Ryan v Worthington
[2014] QCATA 277
•23 September 2014
| CITATION: | Ryan v Worthington [2014] QCATA 277 |
| PARTIES: | Andrew William Ryan (Applicant/Appellant) |
| V | |
| Steven Bryan Worthington t/as Worthington Simmons Builders (Respondent) |
| APPLICATION NUMBER: | APL189-13 |
| MATTER TYPE: | Appeals |
| HEARING DATE: | On the papers and 5 September 2014 |
| HEARD AT: | Brisbane |
| DECISION OF: | Senior Member Oliver Member Deane |
| DELIVERED ON: | 23 September 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The application for leave to appeal or appeal is allowed. 2. The orders of the Tribunal dated 3 April 2013 are set aside. 3. The matter is remitted to the Tribunal for determination according to law. 4. The proceeding is listed for a directions hearing on a date to be fixed. 5. The proceeding is listed for a further hearing on a date to be fixed. |
| CATCHWORDS: | APPEALS – DOMESTIC BUILDING DISPUTE – whether error in determination of loss and damage – whether breach of procedural fairness – whether adequate reasons for decision - whether claim for extension of time made within a reasonable time – whether reasons for increased time was reasonably foreseeable when contract entered into Queensland Civil and Administrative Tribunal Act 2009 (Qld) s 3, s 28, s 142, s146, s147 Pickering v McArthur [2005] QCA 294 Suvaal v Cessnock City Council (2003) 200 ALR 1 Dearman v Dearman (1908) 7 CLR 549 Fox v Percy (2003) 214 CLR 118 Chambers v Jobling (1986) 7 NSWLR 1 |
APPEARANCES and REPRESENTATION (if any):
| APPLICANT: | Andrew William Ryan represented by Mr MF Johnston of Counsel instructed by M&K Lawyers |
| RESPONDENT: | Steven Bryan Worthington t/as Worthington Simmons Builders represented by Mr DP Gardiner of Counsel instructed by Eaton Lawyers |
REASONS FOR DECISION
This matter was primarily heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) and was supplemented by a short oral hearing on 5 September 2014. Mr Worthington is a licensed building contractor. In January 2010 he contracted with Dr Ryan to perform extensive renovations on Dr Ryan’s residence. In August 2011 both parties purported to terminate the contract and subsequently claimed damages from the other. The learned Member’s substantive findings are contained in her reasons dated 3 April 2013. Essentially the learned Member found that Mr Worthington had validly terminated the contract and was entitled to damages and that Dr Ryan was not entitled to liquidated damages. Dr Ryan appeals the decision except for the finding that Mr Worthington is to pay to Dr Ryan the sum of $1,357.76 in respect of electricity charges.
Dr Ryan advances a number of grounds for appeal. He contends that all of the grounds relied upon are errors of law and therefore he has a right to appeal. In the alternative Dr Ryan contends that leave should be granted. Where grounds of appeal consist of an error of fact or mixed law and fact leave to appeal is necessary.[1] There are numerous authorities, in varying language but with unvarying emphasis, that leave to appeal will usually be granted where there is a reasonable argument that the decision is attended by error, and an appeal is necessary to correct a substantial injustice to the applicant caused by that error.[2]
[1]QCAT Act s 142(3)(b).
[2]Pickering v McArthur [2005] QCA 294 at [3].
The numbering of the grounds is different in the Application[3] to the detailed submissions[4]. Mr Worthington contends that leave is required in respect of two of the grounds as they are predicated on findings of facts. These appear to be Grounds 1 and 2 as originally set out in the Application which equate to Grounds 4 and 5 of the detailed submissions.
[3]Filed 6 May 2013.
[4]Filed 26 July 2013 and as amended 11 October 2013.
In these reasons we adopt the numbering in the detailed submissions.
Ground 1
Dr Ryan contends that the learned Member erred in law in awarding damages to Mr Worthington on a wholly different basis to that claimed, pleaded and argued thereby denying Dr Ryan procedural fairness contrary to section 28(3)(a) of the QCAT Act.
We are satisfied that there is a demonstrated error of law.
Dr Ryan relies upon Suvaal v Cessnock City Council[5] for the proposition that it is an error of law to decide a case on a matter not pleaded. That matter involved a decision before a Court.
[5](2003) 200 ALR 1.
The Tribunal does not conduct cases in the same way as Courts conduct cases. There is no provision for formal pleadings in the QCAT Act or Rules. In Go & MJ Nominees Pty Ltd v Hollywells Homewares Pty Ltd[6] it was held that the rules about a party being bound by the pleaded case do not strictly apply in a tribunal.
[6][2010] QSC 169.
In this Tribunal the application and response documents are usually brief and the Tribunal relies upon statements of evidence supplemented in this case by an oral hearing. This manner of conducting cases is consistent with the Tribunal’s objects to deal with matters in a just, economical, informal and quick manner.[7] However, as we observe later where the parties' legal advisers choose to conduct the case in more formal way, this cannot be ignored by the Tribunal.
[7]Ibid s 3(b).
Mr Worthington sought to recover amounts to which he says he was entitled following termination of the contract for Dr Ryan’s breach. The central issues to be determined were which party lawfully terminated the contract and the entitlements of each party upon that termination. Mr Worthington expressly claimed for monies outstanding in his final claim rather than for damages.
The Appeal Tribunal has recently considered a similar issue in Body Corporate for the Astor Centre CTS 6371 v Victorious Dyna Pty Ltd ACN 125095534 as Trustee[8]. In that case the Appeal Tribunal agreed that there had been a denial of natural justice where the Body Corporate was invited to make submission about the application, none were made and the adjudicator decided the application under a different provision of the Body Corporate and Community Management Act 1997 (Qld). The Body Corporate in that case contended upon appeal that the order made breached its entitlement to maintain a claim for legal professional privilege. Presumably the Body Corporate would have made submissions about this had the adjudicator indicated an intention to rely upon this provision.
[8][2014] QCATA 047.
Procedural fairness is a flexible notion.
In this case both parties were represented by lawyers and documents akin to pleadings were filed. The Appeal Tribunal has previously accepted that in such cases it is appropriate to have some regard to the pleaded case in considering the evidence[9].
[9]Airstrike Industrial Pty Ltd v Robertson & Anor [2014] QCATA 043.
Where parties are legally represented it is more likely than where parties are self represented that tactical decisions will be made during the conduct of the hearing as to the nature of evidence to be lead and the extent of cross examination pursued in opposing the claims being made against them. Also, final submissions will be tailored as to how the case was conducted. In such circumstances the Tribunal ought to be cautious in determining a matter, here the manner in which damages should be calculated, on a basis apparently available on the evidence but not raised during the hearing, or at least during closing submissions, without giving the parties an opportunity to make submissions either in writing or orally.
The mischief in adopting this course became apparent when we invited the parties to make further written and subsequently oral submissions in relation to Ground 2. This came about because there seemed to be an inconsistency in the learned Member’s findings of fact and the evidence upon which those findings were made. At the oral hearing on 5 September 2014 it became apparent that Dr Ryan was deprived of making specific submissions to the learned Member in relation to her findings as to the measure of damages. The specific issue raised was in relation to whether the amount of $17,844.38 in respect of ‘pending or forecast variations’ ought to be included in the assessment of damages having regard to the notation in Mr Cosker’s report that these matters were 0% complete but not included as items of incomplete work which had been quantified by the experts.
Dr Ryan submitted that he was not able to assist the Appeal Tribunal in many respects because of the way Mr Worthington’s case was run and the evidence lead at the original hearing which meant that these issues were not specifically canvassed. Counsel for Dr Ryan submitted that this demonstrated the prejudice suffered. There is substance to this submission.
We note that if the learned Member had not made findings consistent with QLine Interiors Pty Ltd v Jezer Construction Group Pty Ltd[10] despite neither party expressly raising the principle that would have constituted an error.[11]
[10][2002] QSC 088.
[11]Smith and Anor v Chesterton as administratix of the Estate of Southion deceased [2012] QCATA 117.
Section 146 of the QCAT Act sets out the Appeal Tribunal’s powers on appeal where the appeal is on a question of law. It does not provide for rehearing as compared to section 147 which relates to appeals on questions of fact or mixed law and fact.[12] If the question of law resolves the matter as a whole then the Appeal Tribunal may substitute its decision otherwise it is to remit the matter for further consideration.
[12]Ericson v Queensland Building Services Authority [2013] QCA 391 at [13].
We have no alternative but to allow the appeal and set aside the decision and return the matter to the learned Member for a fresh determination to be made according to law.
For the sake of completeness we address each of the other grounds.
Ground 2
Dr Ryan contends that the learned Member erred in law in her determination of loss and damage awarded to Mr Worthington.
As noted above we invited the parties to make further written and subsequently oral submissions in relation to this ground.
An appeal tribunal will not usually disturb findings of fact on appeal if it considers the conclusions of the decision maker below were able to be made on the evidence before them,[13] however may interfere if the conclusion is ‘contrary to compelling inferences’ in the case.[14]
[13]Dearman v Dearman (1908) 7 CLR 549 at 561; Fox v Percy (2003) 214 CLR 118 at 125-126.
[14]Chambers v Jobling (1986) 7 NSWLR 1 at 10.
We are satisfied that the learned Member erred in her calculation of loss and damage.
In view of the learned Member’s finding that Mr Worthington validly terminated the contract for Dr Ryan’s breach the measure of damages is that which would place Mr Worthington in the same position as if the contract had been performed.[15] In order for Mr Worthington to receive the unpaid balance of the full adjusted contract price he would have been put to the expense of completing the works[16] and therefore that cost is to be deducted from the unpaid balance of the full adjusted contract price.
[15]Gates v The City Mutual Life Assurance Society Limited (1986) 160 CLR 1.
[16]QLine Interiors Pty Ltd v Jezer Construction Group Pty Ltd [2002] QSC 088 at [112].
In particular Dr Ryan contends that the learned Member made errors in her application of Mr Cosker’s report and applied the incorrect cost to complete the work. Dr Ryan relies on page 5 of Mr Cosker’s report and to the calculation purporting to be the ‘costs to complete’ on that page being the forecast adjusted contract sum less the net value of the works.
This calculation does not represent the costs to complete the work. The costs to complete are found by identifying particular items of work not performed or incomplete items of work and finding a reasonable cost for performing those items of work.
Mr Cosker, Dr Ryan’s expert, in his report[17] sets out 15 items of incomplete work and its value in section 6. Those items were the subject of a joint experts’ report[18]. In the joint experts’ report Mr Cosker revised the value of the incomplete items to the amount of $37,577.98 (excl GST).
[17]Exhibit 22.
[18]Exhibit 23.
The learned Member accepted Mr Cosker’s evidence as to the value of the incomplete items of work and used that figure in the calculation of the damages at [42] of the reasons.
The learned Member included in her calculation of the full adjusted contract price an amount of $17,844.38 for forecast and pending variations. In doing so she accepted Mr Cosker’s evidence as to the adjusted contract price.
We specifically sought further submissions as to the justification of the addition of this amount in the assessment of loss having regard to the evidence contained in the “Construction Variations Summary” on page 10, items 31 – 36, of Mr Cosker’s report.[19]
[19]Direction dated 23 May 2014.
Mr Cosker’s report included the pending variations in the adjusted contract sum but his report indicates that they were 0% complete. His report does not clearly include an estimate of the costs to complete those items. The pending variations (items 31-36) listed on page 10 of Mr Cosker’s report do not appear to correspond to items 1-15 of incomplete work. The learned Member’s reasons do not clearly set out how she reconciled this conflicting evidence.
Including pending variations in the adjusted contract sum without offsetting any cost to complete would unduly inflate the damages payable to Mr Worthington. If the items were 0% complete the cost to complete the pending variations is not necessarily the amount claimed for the variation as amounts claimed will often include a profit margin.
Dr Ryan submits that while the report identifies the items ‘none of those variations were approved and consequently, Napier Blakeley did not take them into account’. This submission is inconsistent with the terms of the report in that Mr Cosker included these amounts in the adjusted contract price however it does provide an explanation as to why Mr Cosker did not consider these items further as to the state of completion and used a 0% complete notation. Dr Ryan’s submissions do not address the issue of whether the items are incomplete and the costs to complete, if any. Dr Ryan says these matters were not directly traversed at the original hearing.
Mr Worthington submits that the values included in item 31 – 36 with the exception of item 32 are not pending or forecast variations but were for work actually carried out. Mr Worthington accepts that item 32 was a pending variation and that no amount was in fact claimed for that item and that the amount of damages should be reduced by this amount.
At the oral hearing both parties accepted that we should either accept or reject the inclusion of the total amount for forecast and pending variations rather than embark upon an analysis of the evidence in respect of each.
The learned Member did not make any express findings in relation to whether the work the subject of the forecast and pending variations had been performed and whether the amounts were due and payable in respect of each item. In contrast the learned Member expressly accepted many aspects of Mr Cosker’s report in the calculation of damages. In the circumstances we are not satisfied that the evidence before the learned Member supported the inclusion of these amounts in the calculation of damages. On that basis the calculation of damages payable ought to be reduced by $17,844.38.
Subject to our finding in respect of Ground 1 we would set aside the learned Member’s decision as to the loss and damage suffered as a result of Dr Ryan’s breach of contract and its consequent termination and substitute our own decision.
Dr Ryan also contends that the learned Member’s inclusion of variation 37 was in error. The learned Member accepted Dr Ryan’s submission that if this sum forms part of the damages then Mr Worthington is required to deliver the Form 16 certificate.[20] The learned Member acknowledged that the certificate had not yet been delivered. Whilst the learned Member’s substantive reasons for her decision have been published she has not made final orders as she made directions for submissions as to the application of GST to the award of damages so that she could finalise the orders. That direction was stayed pending the outcome of this application for leave to appeal or appeal.[21]
[20]At [38].
[21]Direction Senior Member Stilgoe 7 June 2013.
It is premature to conclude that the inclusion of variation 37 in the damages was in error as no final order has been made. In view of the findings the learned Member may have intended to order that if the certificate is not delivered Dr Ryan is not obliged to pay the amount allowed in respect of this variation.
Dr Ryan also contends that the amount is in error because liquidated damages were not offset. Whether Dr Ryan is entitled to liquidated damages is the subject of another ground of appeal.[22]
[22]Ground 4.
Ground 3
Dr Ryan contends that the learned Member erred in law in failing to give adequate reasons for her calculation of the loss and damage particularly with respect to the cost to complete the building work.
A failure to provide sufficient or adequate reasons for a decision is an error of law.[23]
[23]Better Homes Queensland Pty Limited v O’Reilly & Anor [2012] QCATA 37 at [22].
We are not satisfied that an error has been demonstrated except to the extent identified in respect of Ground 2 and more generally Ground 1.
The learned Member set out the critical findings and their basis as follows as she:
a) found that the appropriate measure of damages was as provided for in QLine[24];
b) accepted Mr Cosker’s analysis in his report[25] of the value of the contract sum adjusted to take account of variations and provisional sums except for his inclusion of liquidated damages and his exclusion of variation 37 and accepted his analysis of the money paid[26];
c) accepted the costs of completing the works set out in the joint experts’ report[27] and preferred Mr Cosker’s assessment[28];
d) found that interest had accrued at the date of termination in the sum of $4,189.66[29].
[24]At [32].
[25]Exhibit 22.
[26]At [34 – 37].
[27]At [37].
[28]At [40].
[29]At [39].
Page 4 of the joint experts’ report[30] sets out Mr Cosker’s revised opinion of the costs to complete items 1 – 15, which totals $37,577.98, being the amount found by the learned Member as the cost to complete.
[30]Exhibit 23.
Ground 4
Dr Ryan contends that the learned Member erred in law with respect to the proper construction of clause 15.1 of the Contract which led to an error in finding that a letter dated 16 August 2011 was a valid claim for an extension of time and therefore Dr Ryan had no entitlement to liquidated damages.
We are not satisfied that there is a demonstrated error.
The Tribunal has previously observed that the construction of a contract is a matter of fact[31]. Accordingly leave would be required unless the finding was one not open on the evidence before the Tribunal which would constitute an error of law.
[31]Hodges v Queensland Building Services Authority [2013] QCAT 576.
Dr Ryan contends that upon a proper construction of clause 15.1 the claim for an extension of time must be ‘within a reasonable time’ from when the alleged delay first occurred and then periodically during the alleged occurrence of the delay whereas the learned Member found that the claim for an extension of time had been made within a reasonable time having regard to amongst other matters the last occurrence of the delay. Dr Ryan has not referred to any authority for the construction for which he contends.
Dr Ryan accepts that the delay must have in fact occurred before an extension of time is sought and that the claim must follow an actual event of delay as distinct from a possible future event of delay as clause 15.1 entitles an extension “equal to the period of the delay” which would not otherwise be capable of being known if the delay had not occurred.[32]
[32]Written submissions dated 30 November 2012 at [20].
Mr Worthington submits that the ongoing nature of the delays caused by inclement weather and the resultant affect of variation 9, removal of the pool from the scope of works which work continued until August 2011, were factors relevant to the finding as to whether the claim was made within a reasonable time after the delay occurred.
Whether the claim is made within a reasonable time once the delay has occurred involves questions of fact. Dr Ryan submits that the learned Member should have accepted the evidence of Mr Worthington and his partner, Mr Simmons where they accepted under cross examination that the time period for making the claim was not reasonable. These ‘concessions’ were before the learned Member. As was Mr Worthington’s and Mr Simmons’ evidence that they had no prior experience in making extension of time claims except as part of variation documentation. It was a matter for the learned Member to decide as to whether the claim was made within a reasonable time as a matter of fact in all the circumstances.
As stated earlier in these reasons an appeal tribunal will generally not disturb a finding of fact if the evidence before the Tribunal supports the facts found.[33]
[33]Lida Build Pty Ltd v Miller and Anor [2011] QCATA 219.
We accept that it may be prudent as a matter of managing client expectations to make extension of time claims periodically while a delay continues but the issue is whether the building contractor is time barred if he does not adopt that practice. The learned Member’s interpretation of the clause and her finding that the claim was made within a reasonable time was open on the evidence.
Ground 5
Dr Ryan contends that the learned Member erred in law with respect to the proper construction of clause 21.1 of the contract which lead to an error in finding that Dr Ryan did not validly terminate the contract on 12 August 2011.
We are not satisfied that there is a demonstrated error.
Clause 21[34] permits the owner to end the contract where the work is not finished within a period that is 1.5 times the initial contract period including allowed delays if the reason for the increase in time could reasonably have been foreseen by the building contractor when the contract was entered into.
[34]Mirrors section 90 of the Domestic Building Contracts Act 2000 (Qld) (the DBC Act).
Mr Worthington contends that this ground is reliant on findings of facts and therefore leave is required.
Dr Ryan contends that upon a proper construction any grounds for an extension of time to which the contract refers must have been within the contemplation of the parties at the time the contract was entered into and could ‘reasonably have been foreseen by the building contractor’. Dr Ryan has not provided any authority for this construction. Dr Ryan contends that the proper remedy provided to the building contractor under the terms of the contract to ameliorate the affect of this provision is to apply for an extension of time under clause 15 where such delays occur.
The consequence is that Dr Ryan contends he validly terminated prior to any application for an extension of time contained in the letter of 26 August 2011.
These submissions were considered by the learned Member and rejected. The learned Member’s interpretation of the clause and her findings, that the reasons relied upon by Mr Worthington were causative of the delay and that the delays caused by the pool builder, the extent of variations to the scope of work and the extent of rain could not have been foreseen at the date of the contract, were matters of fact open on the evidence.
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