Treffers v Phung

Case [2020] SASC 228

SUPREME COURT OF SOUTH AUSTRALIA

(Magistrates Appeals: Civil)

TREFFERS v PHUNG

[2020] SASC 228

Judgment of The Honourable Justice Nicholson

1 December 2020

MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - PARTIES

Appeal against findings and award of damages by Magistrate.

The respondent, Ms Phung, arranged with the appellant, Mr Treffers, for timber flooring to be supplied and installed in the respondent’s home. A minor works agreement was entered into on 8 May 2014 and the installation took place during 2015.  Upon completion of the works the respondent complained of certain defects, which the appellant sought to have rectified in September 2015.  In October 2015, the respondent obtained an unsatisfactory building inspection report and proceedings were issued against both the appellant and the company of which he was the controlling mind, Truflor Australia Pty Ltd.  The Magistrate held that the appellant was the party with whom the respondent had contracted, and that the works as performed were unsatisfactory in a number of respects. The Magistrate awarded damages to the respondent in the amount of $80,000, in addition to costs.

On appeal, the appellant complained that the Magistrate had erred: in finding various defects and that the flooring needed to be replaced (grounds 1-5, 10); in quantifying the loss and awarding pre-judgment interest and special costs (grounds 6-8); in failing to allow the appellant to repair the defects (ground 11); in finding that it was necessary to hold a builder’s licence to undertake the works (ground 12); and in finding the appellant to be personally liable for the claim (ground 9).  The respondent contended that the Magistrate was correct in her findings and quantification of damages and costs.

Held:

1.      The time for filing the notice of appeal is extended to 18 October 2019.

2.      Appeal allowed.

3.      The Magistrate's orders for the payment by the appellant of damages, interest and costs are set aside.

4.      The respondent's claim against the appellant at trial is dismissed.

Building Work Contractors Act 1995 (SA) s 3, s 6, s 32, s 34, s 37, s 62; Building Work Contractors Regulations 2011 (SA) reg 5, reg 12, reg 13; Magistrates Court Act 1991 (SA) s 40; Supreme Court Act 1935 (SA) s 30C, referred to.
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Nanosecond Corporation Pty Ltd & Anor v Glen Carron Ltd & Anor [2018] SASC 188; Barrier Wharfts Ltd v Scott Fell & Co Ltd (1908) 5 CLR 64; Kuehn & Kuehn v Masterton Homes (NSW) Pty Ltd [2020] NSWSC 1049; Sagacious Procurement Pty Ltd v Symbion Health Ltd [2008] NSWCA 149; Holt v Bunney [2020] SASCFC 89; Film Bars Pty Ltd v Pacific Film Laboratories Pty Ltd (1979) 1 BPR 97023; Bank of Australasia v Palmer [1897] AC 540; Homburg Houtimport BV & Ors v Agrosin Private Ltd & Anor [2004] 1 AC 715; Lym International Pty…

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Treffers v Phung [2020] SASC 228
Case
[2020] SASC 228
Decision Date

CaseChat Overview and Summary

In the case of Treffers v Phung, the appellant, Keith Treffers, appealed against two judgments made by the Magistrates Court of South Australia. The first judgment awarded damages of $80,000 to the respondent, Hoa Phung, as against the appellant, holding that the appellant had breached a statutory warranty to perform the works in a proper manner to accepted trade standards. The second judgment awarded costs and pre-judgment interest in favour of the respondent. The appellant contended that he was not the contracting party and argued that the decision of the trial Magistrate was wrong in law. The respondent contended that the appeal should be dismissed and that the appeal did not have merit.

The legal issues in this case revolved around the identification of the contracting party and the admissibility of post-contractual evidence. The court had to determine whether the appellant was the contracting party and whether the post-contractual evidence was admissible to determine the contracting party. The court also had to consider whether the appellant breached a statutory warranty under subsection 32(2)(a) of the Building and Construction Industry Security of Payment Act 1999 (SA) and whether the respondent was entitled to rectification work or damages.

The court held that the appellant was not the contracting party and that the post-contractual evidence was not admissible to determine the contracting party. The court held that Truflor Corporation was the contracting party and that the appellant signed the Minor Works Agreement in his personal capacity. The court also held that the appellant breached a statutory warranty under subsection 32(2)(a) of the BWC Act and that the respondent was entitled to damages. The court reduced the damages award to $65,000 and the pre-judgment interest award to $8,950. The court set aside the Magistrate’s orders for the payment by the appellant of damages, interest, and costs and dismissed the respondent’s claim against the appellant at trial.

In conclusion, the Supreme Court of South Australia allowed the appeal on the basis of appeal ground 9 and dismissed all other grounds. The court extended the time for filing the notice of appeal to 18 October 2019 and made orders setting aside the Magistrate’s orders for the payment by the appellant of damages, interest, and costs and dismissing the respondent’s claim against the appellant at trial. The parties will be heard on the questions of the costs of the trial and the appeal.

Orders

Orders of the court

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Background

Background to the litigation

The Magistrate awarded damages to the respondent (the first judgment[2]) as against the appellant, and in a subsequent decision awarded costs and pre-judgment interest in favour of the respondent (the second judgment[3]). The appellant has appealed against both judgments.[2] Hoa Phung v Truflor Australia Pty Ltd and Keith Treffers, AMCCI-16-1424, 9 April 2019.[3] Hoa Phung v Truflor Australia Pty Ltd and Keith Treffers, AMCCI-16-1424, 24 September 2019.Background The appellant registered Truflor Corporation on 11 July 2012 and was appointed a director at that time. He ceased to be a director on 13 March 2014 when he retired, although he continued to work part time.[4] The appellant’s son, Andrew Treffers, was the sole director between 13 March 2014 and its deregistration.[5] Truflor Corporation was a party, as first defendant, to the proceedings at trial. The appellant was the second defendant. No orders were entered against Truflor Corporation and only the second defendant has appealed. [4] Trial Transcript (TT) 601-603.[5] Exhibit P25. Truflor Corporation succeeded with an application to the Australian Securities and Investment Commission (ASIC) for voluntary deregistration made on and effective from 25 February 2016.[6] Truflor Corporation has never held a builder’s licence issued pursuant to the BWC Act. However, the appellant held a builder’s licence personally from 10 February 1993 until cancellation on 19 April 2015. The appellant appears to have obtained a new builder’s licence on 14 May 2015. According to the appellant, he inadvertently failed to renew it on 19 April 2015.[6] There is now a new company with the same name “Truflor Australia Pty Ltd” but a different ACN (ACN 619 008 847) which was first registered on 10 May 2017. The appellant is the sole director, but this company had no standing in these proceedings at trial and has no standing on appeal. The appellant first met the respondent on 1 May 2014. On that same day, a quote for the works was emailed to her.[7] The works involved the supply and installation of floorboards in a downstairs area, an upstairs area and a stairway. The works required “130 x 14 select grade Spotted Gum, both adhered and secret nailed”. The quote was for $36,336.30 and “if new downstairs extension is to be batten and ply”, $2,000 would be added. After asking some further questions through an exchange of emails, the respondent accepted the quote on 4 May 2014 by email.[8] A document entitled “Minor Works Agreement”[9] was signed by the appellant and the respondent on 8 May 2014.[7] Exhibit P1, tabs 1 and 2.[8] Exhibit P1, tab 5.[9] Exhibit P1, tab 11. The trial in the Magistrates Court proceeded over eight days spanning almost 11 months during 2017 and 2018. In the first judgment, the Magistrate held that the appellant, and not Truflor Corporation, was the contracting party. Her Honour found that, in a number of respects, the appellant had breached a statutory warranty, under subsection 32(2)(a) of the BWC Act, to perform the works in a proper manner to accepted trade standards. Her Honour awarded damages in the amount of $80,000.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

NICHOLSON J
I declined to undertake a view and gave the following reasons.Mr Scragg, at this stage I'm not minded to go and have a view. I do have before me, the expert reports with photographs; I do have before me and I've read the view notes that took place when the magistrate had a view. At the moment - and of course I will have drawn to my attention, the examination and cross-examination of the experts, I dare say, as relevant to your grounds.I am concerned that it's five years after the floor was laid and three years after the view was held before the magistrate. I'm also concerned that inevitably, almost, I would receive impressions and understandings that might be characterised as additional evidence without the assistance of the experts and with only the existence of counsel, with all due respect. It may be difficult for me to separate my own thoughts and thinkings and assessments from those that would be provided to me in formal evidence from experts and any eyewitnesses.At this stage I'm disinclined. I'd like to hear the argument and I'll review the position as to whether I see a need for review; strict view only. That is, to understand the evidence that's put before me and the arguments that's put before me. I'll review that position as the argument develops or, perhaps, even at the end of the argument.Having now heard and considered the parties’ submissions and reviewed the evidence, I maintain my initial position that a view was not necessary to assist me to understand the evidence before the Magistrate. Further, in the circumstances, it would not have been appropriate for me to (and it was not suggested that I should) received, as fresh evidence, an impression of the state of the flooring as at the date of the appeal, some five years after it was installed.Conclusion I allow the appeal on the basis of appeal ground 9 (the correct contracting party). I dismiss all other grounds (other than the merits of ground 8) save that I would reduce the damages award to $65,000 and the pre-judgment interest award to $8,950. Depending on a question of the proper construction of the relevant rule of Court, the appellant’s notice of appeal filed on 18 October 2019 was either three days or some months out of time. Given that the merits of the appeal favour the appellant and that there has been no prejudice caused to the respondent, I extend the time for filing the notice of appeal to 18 October 2019. I make the following orders.1.The time for filing the notice of appeal is extended to 18 October 2019.2.Appeal allowed.3.The Magistrate’s orders for the payment by the appellant of damages, interest and costs are set aside.4.The respondent’s claim against the appellant at trial is dismissed.I will hear the parties on the questions of the costs of the trial and the appeal.

Ratio Decidendi

Legal Principle Established

Established by: NICHOLSON J

Whilst the law is not completely settled, Leeming JA in BH Australia Constructions Pty Ltd v Kapeller,[47] after an exhaustive consideration of relevant authorities, reasoned persuasively, with respect, that post-contractual evidence is not available for the purpose of identifying the parties “in the case of a contract which is wholly written and which is not said to be a sham or to involve fraud or is sought to be rectified in equity”.[47] [2019] NSWSC 1086; (2019) 100 NSWLR 367, 387 at [90].Consideration An issue ventilated during the trial on a number of occasions was whether the entity who performed the works in question was required to hold a builder’s licence under the BWC Act. Such a licence was held by the appellant but not by Truflor Corporation. It was the appellant’s evidence that 95 per cent of Truflor Corporation’s work involved installation of floating floorboards for which such a licence was not required. Further, according to the appellant, for the occasions when Truflor Corporation did work for which a licence was required, the statutory requirements were satisfied provided the (licensed) appellant supervised the work. It was the appellant’s case that the works in this case involved floating floorboards and did not require a licensed builder. These issues raise questions of law and of mixed fact and law to which I will return. The works have been completed (subject to complaints) and paid for. The issue between the parties is whether the respondent is entitled to rectification work or damages and, if so, from whom. The question of whether or not the works had to be performed by a licensed builder is of no relevance to the dispute save to the extent, if any, that the answer to this question might assist with the issue of who was the contracting party. The contract was formed upon the execution by the respondent of the Minor Works Agreement (Item 13). The parties at trial referred to various email communications between the respondent and the appellant thereafter in support of their respective cases as to who was the contracting party on the appellant’s side. The Magistrate was persuaded that the terms of the emails sent to the respondent by the appellant before execution of the Minor Works Agreement (identified in the chronology above) the terms of numerous emails sent afterwards and the parties’ personal interactions thereafter concerning the performance of the works and the appellant’s attempts to deal with the respondent’s complaints, all lent support to the finding that the appellant had signed the Minor Works Agreement in his personal capacity. I do not propose to set out the detail of the many post contract formation communications. In my view, none are admissible on the question of who were the parties to the contract. Even if they were admissible, they do not assist either party and, with respect, her Honour’s approach was misconceived. Truflor Corporation was a corporate entity; it could only have operated through the agency of a human being or human beings. At all material times, from the perspective of the appellant and Truflor Corporation, the appellant assumed the role, de jure or de facto, as manager of Truflor Corporation’s business. The appellant negotiated and signed contracts on behalf of Truflor Corporation, he arranged for contracted works to be performed on behalf of and for invoices to be issued in the name of Truflor Corporation so that Truflor Corporation was paid amounts due for the work performed for clients. The fact that various emails went to and came from the appellant both before and after the Minor Works Agreement was signed and the fact that he employed both singular and plural pronouns in that correspondence from time to time is intractably neutral.