Seow and Pillinger
[2008] WASAT 308
•24 DECEMBER 2008
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: COMMERCIAL & CIVIL
ACT: BUILDERS' REGISTRATION ACT 1939 (WA)
CITATION: SEOW and PILLINGER [2008] WASAT 308
MEMBER: MR T CAREY (MEMBER)
HEARD: 12 NOVEMBER 2008
RESPONDENT'S WRITTEN SUBMISSIONS FILED 18 NOVEMBER 2008
APPLICANT'S WRITTEN SUBMISSIONS FILED 27 NOVEMBER 2008
DELIVERED : 24 DECEMBER 2008
FILE NO/S: CC 584 of 2008
BETWEEN: JUNE SEOW
Applicant
AND
ANTHONY PILLINGER
Respondent
Catchwords:
Application for leave to review decisions of the Building Disputes Tribunal - Whether applicant denied procedural fairness - Circumstances where intervention on costs decisions warranted - Whether any error made out in dismissal of complaints - Invitation to reconsider under s 31 State Administrative Tribunal Act 2004 (WA)
Legislation:
Building Registration Act 1939 (WA), s 12A(1)(a), s 33A, s 38(4), s 41
State Administrative Tribunal Act 2004 (WA), s 31
Result:
Application successful in part
Category: B
Representation:
Counsel:
Applicant: Mr T Thies
Respondent: Mr K Burgoyne
Solicitors:
Applicant: Thies Barrister and Solicitor
Respondent: Kevin Burgoyne
Case(s) referred to in decision(s):
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Bellgrove v Eldridge (1954) 90 CLR 613
Braham v Evans [2008] WASC 274
Commissioner for ACT Revenue v Alphaone Pty Ltd (1994) 49 FCR
Re Will of Gilbert (dec'd) (1946) 46 SR (NSW) 318
Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344
Tangent Nominees Pty Ltd and Edwards [2005] WASAT 19
Tangent Nominees Pty Ltd and Edwards [2006] WASC 45
Willshee v Westcourt Ltd [2008] WASC 18
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
The applicant sought leave to review a number of aspects of the decisionmaking by the Building Disputes Tribunal regarding complaints she made against the respondent, a builder who performed building works to the applicant's house. She submitted that the Building Disputes Tribunal made various errors in awarding costs against her. She claimed the Building Disputes Tribunal was wrong to, first, hear, and to dismiss her complaint of defective work in relation to a verandah constructed over an existing soakwell. Finally, she contended the Building Disputes Tribunal also erred by dismissing a complaint concerning the respondent's failure to render the rear wall as the building contract provided.
In relation to each of the two substantive alleged failures, the applicant raised preliminary issues predicated upon there having been an order to remedy made by a registrar, which, the applicant said, could only be overturned given certain conditions. In any event, she claimed no proper notice of the intent of the Building Disputes Tribunal to deal with those matters was given and the applicant was denied a proper opportunity to be heard in relation to them. The State Administrative Tribunal (Tribunal) considered the law and the facts in relation to these claims and on so doing it was not satisfied that leave was justified.
Regarding the costs issue, the applicant's claim that she was denied procedural fairness in two respects was rejected on the facts, the Tribunal finding the applicant was given ample notice of the relevant statutory criteria governing costs. Further, the Tribunal refused to enter into a critical analysis of what the Building Disputes Tribunal had done in its consideration of the relevant factors, once it was satisfied that there had been no conduct in excess of jurisdiction nor application of an incorrect principle. One exception to this was the use made to the soakwellrelated claims as illustration of the applicant's reliance on unmeritorious claims, the Building Disputes Tribunal's treatment of those claims being the subject of error identified by the State Administrative Tribunal.
The errors identified in relation to the soakwellrelated claims were found to have the effect of fettering and distorting a consideration of the claims, which depended upon a variety of interconnected factors. The reasoning of the Building Disputes Tribunal concerning the failure to render claim was to a significant extent supported, and in particular the application of common law principles bearing upon where, as here, the benefit accruing in requiring conformity with the contract was disproportionate to the cost to the builder. It was found that the Building Disputes Tribunal erred in failing to consider whether any lesser amount of damages should be awarded on the basis of the relevant authorities.
The State Administrative Tribunal determined that the most appropriate course was to invite the Building Disputes Tribunal to reconsider its decision in accordance with s 31 of the State Administrative Tribunal Act 2004 (WA) , that the application for leave in respect of the matters identified for that reconsideration be adjourned, and that the application be otherwise dismissed.
Introduction
This is an application for leave pursuant to s 41 of the Builders Registration Act 1939 (WA) (BR Act) to review a small number of decisions of the Building Disputes Tribunal (BDT). I use the term 'small number' advisedly, as there has been a number of decisions, and many more findings, of the BDT in proceedings between the parties, and in the early stages of the proceeding before the State Administrative Tribunal (Tribunal), it appeared that leave to review was being sought in relation to a significant proportion of them.
At the hearing of the leave application on 12 November 2008, counsel for Ms Seow (owner) informed me that leave was sought in relation to the following three items:
1)The order of the BDT on 20 May 2008 that the owner is liable to pay Mr Pillinger's (builder) costs of the BDT proceedings on a particular basis.
2)The BDT's decision not reflected in any order but referred to in reasons for decision published on 11 March 2008 that the owner's complaints concerning a verandah extension constructed over a soakwell (soakwellrelated complaints) be dismissed.
3)The decision of the BDT reflected in orders originally issued on 24 July 2007 to dismiss the owner's complaint that the builder failed to provide at the rear of the house a projecting dado brick course and render above it in accordance with the contract drawing.
I will deal with each item in turn. Before doing so, I will outline the principles applying to applications for leave to review under s 41 of the BR Act.
Leave to review applicable principles
The principles governing the grant of leave to review decisions of the BDT are set out conveniently by Senior Member Raymond in Tangent Nominees Pty Ltd and Edwards [2005] WASAT 19 at [35] [44]. The principles were not the subject of dispute and are summarised below:
•It must be shown that the decision in respect of which leave is sought is wrong, or attended with sufficient doubt to justify the grant of leave.
•In addition, something further must be demonstrated. Substantial injustice resulting from leaving the decision unreversed is a common further requirement, although it is no more than a guideline for the exercise of a broad discretion to grant or withhold leave.
•The additional factor element may in some cases be satisfied if it is shown that a significant question of law is to be considered.
•This Tribunal should be slow to grant leave except in cases where clearly there is no discernable basis for the decision of the BDT, or other cases of apparent error, for example, where rules of procedural fairness have been breached.
•The grant of leave will be limited to such grounds as this Tribunal determines (this principle being upheld by the Supreme Court in Tangent Nominees Pty Ltd and Edwards [2006] WASC 45).
Costs decision
On 15 May 2008, the BDT ordered that the owner pay the builder's costs to be assessed by the BDT on the sum of $44,000 against the relevant Legal Costs Committee determinations for the period during which the respondent was legally represented (costs order). I am informed that since the hearing of the leave application, these costs have been assessed by the BDT at $19,236. As the BDT explained in its reasons accompanying the costs order (costs reasons), $44,000 equated to the difference between the final order to pay and the owner's claim. No objection was taken by the owner to the basis upon which the costs were ordered to be assessed. The owner's challenge concerned the fact that any costs order was made in the circumstances of the case.
The owner alleged that three errors were involved in the costs order and the costs reasons:
a)the owner was given no, or no adequate, notice of the prospect that the costs decision might be made (first claimed error);
b)the owner was not informed of the importance to any costs decision of the factors referred to in s 38(4) of the BR Act. As an unrepresented party, she should have been directed to respond to each of those matters (second claimed error); and
c)the BDT erred in applying the s 38(4) factors to the facts in a number of respects (third claimed error).
Before considering these alleged errors, it is convenient to refer to the costs reasons, including reciting parts of those reasons, and to some general considerations concerning the review of decisions on costs.
The costs reasons
At 10 and a half pages of substantive content, the costs reasons are unusually long in the context of the BDT. They commenced with some background facts, including that they followed on from decisions concerning liability of the parties (145 pages) and assessment of respective claims (27 pages), and that each party had made competing applications for costs.
The costs reasons then dealt with each party's filed documents. Under the heading 'The Complainant's Submissions', the BDT said:
The complainant produced to the Tribunal a full account of the costs incurred by her in prosecuting her complaints and in responding to the respondent's application. At all times the complainant has maintained that she should be reimbursed her legal and other costs by the respondent. It has been assumed by the complainant that if she was successful in her applications, she would be fully indemnified for the legal and other costs incurred by her in prosecuting the complaints and responding to the applicant's application. The complainant's submissions do not address the matters referred to in s 38(4) of the (BR Act) which section directs that the Tribunal must consider the specified matters in respect of any costs application.
The complainant failed to make any submission at all as to her entitlement to an award of costs and has merely identified the accounts for which she seeks a contribution or reimbursement.
The costs reasons went on to deal with the respondent's submission and the complainant's response to that submission, the extent of legal representation of both parties in the proceedings, the law regarding costs in the BDT, the facts and the decision. Under the heading 'The Facts', the BDT dealt with aspects of the factors for consideration by the BDT under s 38(4) and made a number of findings adverse to the owner, as revealed in the following paragraphs:
Whilst it is not raised by the respondent, the Tribunal considers the complainant's conduct in making multiple and often repetitive complaints (as found and referred to in the liability reasons) as a factor falling within s 38(4)(b) of the BR Act. This conduct was singularly the greatest cause of the adjournments and part hearings of the complaints and unnecessarily complicated the prosecution of the complaints, the hearings and resolution of the complainant's complaints and the respondent's application. This factor is against the complainant.
As to the factor referred to in s 38(4)(c) of the BRA, the Tribunal finds that some of the complainant's complaint items were without factual foundation or legal merit (e.g construction over concealed disused soak well). Some complaint items were supported on the evidence but the Tribunal did not accept that evidence or was not persuaded by it (e.g screed strength). The majority of the complaint items that were found to exist and required remedial work were conceded by the respondent. The tiling of the bathrooms and the laundry were hotly contested matters. On balance, the Tribunal considers this factor is against the complainant.
As to the nature and complexity of the proceedings (s 38(4)(d) of the BRA) the Tribunal considers that, at their core, the complaint items were relatively simple but the manner in which the complainant chose to present them and prosecute the complaints clouded the real issues. This factor is against the complainant.
As to s 38(4)(a) of the BRA factors, the Tribunal finds that only factors (iv) and (vi) arise. As stated by the Tribunal, the complainant's conduct of the proceedings has caused a delay in the resolution of the disputes and has caused directly or indirectly adjournments to proceedings. This factor is against the complainant. As to s 38(4)(a)(vi) of the BRA, the Tribunal considers that the complainant conducted the prosecution of the complaints vexatiously, in that she pursued claims without merit, failed to have regard to the proper process of the conduct of proceedings in the Tribunal, repeated several complaint items a number of times and commenced new complaints when existing complaints were already listed for hearing and time had been allocated for only those matters to be heard. Until May 2005 the complainant appears to have been legally represented and no doubt relied on the advice of her solicitor in conducting the proceedings. That, however, is no answer to the manner in which the complainant conducted the proceedings. The complainant's conduct of the proceedings was caused no doubt partly by her misunderstanding and ignorance of the process, the legal and other expert advice she received from time to time (or her interpretation of the same) and perhaps a combination of all of the above. That, however, is no answer to the manner in which the complainant conducted the proceedings.
Under 'The Decision', by reference to what it had already considered, the BDT indicated that the owner's claim that the builder pay her costs of the proceedings was dismissed. It further indicated that the builder's costs were to be paid by the owner on the basis to which I have referred. In that regard the BDT said:
It is not common for a party to succeed in obtaining an order that the opposing party pay its costs of a matter before the Tribunal. However, in the circumstances of this case, and having regard to each factor referred to in s 38(4) of the (BR Act) and having found that the factors referred to in s 38(4)(a)(iv) and (vi), (b), (c) and (d) are against the complainant and also finding that the conduct of the complainant has in fact extended the time taken to resolve the various complaints, the Tribunal concludes that it is fair that an order should be made that the complainant pay to the respondent a contribution to his costs. The respondent has incurred legal costs in responding to and defending a claim, the value of which was far greater than the value of the final order to pay made by the Tribunal.
Costs general considerations
It is generally appreciated, at least in the traditional litigation context, that a decision by a court at first instance on costs will not be disturbed in the absence of the court being found to have acted in excess of jurisdiction or applied an incorrect principle. It has been said that appellate courts will be very reluctant to interfere with decisions of primary judges relating to matters of practice and procedure, such as issues of costs: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at [177]. The rationale for such a tight rein was stated in Re Will of Gilbert(dec'd) (1946) 46 SR (NSW) 318 per Jordan CJ at [322] in terms that 'the result would be disastrous to the proper administration of justice' because '[t]he disposal of cases could be delayed interminably, and costs heaped up indefinitely if a litigant with a long purse or a litigious disposition could, at will … transfer all exercise of discretion in interlocutory application [sic] from a judge in chambers to a Court of Appeal'. This very practical consequence of a ready availability of review of costs decisions resonates with particular clarity in the context of reviews by the Tribunal of decisions of the BDT.
I now turn to the three claimed errors concerning the costs decision. The first and second alleged errors can conveniently be dealt with together.
First and second claimed errors
These errors together form an allegation that the BDT failed to afford the owner procedural fairness. The owner submitted that discrete errors arose, first in the alleged failure by the BDT to forewarn the owner, as an unrepresented litigant, that she was at risk of a substantial costs order against her, and second, by failing to alert her to the fact that it was essential in her own interests that she respond to the matters set out in s 38(4) of the BR Act. In the event, the owner only submitted documents to prove the quantum of her costs and filed no submissions or material addressing the question of liability, whether for her own costs or the builder's costs.
It is necessary to trace the history leading up to the costs decision, commencing with the making by the BDT of its decision on liability. That decision was made on 24 July 2007, with the reasons for its making being published on 11 March 2008 (liability reasons), with the original orders being reissued with some amendments on the same date. On 28 February 2008, following a further hearing on quantum on 7 and 8 February 2008, orders were made determining the competing monetary claims. Those orders were issued as an order to pay on 11 March 2008 and were to the effect that the sum of $8,433.50 paid by the owner into trust, and being the sum claimed by the builder as unpaid moneys under the contract, be paid out to the owner as part payment of a total amount of $9,509.61 found to be owing to the owner for remedial work, with the builder being required to pay the owner the balance of $1,076.11.
The order to pay issued on 11 March 2008 contained the following directions pertinent to the costs issue:
…
5.The parties' respective application for legal and other costs is adjourned sine die.
6.The complainant and respondent each file in the Tribunal and serve on the other, submissions to support their respective applications for legal and other costs together with a list of all costs claimed, within 21 days of the date of issue of this order.
7.The parties each have liberty to apply in the Tribunal and serve on the other, responsive submissions on the issue of costs within 14 days after receipt of the other party's submissions concerning costs.
8.The parties' applications for cost [sic] shall be determined by the Tribunal without the necessity of a further hearing unless otherwise indicated.
9.The parties each have liberty to apply to the Tribunal in writing on any matter concerning the issue of costs.
The transcript of the hearing on 8 February 2008 is in evidence and discloses (at 141 142) the following statement of the deputy chairperson regarding her intended method of dealing with the applications of both parties for costs:
MS OWENCONWAY: I think that the costs should be reserved until another hearing and what I proposed to do at this stage, my - - my mind set is to - - if you were both represented I'd just ask the parties for their submissions in writing. As you're not both represented, I think it might be a bit unfair on Ms Seow that she has to prepare some written submissions because it's not something that she's used to doing. So I'm up in the air about that.
I notice that Ms Seow's filed her documents in relation to expert costs and attendances, as well as some legal fees. I'm going to put that all to one side at the moment, so that you can come back and - - argue that. And what I envisage on that occasion is no more than an hour in the tribunal on that issue, and both parties should have regard to section 38(4) of the Builders' Registration Act about the legal fees and the circumstances in which the tribunal can make an order that one party pay the other party's legal fees. I take it both parties will be saying the other party should pay their legal fees. Those factors are factors that are mandatory and have to be taken into account and - - and they're the - - that’s the only basis upon which the tribunal can make an order that one party pay the other party's costs. Otherwise, it makes no order and that means that each party bears their own. It's not uncommon in jurisdictions and Family Court is the same, it's got a slight difference in the factors that it has to take into account, but prima facie position is that the legislature has decided if you want to get a lawyer in these jurisdictions unless there's special circumstances you have to pay for them yourself.
So have a look at section 38(3) and (4) with respect to that. But that's for another day and as I said, this matter has priority because it needs to be finished, so I envisage that in the next week we'll get an order. Okay. Thank you.
MS SEOW: Thank you.
On 29 March 2008, the owner filed what she described as 'my submissions on costs', but which was, as I have indicated, merely a summary of costs sought to be recovered and relevant invoices. On 31 March 2008, the builder's solicitors sent a letter to the BDT addressing costs and, in particular, contending that the builder should be entitled to his costs by reason of the owner's rejection in November 2004 of an offer of settlement in terms more favourable to the owner that she ultimately recovered (this contention did not find favour with the BDT). As I have said, the costs decision was then made on 15 May 2008, with orders being issued on 20 May 2008.
The BDT is obliged to act in a way consistent with procedural fairness. The contents of that obligation is the subject of a recent decision of the Supreme Court on appeal from a decision of the Tribunal in Braham v Evans [2008] WASC 274, where Beech J concurred with the adoption by the Tribunal of the following passage from Commissioner for ACT Revenue v Alphaone Pty Ltd (1994) 49 FCR (Alphaone), a decision of the Full Federal Court, at [590] [591]:
Where the exercise of statutory power attracts the requirement for procedural fairness, a person likely to be affected by the decision is entitled to put information and submissions to the decisionmaker in support of an outcome that supports his or her interests. That entitlement extends to the right to rebut or qualify by further information, and comment by way of submission, upon adverse material from other sources which is put before the decisionmaker. It also extends to require the decisionmaker to identify to the person affected any issue critical to the decision which is not apparent from its nature or the terms of the statute under which it is made. The decisionmaker is required to advise of any adverse conclusion which has been arrived at which would not obviously be open on the known material. Subject to these qualifications however, a decisionmaker is not obliged to expose his or her mental processes or provisional views to comment before making the decision in question [71]. (Tribunal's emphasis)
On the basis of the principle espoused in Alphaone, it is a difficult proposition to assert, as the owner does, that the BDT was required to forewarn the owner either that (a) she was susceptible to a costs order in the magnitude of the costs decision, or (b) that it was incumbent on the owner to file submissions addressing the s 38(4) factors. This is because the BR Act, the repository of statutory power in this instance, makes quite clear that costs may be awarded to a party in certain circumstances, being the circumstances spelt out in s 38(4) of the BR Act (including the final, allembracing factor 'any other matter the (BDT) considers relevant').
In fairness to the owner, her submission relied heavily on the circumstance that, at that final stage of the very lengthy litigation, she was unrepresented and acted on the uninformed assumption that, as a party which had succeeded to the extent that she had extracted some liability from the builder, she was entitled to her costs. Had the BDT failed to alert Ms Seow to the factors relevant to the exercise of its discretion under s 38(4) of the BR Act, she may well have had cause for complaint.
This, however, was not the case. The BDT drew the parties' attention to those factors in the clearest terms at the conclusion of the hearing on 8 February 2002, as the passage extracted above shows. In response, the owner says, first, that the extract displays equivocation on the part of the deputy chairperson regarding the method by which the parties' submissions on costs might be provided, with the suggestion that a further short hearing might be held. No such hearing was convened, directions for written submissions being made as part of the order to pay issued on 11 March 2008. But the question is not whether the BDT erred by determining the matter on the documents rather than subsequent to a hearing (this not being a complaint relied upon by the owner); rather, it is whether the BDT's advice as to the s 38(4) factors discharged any procedural fairness obligation it had. It seems to me that the apparent uncertainty harboured by the deputy chairperson as to the method of proceeding, and the fact that the BDT proceeded differently from the tentatively proposed method, is not relevant to that question.
The owner then says that the oral advice provided at the end of the hearing on quantum was inadequate because the owner, through fatigue at the end of a two-day hearing, did not appreciate its importance. What should have happened, it is said, was for the BDT to refer expressly in its directions to the s 38(4) factors as being ones with which the respective parties' submissions needed to deal.
In my view, the clear terms of the assistance provided the parties by the deputy chairperson at the conclusion of the hearing on 8 February 2008, which was, literally, her final utterance to them in the course of litigation of many years duration, constituted sufficient notice for the discharge of any procedural fairness responsibility. As I have said, the BR Act itself spells it out, which may have the effect of eliminating the BDT's responsibility in that regard in the first place. However, a reading of the transcript pages for 8 February 2008 preceding at 141 142 indicates that the owner continued to the end to participate in and understand the matters being discussed. There was no reason, consistent with any authority on procedural fairness relied upon by the owner or of which I am aware, to so regulate the procedural fairness obligation of the BDT in this instance as to require it to repeat in its written orders the oral reference made to the relevant statutory factors.
Further, the fact is not simply that the owner failed, through an asserted lack of opportunity, to address the relevant factors. The BDT directed, in writing, that the parties file 'submissions to support their respective applications for legal and other costs together with a list of all costs claimed', but the owner filed only her list of costs and relevant invoices. Despite the opportunity provided by the BDT's order, the owner failed to file any submissions on the question of liability of costs. That being the case, how she could be prejudiced by the omission in the order of a reference to the relevant statutory criteria where she was informed verbally of those criteria previously has not been, and in my view cannot be, adequately explained.
The first and second claimed errors will not be the subject of a grant of leave.
Third claimed error
The owner's counsel relied upon his written submissions at [19] [46] to demonstrate that the BDT's application of the s 38(4) factors was wrong or open to doubt. He thereby invited the Tribunal to critically analyse the reasoning employed in applying the various factors. Subject to one matter, I respectfully decline to do so, for two reasons. Firstly, to do so would be to ignore, on a leave application, the strictures against too readily interfering with the exercise of discretion on issues of practice and procedure. Provided that I am satisfied that the BDT did not act in excess of jurisdiction and applied the correct factors in its consideration of the costs question, which I am, then it would only be in a case of the most patent error in applying the relevant factors which would require this Tribunal to interfere. With one possible exception, no such error has been demonstrated. Secondly, the owner's approach, which is to break down each factor to its constituent parts, and to assess as against each part what she regards as the relevant segment of the BDT's reasoning so as to find a disconnect between the two, has the effect of diminishing, to the point of extinguishment, the significance of the gravamen of the BDT's criticism of the owner which led it to make the costs decision. That was that the owner had been the main contributing factor to (in the context of the BDT) extraordinarily lengthy proceedings which spanned some five years, nine full hearing days, and numerous directions hearings. This was despite the owner's claim, at its highest, totalling about $53,000. The BDT dealt at some length with the history of the proceedings and the causes of the various delays. It concluded that, on an overall assessment of the s 38(4) factors, many indicated an outcome adverse to the owner by reason of the owner's profligacy in the manner in which she conducted the proceedings and that it was appropriate that she receive a costs penalty by reference to the amount by which the BDT's determination came in lower than the amount of her claim. That is an assessment which the BDT was in the best position to make, and I can see no proper basis upon which it ought be reviewed.
The one qualification I make to the above consideration concerns the illustrative use made by the BDT in one of the passages I have reproduced to the construction over the concealed soakwell. This is the first substantive decision on liability to which I am about to turn. My conclusion is that the BDT erred in its reasoning supporting its dismissal of the two relevant complaint items and that the appropriate recourse is an order inviting the BDT to reconsider the relevant parts of its decision. That being so, its reasoning and decision on the costs issue should also be remitted, but only to this extent: once it has completed its reconsideration of the soakwellrelated complaint items, it should consider whether the outcome of that reconsideration has any impact upon the costs decision.
I turn then to the first of the substantive decisions in relation to which leave is sought, the decision on the soakwellrelated claims.
Soakwellrelated claims
In the liability reasons, the BDT dismissed claims concerning cracking of the floor and adjoining balustrade wall and separation of the interface of two walls of a verandah extension at the rear of the property. The existence of a soakwell beneath the verandah was an important ingredient in those claims. Before coming to the BDT's consideration of them, it is necessary to consider two threshold issues:
1)the ability of the full BDT to deal with these claims in light of an order to remedy having been made on 9 November 2004 by a registrar under delegation pursuant to s 33A of the BR Act; and
2)whether the owner had notice that the BDT would be concerned with the matters the subject of the registrar's orders and a proper opportunity to be heard on those matters.
I will deal with each under the heading of the conclusion urged upon me by the owner.
Irregular decision
It was not clear on the papers filed prior to the hearing before me what had occurred between the making of the decision by the registrar and the reference by the BDT to apparently the same claim in the liability reasons. Some light was shed on this by Mr Pillinger, who indicated that the registrar's order was issued at a time prior to the end of the period for comment on the relevant inspector's report into the subject of the claims. His counsel produced a copy of a letter from the builder's solicitors to the BDT dated 17 November 2004 which had attached a 'Response to Order to Remedy' which accepted some parts of the registrar's order to remedy and disputed others, including those relating to the soakwellrelated claims. The owner's counsel (who did not represent her at any time before the BDT) said that Ms Seow denied any knowledge of such a letter, although it is marked as being copied to her then solicitors.
As the BDT pointed out early in the liability reasons (at 14), it is not bound by an order to remedy made by a registrar. The BDT has express power to review such an order, either on an application to review or upon its own motion: s 33A, BR Act. That being so, it acted within power when it carried out its review of some parts of the registrar's order to remedy, whether or not it did so by reference to the order itself or its statutory power to do so, and whether or not it was on the application of a party or on its own motion. The substance of its decision being contrary to, and in conflict with, the registrar's order, the effect is to override that order. The submission that there is some irregularity associated with its decision in that regard is rejected.
No proper opportunity given to be heard
As I have said, the complaint was made on 8 September 2004 and the subject of a registrar's order on 9 November 2004, which, according to the builder, was the subject of challenge by the builder's solicitor's letter dated 17 November 2004. The owner asserts that the relevant items were referred to the BDT not on the basis that the findings of liability were to be reviewed, but rather to pursue an order to pay, the owner's preferred remedy. It was in light of these competing arguments concerning the subject matter of the BDT proceedings as they related to the soakwellrelated claims that I directed that the parties (or more accurately the owner, with input from the builder after consultation with him) file a memorandum of transcript references identifying statements of the BDT disclosing the topics before it regarding the soakwellrelated claims. The owner's counsel filed a memorandum containing a number of references, which has been of assistance.
There is no doubt that by the time of the final hearing days on liability on 16 February 2005, and then on 2, 3 and 4 August 2006, the BDT regarded all remaining claims as sounding in the remedy of an order to pay: see, for example, transcript 16 February 2005 at 3, last paragraph, not numbered, Mr Pentony speaking, and transcript 2 August 2006 from 82 line 57 to 83 line 41.
There is also no doubt that during the elongated series of hearing days on liability, the question of liability with regard the soakwellrelated claims was regarded as live by the Tribunal and both parties. In transcript 16 February 2005 at 3, first paragraph, Mr Pentony (then counsel for the owner) said:
We will of course need to have Mr Smith come again and give his evidence about complaints 3 and 4.
Complaint 4 included the two soakwellrelated claims, which, by then, were the subject of the registrar's order to remedy, and Mr Smith was the inspector who had reported his view that the builder was liable. There was no need for Mr Smith to give further evidence at the hearing unless there were still live questions of liability.
At the time of the later hearing dates, the owner was no longer legally represented and she conducted her own case. It will be recalled that this series of hearings was concerned solely with liability the hearing on quantum occurred on 7 and 8 February 2008.
The liability on the soakwellrelated claims was, without any objection by the owner, the subject of the following evidence:
•Ms Seow (T:144) (T:148) 2 August 2006.
•Mr Purich (T:25) 3 August 2006 and (T:38) (T:54) 3 August 2006, when the witness was cross-examined by Mrs Seow.
•Mr Knowles (T:108) (T:111) 3 August 2006, when the witness was cross-examined by Mrs Seow, and 3 August 2006 at 129 132.
•Mr Smith (T:129) (T:132) 3 August 2006 (T:171) (T:177) where the witness was examined by Mrs Seow, and (T:2) (T:24) 4 August 2006.
There are two telling passages in the transcript for 3 August 2006 relevant to the claim now made that the owner was not adequately informed that the liability question was to be heard. The first is at the bottom of 50. At lines 54 55, Ms Seow says:
… this one didn't become an order to remedy. I don't think. Did it? I can't remember.
Here, she is raising the possibility of a registrar's order to remedy concerning the soakwellrelated claims, not to suggest that the hearing should not have been concerned with liability in respect of those claims, but as part of her response to the questioning of the deputy chairperson regarding the filing of a document (Mr Knowles' second report).
The second significant reference is at 11, lines 1 8, at the end of her examination of Mr Knowles, where Mrs Seow asks whether she should ask the witness questions on costing. The deputy chairperson's response is:
I don't want you to go through this. I thought we were going to determine the liability first
to which Ms Seow replies:
All right.
The upshot of all this is that the owner was aware that, despite the registrar's order to remedy, the hearing in the BDT was concerned with the liability attaching to the soakwellrelated issues. On the February 2006 hearing dates, she gave evidence herself, examined her own witnesses and crossexamined the applicant's witnesses in each case on matters going to liability, and exhibited no sign that she was in any way disadvantaged. The allegation of a failure to give proper notice and a fair opportunity to be heard on the liability question in relation to the soakwellrelated claims is rejected.
Soakwellrelated claims substantive decision
The reasons of the BDT regarding these claims appear in the liability reasons at 133 137. With great respect to the BDT, which on the whole displayed great application to what was a long and timeconsuming task, some of its reasoning on these pages is problematic. There was a number of factors at play in relation to the soakwellrelated claims: whether the soakwell's existence compromised the integrity of the verandah; whether or not the soakwell was still in use, and whether this made any difference; whether the quality of compaction of the relevant areas had a determinative effect, and what the actual compaction was like; whether the cracking which had occurred was attributable to settlement of footings on poorly compacted ground or to some other cause. Great care needed to be exercised in considering all the evidence (including ensuring that all relevant evidence was considered) before arriving at the series of findings necessary to determine the soakwellrelated claims.
The BDT's reasoning on the soakwellrelated claims with which I have concerns, and the cause of those concerns, are as follows:
•At 134, the observations by Inspector Smith, his assumptions and his determination concerning soil compaction, were said to be 'wholly without foundation', which 'carried no weight with the Tribunal'. Although perhaps a matter of semantics, it is one thing to reject the expression of opinion by an expert witness on the basis that it is based on an incorrect factual premise; it is another to say of every assumption, fact and opinions of the expert that it '(carried) no weight'. Such a strong statement, however, is further compounded in this case because the BDT paid no regard to relevant evidence of Mr Knowles, which, at least in part, corroborated Inspector Smith. I will return to this.
•At the bottom of 135, going to the top of 136, the BDT relied upon the owner's admission that she was aware of the soakwell's existence (it having been commissioned by her or on her behalf some years previous) without any reference to an issue which arose in the examination of a number of witnesses as to whether this was sufficient to relieve the builder of his obligation to ensure the site was suitable for building works.
•At 135, apparently in order to deal with the issue of the builder's obligation apropos the soakwell, the BDT relied upon a compaction certification in evidence to substantiate a finding that:
The area where the extension was to be built was compacted.
Such a bald finding sits uncomfortably with evidence that the certificate was of limited use and that there was a real question as to the quality of compaction where the pier of the verandah was constructed. No explanation is given why the certificate was afforded such paramount effect.
•At 135, the BDT noted:
This issue [a reference to the first of the soakwellrelated issues] was not the subject of any complaint in Mr Knowles' report and the Tribunal would have expected it to have been.
In fact, the driving force for the bringing of this complaint was the second Knowles' report. That the BDT overlooked this is all the more surprising given that the existence of the report and the fact that it had not been filed were the subject of a lengthy exchange between the deputy chairperson and Ms Seow (see (T:48) (T:50) 3 August 2006) and Mr Knowles was examined and crossexamined on the issue at some length (the transcript references containing the relevant passages are given above). Although it is true that it is not necessary in a statement of reasons to refer to evidence which is not accepted, the oversight by the BDT of the relevant report and evidence of Mr Knowles attained the following special significance:
a)The asserted lack of any reference by Mr Knowles in any report gave rise to an inference by the BDT adverse to the authenticity of the claim.
b)It also allowed the BDT to isolate Inspector Smith's evidence, and to discount it to the point of carrying no weight, on the basis that it was 'wholly without foundation'.
The effect of the matters I have identified was to fetter and distort the BDT's consideration to the point that its conclusions are in my opinion seriously compromised. The invitation to the BDT to reconsider its decision under s 31 of the SAT Act will extend to both soakwellrelated claims. Such reconsideration is to have regard only to the deficiencies I have identified; all further allegations raised by the owner are rejected on the basis that the BDT's findings to which they relate are supported by some discernible basis (generally, that they were reached upon an assessment of the evidence which went both ways).
Failure to render rear wall
The relevant complaint item concerns an admitted failure by the builder to provide rendering to the rear wall of the house according to the contract, 'similar to the existing front'. The front of the house has render above a dado height stretcher bond course.
Although the BDT found a failure by the builder to construct in a proper and workmanlike manner for the purposes of s 12A(1)(a) of the BR Act by reason of his failure to alert the owner to an inconsistency between the contract and the plan regarding the render finish to the rear wall, it dismissed the complaint item on the basis that the remedial work required would be disproportionate to 'the builder's failure'.
This item was the subject of an order to remedy issued by a registrar on 30 July 2003. The owner raised the same threshold issues as in the case of the soakwellrelated claims.
I am satisfied that despite the registrar's order to remedy, it was properly before the full BDT when it came to decide the various liability issues. I am also satisfied that Mrs Seow had adequate opportunity to present her case on this claim in the BDT. I need go no further, I think, to vindicate my satisfaction on these matters than to refer to the following passage in (T:138) 3 August 2008 commencing line 50:
MS SEOW: I think that we went through the bulk of it in the first so I'm not going to go through … the whole works, okay, just to perhaps go through the one that was brought up to the BDT but that wasn't discussed, was it?
MS OWENCONWAY: Which one?
MS SEOW: I'll just have a look through, if not I won't bother. Okay. Just to ask your opinion because we had much discussion about this rendering …
Ms Seow then commenced her examination of Inspector Smith on the failure to render complaint item.
The reproduced passage indicates the owner's appreciation that this item was the subject of a registrar's order to remedy, which had, to use her words, been 'brought up to the BDT'. She then, quite freely, examined Inspector Smith with a view to advancing her case on the builder's liability for the lack of rendering.
The real issue is whether the BDT erred in dismissing the item on the basis of disproportionality as I have described it, and if so, whether a substantial injustice would arise were the decision to remain untouched.
In Willshee v Westcourt Ltd [2008] WASC 18 (Willshee), the defendant was contractually bound to use high quality limestone blocks in constructing the plaintiff's house. As Templeman J found, approximately 50% of the blocks used were not of high quality, and the defendant was to that extent in breach of contract. The defects did not affect the structural integrity of the house but its aesthetics. The plaintiff sought damages based on removal of the entire limestone cladding (which would have involved removal of both good and defective blocks) and replacement with high quality blocks for which a quotation in excess of $250,000 had been obtained. The plaintiff's house was worth some $1.7 million.
Templeman J at [322] referred to the 'general rule' that a person who contracts with a builder for the construction of a house is entitled to be provided with a building which conforms with the contract plans and specifications. His Honour then went on:
However, there is a qualification to that general rule, as stated by the High Court in Bellgrove v Eldridge (1954) 90 CLR 613. There, in the judgment of the court given by Dixon CJ and Webb and Taylor JJ, their Honours said:
The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt. No one would doubt that where pursuant to a building contract calling for the erection of a house with cement rendered external walls of secondhand bricks, the builder has constructed the walls of new bricks of first quality the owner would not be entitled to the cost of demolishing the walls and re-erecting them in secondhand bricks. In such circumstances the work of demolition and reerection would be quite unreasonable … We … think that the building owner's right to undertake remedial works at the expense of a builder is not subject to any limit other than is to be found in the expressions 'necessary' and 'reasonable' … Many examples may, of course, be given of remedial work, which though necessary to produce conformity would not constitute a reasonable method of dealing with the situation and in such cases the true measure of the building owner's loss will be the diminution in value, if any, produced by the departure from the plans and specifications or by the defective workmanship or materials (618 619).
Templeman J rejected the plaintiff's contention that it was reasonable to spend some $258,000 in rectifying defects in a house worth $1.7 million. His Honour referred to the fact that the structural integrity of the house was not in doubt and that the complaint was based only on the aesthetic quality of the limestone, about which the contract was silent. His Honour distinguished the facts of the case before him from the facts in Bellgrove v Eldridge (1954) 90 CLR 613 (Belgrove), in which the complaint concerned defective foundations, and the outcome was that the owner was awarded the reinstatement cost.
Templeman J referred to a House of Lords decision, Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344 (Ruxley) as a case more aligned to the case before him. In Ruxley, a contract for a domestic swimming pool provided for a maximum depth of seven feet six inches, whereas the as constructed pool had a maximum depth of six feet nine inches. The House of Lords upheld the decision of the trial judge in holding that it would be unreasonable for the pool to be reconstructed to conform with the contractual specifications. The trial judge's award of a modest sum in general damages for loss of amenity was also upheld.
Passages extracted by Templeman J in Willshee from the judgment in Ruxley stressed the lack of proportionality between the benefit to be conferred by performing work to produce compliance with the contract and the cost of that work, in circumstances where the as constructed building was entirely adequate for its design purpose.
Both parties before me cited the line of cases to which I have just referred with various emphases and attempts to distinguish them as befitting their respective cases. Although not entirely analogous, in my view the Ruxley scenario most closely approximates the present case. Whilst the contract specified a particular render treatment for the rear wall, and this was not done, the house remained adequate for its design purpose.
In its liability reasons at the top of 78, the BDT made the following finding:
The Tribunal finds that in order for the rear elevation to match or be similar to the front elevation a stretcher bond course at dado height must be included. To achieve this now that the wall has been completed and the roof covered, would require propping of the roof, removal of the wall or a substantial part thereof, inclusion of the dado height stretcher bond course, reconstruction of the wall and rendering to the stretcher bond course. It is not possible to achieve a rendered finish similar to the front elevation without the inclusion of the stretcherbond course as the render would not neatly finish and would protrude from the lower brickwork by 5mm. Such a result would be unsightly and would result in the render deteriorating. Viewed in profile, the render finish would have no support and there would be no clear finish between the render and the brickwork beneath. The statement on the plan 'render finish similar to existing front' and the absence of any detail referring to the construction of a dado height stretcherbond course, in the circumstances, should have alerted the respondent to an inconsistency in the plan which should, in turn, have caused him to raise the inconsistency with the complainant.
There is an issue which the owner sought to agitate before me regarding the BDT's acceptance of certain evidence suggesting that Ms Seow had agreed to there being no corbel on the rear elevation and that the complainant refused to cause working drawings to be prepared, which, had they been done, would have clarified the position. However, at the end of the day, the builder was found liable under s 12A(1)(a) of the BR Act for a failure to construct in a proper and workmanlike manner, a finding which the owner accepts. Her complaint concerns the treatment by the BDT of the feasibility of her preferred solution: rectification in accordance with the contract and plans (such as they were).
The owner complains that the passage which I have reproduced regarding what the rectification works would entail had not been the subject of any evidence. This is not completely true. Inspector Smith gave some evidence concerning what was involved with rendering part of the rear wall in the absence of a stretcher bond course. The reasoning does, however, appear to rely heavily upon the knowledge of the builder member of the BDT. This is no criticism of that reasoning. Particularly given the basis for the liability finding that the builder was aware of an ambiguity between the contract and the plan, which should have alerted him to the need to raise the issue with the owner, with the likely outcome that a variation would have been raised the BDT was quite entitled to engage in the reasoning and make the finding disclosed at 78 in the passage reproduced above.
With one qualification, this comment applies equally to the following passage from the liability reasons 79, second paragraph:
The Tribunal considers that it is not reasonable for the remedial work referred to above to now be undertaken to produce a similar finish to that of the front elevation. The Tribunal finds that the remedial work to be [sic] disproportionate to the respondent's failure, particularly when the brick work is of such a high standard.
The qualification is that, in accordance with the tests propounded in the authorities, the question is not whether remedial work is disproportionate to any failure by the builder, but rather, to the benefit the owner would receive were the remedial work to be undertaken. However, in the context of the BDT's reasoning as a whole on this issue, I am content to regard this as nothing more than an accidental slip, which does not disclose the application of any incorrect principle. Certainly no substantial injustice can be said to arise from the use of this infelicitous language.
The question which then arises is whether any damages should have been awarded by reason of the owner not obtaining the rear wall for which she had contracted. As the owner points out, the BDT's dismissal of this complaint item meant that no assessment of damages occurred in relation to it.
On the authorities to which I have referred, two possible bases for assessment exist. The first is that referred to in Bellgrove of the diminution in value resulting from the departure from the plans and specifications. The second was referred to in Ruxley at 353, where loss of 'amenity, convenience or aesthetic satisfaction' was propounded as the appropriate head of damage in cases where there was no differential in commercial value, although Lord Bridge of Harwich alluded to a lack of English authority as to the measure of such a loss. By way of explanation for this hiatus, His Lordship surmised that 'this may be because parties to this kind of dispute normally have the good sense to settle than to litigate'.
I consider that by making a finding of liability against the builder, but dismissing the complaint item because of the unreasonableness of requiring rectification, the BDT erred by failing to consider, and call for evidence on, the question of damages, if any, which arose on either of the two alternative bases of assessment. All the appearances indicate that the claim may distil down to a claim for nominal damages for loss of amenity, which must inform the element of whether a substantial injustice would occur if the decision were to remain. However, given that the matter is to be reconsidered by the BDT on other grounds, and given that the BDT's error regarding this item is capable of easy rectification, it seems to me that it is consistent with the substantial merits of the case that the BDT's reconsideration should extend to the owner's entitlement to any damages by reason of the builder's proven breach.
Order
For the above reasons, the Tribunal orders that:
1.The application for leave to review the decision of the Building Disputes Tribunal on costs made 15 May 2008, limited to the extent identified by this Tribunal's reasons for decision, is adjourned in accordance with order 7 below;
2.The application for leave to review the decision of the Building Disputes Tribunal on the soakwellrelated claims, limited to the extent identified by this Tribunal's reasons for decision, is adjourned in accordance with order 7 below;
3.The application for leave to review the decision of the Building Disputes Tribunal made 24 July 2007 to dismiss the failure to render claims, limited to the extent identified by this Tribunal's reasons for decision, is adjourned in accordance with order 7 below;
4.The application for leave is otherwise dismissed;
5.Pursuant to s 31 of the State Administrative Tribunal Act 2004 (WA), the Building Disputes Tribunal is invited to reconsider the following decisions:
(a)decision on costs;
(b)decision on the soakwellrelated claims; and
(c)decision on the failure to render claims
consistent with this Tribunal's reasons for decision published today;
6.The respondent is directed to serve forthwith on the Registrar of the Building Disputes Tribunal:
(a)a copy of this order; and
(b)this Tribunal's reasons for decision published today.
7.The application is otherwise adjourned to a further directions hearing on 26 February 2009 pending the Building Disputes Tribunal's further consideration of the matter pursuant to order 5 above.
I certify that this and the preceding [73] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR T CAREY, MEMBER
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