Taylor v Chapman - [2003] NSWSC 992

No judgment structure available for this case.

CITATION: Taylor v Chapman & Anor [2003] NSWSC 992

HEARING DATE(S): 26 June 2003

JUDGMENT DATE:
4 November 2003

JURISDICTION:
Common Law

JUDGMENT OF: Master Harrison

DECISION: (1) The appeal is upheld; (2) This matter is remitted to the Tribunal Member to be determined according to law; (3) The defendants are to pay the plaintiffs' costs of the summons as agreed or assessed.

CATCHWORDS: Appeal decision of CTTT - contract - frustration

LEGISLATION CITED: Consumer, Trader and Tenancy Tribunal Act 2001 - s 63(3)
Home Building Act 1989

CASES CITED: Carmichael v Colonial Sugar Refining Co Ltd (1994) 44 SR(NSW) 233
Codelfa Constructions Pty Limited v State Rail Authority (1982) 149 CLR 337
Davis Contractors Limited v Fareham Urban District Council [1956] AC 696
Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation Ltd [1942] AC 154
Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] VR 239
Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169
Simmons Ltd v Hay (1964-5) NSWR 416
Taskiroglou v Noblee Thorl GMBH [1962] AC 93
The Civil Servant Two [1990] Vol 1 1 LILR 1
Universal Cargo Carriers Corporation v Citati [1957] s QB 401
Whim Well Copper Mines Ltd v Pratt (1910) 12 WALR 166

PARTIES :

Ernest & Fredericka Taylor
(Plaintiffs)
David Chapman
(First Defendant)
Royal & Sun Alliance Insurance Australia Limited
(Second Defendant)

FILE NUMBER(S): SC 12971/2002

COUNSEL:
Mr B A Coles QC with Mr G B Carolan
Dr John Azzi
(First Defendant)
Mr M S Jacobs QC with
Mr P Bambagiotti
(Second Defendant)

SOLICITORS:
G P Bartels Laywers
(Plaintiffs)
Mr H Weller
Herbert Weller Solicitors
(First Defendant)
McLachlan Chilton
(Second Defendant)

LOWER COURTJURISDICTION: CTTT

LOWER COURT FILE NUMBER(S): HB 00/83497

LOWER COURT
JUDICIAL OFFICER : Senior Member Mr G J Durie

- 13 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

MASTER HARRISON

TUESDAY, 4 NOVEMBER 2003

12971/2002 - ERNEST & FREDERICKA TAYLOR v
DAVID CHAPMAN & ANOR

1 MASTER: By summons filed 30 October 2002, the plaintiffs seek firstly, an order appealing the whole of the decision of Senior Member Mr G J Durie in the Consumer Trader and Tenancy Tribunal (CTTT) in proceedings HB 00/83497 dated 2 October 2002; secondly, a declaration that the building contract between the plaintiffs and the first defendant was not frustrated on 15 April 2000 or some other date; thirdly an order that the preliminary point be dismissed; and fourthly, an order that the first and second defendants pay the plaintiff’s costs of the preliminary point in the CTTT. The plaintiffs are Ernest Taylor and Fredericka Taylor. The first defendant is David Neil Chapman. The second defendant is Royal & Sun Alliance Insurance Australia Limited.

2 The plaintiff relied on the affidavit of Geoffrey Paul Bartels sworn 30 January 2003. The second defendant relied on the affidavit of Paul Stanislaw Jurdeczka sworn 14 March 2003. The list Judge referred this matter to a Master for hearing. For the purposes of this hearing, I shall refer to the applicants in the Tribunal as the plaintiffs and the first and second respondents as the first and second defendants.

3 Section 65(3)(b) Consumer, Trader and Tenancy Tribunal Act 2001 (the Act) provides that relief can be granted by way of a judgment or order in the nature of prohibition, mandamus, certiorari, and a declaratory judgment or an injunction if in relation to the hearing or declaration of the matter, a party had been denied procedural fairness.

4 Section 67 of the Act allows for an appeal to be made to this court on a question of law. An appeal may only be made with leave of the court. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal. The onus lies on the plaintiff to demonstrate that there has been an error of law. Section 67(3) of the Act provides that after deciding the question of the subject of an appeal the court may, unless it affirms the decision of the Tribunal on the question that should have been made by the Tribunal, remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal.

5 The ground of appeal is narrow. It is whether the Senior Member erred in law in finding that the building contract between the plaintiffs and the first defendant was frustrated on 15 April 2000.

6 On 22 December 2000, the Tribunal received an application from plaintiffs seeking damages from David Chapman. They also applied by way of appeal under the Home Building Act 1989 (HBA) against a decision of Royal and Sun Alliance Insurance Ltd to decline an insurance claim which they had made. At that hearing, the Tribunal Member was asked to determine as a threshold question whether the contract between the plaintiffs and the first defendant had been frustrated. The Tribunal Member held that the contract was frustrated [para 19 Member’s judgment].

7 There were six agreed facts for the preliminary hearing. They were as follows:

(1) The plaintiffs and the first defendant entered into a contract on 29 August 1999 (“the building contract”) for residential building work (“the work”) to be carried out at Kurrajong Heights, New South Wales (“the property”).

(2) The second defendant issued a certificate of Insurance, pursuant to s 92 of the HBA in relation to the work.

(3) On 15 April 2000 the first defendant was injured on a building site that was not the property, receiving injuries that included an injury to the brain.

(4) The first defendant was admitted to Westmead Hospital on 15 April 2000, and remained in a coma as the result of his injuries for a period of approximately five weeks.

(5) The first defendant was unable to undertake or supervise the work until at least about September 2000.

8 At the hearing of this appeal there was much debate over whether the Tribunal Member was permitted to consider matters other than the agreed facts in arriving at his conclusion. The tribunal Member considered the terms of the contract which was not referred to in the agreed facts, but clearly it was necessary for him to do so.

9 At paragraph 17 the Tribunal Member stated:

“17. I have also found the decision of Sir Bernard Sugarman in the Simmons Limited v Hay case of considerable assistance. This is a contract which on the face of it did not call for the personal intervention of Mr Chapman. However, when I look at the letters written by the solicitor for the Applicants to Mrs Chapman after the accident, I feel comfortable in concluding that the Applicants were most concerned that this contract was to be performed by Mr Chapman, and is not by a third party.

10 Thus the Tribunal Member took into account evidence which was outside the bounds of the agreed facts and the contract. The written contract (Ex A) identifies the parties as being David Chapman (the contractor) and Mr E and Mrs F Taylor as the owners. It contains two clauses that relate to the performance of the contract, namely clauses 8(a) and 15. Clause 8(a) refers to site possession and access. It states:

“The owner allows the Contractor, or in his absence, the Contractor’s employees subcontractors or agents to:

(a) permit any person onto the Land for the purpose of carrying out the Building Works;”

11 and clause 15 provides:

“Neither Contractor, nor the Owner, is allowed to transfer the benefit of this Agreement or the obligations under this Agreement, without the prior written consent of the other party. The Contractor may use sub-contractors and other trades people to perform part of the Building Works.”

12 However, the use of such people does not relieve the Contractor from the overall responsibility for the Building Works to be completed in accordance with this Agreement.”

13 At paragraph 18, the Tribunal Member stated that in determining the identities of the contracting parties, the document speaks for itself.

14 The Tribunal Member reached his conclusions at paragraph 19 where he stated:

15 Thus the conclusion that the Tribunal Member reached was that the contract was one which had to be performed by either Mr Chapman personally or else under his supervision. These conclusions are consistent with the terms of the written contract.

16 However, it is the balance of paragraph 19 that is contentious. The plaintiff submitted that performance of the contract after the first defendant’s injury was not “a thing radically different” from that called for by the contract. According to the plaintiff, the first defendant’s injury falls into the category where “prima facie a promisor takes the risk of an event happening which prevents him from performing his promise”. In Scanlan’s New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 lessors in New South Wales and Victoria sought to recover arrears due under 5 year agreements for the installation and maintenance of neon signs. During the currency of the agreements, the governments in New South and Victoria acting under wartime regulations, prohibited the display of external lights. The lessees argued that the contracts had been frustrated by this. However, the High Court held that the contracts had not been frustrated. The court took into account that there had been a period of illumination for a substantial period before government intervention, that the signs had advertising value even when not illuminated and that the major part of the appellant’s performance, installation, had already been performed. Latham CJ said at 191:

“When a man agrees to buy a pair of boots for himself, both parties expect that he will be able to wear them. If he has an accident, so that he can no longer wear boots, he nevertheless still has to pay for them. If a man buys or hires a motor car, both parties know that he expects to be able to drive it. The stoppage of the sale of petrol, which would make it impossible for him to drive it, does not excuse him from his obligation to pay the purchase money or the hire for the agreed period.”

17 Both parties referred to the seminal case of Davis Contractors Limited v Fareham Urban District Council [1956] AC 696, and in particular the statements of Lord Radcliffe. In that case, Lord Radcliffe made his classic statement that frustration in circumstances where “without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from at which was undertaken by the contract Non haec in foedera veni. It was not this that I promised to do.” This classic statement was referred to by the Tribunal Member at the outset of his reasons for judgment. At the foot of p 727 Lord Radcliffe in Davis stated that frustration is not likely to be invoked as the dissolvent of a contract. The Tribunal Member also referred to a decision that he found to be helpful, namely The Civil Servant Two [1990] Vol 1 1 LILR 1 which sets out five basic principles of the doctrine of frustration. The statement of Lord Radcliffe referred to above is reflected in principle (b). It is convenient if those 5 principles are reproduced here. They are:

“(a) The goal of the doctrine of frustration was to mitigate the rigour of the common law’s insistence on initial performance of absolute promises; the object of the doctrine was to give effect to the demands of justice and to achieve a just and reasonable result [doing] what is reasonable and fair;

(b) Since the effect of frustration is to kill the contract and discharge the parties from further liability under it, the doctrine is not to be lightly invoked, [and] must be kept within very narrow limits and it ought not to be extended;

(c) Frustration brings the contract to an end forthwith, without more and automatically;

(d) The essence of frustration is that it should not be due to the act or election of the parties seeking to rely on it; and

18 In Davis, Lord Radcliffe at 729 further stated:

(Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd

19 Lord Radcliffe’s statement has been adopted in many cases, and in particular by the High Court in Codelfa Construction Pty Limited v State Rail Authority (1982) 149 CLR 337.

20 Lord Reid in Davis stated:

British Movietonews Ltd v London and District Cinemas Ltd

Sir Lindsay Parkinson & Co Ltd v Commissioners of Works

Thorn v London Corporation (1876 App Cas 120, 127)

21 Both parties also referred to Taskiroglou v Noblee Thorl GMBH [1962] AC 93. In Tsakiroglou, the appellants agreed to sell to the respondents 300 tonnes of groundnuts. However due to the blockade of the Suez canal from November 2 1956 until April 1957, the appellants failed to deliver these goods and the respondents sued for breach of contract. The issue before the court was whether by reason of the blockade the contract became impossible of performance and could therefore be discharged as frustrated. The appellants argued that the use of an alternative route via the Cape of Good Hope to deliver the goods meant that the contract was frustrated. The House of Lords found for the respondents. Viscount Simmonds held that use of the route via the Cape did not frustrate the contract, he pointed out, at 115, that it may well have meant greater expense and reduced or eliminated the appellant’s profits but that was not a ground for frustration and the contract was not “fundamentally” altered. Lord Reid also commented, at 119, that the appellants had simply to find another ship and that the altered nature of the voyage did not mean that the contract was frustrated. His Lordship stated that it was a question of law in light of commercial considerations whether a contract was fundamentally different and was frustrated. Shipping the goods by a different route was not commercially or fundamentally different so as to frustrate the contract. Lord Radcliffe said, at 124, that he felt that it was a question of mixed fact and law whether the alternative route of transport frustrated the contract. His Lordship also concluded, at 125, that the alternative route did not “involve any elements of difference that would be regarded as material...” Lords Hodson and Guest made similar findings.

22 The Tribunal Member having decided that the contract had to be performed by either Mr Chapman personally or else under his supervision, went on to say that the fall on 15 April 2000 meant that Mr Chapman was unable to continue to perform those tasks. The Tribunal Member held that the contract could not have gone ahead as envisaged by the parties by reason of the fall. According to the Tribunal Member, this meant that the thing (the building work) undertaken would, if performed be a different thing from that which was contracted for and the plaintiffs would not be receiving performance of the contract by Mr Chapman.

23 During this appeal, the parties made submissions on which of them bore the onus of proof of establishing that the act was the fault of the builder and referred to Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation Ltd [1942] AC 154 in which the House of Lords, in a case involving an event by frustration, held that on the issue of whether the alleged frustrating event resulted from that party’s breach (that is, was “self induced”), the onus of proof lay on the other party. The question of where the onus of proof lay was the sole issue in the appeal, being starkly defined by Lord Russell of Killowen (at 177) as follows:

“…The rival contentions may be stated thus:

(1) The appellant says: ‘Frustration will excuse unless it is proved to be self-induced.’

24 This issue is not a critical one because, on the agreed facts, there was nothing to suggest that the injuries to Mr Chapman were self-induced, and upon this topic, the Tribunal Member was neutral as he stated:

“…whilst the propositions do lead to the conclusion that a party cannot take advantage of his own negligence, there is nothing before me to suggest how Mr Chapman met his fall, and thus to conclude that it was from his own negligence. The fall is consistent with negligence on Mr Chapman’s part, with negligence on the part of a third party, or through no negligence of any person.”

25 The second defendant referred to a passage from Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 where Lord Devlin stated:

“Since a man must be both ready and willing to perform, a profession by words or conduct of inability is by itself enough to constitute renunciation. But unwillingness and inability are often difficult to disentangle, and it is rarely necessary to make the attempt. Inability often lies at the root of unwillingness to perform. Willingness in this context does not mean cheerfulness; it means simply an intent to perform. To say: “I would like to but I cannot” negatives intent just as much as “I will not”.

26 Counsel for the insurer referred to Carmichael v Colonial Sugar Refining C Ltd (1944) 44 SR (NSW) 233 where Jordan CJ says:

Hancock v BSA Tools

Grady v M Saper Ltd

Martha Goldmining Coy (Waihi) Ltd v Inspector of Awards

27 Carmichael concerned whether the Workers Compensation Commission was correct at law in awarding compensation to a worker who claimed it in addition to ordinary rates paid for time off due to illness over a holiday period. Jordan CJ did not refer in his judgment to, or decide the case upon, principles of frustration. It is not helpful. Counsel for the insurer also referred the court to Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] VR 239; Simmons Ltd v Hay (1964-5) NSWR 416 and Whim Well Copper Mines Ltd v Pratt (1910) 12 WALR 166.

28 In Lobb, the plaintiff/executrix claimed repayment of £1250, which had been put by the deceased/promisee towards the purchase of a flat; the construction of which had not been completed by the time of her death. The plaintiff argued, inter alia, that the death of the promisee had frustrated the contract and rendered it impossible to perform. Hudson J, at 247, accepted this argument and upheld the plaintiff’s claim.

29 In Simmons, the plaintiff engineer, who had been contracted to work for a company for three years fell ill less than year after commencement of work and due to the illness was totally and permanently incapacitated to perform his duties. The company terminated the plaintiff’s employment and he sued for damages for wrongful dismissal. The plaintiff was at first instance successful. On appeal to the Supreme Court, the question to be decided was whether the plaintiff’s contract was discharged by reason of his illness and whether on that ground the plaintiff’s action for wrongful dismissal should not have failed at first instance. Sugerman J, with whom Wallace and Asprey JJ agreed, found that the plaintiff’s contract had been discharged by frustration by reason of his incapacitating illness. His Honour said at 418:

“[T]his was a case of illness such as in a business sense to put an end to the contract and frustrate the object of the plaintiff’s employment by the defendant. The question is not in my opinion merely one of fact. Questions of fact may well arise in this type of situation where the illness was such as to cause merely a temporary unfitness for, and a period of absence from, the work which the employee was employed to do. But here the unfitness was undoubtedly permanent and not merely temporary; it was such as would result in the plaintiff’s being no longer able to perform the agreed services under the contract for much the greater part of the agreed period of employment.”

30 Simmons and Lobb refer to a permanent state of events which frustrated performance of the contract. In this appeal an injury to the brain rendered the first defendant temporarily unable to undertake or supervise the work from 15 April to September 2000. As Sugerman J indicated, a temporary injury is not sufficient to frustrate a contract of employment. The doctrine of frustration is not to be lightly invoked.

31 It is my view that the facts of this case are not ones which would invoke the doctrine of frustration. The appeal is upheld. This matter is remitted to the Tribunal Member to be determined according to law.

32 Costs are discretionary. Costs follow the event. The defendants are to pay the costs of the summons as agreed or assessed.

33 The Court orders that:

(1) The appeal is upheld.

(2) This matter is remitted to the Tribunal Member to be determined according to law.

**********

Last Modified: 11/10/2003

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Citations

Taylor v Chapman [2003] NSWSC 992

Cases Citing This Decision

0

Cases Cited

2

Statutory Material Cited

2

Scanlan's New Neon Ltd v Tooheys Ltd [1943] HCA 43

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24

CITATION:	Taylor v Chapman & Anor [2003] NSWSC 992
HEARING DATE(S):	26 June 2003
JUDGMENT DATE:	4 November 2003
JURISDICTION:	Common Law
JUDGMENT OF:	Master Harrison
DECISION:	(1) The appeal is upheld; (2) This matter is remitted to the Tribunal Member to be determined according to law; (3) The defendants are to pay the plaintiffs' costs of the summons as agreed or assessed.
CATCHWORDS:	Appeal decision of CTTT - contract - frustration
LEGISLATION CITED:	Consumer, Trader and Tenancy Tribunal Act 2001 - s 63(3) Home Building Act 1989
CASES CITED:	Carmichael v Colonial Sugar Refining Co Ltd (1994) 44 SR(NSW) 233 Codelfa Constructions Pty Limited v State Rail Authority (1982) 149 CLR 337 Davis Contractors Limited v Fareham Urban District Council [1956] AC 696 Joseph Constantine Steamship Line Ltd v Imperial Smelting Corporation Ltd [1942] AC 154 Lobb v Vasey Housing Auxiliary (War Widows Guild) [1963] VR 239 Scanlan's New Neon Ltd v Tooheys Ltd (1943) 67 CLR 169 Simmons Ltd v Hay (1964-5) NSWR 416 Taskiroglou v Noblee Thorl GMBH [1962] AC 93 The Civil Servant Two [1990] Vol 1 1 LILR 1 Universal Cargo Carriers Corporation v Citati [1957] s QB 401 Whim Well Copper Mines Ltd v Pratt (1910) 12 WALR 166
PARTIES :	Ernest & Fredericka Taylor (Plaintiffs) David Chapman (First Defendant) Royal & Sun Alliance Insurance Australia Limited (Second Defendant)
FILE NUMBER(S):	SC 12971/2002
COUNSEL:	Mr B A Coles QC with Mr G B Carolan Dr John Azzi (First Defendant) Mr M S Jacobs QC with Mr P Bambagiotti (Second Defendant)
SOLICITORS:	G P Bartels Laywers (Plaintiffs) Mr H Weller Herbert Weller Solicitors (First Defendant) McLachlan Chilton (Second Defendant)

LOWER COURTJURISDICTION:	CTTT
LOWER COURT FILE NUMBER(S):	HB 00/83497
LOWER COURT JUDICIAL OFFICER :	Senior Member Mr G J Durie