Twinbrook Pty Ltd and WMP Pty Ltd
[2008] WASAT 279
•24 NOVEMBER 2008
TWINBROOK PTY LTD and WMP PTY LTD [2008] WASAT 279
| STATE ADMINISTRATIVE TRIBUNAL | Citation No: | [2008] WASAT 279 | |
| BUILDERS' REGISTRATION ACT 1939 (WA) | |||
| Case No: | CC:1098/2007 | 25 JULY 2008 | |
| Coram: | MR C RAYMOND (SENIOR MEMBER) | 23/11/08 | |
| 18 | Judgment Part: | 1 of 1 | |
| Result: | Application granted | ||
| B | |||
| PDF Version |
| Parties: | TWINBROOK PTY LTD WMP PTY LTD |
Catchwords: | Builders Registration Act 1939 (WA) Review of decision of Building Disputes Tribunal Whether breach of obligation to provide procedural fairness Extent to which specialist tribunal may inform itself and use specialist knowledge Distinction between use of specialist knowledge to evaluate evidence and use to substitute for or supplement evidence Whether duty to disclose knowledge and provide opportunity to contradict |
Legislation: | Builders Registration Act 1939 (WA), s 12A, s 12A(1)(d), s 36(1), s 36(5), s 41 Builders Registration Regulations (WA) Home Building Contracts Act 1991 (WA), s 3, s 17, s 17(a)(i) State Administrative Tribunal Act 2004 (WA), s 29(3)(2) |
Case References: | Allesch v Maunz (2000) 203 CLR 172 APA Life Insurance Ltd v Charles [1981] 2 NSWLR 352 Barr v Small Claims Tribunal; ex parte Cameron (1976) VR 427 Brian Gardner Motors Pty Ltd v McComish WASC (Full Court) Lib No 920108 Hall v University of New South Wales [2003] NSWC 669 House v R (1936) 55 CLR 499 Monaco & Anor v Arnedo Pty Ltd & Anor WASC (Full Court) Lib No 940481 Nelson v Mardesic (1999) 22 SR (WA) 42 R v Milk Board; ex parte Tomkins [1994] VLR 187 at 197 Re Minister of Health v Ronald Leslie Thomson [1985] FCA 208 Ridge v Baldwin [1964] AC 40 Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119 Wetherall v Harrison [1976] QB 773 |
Orders | 1. Leave to review the decision of the Building Disputes Tribunal reflected in Order to Pay No 2/2007-08 dated 2 July 2007 is granted.,2. The decision under review is set aside.,3. Pursuant to s 29(3)(c)(ii) of the State Administrative Tribunal Act 2004 (WA), the matter is referred back to the Building Disputes Tribunal for reconsideration in accordance with the following directions.,3.1. The Building Disputes Tribunal must be differently constituted from the Tribunal which determined the decision under review.,3.2. A directions hearing must be held as soon as practicable:,3.2.1 to enable the parties to inform the Building Disputes Tribunal of any agreement which might be reached concerning any of the matters in issue, and whether any order to pay which might be awarded in favour of the owner should require compliance only after payment of any outstanding monies under the cost plus contract between the parties; and,3.2.2 so that the Building Disputes Tribunal may issue appropriate directions to ensure that the issues are defined prior to hearing and that all necessary preparatory steps for hearing conducted.,3.3 Unless the parties agree that the assessment of any remedial costs is to be based on the cost of the owner engaging a third party builder to carry out the necessary remedial work, the principles set out in Nelson v Mardesic (1999) 22 SR (WA) 42 must be applied in determining the appropriate basis for the assessment of such costs. |
Summary | The applicant applied for leave to review and to review a decision of the Building Disputes Tribunal pursuant to s 41 of the Builders Registration Act 1939 (WA). The application for leave and the review were heard together. The hearing was limited to a consideration of whether or not the Building Disputes Tribunal had erred in principle in quantifying the compensation awarded to the applicant.,The State Administrative Tribunal found that the Building Disputes Tribunal had failed to provide procedural fairness to the parties. Neither party had been forewarned that the Building Disputes Tribunal would investigate the possibility of defective external render to the three units concerned being remedied by the application of an acrylic texture paint. Consequently, neither party provided any evidence relating to the costs of such a coating. The omission was remedied by the Building Disputes Tribunal using its own specialist knowledge to assess the costs, but it did not provide the parties with an opportunity to contradict any preliminary views held on costs.,The State Administrative Tribunal held that while specialist knowledge is inseparable from the expert tribunal and is part of its decision-making equipment, there is a distinction to be drawn between using that knowledge to evaluate evidence and the use of that knowledge to substitute evidence which could have been provided on behalf of one or other of the parties. Further, that reliance could be placed on special knowledge provided it was disclosed and the parties were provided with an opportunity to deal with it.,The effect of failure to provide procedural fairness was held to render the decision under review void.,The State Administrative Tribunal further held that the Building Disputes Tribunal had failed to take into account that the complaint in relation to the render was not only as to variations in its finish, but also that there were a number of areas where the levels differed.,Further, the State Administrative Tribunal found that the Building Disputes Tribunal had erred in the exercise of its discretion to make the order to pay effective only after the applicant had paid all monies due to the respondent builder under a cost plus contract entered into for the construction of the three units. This was because matters relevant to determining the correct basis for assessing the cost of remedial work had not been investigated and that evidence would inevitably have impacted on the exercise of the discretion.,The applicant was accordingly granted leave to review the decision sought to be reviewed, which was set aside and the matter referred back to the Building Disputes Tribunal for reconsideration in accordance with specific directions made by the State Administrative Tribunal. |
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : BUILDERS' REGISTRATION ACT 1939 (WA) CITATION : TWINBROOK PTY LTD and WMP PTY LTD [2008] WASAT 279 MEMBER : MR C RAYMOND (SENIOR MEMBER) HEARD : 25 JULY 2008 DELIVERED : 24 NOVEMBER 2008 FILE NO/S : CC 1098 of 2007 BETWEEN : TWINBROOK PTY LTD
- Applicant
AND
WMP PTY LTD
Respondent
Catchwords:
Builders Registration Act 1939 (WA) - Review of decision of Building Disputes Tribunal - Whether breach of obligation to provide procedural fairness - Extent to which specialist tribunal may inform itself and use specialist knowledge - Distinction between use of specialist knowledge to evaluate evidence and use to substitute for or supplement evidence - Whether duty to disclose knowledge and provide opportunity to contradict
Legislation:
Builders Registration Act 1939 (WA), s 12A, s 12A(1)(d), s 36(1), s 36(5), s 41
Builders Registration Regulations (WA)
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Home Building Contracts Act 1991 (WA), s 3, s 17, s 17(a)(i)
State Administrative Tribunal Act 2004 (WA), s 29(3)(2)
Result:
Application granted
Category: B
Representation:
Counsel:
Applicant : Mr T Saulsman (Acting as Agent)
Respondent : Mr W Wong (Acting as Agent)
Solicitors:
Applicant : Self-represented
Respondent : Self-represented
Case(s) referred to in decision(s):
Allesch v Maunz (2000) 203 CLR 172
APA Life Insurance Ltd v Charles [1981] 2 NSWLR 352
Barr v Small Claims Tribunal; ex parte Cameron (1976) VR 427
Brian Gardner Motors Pty Ltd v McComish WASC (Full Court) Lib No 920108
Hall v University of New South Wales [2003] NSWC 669
House v R (1936) 55 CLR 499
Monaco & Anor v Arnedo Pty Ltd & Anor WASC (Full Court) Lib No 940481
Nelson v Mardesic (1999) 22 SR (WA) 42
R v Milk Board; ex parte Tomkins [1994] VLR 187 at 197
Re Minister of Health v Ronald Leslie Thomson [1985] FCA 208
Ridge v Baldwin [1964] AC 40
Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119
Wetherall v Harrison [1976] QB 773
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Summary of Tribunal's decision
1 The applicant applied for leave to review and to review a decision of the Building Disputes Tribunal pursuant to s 41 of the Builders Registration Act 1939 (WA). The application for leave and the review were heard together. The hearing was limited to a consideration of whether or not the Building Disputes Tribunal had erred in principle in quantifying the compensation awarded to the applicant.
2 The State Administrative Tribunal found that the Building Disputes Tribunal had failed to provide procedural fairness to the parties. Neither party had been forewarned that the Building Disputes Tribunal would investigate the possibility of defective external render to the three units concerned being remedied by the application of an acrylic texture paint. Consequently, neither party provided any evidence relating to the costs of such a coating. The omission was remedied by the Building Disputes Tribunal using its own specialist knowledge to assess the costs, but it did not provide the parties with an opportunity to contradict any preliminary views held on costs.
3 The State Administrative Tribunal held that while specialist knowledge is inseparable from the expert tribunal and is part of its decision-making equipment, there is a distinction to be drawn between using that knowledge to evaluate evidence and the use of that knowledge to substitute evidence which could have been provided on behalf of one or other of the parties. Further, that reliance could be placed on special knowledge provided it was disclosed and the parties were provided with an opportunity to deal with it.
4 The effect of failure to provide procedural fairness was held to render the decision under review void.
5 The State Administrative Tribunal further held that the Building Disputes Tribunal had failed to take into account that the complaint in relation to the render was not only as to variations in its finish, but also that there were a number of areas where the levels differed.
6 Further, the State Administrative Tribunal found that the Building Disputes Tribunal had erred in the exercise of its discretion to make the order to pay effective only after the applicant had paid all monies due to the respondent builder under a cost plus contract entered into for the construction of the three units. This was because matters relevant to determining the correct basis for assessing the cost of remedial work had not been investigated and that
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- evidence would inevitably have impacted on the exercise of the discretion.
7 The applicant was accordingly granted leave to review the decision sought to be reviewed, which was set aside and the matter referred back to the Building Disputes Tribunal for reconsideration in accordance with specific directions made by the State Administrative Tribunal.
The application
8 The applicant (owner) lodged an application on 16 July 2007 seeking the review pursuant to s 41 of the Builders Registration Act 1939 (WA) (BR Act) of an order to pay made by the Building Disputes Tribunal (BDT) made on 2 July 2007 in favour of the owner. The order required the respondent (builder) to pay the owner the sum of $7,338.10 within 10 days of the owner paying to the builder the final payment pursuant to the terms of a building contract executed between the parties on 15 May 2006. The application was amended at the first directions hearing on 2 August 2007 to include an order for the granting of leave in respect of the proposed review.
9 The grounds stated in support of the application are expressed clumsily, but are understood to raise the following. Firstly, that the BDT erred in its assessment of the cost of remedying an agreed list of defects. Secondly, that the BDT acted beyond its jurisdiction by taking into account a cost plus building contract entered into between the parties, which assumed that the owner owed the builder monies thereunder, while denying the owner an opportunity to present evidence which might have demonstrated the opposite.
10 The first of the above grounds, which covered a large range of items, was abandoned at the hearing, save in respect to the one major item concerning the unacceptable finish of render to the exterior of the buildings the subject of the contract. At the hearing, the application was amended to add a further ground of review to the effect that the BDT denied the owner procedural fairness by determining the claims for rectifying the render finish by a method of which the parties were not forewarned, and did so by relying on costings which the parties were given no opportunity to contradict.
11 The matter was set down for a combined hearing of the application for leave and the review but subject to the Tribunal's order that the hearing would address only any alleged error in principle applied by the BDT in the
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- quantification of the compensation awarded, so that the assessment of the actual quantum of each item or claim was excluded from consideration. Given the numerous defects which were then the subject of the application, the Tribunal was concerned that time should not be spent in the quantification of claims in respect of which leave might be refused.
The decision under review
12 The BDT published its written reasons for the decision on 13 November 2007. The decision reflects the exercise of diligence in dealing with the numerous issues which were in issue and is some 40 pages in length. In view of the owner's withdrawal of the first ground of review in respect of all items but one, it is not necessary to deal with those aspects of the decision under review. In respect of the unacceptable finish of the external rendering and four other minor defects, the BDT awarded an amount of $3,636 plus GST. The amount claimed by the owner in respect of the external render repair was $51,000.
13 The BDT noted that it had no jurisdiction to hear and determine any breach of contract issues that may have arisen between the parties by reason of the provisions of s 3 and s 17(a)(i) of the Home Building Contracts Act 1991 (WA) (HBC Act) which exclude jurisdiction in respect of a cost plus contract as entered into by the parties. It was also recorded that the parties had agreed that they would accept the findings of the Builders Registration Board inspector, as set out in a report dated 16 February 2007. As a result of that agreement, the only task for the BDT was to determine what amount should be paid to the owner representing such costs of remedying the faulty or unsatisfactory building work as the BDT considered reasonable (s 12A(1)(d) of the BR Act). That is not expressly stated in the reasons for decision but it is clearly the task which was undertaken.
14 The reasons for decision identify that the owner's complaint in respect of the rendering was 'External rendering not consistent finish Units A, B and C'. The cost plus contract entered into between the parties was for the construction of these three buildings.
15 The reasons for decision then refer to the report completed by an inspector of the Builders Registration Board after inspection of the complaints raised by the owner. The report is quoted in full in relation to the render complaint, as follows:
Taking an overview, the render finish to the complex is considered to be below acceptable standards. In some locations day lines have been used between the ground and first floor but this detail is not consistent around the complex. Where repairs have been
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- made to corners, reveals, top edges of walls, lower sections of walls where mortar has been extended down to paving level these sections are not level with adjoining surfaces and the surface texture differs from other sections of the wall. On the main sections of the walls the surface texture differs between panels and in some locations within panels and detracts from the overall aesthetics of the complex.
16 The inspector's written recommendation is set out and that is:
Bring the render finish up to acceptable standard and consistent finish throughout.
17 The amount claimed to rectify the defective render is stated, being the sum of $51,000, based on a quotation identified by reference to the BDT book of documents. The quotation as appears from the book of documents is from Austwest Homes and provides a quotation for the remedial work for each item of complaint totalling $120,961.83. The complaint in respect of the render is by far the most significant claim in terms of alleged repair costs.
18 The inspector gave evidence at the hearing, and that evidence is summarised in the reasons for decision. The inspector confirmed that there was a different visual texture between different areas of the render. The reasons state that the inspector testified that the application of a textured finish acrylic paint coat to all elevations would result in a consistent finish and 'would remedy all the aesthetic defects in the render'.
19 Reference is thereafter given to the evidence of a director of Austwest, Mr Rapanaro, who was called to support the quotation provided by his company for the repair work. The reasons for decision reflect that Mr Rapanaro's evidence was at best vague, and he displayed no ability to speak in detail about the method(s) utilised by him in calculating remedial costs.
20 The BDT reasons continue to reflect that the Tribunal members attended the site and undertook an inspection of the external render of all three units. The reasons state:
The Tribunal accepts that the render to all three units is faulty and unsatisfactory. There were discrepancies in the texture of the render, which were highly visible even in shadow. The major instances of discrepancies appeared on the north and south panels of the units at the front of Unit A. The Tribunal observed the horizontal line constructed to the front of Unit A at the upper end of the ground floor and accepts that the same was poorly constructed and inconsistent with the balance of the render to the units.
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21 Reference is then made to a statement made by a Mr Gore that a lightweight collar over the junction of the ground floor and upper floors would mask any difference between the render to the upper and lower floors. The BDT agreed with that statement but concluded that, as the whole of the complex was to be texture painted, it was not necessary to require a collar to mask any upper and lower floor differences.
22 The reasons for decision continue to set out that neither party produced any evidence or information to calculate the cost of the textured painting. It is then stated:
… The Tribunal is a specialist Tribunal and is comprised of inter alia, a builder. The Tribunal often relies on the expert knowledge and information possessed by the builder member to assess the reasonableness of any proposed remedial work and the cost thereof, so as to avoid cost to the parties of obtaining additional expert reports and quotations. The Tribunal acknowledges that in times of high demand, as currently experienced, it is difficult for parties to obtain such evidence. The Tribunal, as a specialist Tribunal, is aware of the market rates for building work by the participation of a builder member. The Tribunal reviewed the plans for the units (Exhibit 1) and calculated the external panel areas of all three units requiring remedial texture painting at 253 square metres. The Tribunal accepts that $12 per square metre is the market rate for painting and has added to that price $600 being the cost of scaffolding. Attached to these reasons is a copy of Exhibit 1 with the Tribunal's highlighted markings of the panel areas and calculations per panel for the three units as a whole.
Item 1(c) and the proposed remedial works referred to herein also resolves the remedial work relevant to items 2(x), (y) and (z) and 5(i). Accordingly, the Tribunal finds that the sum of $3,636 plus GST is the cost of remedying the defects as identified in items 1(c), 2(x), (y) and (z) and 5(i) upon the basis of texture painting the whole of the exterior render to the complex.
23 Item 1(c) is the render complaint and other complaints referred to relate to a downpipe which had slipped, some settlement cracking and a joint between the render and a patio soffit which was cracked and required filling and repainting.
24 The BDT then proceeded to address each of the very many other complaint items. After dealing with those matters, the reasons for decision reflect that the BDT found that the owner's claim as to the extent and degree of defective work alleged had been substantially exaggerated. Further, that the defects of the type referred to
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- (which is not understood to include the render complaint) were usually attended to by a builder immediately after the handover inspection has taken place, at which time a handover list is usually prepared; but that, in this case, the builder was not given the opportunity to hand over the property as the owner took possession before that had been arranged and without the builder's consent. For this reason, it was stated that it would be ordered that the amount to be paid by the builder to the owner should be paid upon payment of the final payment by the complainant to the respondent. Further, it was stated:
The Tribunal's process and jurisdiction was not intended by the legislature to subvert the terms of the contract between the parties. It is not a case where the respondent has refused to return to site after completion and payment. In this case, the complainant has had the full substantial benefit of possession of the units prior to full payment. The Tribunal finds that it is the complainant's conduct of unauthorised possession [sic] that has caused the dispute in the initial stage and the complainant has substantially aggravated the dispute by exaggerating the degree and gravity of the allegations of defective work and relying upon a grossly exaggerated costing by Austwest.
25 The first ground for review, which is summarised above, includes an assertion that the BDT did not take into proper consideration the cost of making good all the defects as listed and as agreed to between the parties. That ground is broad enough to include issue 1 below. Based on the above, the issues for determination are accordingly as follows:
1. Did the BDT fail to address that the external render complaint raised workmanship issues other than an inconsistent texture finish, which were not addressed?
2. Did the BDT fail to provide procedural fairness by reason that:
(a) the parties were not forewarned that an issue to be investigated was whether the application of an acrylic texture paint would constitute an appropriate remedy; and
(b) it made findings on costings based on its own knowledge which the parties were given no opportunity to contradict?
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- 3. Did the BDT act beyond its jurisdiction by framing the order to pay in terms that obliged the builder to pay only after final payment had been made by the owner to the builder under the building contract?
26 It is convenient to deal with the second issue first.
Procedural fairness
(a) Notice of issue to be investigated
27 To the extent that the BDT's procedures are not prescribed by the BR Act or the Builders Registration Regulations (WA), the BDT determines its own procedure (s 36(5) of the BR Act). The BDT is a specialist tribunal which is intended to act according to equity, good conscience and the substantial merits of the case and without regard to technicalities and legal forms. It is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks fit (s 36(1) of the BR Act).
28 In this case, there was no method adopted by which to define the issues prior to the hearing. The parties had, however, been provided with copies of the inspection report prepared by an inspector of the Builders Registration Board to which reference has already been made. In effect, that document, and possibly other documents copied between the parties, defined the issues for determination.
29 The inspector's observations and comments in relation to the render issue and his recommended action to be taken as set out in the reasons for the decision of the BDT are set out above.
30 The observations reflect that the issue with the external render included:
(a) that in some locations, day lines had been used between the ground and first floor but the detail was not consistent around the complex;
(b) where repairs had been made to corners, reveals, top edges of walls and lower sections of walls where mortar had been extended down to paving level, these sections were not level with adjoining surfaces;
(c) the surface texture differed between the above sections and other sections of the wall;
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- (d) on the main sections of the walls, the surface texture differed between panels, and in some locations, within panels which detracted from the overall aesthetics of the complex.
31 The action recommended was to bring the render finish up to an acceptable and consistent finish throughout.
32 The owner advanced its case and submitted quotations based on a complete re-render of the external faces of the building.
33 It is evident that the builder relied on a statement contained in a report commissioned by the owner from the Building and Home Consulting and Inspection Service which was prepared by Mr S Glorie. This appears to be the Mr 'Gore' referred to in the BDT's reasons for decision. That statement was to the effect that the only way of rectification which he could see, other than stripping down and reapplying the render, was to provide a pre-manufactured lightweight concrete band, glued to the external wall and painted, which would deflect the eye from unsightly areas (BDT book of documents p 114). Mr Foong, who is described in one BDT reasons for decision as a registered builder and quantity surveyor, who gave evidence on behalf of the builder, relied on the statement and agreed with it.
34 Some of the reports from Building and Home Consulting and Inspection Service included in the BDT book of documents contain an express suggestion that the report be copied to the builder. It seems probable, therefore, that the builder received a copy of these reports prior to the hearing. A report relied upon by the builder from Mr TC Foong (BDT book of documents p 140/141) comments upon the Austwest quotation.
35 Accordingly, the parties had sufficient notice that the owner was contending that the external faces of the units required to be re-rendered and that the owner contended that the amount which should be awarded to cover that remedial work was the amount of $51,000 included within the Austwest quotation. The basis upon which the builder intended to oppose that relief was not clear but based on the documentation which appears to have passed between the parties, there was a basis for the builder to argue that an appropriate remedy would be the fixing of a lightweight concrete band glued to the external wall (it is understood at the join between the upper and lower storeys of each unit) would deflect the eye from unsightly areas. There is nothing to indicate that either party considered the possibility of an acrylic texture coating being applied.
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36 A reading of the transcript of the evidence before the BDT reflects that the learned chairperson did not initially understand that it might be contended that the application of the acrylic textured paint could be a suitable remedy. The issue only arose because one of the other members of the BDT, Mr Mittonette, raised his concern that the inspector's comments 'are not definitive' and … 'it may very well be that the cost of re-rendering or applying an additional texture coat' (might need to be considered) (T:19/20) (28 June 2007).
37 The inspector, Mr O'Connor, was then called to give evidence. He was asked by the learned chairperson whether he considered that the three units needed to be re-rendered, and answered in the negative. He went on to explain why he considered that the application of an acrylic texture paint would provide an adequate finish. His examination at this point was conducted by the learned chairperson and Member Mr Mittonette. The chairperson then invited the parties to ask any questions 'on that point' (T:34).
38 M Saulsman, for the owner, took up the invitation. Mr Saulsman raised, through his questions, his concern that the proposed remedy constituted a compromise because the contract required that a proper render finish be provided (T:46/47). That was the only basis upon which he could attempt to impugn Mr O'Connor's evidence as to the proposed remedy.
39 As the BDT's reasons for decision reflect, neither party put forward any costings in relation to the application of an acrylic texture paint.
40 It is trite that procedural fairness requires that before a person's interests are affected, notice should be given of any relevant matters to be determined and an appropriate opportunity to be heard provided.
41 As stated in Allesch v Maunz (2000) 203 CLR 172 per Kirby J at [35]:
It is a principle of justice that a decision-maker, at least one exercising public power must ordinarily afford a person whose interest may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made. The principle lies deep in the common law. It has long been expressed as one of the maxims which the common law observes as 'an indispensable requirement of justice'. It is a rule of natural justice or 'procedural fairness'. It will
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- usually be imputed into statutes creating courts and adjudicative tribunals. Indeed, it long preceded the common and statute law. Even the Almighty reportedly afforded Adam such an opportunity before his banishment from Eden.
42 Although the statement forms part of the minority dissenting judgment, that dissention turned on other considerations.
43 Further, persons appearing before consumer claims tribunals must be properly aware of the issues to be investigated: Barr v Small Claims Tribunal; ex parte Cameron (1976) VR 427; APA Life Insurance Ltd v Charles [1981] 2 NSWLR 352 per Hunt J at 356; Brian Gardner Motors Pty Ltd v McComish WASC (Full Court) Lib No 920108 dated 15 March 1992.
44 It follows that, unless the decision can be preserved on the basis that, the BDT was entitled to inform itself in the manner in which it did, the owner was denied procedural fairness by not being provided with adequate notice that the BDT would investigate the above issue, and consequently had an inadequate opportunity to prepare its case.
(b) The making of findings on remedial costs and whether the parties should have had an opportunity to contradict those findings
45 As set out above, s 36(1) of the BR Act empowers the BDT to inform itself on any matter in such manner as it thinks fit.
46 There are many authorities which hold that a tribunal can act on its own views, and can do so without disclosing those views to a person appearing before it: see Re Minister of Health v Ronald Leslie Thomson [1985] FCA 208 and the authorities there cited. However, there is a distinction drawn between evidence of matters on which a tribunal informs itself and an expert tribunal's 'special knowledge'. Special knowledge is inseparable from the expert tribunal and is part of its decision-making equipment so that procedural fairness does not require disclosure: R v Milk Board; ex parte Tomkins [1994] VLR 187 at 197.
47 But it is one thing to use special knowledge to evaluate evidence and another to use it as a substitute for, or to supplement, the evidence. It is where expertise and experience is used only to interpret and evaluate that there is no duty of disclosure: Wetherall v Harrison [1976] QB 773; Hall v University of New South Wales [2003] NSWC 669 and the further authorities referred to in The Laws of Australia (Thomson Legal On-line at [2.5.610]).
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48 In this instance, the BDT has provided its own evidence. Its special knowledge has not been used in the process of evaluation but to substitute for evidence which should have been provided on behalf of one or other of the parties. The BDT was entitled to rely on special knowledge provided that it was disclosed and the parties were provided with an opportunity to deal with it: Monaco & Anor v Arnedo Pty Ltd & Anor WASC (Full Court) Lib No 940481 dated 6 September 1994 and The Laws of Australia above at [2.5.600].
49 In failing to provide this opportunity to the parties, they were denied procedural fairness.
50 It follows that on both the above bases, there has been a denial of procedural fairness, the consequence of which is to deprive the BDT of jurisdiction and to renders its decision void: Ridge v Baldwin [1964] AC 40; Justice in Tribunals by JRS Forbes (The Federation Press 2002 at p 87).
Failure to address all agreed defects
51 The observations of the inspector concerning the external defective render, as set out above, included not only differences in surface texture but areas where repaired sections of render and areas where lower sections of render had been extended down to paving level were not level with adjoining areas.
52 The learned chairperson of the BDT directed and controlled the examination of Inspector O'Connor. His evidence did not address the differences in levels. Mr O'Connor commenced his evidence, in answer to a question from the learned chairperson, as to what he observed in relation to this complaint, by stating that he had observed an inconsistent texture in the finish of the remedy (T:25line 47). His evidence remained focussed on the texture issue, explaining that it was caused by different trowelling techniques, water content, drying conditions and whether sand had been provided from different sources. It is noted that the BDT reasons reflect that Mr O'Connor testified that the texture paint application 'would remedy all the aesthetic defects in the render'. That may reflect an understanding of the import of Mr O'Connor's evidence because the transcript does not reveal any statement in those express terms. But, in any event, in the context of his evidence which focussed only on the inconsistent texture, it is not clear whether painting would address the different levels of the render.
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53 It may be that the differences in levels are so minor that the provision of the acrylic texture paint might address it - but if so, that is not clear on the evidence as revealed by the transcript or the reasons for decision. As the decision under review has been rendered void, this is an aspect which the parties will have an opportunity to address.
Did the BDT act beyond its jurisdiction in framing the terms of the order to pay?
54 It is common cause that the contract entered into between the parties is a cost plus contract as that term is used under the HBC Act. The BDT has jurisdiction under s 17 of the HBC Act for breach of a home building work contract as defined. The definition excludes a cost plus contract.
55 The effect of the above provisions preclude the BDT from granting relief under the HBC Act. It does not prevent the BDT from hearing evidence concerning the performance or failure to perform a lump sum contract where that evidence is relevant to the exercise of its discretion to grant relief under s 12A of the BR Act.
56 The BDT exercised a discretion in determining when payment was to be made. That discretion should be interfered with only if it miscarried in accordance with the principles in House v R (1936) 55 CLR 499.
57 It is perhaps surprising that the order for payment was dependent upon the builder paying in full. That seems to have been rationalised on the basis that the complaints would have been addressed after handover as part of the builder's usual maintenance obligations during the defects liability period. That is a sufficient basis for the exercise of the discretion in the manner adopted by the BDT. However, there was a great deal of other evidence which should properly have been put before the BDT but was not. As the BDT is charged to determine disputes according to their substantial merits, and is not a court, and the parties were not legally represented, it should have made some enquiries which would have elicited that evidence.
58 In order to properly assess the amounts to be paid to the owner under the order to pay, the BDT needed to determine whether the quantum should be based on the cost of the owner engaging a third party to do the work, or based on what it would cost the builder. It is not clear from the reasons for decision as to which basis of assessment has been followed. The rates applied by the BDT are referred to as market rates, but are they market rates payable by a builder to subcontractors, or the market rates payable by an owner to a builder?
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59 To determine which was the appropriate method of assessment, the BDT needed to make findings as to whether the builder had established that the owner had acted unreasonably in taking possession and not allowing the builder to complete the works in accordance with the principles set out in Nelson v Mardesic (1999) 22 SR (WA) 42 (Nelson), which has been followed on numerous occasions in this Tribunal. If the owner did not act unreasonably and it cannot be established that the owner therefore failed to mitigate its damages, the owner is entitled to be awarded the costs of engaging a third party to carry out the remedial work. In addressing the considerations outlined in Nelson, the BDT would have had the benefit of considerable more evidence of the circumstances which resulted in the dispute in question and why the owner is not prepared to allow the builder to carry out the necessary remedial work.
60 The BDT appears to have assumed, because it found that the owner's claims were exaggerated, that the owner was responsible for the dispute. But the dispute and its cause were not investigated beyond dealing with the defective workmanship complaints. While the other claims might not have prevented practical completion, the render may have done so. The render complaint is a serious one. Neither party foresaw the remedy found by the BDT. Mr Saulsman alleged that the builder had acted in a totally untrustworthy and dishonest way, that the relationship had broken down totally and that the builder did not take seriously its obligations to remedy defective work (T:4/5). The render issue alone may be sufficient to justify a loss of confidence depending on the manner of response to it. These were matters that needed to be investigated.
61 As there was no consideration of the principles discussed in Nelson, and as a full investigation of the relevant considerations must inevitably impact on the exercise of the discretion, the discretion miscarried. In the circumstances, this ground of review is also made out.
62 It follows, for all of the above reasons in relation to each ground, that the criteria for the grant of leave as set out in Tangent Nominees Pty Ltd and Edwards & Anor [2005] WASAT 119 have been met, and that the decision of the BDT must be set aside.
General considerations: the way forward
63 Although the review was ultimately restricted to the above matters, the effect of the findings in relation to the procedural fairness issues is that the BDT acted without jurisdiction and the entire decision is void.
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64 That means there is potential for all claims to be revisited, and it may be that the amounts awarded in respect of other items will differ from that awarded in the decision under review. It would be unfortunate if a full enquiry on all issues is required. The parties should obtain advice in order to ascertain if the basis upon which the remedial work has been costed can be determined. The parties might wish to consider endeavouring to settle all other items in dispute on a basis which is mutually acceptable. But if not, all claims will need to be determined. If agreement cannot be reached on those claims and also on whether it is appropriate for any order made in favour of the owner to only require payment after any amounts due under the contract by the owner to the builder have been paid, it will be necessary for additional evidence to be led concerning the circumstances which resulted in the dispute.
65 Given the substantially increased scope of enquiry which may be necessary to resolve the matter between the parties, the matter will be referred back to the BDT for reconsideration in accordance with specific directions. Those directions will include that a directions hearing be held as soon as possible so that the parties can report on any agreement reached between them on the issues required to be determined and so that procedures can be set in place to ensure that the issues between the parties are defined prior to any final hearing.
66 It is evident from a reading of the transcript and the BDT's reasons for decision that the BDT made a real effort to determine what were undoubtedly difficult proceedings to manage. The reasons given by the BDT for making the assessment of costs which it did are understandable, although for the reasons given, wrong. There is nothing to suggest that the BDT as constituted for determination of the decision under review would not bring an impartial mind to bear in its reconsideration of the matter. However, given that findings have been made which have fixed costs on all items, including the render issue, it is preferable that, on its reconsideration of the matter, the BDT be differently constituted. The Tribunal's directions will provide accordingly.
Orders
67 For the above reasons, the Tribunal will issue an order in the following terms.
1. Leave to review the decision of the Building Disputes Tribunal reflected in Order to Pay No 2/2007-08 dated 2 July 2007 is granted.
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- 2. The decision under review is set aside.
3. Pursuant to s 29(3)(c)(ii) of the State Administrative Tribunal Act 2004 (WA), the matter is referred back to the Building Disputes Tribunal for reconsideration in accordance with the following directions.
3.1. The Building Disputes Tribunal must be differently constituted from the Tribunal which determined the decision under review.
3.2. A directions hearing must be held as soon as practicable:
3.2.1 to enable the parties to inform the Building Disputes Tribunal of any agreement which might be reached concerning any of the matters in issue, and whether any order to pay which might be awarded in favour of the owner should require compliance only after payment of any outstanding monies under the cost plus contract between the parties; and
3.2.2 so that the Building Disputes Tribunal may issue appropriate directions to ensure that the issues are defined prior to hearing and that all necessary preparatory steps for hearing conducted.
3.3 Unless the parties agree that the assessment of any remedial costs is to be based on the cost of the owner engaging a third party builder to carry out the necessary remedial work, the principles set out in Nelson v Mardesic (1999) 22 SR (WA) 42 must be applied in determining the appropriate basis for the assessment of such costs.
- I certify that this and the preceding [67] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
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MR C RAYMOND, SENIOR MEMBER
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