Ultra Developments Pty Ltd v Robert and Kelly Nagle

[2015] NSWCATCD 32

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Ultra Developments Pty Ltd v Robert and Kelly Nagle [2015] NSWCATCD 32
Hearing dates:	5 November 2014
Decision date:	04 March 2015
Jurisdiction:	Consumer and Commercial Division
Before:	T Simon, Senior Member
Decision:	The respondent is to pay the applicant the sum of $74,276.47.00 immediately. Any application for an order for costs is to be notified to the Registry by 23 March 2015 by sending a copy of any submissions and evidence in support of such an application to the Registry and the other party. The party against whom any application for costs is made may provide submissions to the submissions and any evidence in reply to the Registry and the other party by 23 April 2015.
Category:	Principal judgment
Parties:	Ultra Developments Pty Ltd (applicant) Robert Nagle and Kelly Nagle (respondent)
Representation:	Counsel: Young, J for the applicant builder Toomey, D for the respondent homeowner Solicitors: Blackwell Short Lawyers for the applicant Whiteley, Ironside & Shillington Solicitors for the respondent
File Number(s):	HB 10/52785, HB 14/20419
Publication restriction:	Nil

Reasons for Decision

First instance proceedings in the Consumer, Trader and Tenancy Tribunal

1. For ease of reference the applicant shall be referred to as the builder and the respondents as the homeowner.

2. The initial application (HB 10/52785) was made by the builder on 11 November 2010 for payment of an outstanding invoice totalling $32,636.00. An application (HB 11/28376) was subsequently made by the homeowners on 31 May 2011 for an order not to have to pay the amount of $32,636.00.

3. The matters were heard over two days and orders were made in relation to both matters. The relevant orders were…

1. I give leave for Darian Percy to be joined as a respondent in application HB 11/28376.

2. Order that the claim against Ultra Developments Pty Ltd and Darian Percy in application HB 11/28376 be dismissed.

3. In application HB 10/52785, Order that Robert Nagle and Kelly Nagle pay to Ultra Developments Pty Ltd the sum of $59,320.55.

Appeal to the District Court

4. The matters were appealed to the District Court by the homeowners. Parts of the appeal were subsequently abandoned by the homeowners (in relation to the misleading and deceptive conduct). However parts of the appeal were allowed and remitted back to the Tribunal.

5. In his judgment at paragraph 70, His Honour Justice Hoy of the District Court noted:

70 The appeal is allowed having regard to the provisions of section 67 (3)(a) & (b) of the CTTT Act I will receive submissions on whether the matter should be remitted to the Tribunal the determination according to law or whether this Court should substitute its own decision

6. The District Court subsequently made the following relevant orders:

1. Pursuant to s 67(3)(b) and (4) of the Consumer, Trader and Tenancy Tribunal Act 2001 I remit the decision of this Court to the Tribunal and order a re-hearing of the proceedings by the Tribunal.

2. I note that on the hearing of the Appeal on 28 August 2013 (Day 2), the plaintiff confined the questions to be considered on Appeal by way of a document headed “Precis” dated 28 August 2013 to points (A), (B) and (C). The plaintiff has succeeded on points (A) and (C) and is unsuccessful on point (B).

7. The Appellants “Precis” document referred to in the orders states the following

The Tribunal erred in:

1. Treating the revised reconciliation document as material that could support a finding (explicit or implicit) that the work actually performed by the builder was all of that required to be performed under the contract to entitle him to payment to the amount awarded.

2. Finding, explicitly or implicitly, that the builder had performed work to an extent that would entitle him to payment of the sum awarded when there was no material, or insufficient material, before him which would permit him to make that finding.

3. Failing to make a finding with respect to the extent to which the builder had in fact performed the work required of him under the contract, being a finding which was essential to his award.

8. The application to be decided by this Tribunal relates to the builder’s initial application HB 10/52785 and the re-registered application HB 14/20419.

The remitted proceedings and issues to be decided

9. The District Court orders were made pursuant to sections 67(3)(b) and (4) of the Consumer, Trader and Tenancy Tribunal Act (NSW) 2001 (the CTTT Act) which relevantly states as follows:

….(3) After deciding the question the subject of such an appeal, the District Court may, unless it affirms the decision of the Tribunal on the question:

….(b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal.

(4) If such a rehearing is held, the Tribunal is not to proceed in a manner, or make an order or a decision, that is inconsistent with the decision of the District Court remitted to the Tribunal.

…(7) If a rehearing is held, fresh evidence, or evidence in addition to or in substitution for the evidence on which the original decision was made, may be given on the rehearing.

10. The transitional provision contained in clauses 7 and 8 of schedule 1 in the Civil and Administrative Tribunal Act (NSW) 2013 (the NCAT Act), allow for the application to be remitted to the NSW Civil and Administrative Tribunal and allow section 67 of the CTTT Act to continue to apply.

What should be considered by the Tribunal?

11. The builder put to the Tribunal that three elements of the claim needed to be established. The first was the existence of a contract, the second was whether there was wrongful repudiation of the contract and the third related to the losses suffered by the builder as a result of the repudiation.

12. In relation to the existence of the contract, the parties were not in dispute. His Honour, made a number of findings in relation to the existence of the contract including:

8. On 18 March 2013 the builder and the owners entered into a residential building contract for renovations and additions to the owners house situated at 19 Birchgrove Drive orange New South Wales.

9 The contract a standard form HIA (January 2008 edition) contained (inter alia) provisions whereby the builder could make progressive claims for payment: clause 15

13. A copy of the contract is also contained as an attachment in the statement of Darian Percy dated 30 March 2011.

Termination or repudiation of the Contract?

14. Both parties put to the Tribunal that they had validly terminated the contract. There was evidence before the Tribunal in relation to the initial proceedings as to the dealings of the parties up to the termination of the contract. These were also referred to in the judgment of the District Court relevantly extracted as follows:

19. In September 2010 the owners advised the builder that they were unwilling to pay progress claim 6 in full.

….

22. It is of significance that the builder in this case did not issue a final claim and did not claim to have reached Practical Completion.

23. The builder was entitled, on the basis of the contract terms, to treat the non-payment of the progress claim as a substantial breach of the contract, but apparently he took a conciliatory approach and agreed to review the prime cost and provisional adjustments which were the subject of the owners disagreement.

….

25. Notwithstanding, the builder continued to work on site. That is much clearer from his email correspondence that post-dated 30 September.

26. On 11 October 2010 the builder wrote to the owners again, demanding payment and asserting that the owners were in breach of the contract.

27. The owners responded by a solicitor’s letter dated 19 October 2010 in which they disputed the reconciliation of the prime cost and provisional allowances and offered to pay $2,511.05 (apparently in settlement of the builder’s claim) on terms that, (1) the works be completed by qualified tradesmen, (2) certain defects be rectified “within the defects period”, (3) the roof be a re-aligned, and (4) there be an adjustment for liquidated damages for delay. The letter concluded in terms that the builder should complete the work or risk the owners terminating the contract pursuant to clause 33 of the contract.

28. At the time correspondence was sent, the owners were in breach of the contract for non-payment of progress payment 6 (my emphasis). They were not entitled to demand a set off for liquidated damages as they were not entitled to demand that the builder attend to the defects within a particular period.

29. The owners’ letter of 19 October was capable of being construed as evidence that they did not intend to be bound by the terms of the contract. (It is noted that whilst the builder’s contract is current, it is responsible for the completion of the works. The owner may only notify defects and insist upon rectification after the project has been handed over (Practical Completion)

30. On 29 October 2010 the owners notified the builder of their intention to terminate the contract in accordance with clause 36 of the contract and asserted that they would thereafter complete works in accordance with clause 36.

31. Therefore followed a meeting or meetings between the parties the terms of which are not entirely clear.

32. On 11 November 2010 the builder wrote to the owners and claimed that it had been denied access to the site and asserted that the owners were in substantial breach of the contract. The owners wrote back on the same day and alleged that the builder had said it was not prepared to complete the works and that it had demanded payment of an additional $40,000.00. The builder replied, asserting that it was the owner who told the builder not to return to the site and that the builder remained ready, willing and able to complete the works. The letter added that there were only “minor matters outstanding”. Other than the reference to the (minor) defects, the owners did not challenge this assertion.

33. On 15 November 2010 the owners sent a purported Notice of Termination under clause 33 of the contract. On 23 December 2010 the builder accepted what it said was a wrongful repudiation of the contract by the owners.

34. The building undertook a final reconciliation of the contract sum on 30 May March 2011 and the outstanding amount claimed was $48,566.34 plus costs.

15. The builder submitted that the District Court findings as contained in those (and other) paragraphs provide evidence to support a finding of repudiation of the contract by the homeowner and that there was an entitlement of the builder to terminate the contract. They also submitted that the homeowner did not challenge the original decision in relation to the question of repudiation. They submit that the “Précis” document makes it clear that there was no challenge made to the original decision relating to repudiation. The builder submitted that by doing so the homeowners had accepted the entitlement of the builder to terminate the contract by reason of the repudiation by the homeowner.

16. The homeowner submitted that there was no finding on the question of termination or repudiation in the original proceedings. They note that the Member in the initial proceedings had stated at paragraph 119 that it seemed unnecessary to resolve the issue of whether the termination was valid. The homeowner also submitted that the District Court made no finding in relation to termination or repudiation that was binding on the Tribunal’s present proceedings. The homeowner submitted that it is no longer relevant to find termination or repudiation of the contract. They also noted that the builder was claiming $54,896.30 for unpaid amounts for works up to the date of termination as contained in paragraph 26 of their submissions to the Tribunal dated 25 June 2014.

17. The Tribunal is not satisfied that the original Member or the District Court ever made a finding of repudiation or termination. The District Court made it clear that it was necessary for the Tribunal to make a finding on this point.

58 I do not think it right, however, that it was unnecessary for the Tribunal to determine whether the termination by the owners was valid or not. The Tribunal member said that if the contract had been properly terminated by the owners, the unpaid balance of the contract price must be bought to account between the parties, in accordance with clause 36 and, in the alternative, if the contract was repudiated by the owner, the builder was entitled to claim damages unless clause 35 applied.

59. It is also clear, however, that the builder did not purport to bring the contract to an end pursuant to clause 35. Properly construed, his acceptance of the wrongful repudiation by the owners by his letter of 23 December 2010 was an exercise of his common-law rights.

60. It is only after determination is made of the circumstances in which the contract came to an end that the rights of the parties can be properly considered. If the owners were entitled to terminate the contract in accordance with clause 36, then it is true that the unpaid balance of the contract price have to be bought to account between the parties. The owners led evidence in relation to their costs of completion, and although it was the subject of dispute by the builder, in would have been possible for the Tribunal to determine what amount was going to the builder.

61. If, however, the owners were not entitled to rely on the notice of termination and in fact wrongfully repudiated the contract, the builder was entitled to have his claim for damages assessed in accordance with common law principles.

18. The District Court returned to the issue later in the judgment:

68. Further, in order to determine the builder’s entitlement it was necessary for the Tribunal to make a determination in respect of the respective actions and rights of the parties under the contract. It was open to the Tribunal on the evidence to find that the owners were in breach of the contract for failing to pay progress claim 6, and/or for refusing the builders access to complete the works, and/or by demanding that the builder carry out certain works. The latter conduct and the issue of the notice of termination by the owners is capable in my view, of supporting a finding that the owners were evincing an intention not to be bound by the contract or otherwise acting in a manner which was repudiatory and which entitled the builder to take the course that it did. In other words it was open to the Tribunal to find that the builder accepted the wrongful repudiation by the owners and bought the action at an end on a contract at an end on or about 23 December 2010.

69. Had the Tribunal made those findings, it was then entitled to accept the agreed position of the parties with respect to the mathematical calculations carried out by the expert.

19. The Tribunal is satisfied on the uncontested evidence before it that in September 2010, the owners advised the builders that they were unwilling to pay progress claim 6. The Tribunal is also satisfied that this was a breach of clause 15 of the contract. Clause 15 of the contract, which is attached to Mr Percy’s statement of 30 March 2011, requires the homeowners to pay the progress claim. Also attached to that statement was a notice from the homeowners pursuant to clause 33.3 of the building contract claiming breach of the contract on a number of ground and a subsequent termination notice dated 15 November 2010, claiming that the contract was at an end.

20. In a letter dated 23 December 2010, attached to Mr Percy’s statement, the builders advised the homeowners that they were in substantial breach and that their actions were a “repudiation of the contract”. The builder however accepted the repudiation. The Tribunal finds that the homeowners acted in a manner that was repudiatory when they refused to pay the progress payment. They were in breach by failing to pay progress payment 6 in accordance with the contract and could not terminate the contract. The contract was at an end as of 23 December 2010 when the builder accepted the repudiation.

Has the builder proved that the work for it which it is claiming been done?

21. As referred to previously, the District Court made clear that in the event the Tribunal made the finding of repudiation of the contract, it was “entitled to accept the agreed position of the parties with respect to the mathematical calculations carried out by the expert.”

22. While there is an agreed position by the parties in respect to the mathematical calculations contained in the reconciliation, both parties submitted that the builder needs to demonstrate to the Tribunal, the factual assumptions underpinning the reconciliation.

23. The builder submitted that the District Court had found an “abundance of evidence from which the Tribunal could conclude that the builder had established an entitlement to be paid for work actually performed”. In particular they referred to paragraphs 46, 51 and 67 of His Honour’s judgment.

24. The builder put to the Tribunal that the statements of the District Court alone were enough for the Tribunal to find that the builder was entitled to the amounts for the works done. In the alternative, they submitted that even if the Tribunal was not satisfied that it should follow the observations of the District Court, that there was ample evidence before it to support the finding that the builder was entitled to the amounts contained in the reconciliation calculation for the works done.

25. In their submissions, the homeowners put to the Tribunal that any findings in relation to evidence by the District Court should be disregarded. The homeowners submitted that the findings of the District Court were only relevant to finding that the Member of the original proceedings was in error in failing to require proof that the applicant did the work. They submitted that the reconciliation was no more than a business record created by the builder and it did not provide any evidence of work being carried out. They submitted that it had been open to the builder, in the original proceedings, to obtain evidence that would have substantiated that he had completed the works. The builder had retained an expert who could have given evidence as to the inspection completed and what works had been completed. The homeowner submitted that the builder had completely failed to prove its claim for damages.

26. The Tribunal is satisfied that it must satisfy itself that the damages are proven at the requisite standard by the builder and cannot simply accept the observations of the District Court.

27. The parties had agreed pursuant to orders made at directions on 20 May 2014 that the Tribunal should have regard to the following documents.

1. Statements of Darian Percy dated 30 March 2011, 3 February 2012 and 12 April 2012.

2. Statement of Kelly Nagle.

3. Statement of Robert Nagle.

4. Statement of Tim Warboys.

5. Statement of Allison Bennett (as to those paragraphs admitted).

6. Report of Mitchell Staniforth (admitted subject to limitations page 28, line 10 transcript 21 of June 2012).

7. The exhibits tendered and admitted

8. The reconciliation document.

9. The transcript of the proceedings 21 June 2012 and 22 June 2012.

28. The homeowner submitted that of those documents, the only evidence that could possibly assist the builder were the statements of Darian Percy and the transcript of his oral evidence given at the proceedings.

29. The Tribunal was satisfied that when read as a whole, there was substantial material contained in those documents to support the assumptions underpinning the reconciliation. In the statement of Mr Percy dated 30 March 2011 he gave evidence that the work started after 18 March 2010 and the he issued invoices pursuant to the progress payment schedule. In preparing the contract he had detailed the provisional items and a list of those items was attached to the builders statement. In his statement of 30 March 2011, Mr Percy also detailed payments in relation to provisional items for the job and the ongoing conversation and correspondence in relation to the provisional items and additional works. In paragraphs 16 to 19 of the builder statement of 30 March 2011, he detailed the homeowners requests for additional works and works and materials that the homeowners had supplied.

28. At paragraph 28 of his statement of 30 March 2011, Mr Percy referred to an invoice 708 that was provided to the homeowners in September 2010. The homeowners refused to pay that invoice. The builder refers to a meeting that was held with the homeowners where he reviewed the costs in an effort to allow the job to progress. He stated that he provided a substantial discount to the builder and continued the works in an attempt to negotiate an acceptable solution. On 1 October 2010, the homeowners advised that they were not prepared to accept any of the offers that the builder had made and he withdrew all previous offers.

29. The builder stated that on 10 November 2010 he met with the homeowners and their solicitor on site. The solicitor had requested details of the increased cost of the provisional funds and the owners advised of a number of areas that had not been completed. The builder stated that he was prepared to return to rectify those defects. Attached to the statement were also invoices and correspondence that would indicate that the works were done. For instance, in an email dated 30 September 2010, Mr Percy has set out a spreadsheet with details of the final claim.

30. In his oral evidence to the Tribunal Mr Percy explained that various invoices continued to come in after the date he provided the final invoice to the owners. In cross-examination Mr Percy was asked about the final progress payment that he provided in 17 September 2010 for $24,000.00. On the second day of hearing, at page 67 of the transcript, Mr Percy was specifically asked about whether he had finished the work and he answered “there was no significant work to be done.” He also continued to explain how after that time he had received additional invoices which he added to the claim.

31. At paragraph 44 of the builders statement dated 30 March 2011, Mr Percy explains that on 30 March 2010 (presumably this is intended to be 2011) he undertook a reconciliation of the accounts, being the final invoice which he had issued earlier, together with the remaining invoices that came later totaling an outstanding amount of $48,566.34 plus interest plus costs. That is now the basis of the reconciliation statement that is referred to in these proceedings. That reconciliation statement has had some agreed adjustments from matters arising out of the original proceedings, for example there was a subsequent discount of $4,374.47 for defective and incomplete works and an adjustment of the interest.

32. The Tribunal has also considered the homeowners statements. In her statement of 22 September 2011, Kelly Nagle at paragraph 12 only refers to the works being defective. No mention was made of what was incomplete. In his statement dated 21 September, Robert Nagle refers to painting that needs to be completed and both homeowners were cross-examined in relation to the painting. The work complained of by the homeowners seems to relate to defective works. There is very little complaint in the homeowners’ statements about the works being incomplete. Further in the cross-examination of the homeowners, very little is revealed about which works they are claiming were not done. The homeowners’ main objections were to the costs of the provisional works and the scope of the actual contract.

33. Having considered the oral evidence of Mr Percy, his statements, all the documents provided with the statements, the spreadsheet, invoices and his updates by email of stages the works had reached, the Tribunal is satisfied that the reconciliation document agreed by the parties, is an accurate reflection of the monies outstanding to the builder. It accounts for the costs to complete and rectify works and deducts the cost for flooring to the ensuite shower and the cost of the mirror and the shower screen.

34. Accordingly, the Tribunal is satisfied that the balance of the sum owing to the builder is $54,896.50 as reflected in the amount agreed in the reconciliation document. The builder submitted that if such an order was made, the Tribunal should adopt the interest calculation method adopted by the original Member in his decision at paragraph 125. The homeowners did not address this. The Tribunal agrees that the appropriate calculation is $18.51 per day from 12 April 2012 to the date of these reasons. That being a total of 1047 days. The interest totaling $19,379.97.

35. The orders are made accordingly.

T Simon

Senior Member

Civil and Administrative Tribunal of New South Wales

4 March 2015

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 12 May 2015