Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Scott v Stewart [2021] NSWCATAP 326 Hearing dates: 5 October 2021 Date of orders: 22 October 2021 Decision date: 22 October 2021 Jurisdiction: Appeal Panel Before: R C Titterton OAM, Senior Member J McAteer, Senior Member Decision: 1. In proceedings 2021/00146721: (a) leave to appeal refused; (b) appeal otherwise dismissed. 2. In proceedings 2021/00180102: (a) leave to appeal refused; (b) appeal otherwise dismissed. 3. Each party is to file submissions as to the costs of the appeals within seven days. Each party may reply to the other's submissions within 14 days. 4. The Tribunal proposes to determine the issue of costs in each appeal "on the papers" and without a hearing. 5. If either party opposes that course it should address that matter in their submissions. 6. Each set of submissions is to be no longer than five pages in length. Catchwords: CONTRACT LAW – termination on notice – substantial breach – meaning of "substantial". REPUDIATION – election – manner by which repudiation can be accepted – reasonable time to make election – conduct in performance of contract while considering notice under contract. Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) – s 80(2)(b) Fair Trading Act 1987 (NSW) – s 79U(1) Home Building Act 1989 (NSW) – 4(1) Cases Cited: Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd [2009] FCAFC 85. Collins v Urban [2014] NSWCATAP 17 Coulton v Holcombe [1986] HCA 33 Dimitropoulos v Capital Constructions Pty Ltd; Capital Constructions Pty Ltd v Dimitropoulos [2018] NSWCATAP 100 Drivas v Burrows [2014] NSWCATAP 87 Earnshaw v Gorman & Sons Pty Ltd [2001] WASCA 50 Halkidis v Bugeja [1974] 1 NSWLR 423 Hocking v Bell (1945) 71 CLR 430 McNally v Waitzer [1981]1 NSWLR 294 Palm Homes Pty Ltd v Kav's Constructions Pty Ltd [2015] NSWCATAP 113 Pholi v Wearne [2014] NSWCATAP 78 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 State Bank of NSW v Brown (2001) 38 ASCR 715; [2001] NSWCA 223 Category: Principal judgment Parties: Appellant: Mark Owen Archibald Scott Respondent: Debra Stewart and Peter Meywe Representation: Counsel: M Gunning (for M Scott) M Klooster (for D Stewart and P Meywes) Solicitors: Joseph Grassi & Associates (for M Scott) M Atkinson & Associates (for D Stewart and P Meywes) File Number(s): 2021/00146721 and 2021/00180102 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 23 April 2021 Before: D Goldstein, Senior Member File Number(s): HB 19/29873 REASONS FOR DECISION Summary 1. There are two appeals before the Appeal Panel. 2. The first is 2021/00146721, which is the appeal of Mr Mark Scott (hereafter the Builder) (the Builder's appeal) who appeals from a decision of the Consumer and Commercial Division of the Tribunal (Tribunal) of 23 April 2021 in matter HB 19/29873 (the Decision). 3. Relevantly, the Tribunal ordered the Builder to pay Ms Debra Stewart and Mr Peter Meywes (hereafter the Homeowners) $53,193.70, and to undertake certain works at the Homeowners' property, being demolition and reinstatement of the "drive/verge" and repairs to the stairway. 4. The second is 2021/00146721, which is the Homeowners' appeal from the Decision. 5. We shall consider the Builder's appeal first. Builder's Grounds of Appeal 1. The Builder's grounds of appeal are set out in an attachment to the amended notice of appeal filed 17 August 2021. The eight grounds of appeal can be divided into three groups. 2. The first group of grounds relate to the Tribunal's finding that the Builder's breach of cl 4 of the contract was a substantial breach thus entitling the Homeowners to terminate the contract. We will refer to this as Ground One. 3. The second group of grounds relates to the termination of the contract. The Builder submits that the Tribunal erred in finding that: * the Homeowners did not repudiate the contract by their conduct; and * the Homeowners were entitled to bring the contract to an end by their letter of 5 May 2020. 1. We will refer to this as Ground Two. 2. The final ground of appeal relates to the Tribunal's calculation of the damages awarded. We will refer to this as Ground Three. 3. At the commencement of the hearing Mr Gunning for the Builder conceded that if the Builder was unsuccessful in Grounds One and Two, Ground Three fell away. He further indicated that success on Ground Two was conditional on success in Ground One. Nature of an appeal 1. Section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) sets out the basis upon which appeals from decisions of the Tribunal may be brought. That section states that an appeal may be made as of right on any question of law or with leave of the Appeal Panel on any other grounds (s 80(2)(b)). A question of law 1. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, without listing exhaustively possible questions of law, the Appeal Panel considered the requirements for establishing an error of law giving rise to an appeal as of right. Leave to appeal 1. Clause 12 of Sch 4 of the NCAT Act provides that, in an appeal from a decision of the Consumer and Commercial Division of the Tribunal, an Appeal Panel may grant leave to appeal only if satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel conducted a review of the relevant cases at [65]-[79] and concluded at [84](2) that: Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) Issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed. 1. Even if an appellant establishes that they may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave under s 80(2) of the NCAT Act. An appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32]. Ground One – substantial breach Background 1. As noted, the first ground of appeal relates to the Tribunal's finding that the Builder was in substantial breach of the contract by not having the necessary licence to carry out the subject work. 2. To do justice to the Builder's submissions it is appropriate to note the following matters. 3. The dispute between the parties arose out of building work carried out pursuant to an HIA NSW Residential Building Contract for Renovations and Additions they entered into in March 2019 (the Contract). The contract price was $183,617.50. The building works were said to be described in the plans and specifications drawn by ddc architects and NJK engineers. The Builder's quote/scope of works dated 21 September 2018 was stated to be a contract document. The quote referred to the plans and specification prepared by ddc Architects and approved by the Blue Mountains City Council dated 21 February 2018 Application No: X/778/2017. The work to be undertaken was construction and alterations to an existing dwelling including a new driveway, ramp access and roofing. 4. The Builder's Amended Points of Claim alleged that the construction work commenced on or about 15 March 2019. The Homeowners' Points of Defence say that the scaffolding ramp was installed on that date, but that the actual building works commenced the following week beginning on 18 March 2019. Nothing turns on the date for the purposes of this appeal, so we will assume that the works commenced on or around 18 March 2019. 5. On or about 26 May 2019, the Homeowners sent an email to the Builder which relevantly stated: We have identified issues with the work, contracted and performed by [you] and associated contractors. We understand that my Glo Case Manager has advised you of our concern that you have been emailed the content of our concerns; however we have had no contact from you in this regard. We have raised concerns with Blue Mountains City Council (BMCC) that work performed on our site may not meet documented Australian Standards or Codes. BMCC have advised that the initial assessment is that work has been performed outside their building standards/codes have therefore requested further assessment prior to their determination being made. BMCC have confirmed that you have conducted work, as part of our contract, without Planning Approval being sought from, or given, by BMCC. Compulsory assessments of the building work have also not been conducted as per the schedule which Council has determined/documented. BMCC have requested further assessments be conducted: 1. Accurate assessment & reporting of measurements to be conducted by a Surveyor, 2. Architectural assessment & reporting to be conducted to assess the work which has been performed against the scope of the Development Application, Construction Specification and Engineering Specification. BMCC have advised that, once they receive the results of these assessments, they will make further determination of our concerns with building work. Whilst the assessments, requested by BMCC, are being undertaken by our Surveyor and Architect (beginning Monday), we hereby advise you that we temporarily put a hold on any further work being conducted on our site until we receive reports from these professional bodies. We firmly believe that any work performed whilst the building work is being assessed and reports are being documented, would potentially compound the issues we have already identified and may create further rectification work, which we do not accept as practical. [You] have not performed any work on site for more than six weeks (other than the Electrician), without us being advised of any reason for these delays. (NB We were advised by [you] that the work contained within the contract would take a total of four weeks to complete). We therefore do not believe there to be any negative impact on this short and temporary delay whilst these important assessments are finalised. Please do not contact our independently hired professionals directly, we will liaise with them and we will advise you of the outcome, once we receive the reports requested by BMCC and their subsequent determination. We will further advise you how to proceed at that time. To clarify, please be advised that, until we receive these professional assessments and determination by BMCC, we confirm that a temporary hold is to be placed on work on our property. Please ensure this advice is actioned. (emphasis added) 1. Following that email, on 29 May 2019 the Homeowners became aware that the Builder was not a fully qualified licensed builder to undertake the building work in accordance with the Home Building Act 1989 (NSW) (HB Act). 2. As the Decision notes at [27], on 4 December 2019 the solicitors for the Homeowners sent the Builder a letter which relevantly relevantly stated: The Homeowners are of the opinion that you are in substantial breach of the Contract in the following respects: a) You have failed to proceed with the works with all diligence and within the time stipulated in the Contract;' b) You have failed to remedy defective work; c) You have abandoned the work; d) You are not properly licensed to undertake the residential building work in accordance with the Home Building Act. 1. For the reasons set out in par [33] of the Decision, the Tribunal rejected the submission that the Builder was in substantial breach of the Contract because he failed to proceed with the works with all diligence and within the time stipulated in the Contract. In summary, the Tribunal concluded that, as it had found that the Homeowners' email of 26 May 2019 which suspended the carrying out of the works by the Builder was not authorised by any condition of the Contract and was in breach of cl 13.1 of the Contract, the Builder was not in substantial breach of the Contract because he had not continued with the building works after the Homeowners' email suspending the performance of the works. 2. For the reasons set out in par [36] of the Decision, the Tribunal rejected the submission that the Builder was in substantial breach of the Contract because he had failed to rectify defective work. After referring to the decision of the Appeal Panel in Dimitropoulos v Capital Constructions Pty Ltd; Capital Constructions Pty Ltd v Dimitropoulos [2018] NSWCATAP 100, the Tribunal stated: I find that under the [Contract] the [Homeowners] had no right or entitlement to direct the [Builder] to remedy defects before practical completion. I find that the passages extracted from Dimitropoulos support a finding that the [Builder] was not in substantial breach of contract because he had not remedied defective work. I further find that the [Homeowners] notice of 4 December 2019 was defective in requiring the [Builder] to remedy defective work, because it did not as required, provide details of the breach. I find that the general reference to defective work was too broad. 1. As to the third claimed substantial breach, at [38] the Tribunal stated: The third matter said to constitute a substantial breach was that the [Builder] had abandoned the work. I find for the same reasons as were provided in connection with the assertion that the [Builder] had failed to proceed with the works with all due diligence and within the time stipulated in the contract, that the [Builder] was not in substantial breach of contract because he had abandoned the work. 1. As to the fourth claimed substantial breach: * at [39] the Tribunal noted that the Builder's evidence was that he has a building licence 245726C, but that by an undated letter from NSW Fair Trading which was attached to the application, the Homeowners were told that the Builder was licensed to perform the following work, Kitchen/Bathroom/Laundry Renovation, Carpenter, and Joiner; * at [39] the Tribunal noted that cl 39.1(c) of the Contract was a warranty that the building works would be done in accordance with, and would comply with, the HB Act or any other law; * at [40] the Tribunal noted that s 4(1) of the HB Act provided that: A person must not contract to do- (a) any residential building work, or (b) any specialist work, except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work. 1. The Tribunal then concluded: 41. The work that the Builder was undertaking under the contract was described as construction and alterations to existing dwelling including new driveway, ramp access and roofing. I find that the Builder was licensed to perform the following work, Kitchen/Bathroom/Laundry Renovation, Carpenter and Joiner. I further find that the Builder was in breach of s 4(1) of the Home Building Act because he was carrying out the residential building work that I have described, without a licence enabling him to do that work. In that regard the Builder asserts that his licence allowed him to carry out some, but admits not all of the work under the contract. I find by reference to Schedule 4 to the Home Building Act that the Builder's licence was not appropriate to the work that he was carrying out under the contract, as stated by NSW Fair Trading in the letter that I have referred to. I also find that the Builder's case that he had subcontracted parts of the work to appropriately licensed contractors, namely Mr Cunningham, does not mean that he was not in breach of s 4(1) of the Home Building Act. 1. Following that conclusion, the Tribunal further found that as the Builder was in breach of s 4(1) of the HB Act, he was in breach of the statutory warranty in cl 39.1(c) of the Contract, namely that the building works will be done in accordance with, and will comply with, the HB Act or any other law. 2. It is against that background we now summarise the Builder's submissions on Ground One. Builder's Submissions 1. The Builder submits that "central" to the Tribunal's finding of a substantial breach were two further findings, namely that: 1. by not possessing the necessary licence to carry out the work under the Contract, the Builder was incapable of performing his obligations in accordance and in compliance with s 4 of the HB Act; 2. the Builder took no action to respond to the Homeowners' solicitor's letter of 4 December 2019 either by writing a response to the letter or by his actions to address the licensing issues raised as the substance of the substantial breach alleged on behalf of the Homeowners. 1. The Builder challenges the primary finding of substantial breach, and the two further findings regarding the Builder's: * incapability of performing his contractual obligations, and * inaction following the letter dated 4 December 2019. 1. The Builder submits that the Tribunal's finding that he was incapable of performing his contractual obligations by not possessing the necessary licence, contradicts and fails to consider the relevance of the Tribunal's clear rejection of three of the substantial breaches relied upon by the Homeowners in their solicitor's letter dated 4 December 2019. 2. The Builder submits that for the same reasons the Tribunal rejected three of the substantial breaches relied upon by the Homeowners, the Tribunal should have rejected the fourth matter that the Homeowners relied upon as being a substantial breach. Homeowners' Submissions 1. The Homeowners say that the gravamen of the Builder's complaint is the factual finding that the Builder was in substantial breach of the Contract as he was incapable of performing his obligations under the Contract as he did not hold the necessary licence. They say that the short point raised by the Builder is that the finding was not available as the Builder was physically incapable from carrying out the works by reason of the Homeowners' conduct in excluding him from the site some months earlier. 2. The Homeowners submit that, "leaving aside the obvious difficulty in disturbing findings of fact and the leave required to do so", the primary problem is that the Builder has misconstrued the Tribunal's finding. The finding that the Builder was in substantial breach arose by reason of the fact that he was incapable of lawfully carrying out the works as he did not hold the appropriate licence. This is a separate and distinct issue as to whether he was physically able to carry out the works. 3. Finally, the Homeowners submit that the general complaint raised that the Tribunal failed to take into account relevant evidence and considerations and its other findings, even if established by the Builder, do not constitute errors of law. Builder's submissions in reply 1. The submissions in reply are lengthy and to a degree repetitive. They also introduce some material which should have been raised in chief. We summarise the submissions as follows. 2. First, the Builder submits that Foran v Wight (1989) 168 CLR 385 is authority for the propositions that: 1. a party itself unable or unwilling to perform a contract cannot complain of the other party's breach, 2. readiness and willingness to perform goes to the cause of action, and 3. where termination is based upon an actual breach, the terminating party must establish that it performed its contractual obligations up until that time. 1. Furthermore, the party who issues the breach notice must itself be ready and willing to perform the contract at the time the notice is served: Earnshaw v Gorman & Sons Pty Ltd [2001] WASCA 50 at [27]; Halkidis v Bugeja [1974] 1 NSWLR 423; McNally v Waitzer [1981]1 NSWLR 294. 2. The Tribunal findings at [33], [36] and [38] of the Decision demonstrate overwhelmingly that the Homeowners were in breach of the Contract, and were unwilling to enable the Builder to return to the site to complete the building work, at the time they issued their purported breach notice on 4 December 2019. These findings were based upon clear evidence before the Tribunal below that the Homeowners had refused to allow the Builder to be on site to complete the building work from 26 May 2019. 3. Secondly, the Tribunal therefore made two errors of law by: 1. finding that the Builder was in substantial breach as at 4 December 2019, in circumstances where the weight of the evidence demonstrates that he could not return to the site to complete the building work because of the Homeowners' continuing breach of cl 13.1 of the Contract up until and beyond 4 December 2019; and 2. implicitly (if not expressly) upholding the default notice issued by the Homeowners on 4 December 2019 (which was a necessary precursor to the termination notice dated 5 May 2020), in circumstances where at that point the Homeowners: 1. had not performed or adhered to their contractual obligations under the Contract by allowing the Builder to return to the site; 2. continued to be in breach of the Contract; and 3. were not ready or willing to perform the Contract according to its terms. 1. Thirdly, the Tribunal's finding that the Builder was in breach as at 4 December 2019 by reason of the licence issue was a perverse finding, in circumstances where the Tribunal rejected the Homeowners' other grounds of substantial breaches because the Homeowners wrongfully precluded the Builder from returning to the site. This he submits is an error of law as it is a finding that no fact finder could reasonably make: Hocking v Bell (1945) 71 CLR 430 at 486. 2. Fourthly, the Tribunal below did not correctly apply the legal principles regarding the question of whether there was a substantial breach. The Tribunal below failed to consider the circumstances arising from the Homeowners' continuing breach of the Contract, as they existed on 4 December 2019 when the Homeowners issued the breach notice, to then determine whether the Builder was in substantial breach at that point. 3. Fifthly, the Homeowners refused the Builder access to the site as and from 26 May 2019, and failed to act on the subsequent breach notice on 4 December 2019 for a further 6 months. It is clear that the Homeowners' conduct (which involved delay, inaction, and a continuing breach of the Contract) had intimated to the Builder that there was no point to seek to rectify the licence issue in those circumstances. The Builder submits that the Homeowners should not be allowed to take advantage of their own breach, delay and inaction by now relying upon the licence issue as a means to terminate the Contract. Consideration 1. There are a number of iterations of the Builder's position. 2. First, he submits that because the Tribunal found that: * the Homeowners had no right to suspend the building works by the email of 26 May 2019, and that that purported suspension of the works was in breach of cl 13.1 of the Contract; * the Builder had not been on site since 26 May 2019; * as a result of which the Builder was unable to perform his contractual obligations "it must therefore follow" that, there being no appeal from those findings, the Tribunal erred in rejecting the fourth substantial breach relied on, namely that the Builder had no proper licence to undertake the building works. 1. Secondly, the Builder further submits that: * the question whether the Builder in this case was in substantial breach of the Contract is to be evaluated at the time the notice (namely 4 December 2019) was sent; * the question of incapability must be considered in the context of the Homeowners' suspension of the works and refusal to allow the Builder to return to complete the works in any event; * the Tribunal erred by not considering the question of incapability in this particular context; * the Builder cannot be incapable of performing, or be in any breach of his contractual obligations as at 4 December 2019, if the Homeowners had previously suspended the performance of those obligations by their email of 26 May 2019 and refused to allow the Builder to return to the site; and therefore there was no breach that was capable of being remedied as at 4 December 2019. 1. Thirdly, the Builder submits that even if one accepts that a failure to have the appropriate licence, despite the circumstances outlined above, was a breach of s 4 of the HB Act and cl 39.1(c) of the Contract, this was merely one breach found by the Tribunal out of four that the Homeowners had relied upon in their solicitor's letter of 4 December 2019. 2. The Builder submits that the proper approach in determining whether the Builder was in substantial breach, by reason of the licence issue alone, is to identify the terms breached, and to then evaluate the breach by considering the nature and the consequences of the breach. 3. He says that in circumstances where, as at 4 December 2019, the Homeowners had wrongfully suspended the works (the works by that stage had been suspended for more than 6 months), it could hardly be said that the consequences of the breach regarding the licence were significant, particularly in the absence of any evidence that the Builder was incapable of upgrading or extending the licence to cover the additional work. 4. Accordingly, the Builder submits that the Tribunal's rejection of three of the four substantial breaches relied upon by the Homeowners significantly diluted the nature and consequences of the remaining breach. 5. Specifically, the Builder submits that the Tribunal's finding contradicted and/or failed to take into account the Tribunal's other findings that: * the Homeowners email dated 26 May 2019 suspended the carrying out of the building works by the Builder; * the suspension of the works by the Contract was not authorised by the Contract and was in breach of cl 13.1 of the Contract; * the Builder was not and could not have been in substantial breach of the Contract as at 4 December 2019 by reason of the first three grounds relied upon by the Homeowners in their letter dated 4 December 2019; * the finding failed to take into account material evidence, which the Tribunal had accepted and/or had not rejected, that the Builder had not been allowed on site by the Homeowners since the email dated 26 May 2019. 1. Further, the Builder submits that by reason of the above matters, the finding was not reasonably open on or supported by the evidence and the other findings of the Tribunal, and that: * it was impossible for the Builder to be in substantial breach of the Contract as at 4 December 2019 in circumstances where the Homeowners suspended the works on 26 May 2019, and did not allow the Builder on site to perform his contractual obligations; and * if the Builder was incapable of performing his contractual obligations as at 4 December 2019, it was by reason of the Homeowners' decision to suspend the works in breach of the Contract. 1. We reject all of these submissions. We accept with the Homeowners' simple and straightforward submission that the finding that the Builder was in substantial breach arose by reason of the fact that he was incapable of lawfully carrying out the works as he did not hold the appropriate licence. This is a separate and distinct issue as to whether he was physically able to carry out the works. 2. As was submitted by the Homeowners, a person who contracts to do any residential building work in contravention of s 4 (unlicensed contracting), is not entitled to damages or to enforce any other remedy in respect of a breach of the contract committed by any other party to the contract, and the contract is unenforceable by the person who contracted to do the work. However, the person is liable for damages and subject to any other remedy in respect of a breach of the contract committed by the person. 3. We agree that the finding made was that the Builder was incapable of lawfully performing his obligations under the Contract, was a separate and distinct issue as to whether the Builder was physically incapable to perform his obligations under the Contract. The findings with respect to the other issues raised in the breach notice, none of which were established as a matter of fact, are all directed to the Builder being physically incapable to perform the works by reason of the Homeowners' conduct. 4. We accept that, even if the Homeowners had repudiated the Contract by causing the Builder to be physically incapable of carrying out the works, they can still rely on, and in fact did rely on, an express contractual right of termination: Allphones Retail Pty Ltd v Hoy Mobile Pty Ltd [2009] FCAFC 85. As an express contractual right was exercised, the conduct of the party relying on that right is of no import when considering lawful termination. 5. We accept the Homeowners' submission that the Tribunal adopted the correct approach by initially finding as a matter of fact that the Builder was not appropriately licensed and then evaluating the nature and consequences of the breach. The Tribunal found that, as a matter of fact, the Builder was incapable of lawfully carrying out the work by reason of not holding the appropriate licence. To the extent the Builder was physically incapable of carrying out the work by reason of the Homeowners' conduct, this does not displace the factual finding made. 6. We note that there is an inclusive definition of "substantial breach" in the Contract. 7. We also reject the following propositions argued in reply found a basis to allow the appeal: 1. where termination is based upon an actual breach, the terminating party must establish that it performed its contractual obligations up until that time; 2. the party who issues the breach notice must itself be ready and willing to perform the contract at the time the notice is served, as neither point seems to have been taken below: Palm Homes Pty Ltd v Kav's Constructions Pty Ltd [2015] NSWCATAP 113; Coulton v Holcombe [1986] HCA 33. 1. We also reject that these further propositions argued in reply found a basis to allow the appeal: 1. the Tribunal's finding that the Builder was in breach as at 4 December 2019 by reason of the licence issue was a perverse finding, in circumstances where the Tribunal rejected the Homeowners' other grounds of substantial breaches because the Homeowners wrongfully precluded the Builder from returning to the site. 2. the Tribunal below did not correctly apply the legal principles regarding the question of whether there was a substantial breach. 1. Both these matters were raised in submissions in chief and we have dealt with them above. 2. In conclusion, we have set out par [41] of the Decision above, where the Tribunal reached its conclusion on this issue. We consider that the Tribunal's reasoning was correct and the findings made entirely open to it. 3. This ground of appeal is dismissed. Ground Two – termination 1. Given that success on Ground Two hinges on success on Ground One, we can deal with this ground briefly. Background 1. This ground of appeal relates to the Tribunal's finding of termination of the Contract. 2. Before the Tribunal, the Builder claimed that the Homeowners repudiated the Contract by sending him an email dated 26 May 2019 suspending access to the site and purportedly terminating the Contract. As has already been noted in these reasons, the Tribunal found that the suspension of the works was not authorised by the Contract, and was in breach of cl 13.1 of the Contract. The Tribunal also found that the email did not state that the Homeowners were terminating the Contract. 3. Assuming that this was the case, the Tribunal found that the Builder's evidence did not establish that soon after the Homeowners email the Builder either by communication or conduct clearly and unequivocally conveyed to the Homeowners that he was treating the contract as at an end. 4. The Tribunal noted that it was only in his Points of Defence filed in the Tribunal on 16 June 2020 that the Builder stated that the Homeowners had repudiated the Contract. As a result, the Tribunal concluded that it was unable to find that even if the Homeowners had repudiated the Contract by their email of 26 May 2019, the repudiation was accepted before 16 June 2020. 5. The Tribunal then found that on 4 December 2019 the solicitor for the Homeowners sent the Builder a letter by registered post which set out a number of instructions they had received from the Homeowners and then informed the Builder that the Homeowners were of the opinion that the Builder was in substantial breach of the Contract in the following respects, namely that the Builder had: * failed to proceed with the works with all due diligence and within the time stipulated in the Contract; * failed to remedy defective work; * abandoned the work; and * no proper license to undertake the residential building work in accordance with the HB Act. 1. The solicitor's letter stated that the notice was provided pursuant to cl 27 of the Contract and the Builder was further advised that unless he remedied the defaults set out within 10 business days after receipt of the notice, the Homeowners would be entitled to end the Contract. 2. On 5 May 2020, the solicitor for the Homeowners sent the Builder a letter by registered post which stated that as the Builder had not remedied the default set out in the 4 December 2019 letter, the Homeowners gave notice pursuant to cl 27.4 of the Contract terminating the Contract. Builder's Submissions 1. The Builder submits that the Tribunal erred in a number of ways in coming to the conclusion that the Homeowners were entitled to bring the Contract to an end by their solicitor's letter dated 5 May 2020. The Builder submits that the Tribunal failed to take into account a number of material considerations including the following: 1. the Builder was not and could not have been in breach of the Contract at all; alternatively, the Builder was not in substantial breach of the Contract; 2. the fact that the Homeowners themselves were unwilling to perform the Contract in accordance with its terms (by suspending the works and excluding the Builder from the site in breach of cl 13.1 of the Contract), the Homeowners had no cause to complain of any breach relating to the Builder's licence as at 4 December 2019, and no right to terminate the Contract for such a breach identified in the solicitor's letter dated 4 December 2019; 3. by failing to consider that there was no point in the Builder seeking to rectify the issue with his licence, while the Contract was (purportedly) suspended and the Builder was excluded from the site; 4. by failing to take into account or consider whether the Homeowners had waived any right to terminate under cl 27 of the Contract, in circumstances where (by their letter dated 4 December 2019) the Homeowners did not rely upon any matters giving rise to a substantial breach within the meaning of cl 27.1 of the Contract; 5. failing to take into account whether the Homeowners had, by passage of time from 4 December 2019 to 5 May 2020 waived any entitlement to terminate the Contract under cl 27.4, or had delayed unreasonably in their election to terminate; and by doing so, affirmed the Contract or lost their right to terminate on the basis of the alleged unremedied breaches set out in their solicitor's letter dated 4 December 2019; 1. Finally, the Builder submits that when the Homeowners commenced proceedings in the Tribunal, any cause of action based upon defective or incomplete work, or upon the licence issue, had clearly not crystallised, given that the Homeowners did not purport to give a notice remedying the defects until their solicitor's letter dated 4 December 2019. The Builder further submits that when the Homeowners subsequently filed their Amended Points of Claim dated 20 December 2019 (16 days after the 4 December 2019 letter) they then waited until 5 May 2020 (shortly prior to the commencement of the hearing) to purport to terminate on the basis of the letter dated 4 December 2019. On these facts, it would appear that the Homeowners did not have a cause of action that had crystallised by the time they had commenced proceedings, or when they had filed their Amended Points of Claim. 2. This point can be dealt with immediately. It is another example of the Builder raising on appeal a matter which had not been argued at first instance. As the plurality of the High Court of Australia noted in Coulton v Holcombe [1986] HCA 33 at [9]: ". . . in a recent decison of six Justices of this Court - University of Wollongong v. Metwally (No. 2) [1985] HCA 28; (1985) 59 ALJR 481, at p 483; [1985] HCA 28; 60 ALR 68, at p 71 - the Court said: "It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so". 1. See too Drivas v Burrows [2014] NSWCATAP 87 where the Appeal Panel observed: "32. The considerations favouring finality of litigation are at least as strong, and probably stronger, in the case of the Tribunal given the importance attached to the expeditious and inexpensive disposition of proceedings [under the] Civil and Administrative Tribunal Act. 33. Generally, a new point will not be allowed where the consequence would have to be a new trial because "evidence could have been given which by any possibility could have prevented the point from succeeding": Suttor v Gundowda [[1950] HCA 35; (1950) 81 CLR 418] at 438.3." Homeowners' Submissions 1. The Homeowners make a number of specific submissions in relation to this ground. They say that the effluxion of time is not material and does not displace the findings and ultimately conclusion reached that the Homeowners lawfully terminated the Contract pursuant to an express contractual right. 2. They submit that: * the Contract provides that a waiver of rights cannot take place unless it is confirmed in writing. No written document exists, and accordingly no waiver arises; * election does not arise in circumstances where the Homeowners rely on the exercise of an express contractual right. The cases relied on by the Builder deal with circumstances where the right to accept repudiatory conduct is lost in the event an election is made to affirm the Contract. They are of no application when a party terminates pursuant to an express contractual right; * any contention that the Contract was abandoned (as a matter of fact) should be rejected as it was not raised below. As is well known, a difficulty in agitating new points on appeal lies where evidence could have been raised below to deal with the point. In any event, any abandonment issue would necessitate new factual findings which the Appeal Panel is unable to do. Consideration 1. The Homeowners rightly submit that the complaints that the Tribunal failed to take into account relevant evidence and considerations and its other findings, even if established, are not errors of law and leave is required. They also submit that the Tribunal's findings were open to it and clearly in accordance with the preponderance of the evidence. 2. In our view the findings of the Tribunal on all these issues demonstrate a thorough examination of the facts and law by an experienced Senior Member of the Tribunal, who published detailed and careful reasons for Decision. 3. We are not persuaded that leave should be granted in relation to any the six failures identified by the Builder above. This is because the Tribunal clearly took into account the purported suspension of the works and the Builder's inability to attend the site (Decision at [33]), and the majority of the other submitted failures of the Tribunal were not raised before it (namely waiver, abandonment and whether the cause of action had crystallised). Ground Three - damages 1. The Builder submits that the Tribunal erred in awarding damages. The Builder submits that there was no breach of the Contract, substantial or otherwise, that termination was not justified under cl 27 and therefore no damages were suffered by the Homeowners as a result of any breach by the Builder. 2. As we have found no error in the Decision, it follows that this ground of appeal fails. Costs of the Builder's appeal 1. The Builder has been unsuccessful. Subject to hearing from the parties, we would propose to order the Builder to pay the Homeowners' costs as agreed or as assessed. The Homeowner's appeal 1. We turn now to Homeowners' appeal. They seek to set aside the order that the Builder rectify the driveway, and substitute instead a money order for them to undertake the works. Homeowners' submissions 1. We summarise the Builder's submissions as follows. 2. First, the Builder submits that the primary question in this appeal was the Tribunal's conclusion at [75] that it would be unreasonable for the entire slab forming part of the driveway to be demolished and relaid. Here the Homeowners submit that, when assessing whether the rectification method proposed by the Homeowners was a reasonable course to adopt, the Tribunal applied the wrong legal principle by only considering one matter (costs being disproportionate to the benefit to be obtained) and not an analysis of a range of factors, only one of which is whether rectification costs are disproportionate to the benefit to be obtained (Submission 1). 3. Secondly, an ancilliary question is whether it is in fact possible for the parties to comply with the work order as made. The difficulty in this respect arises because: * the Builder has been charged with carrying out works in a particular way to obtain compliance; * Mr Dockrill has provided an unchallenged opinion that the works the Builder has been ordered to carry out cannot obtain compliance; * Mr Dockrill is the person who must inspect and certify that compliance has been obtained, and "it is fairly obvious this cannot occur". 1. In relation to this issue, the Homeowners submit that the Tribunal failed to address and determine a necessary issue, in that no finding was made as to whether compliance can be obtained without complete demolition and reconstruction of the entire driveway; alternatively, if such a finding was made, the Tribunal failed to provide reasons, or adequate reasons (Submission Two). 2. Thirdly, the Homeowners submit that the Tribunal failed to take into account a mandatory consideration, being that contained in s 79U(1) of the Fair Trading Act 1987 (NSW) (FT Act), requiring that the terms of any work order are just and equitable (Submission Three). Builder's submissions 1. In relation to what we described above as the Homeowner's Submission One, the Builder submits, in very general summary, that this submission should be rejected. He says that there was no error in the Decision, and that the Tribunal properly considered and applied the correct authorities, and that the Homeowners' scope of rectification was plainly unreasonable and exceeded what was reasonable to achieve the contractual objective of ensuring that the drive/verge cross over complied with the required thickness and gradient. 2. In relation to the Homeowner's Submission Two, the Builder submits that Tribunal's finding should not be considered in a vacuum, noting that the Tribunal went into considerable detail to explain why the course of rectification that focused upon the drive/verge cross-over was a reasonable course to adopt, as compared with the Homeowners' method of rectification. Further, he submits that the photo of the driveway and the drive/verge cross-over demonstrates quite clearly why the Tribunal's decision to order rectification of the drive/verge cross-over only, rather than demolishing and replacing the whole of the driveway, was a reasonable course to adopt. 3. The Builder submits that the Homeowners' submission that Mr Dockrill's opinion was that the entire driveway needed to be demolished and reconstructed, and that it was not possible to "rectify the change in grade of non-compliance of the driveway access without a complete demolition and reconstruction of the entire driveway", is not supported by Mr Dockrill's report, and at no stage did Mr Dockrill expressly conclude that the whole of the driveway needed to be demolished and replaced. 4. In relation to the Homeowner's Submission Three, the Builder notes that s 79U(2) of the FT Act sets out a list of factors that the Tribunal is to consider, for the purposes of s 79U(1), if they are material to the particular circumstances of the case. 5. The Builder submits that the Homeowners have failed to point to any of those factors in s 79U(2) as being material or relevant to the circumstances of this case, and that no such factors are articulated or expanded upon in the Homeowners' Submissions. 6. Finally, the Builder submits that even if there is an error in this respect, it would not have affected the Tribunal's decision, or made a difference in the outcome. In those circumstances, the Tribunal's decision is erroneous or unreasonable, and does not require the Appeal Panel to embark on a fresh exercise of discretion: State Bank of NSW v Brown (2001) 38 ASCR 715; [2001] NSWCA 223. Consideration 1. We note at the outset that to the extent that the Homeowners pressed any submission that the Tribunal's reasons were inadequate, we reject that submission. The reasons for decision were lengthy, detailed and careful, and reflect the expertise of an experienced Senior Member of the Tribunal. 2. Submission One was that, when assessing whether the rectification method proposed by the Homeowners was a reasonable course to adopt, the Tribunal applied the wrong legal principle by only considering one matter (costs being disproportionate to the benefit to be obtained) and not an analysis of a range of factors, only one of which is whether rectification costs are disproportionate to the benefit to be obtained. 3. We think this submission should be rejected. When considering this issue the Tribunal stated 75. Given that there is evidence of only two measurements of the driveway slab being less than 150mm and the fact that the driveway slab complies with AS 3727.1:2016, on the basis that it will not be used for commercial purposes, I am inclined to find that it would not be reasonable for the entire slab to be demolished and re-laid. This is a situation where the cost of the proposed rectification would be out of all proportion to the benefit to be obtained. I find that to demolish and re-lay the slab in the circumstances to which I have referred would amount to fairly exceptional circumstances, especially having regard to the compliance with AS 3727.1:2016. 76 It follows from the above reasons that the relief that the [Homeowners] would be entitled to, by way of damages or a work order would be the demolition and reinstatement of the drive/verge crossover in order to comply with the Blue Mountains City Council requirements and all relevant Australian Standards, particularly as to the grade of the drive/verge crossover. … 1. We consider that these conclusions were available to the Tribunal on the evidence before it. 2. As to Submission Two, we agree that Mr Dockrill's opinion that the entire driveway needed to be demolished and reconstructed, and that it was not possible to "rectify the change in grade of non-compliance of the driveway access without a complete demolition and reconstruction of the entire driveway", was not supported by Mr Dockrill's report, and at no stage did Mr Dockrill expressly conclude that the whole of the driveway needed to be demolished and replaced. 3. We think that Submission Three is misconceived. 4. The proceedings before the Tribunal were a building claim in accordance with the HB Act, that is a claim for (a) the payment of a specified sum of money, or (b) the supply of specified services, arising from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services: HB Act, s 48A. The proceedings were not a consumer claim for the purpose of the Australian Consumer Law or the NSW FT Act. 5. Consequently, s 79U has no application. Costs 1. Given our conclusions, we propose to order that: 1. in the Builder's appeal, the Builder is to pay the Homeowners' costs of as agreed or assessed; 2. in the Homeowners' appeal, the Homeowners are to pay the Builder's costs as agreed or assessed. 1. However, we will invite submissions from the parties. Orders 1. The Appeal Panel orders: 1. In proceedings 2021/00146721: 1. leave to appeal refused; 2. appeal otherwise dismissed. 1. In proceedings 2021/00180102: 1. leave to appeal refused; 2. appeal otherwise dismissed. 1. Each party is to file submissions as to the costs of the appeals within seven days. 2. Each party may reply to the other's submissions within 14 days. 3. The Tribunal proposes to determine the issue of costs in each appeal "on the papers" and without a hearing. If either party opposes that course it should address that matter in their submissions. 4. Each set of submissions is to be no longer than five pages in length. ********** 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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 22 October 2021