Walia v Staycool Heating & Air Conditioning

[2010] VSC 565

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 195 of 2010

MANJIT S WALIA	Appellant
v
STAYCOOL HEATING & AIR CONDITIONING (ACN 072 687 275)	Respondent

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JUDGE:	OSBORN J
WHERE HELD:	Melbourne
DATE OF HEARING:	23 November 2010
DATE OF JUDGMENT:	23 November 2010
CASE MAY BE CITED AS:	Walia v Staycool Heating & Air Conditioning
MEDIUM NEUTRAL CITATION:	[2010] VSC 565

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APPEAL – Appeal from a decision of  the Victorian Civil and Administrative Tribunal sitting in the civil claims list – Building dispute – Inadequate reasons for finding on counter claim – Matter remitted for the provision of further and better reasons.

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APPEARANCES:	Counsel	Solicitors
For the Appellant	Mr W Gillies	Vincent Verduci and Associates
For the Respondent	Mr S Matters	Mark G Bramich

HIS HONOUR:

1. The appellant (‘the developer’) appeals an order of the Victorian Civil and Administrative Tribunal (‘the Tribunal’) on a single ground, namely, ‘The Tribunal member failed to give reasons for the findings in support of orders made’.

1. The developer retained the respondent (‘the contractor’) to install air-conditioning in four residential units.  The contractor performed the work and then claimed $6,000 in the civil claims list of the Tribunal for the balance of moneys due for the work done and materials supplied.  The developer cross-claimed a sum in the order of $22,000 for rectification works which had been incurred in part, but which were substantially estimated as being necessary.

1. The Tribunal heard and decided the matter on 22 December 2009.  Mr Taylor, who is evidently, in effect, the principal of the contractor, appeared on its behalf and a solicitor appeared on behalf of the developer.  Mr Taylor gave evidence and evidence was called on behalf of the developer firstly from Mr Singh, the developer himself, and secondly from an air-conditioning engineer.  The Tribunal's reasons and orders were stated orally and subsequently issued in writing following a request for written reasons.  The written reasons are substantially the same as those recorded in the transcript, save that the written reasons contain one typographical error, substituting the word ‘better’ for ‘hotter’.  These are reproduced below:

1.In December 2006 the Applicant submitted a quotation to the Respondent in respect to the airconditioning and heating of 4 townhouses located at 6 Old Warrandyte Road Donvale.  At the time the Respondent was acting as the project manager for his son who was the builder of the townhouses.

2.The quote of the Applicant was in writing and dated 19 December 2006.  The quotation was authorised by the Respondent and work commenced.

3.I accept that the Applicant had to work in tight places in the attics of all four townhouses especially that of unit 1.  The Applicant prior to actual work being commenced could have walked away from the whole situation.  The Applicant chose not to do this and proceeded with the work.

4.The evidence of the parties is polarised to a large extent.  Importantly the expert engaged by Mr Singh, Mr Romano from O’Connors was independent and impartial.  I accept that while only a minimal amount of work in Mr Romano’s business was purely domestic, a significant amount of his commercial work had the same general principles applicable to domestic work.  Mr Romano was honest and candid in his evidence.  The aspects of his evidence that I prefer are namely:

(a)That the prime issue in respect to the units was air balance.

(b)That the manufacturing units recommended by the Applicant were of satisfactory capacity.

(c)That at the time that Mr Romano has conducted air flow tests that the airflow in Units 2 and 3 were satisfactory.

(d)That there were possibly some design issues with the length of the ducts in unit 1 to the master bedroom and the need to insert more dampeners but Mr Romano could not comment further on this because he did not inspect those things and was not on site at the time of installation.

(e)That there was an issue with a condenser.  Even though this could be attributable to a number of causes in all likelihood it was a manufacturer and not installer issue.

5.I accept that the Respondent has some issues but they are not of the magnitude that is claimed by the Respondent.  I accept Mr Gurdip Ahluwlia’s evidence in part that on better days that there were issues in respect to the system.  Part of those issues were from the intensity of the heat at that time.  Part arose through the lack of balance of air flow.

6.The Respondent with summer at present should have if he had significant concerns taken steps to address what he perceived as being issues.  This has only been undertaken to a small extent.  Equally the Applicant from the outset should have checked all potential issues in units 2, 3 and 4 instead of using unit 1 as the excuse to not reattend on site.

7.        On the evidence and arguments:

(a)The Applicant has undertaken work and installed a system both in respect to airconditioning and heating and is entitled to be paid the amount of $6,000.00.

(b)The Respondent has genuine issues on air balance, lack of dampeners and in part the reconfiguration of ducts which I allow at $3,304.00.

(c)In respect to other issues including access panels these are issues which relate to the builder and for which the applicant is not responsible.

(d)The costs ordered against the Respondent by the Tribunal previously and the costs of Mr Romano of today effectively cancel each other out.

(e)In respect to other costs including legal costs. I do not accept that either side have a basis to claim pursuant to s 109 of the VCAT Act.

8.After taking into account my orders and findings I order that the Respondent shall within 30 days pay to the Applicant the sum of $2,196.00.[1]

[1]Order of VCAT in VCAT Reference: C7824/2008 made on 22 December 2009. 

1. Whilst it is plain that the Tribunal considered and responded to the evidence called on behalf of the developer and might be regarded as giving reasons in the broad for rejecting substantial components of the cross-claim, there is no explanation of the figure of $3,304 which was allowed for such claim.  It follows that, although I do not entirely accept Mr Gillies' submission that reasons are not given for rejecting the cross-claim, I do accept his submission that reasons in the relevant sense have not been given for the amount in which the cross-claim has been allowed.  The figure of $3,304 appears to be the product of precise calculation.  It does not appear to be simply a broad estimate in round figures.  Nevertheless, it is unexplained.

1. The appearance of calculation is also corroborated by the fact that the Tribunal expressly foreshadowed an item by item assessment of the cross-claim at pages 54 and 55 of the transcript.  In turn, as Mr Gillies submits, there is no item by item assessment of the cross-claim in the reasons.

1. Section 117(1) of the Victorian Civil and Administrative Tribunal Act 1998 (‘VCAT Act’) requires the Tribunal to give reasons for its decision. Section 117(5) requires the Tribunal to include in its written reasons for decision ‘its findings on material questions of fact’. In a very useful paper delivered by Kyrou J of this Court at the Council of Australasian Tribunals Conference on 30 April 2010, his Honour observed:

A synonym for ‘reasons’ is ‘explanation’ or ‘rationale’.  A synonym for ‘findings’ is ‘conclusions’.  Material questions of fact are factual matters that affected the findings or conclusions. 

In simple terms, a statement of reasons must set out the VCAT's conclusions and findings on material questions of fact and explain how those findings affected the conclusion or outcome.  Where the facts are in dispute, the findings must refer to the competing evidence and explain why certain evidence has been accepted and other evidence has been rejected.  The VCAT must also set out the law that it has applied in arriving at the outcome.

1. In Secretary to the Department of Treasury and Finance v Della-Riva,[2] the Court of Appeal considered the question of whether non-compliance with s 117 of the VCAT Act constitutes an error of law which enables the Court to set aside an order of the Tribunal. The case involved an appeal from a decision of the Tribunal under the Freedom of Information Act 1982.  Buchanan JA, with whom Ashley JA and Smith AJA agreed, said:

It is necessary that a tribunal's reasons disclose the findings and reasoning upon which the tribunal's conclusion is based.  Failure to provide such reasons, which frustrates the ability to review the tribunal's decision, constitutes an error of law.[3]

[2][2007] VSCA 11.

[3]Ibid, [23].

1. The extent of the obligation cast on the Tribunal by s 117 will be dependent upon the subject matter of the dispute before it. Further, the extent of reasons reasonably required will necessarily be proportionate to some degree to the subject matter of the dispute. In some cases involving small civil claims, the reasons need not be particularly complex.[4]

   [4]Cf Perkins v The County Court of Victoria [2000] 2 VR 246, 270-73; Wightman v Johnston [1995] 2 VR 637; Waribay Pty Ltd v Minter Ellison [1991] 2 VR 391, 402 (Young CJ and Kaye J); Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, 282

1. Nevertheless, despite the low value and limited nature of the dispute here in issue, the reasons do not comprise findings justifying the figure awarded on the cross-claim.  The allowance made in [7(b)] of the reasons is not explained in any way which links its quantum to the prior findings on the merits.  The question thus arises as to what this Court should now do.

1. Section 148(7) of the VCAT Act empowers the Supreme Court to affirm, vary or set aside the Tribunal's order; to make any order the Tribunal could have made; to remit the proceeding to be reheard by the Tribunal or to make ‘any other order the court thinks appropriate’.[5] 

   [5]Victorian Civil and Administrative Tribunal Act1998 s 148(7)(d).

1. Counsel for the contractor has submitted that if I am satisfied that an error of law has occurred because the reasons are deficient, the matter should be remitted to the division of the Tribunal which heard the matter in order for further reasons to be provided. 

1. Section 148(7) does not expressly empower the Court to order the Tribunal to provide a further and better statement of reasons where reasons have been provided that do not comply with s 117. Nevertheless, in my view s 148(7) necessarily confers such a power. Such an order is one which might in proper circumstances, constitute ‘Any other order the Court thinks appropriate’.

1. In some cases it is possible to infer from a deficient set of reasons, that the Tribunal has failed to take account of some factor which it is required to consider.[6]  There is a long line of authority in this Court going back to cases constituted by orders to review decisions of the Magistrates' Court which elaborates the approach to be taken in respect of such cases.[7] 

   [6]See Body Corporate Strata Plan No 4166 v Stirling Properties Ltd (No 2)[1984] VR 903.

   [7]The accepted approach is stated by Sholl J in Yendall v Smith Mitchell & Co Ltd [1953] VLR 369, 379 as set out by his Honour in Harrison v Mansfield [1953] VLR 399, 404.

1. In essence, a deficiency in reasons depending upon its context may or may not allow an inference of underlying error of law to be drawn.  In my view this is not a case in which such an inference can be drawn.  There is nothing in the Tribunal's stated reasons which suggests that there was an underlying error of law in the way in which it approached the matter.  Rather, this is simply a case of deficient reasons.  The fact that this matter has proceeded on one ground of appeal only is entirely consistent with this view.

1. In other cases the Tribunal's decision involves the exercise of a global discretion as to whether a permit or licence of some sort should be granted.  If the exercise of that global discretion is not properly justified, the appearance of justice will not easily be satisfied if the Tribunal is given a further opportunity to provide reasons.  Once again, however, this is not such a case. 

1. In yet other cases the reasons of a Tribunal may be so inadequate that a court can have no real confidence that the decision-making process can be brought to a proper final conclusion by the provision of further reasons.  Again, in my view, this is not such a case.  The present case is one in which the Tribunal has in part offered sensible reasons directly responsive to the merits of the matter before it.  I would add that it has done so where the matter proceeded in an informal and to some extent chaotic way, and the Tribunal was not particularly well assisted by those who appeared before it.

1. The Tribunal, despite offering fundamentally sensible reasons, has not, however, gone on to adequately explain the quantification of its conclusions.  It is, perhaps, not unlikely this has occurred because it has misjudged the extent of reasons proportionately necessary to properly resolve and explain its decision on a relatively small claim.  Whether this be so or not, I have come to the view that the Tribunal should be given the opportunity to provide further reasons for the figure of $3,304 which it has awarded on the cross-claim. 

1. In the case of De Iacovo v Lacanale,[8] Monahan J observed of a decision of a magistrate sitting as the Fair Rents Board at 559:

In the case relating to the premises occupied by the respondent Psaila the Board fixed the rent at 2 pounds, 96d.  If this sum has been reached by the application to the area of the premises of formula, the basis of such formula must be known to the magistrate and needs to be disclosed before this Court can determine whether by the application of that formula, any or any proper and sufficient weight has been given to the various matters referred to in s 21 of the Act.  Accordingly, it is necessary for me before proceeding to consider the second ground which was argued before me, to return the matter to the Board concerned with a request that the magistrate state to this Court the reasons on which he based these determinations.

[8][1957] VR 553.

1. Although that case was concerned with a failure to express any relevant reasons and this is concerned with a failure to properly state an element of the Tribunal's reasoning, this case is similar to De Iacovo in the sense that the proper course is to require the disclosure of the basis of the calculation performed by the Tribunal in arriving at the precise figure which it came to in assessing the cross-claim. 

1. The appropriateness of an order for further reasons to enable the assessment of the underlying reasoning of the Tribunal in issue was also endorsed in Apps v Pilett[9] Although that case was concerned with a different type of appeal, nevertheless it supports the view that in circumstances such as the present an appropriate order under s 148(7) may be an order for further reasons.

   [9](1987) 11 NSWLR 350.

1. This is, if anything, a stronger case for further reasons than those to which I have referred because the reasons stated by the Tribunal are otherwise not in themselves suggestive of any error of law, but to the contrary reflect a sensible and principled approach to the case before it, responsive to the evidence which was adduced. 

1. Subject to anything further counsel may wish to say I propose to order that the appeal be allowed and that the Tribunal provide further and better reasons for its finding as to the quantum of the sum which should be allowed on the cross-claim, namely $3,304, and I will hear the parties as to the question of costs.

…

1. In this matter the developer has been successful to the extent that the appeal has been allowed and I have determined that an order should be made directing the Tribunal to provide further and better reasons in respect of its decision.  Counsel for the developer now makes application for costs on the basis that costs should follow the event, and implicitly, having regard to the terms of an order submitted earlier today that an indemnity certificate can be granted to the contractor pursuant to the Appeals Costs Act 1998. 

1. Counsel for the contractor resists this application and seeks an order for costs against the developer, pointing in particular to two aspects of the history of the matter.  First, when leave to appeal was granted, Mahony AsJ ordered in part that the costs of the application for leave to appeal should be costs in the appeal, and further ordered that the contractor's costs of an initial abortive hearing on 17 February 2010 be paid by the developer.

1. Secondly, on 5 November 2010 the solicitor for the contractor sent to the solicitors for the developer a letter on a without prejudice save as to costs basis.  This letter stated as follows:

I wish to advise that my client is prepared to settle your client's appeal upon the following basis;

(4) The Appellant comply with all outstanding orders in relation to payment of costs to the Respondent.

(5) The matter be remitted to Member Eggleston of the Victorian Civil & Administrative Tribunal for further reasons (refer De Iacovo v Lacanale [1957] VR 553; Apps & Anor v.Pilet (1987) 11 NSWLR 350).

(6)  The appeal be otherwise struck out.

This offer shall remain open until the close of business on 15 November, 2010 at which time the offer will lapse and be withdrawn. 

In the event that the abovementioned offer is not accepted by the abovementioned date and time and in the appeal the Appellant obtains an order no more favourable than the above-mentioned offer, I intend to produce this letter to the Court on the question of costs and seek an order that the Appellant pay the Respondent's costs on a full indemnity basis from the date of this letter in accordance with the principles in Calderbank v Calderbank as adopted in an unreported decision of the Honourable Mr Justice Byrne in the Supreme Court of Victoria on 28 April 1993 in Mutual Community Limited v Lorden Holdings Pty Ltd & Ors.[10]

[10]Citations and emphasis from original omitted.

1. In my view the developer is entitled to some of his costs.  He has succeeded in obtaining an order for further reasons and it was necessary for him to institute the present proceedings and to obtain leave in order to obtain that order.

1. Even if the offer of 5 November 2010 to remit the matter had been accepted, the costs prior to that date were necessarily incurred.  The more difficult question is whether the developer should get the costs of today.  It seems to me that in substance the contractor has been successful in terms of the critical question of what relief should be granted.  Doing the best I can I will order that the contractor pay fifty per cent of the developer's costs and I will grant an indemnity certificate to the contractor in respect of the matter pursuant to the provisions of the Appeal Costs Act 1998.

1. I have considered whether the contractor should get an order for its costs particularly having regard to the letter of 5 November 2010.  If that letter had offered to pay the developer's costs up to that point in time, subject to the grant of an indemnity certificate, then I would have made an order in favour of the contractor but it did not and it seems to me that the developer was entitled to seek, at the very least, some order as to costs in the matter.  It also seems to me that for the same reason the underlying equities of the situation do not support the making of any other order more complex than the one I have formulated.  The order I have formulated, in effect, reflects the fact that the developer was only partially successful and failed wholly in its claim for primary relief which sought to set aside the decision against it.  Further it did so in circumstances where the contractor contended that if an order was to be made it should be to the effect which I have accepted.  Nevertheless save for a discount in respect of these matters I do not propose to depart from the normal orders.