enough that the conduct is consistent with what are the alleged to be the terms of a binding agreement. The evidence must positively indicate that both parties considered themselves bound by that agreement….
The tasks above dovetails with the task of identifying the implied terms of a contract. The High Court in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales[1] identified five elements that are required to imply terms into a contract:
(a)It must be reasonable and equitable.
(b)It must be necessary to give effect to business efficiency, (the contract cannot be effective without it).
(c)It must be obvious i.e “goes without saying.”
(d)It be clearly expressed.
(e)It must not contradict an express term of the contract.
[1] (1982) 149 CLR 337
In Elketron v Rabbi Benzion Milecki,[2] the Court of Appeal in New South Wales reaffirmed that a term can be implied based on custom or normal industry practice. The Court said that there must be evidence that:
the custom relied on is so well known and acquiesced in that everyone making a contract in that situation can reasonably be presumed to have imported that term into the contract.[3]
[2] [2018] NSWCA 141 at [44]
[3] Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226, 236-237
In the present case neither party denied their intention to enter a binding contract. The preliminary contractual issues concerned:
(a)whether there was one contract to cover the work at both sites which justified the respondent retaining a sum from payment on the second site for alleged defects and damages on the first site;
(b)whether there was an agreed rate per brick.
The Tribunal finds that there were two separate contracts, one for each site. The work on the first site was completed before agreement to do the work on the second site. The applicant rendered an invoice for the work on the first site and it was paid in full. There is no evidence to suggest that the respondent was under a contractual obligation to contract the applicant to do the work in the second site.
In accordance with this finding the respondent had no right to withhold payment for the second site by reason of alleged defects on the first site.
The rate per brick was set out on the invoices. It was never challenged by the respondent until the hearing in ACAT. The respondent paid the invoice for the site. The Tribunal accepts that the applicant invoiced at the agreed rate. It is not unreasonable to have different rates per material. The respondent has not shown any evidence of this disagreement.
It was both industry practice and common ground between the parties that their contract required the applicant to repair defects after completing the work. The applicant stood ready willing and able to do so at the first site, but only after the respondent paid the money due on the second site. The applicant however, did not have the right to do this for the first site. He had been fully paid for his work on the first site and this enlivened his obligation to complete the repairs.
The applicant was prepared to attend to repairs of the bricks at the second site but only after payment of the retained amount. This raises the issue whether the respondent had a contractual right to retain the final payment until the applicant carried out the repairs. There was no evidence to reflect a contractual term for such a right, yet, it may be implied by the conduct of the parties. This leads to the following conclusions:
(a)If the right to retain the final payment was an implied term, then the applicant was in breach in refusing to repair the damage until he is fully paid. This assumes that the defects were due to the applicant’s work.
(b)Since the respondent was not able to satisfy the burden of proof of showing that the defects were in fact caused by the applicant, the Tribunal has determined that it was not necessary to pursue this issue. For that reason, the claim of the respondent for the deduction of $2,200 fails.
There is no itemisation or breakdown of the defects between the sites, but in order for the respondent to succeed on this claim it must establish that the applicant caused the damage and defects. There is no evidence for this and there is an obvious alternative explanation, namely the work of the third party cleaning the bricks was the cause.
Even if the respondent had been able to make out his claim per paragraph 19 above, the fact remains that he did not pay the applicant the remainder of the amount, which was not in dispute. This results in the applicant’s claim to be successful.
………………………………..
Senior Member A Anforth
HEARING DETAILS
FILE NUMBER: | XD 726/2019 |
PARTIES, APPLICANT: | James Robinson |
PARTIES, RESPONDENT: | Homemakers Pty Ltd Trading as Concord Building |
COUNSEL APPEARING, APPLICANT | N/A |
COUNSEL APPEARING, RESPONDENT | N/A |
SOLICITORS FOR APPLICANT | N/A |
SOLICITORS FOR RESPONDENT | N/A |
TRIBUNAL MEMBERS: | Senior Member A Anforth |
DATES OF HEARING: | 13 December 2019 |
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