New South Wales Supreme Court CITATION : Ramzy & Anor v CTTT & 2 Ors [2005] NSWSC 48 HEARING DATE(S) : 31 January 2005 JUDGMENT DATE : 15 February 2005 JURISDICTION : Common Law Division, Administrative Law List JUDGMENT OF : Master Harrison DECISION : (1) The appeal is dismissed; (2) The decisions of Tribunal Member Mallam dated 19 January 2004, 8 April 2004 and 16 May 2004 are affirmed; (3) The second amended summons is dismissed; (4) The plaintiff are to pay the defendants' costs as agreed or assessed. CATCHWORDS : Appeal decision of CTTT- cross claim - interest LEGISLATION CITED : Consumer Trader and Tenancy Act 2001 (NSW) - s 67 CASES CITED : Bellgove v Eldridge (1954) 90 CLR 613 Ramez Ramzy & Maha Ramzy (Plaintiffs) Ausegy Construction & Development Pty Limited PARTIES : (Second Defendant) Talaat Nasralla (Third Defendant) FILE NUMBER(S) : SC 30016/2004 Ms M Fraser (Plaintiffs) COUNSEL : Mr CC Dwyer (Second & Third Defendants) Mr P Ives Maxwell Berghouse & Ives (Plaintiffs) SOLICITORS : Submitting Appearance (First Defendant) Adams & Partners (Second & Third Defendants) LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW LOWER COURT FILE NUMBER(S) : HB00/70990; HB00/72239 LOWER COURT JUDICIAL OFFICER : Tribunal Member, Mr W G Mallam IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST MASTER HARRISON TUESDAY, 15 FEBRUARY 2005 30016/2004 - RAMEZ RAMZY & ANOR v CONSUMER TRADER AND TENANCY TRIBUNAL & 2 ORS JUDGMENT (Appeal decision of CTTT) 1 MASTER: By second further amended summons (SFAS) filed 13 August 2004 the plaintiffs seek firstly, an order that the orders of Mr W G Mallam, Member of the Consumer Trader and Tenancy Tribunal (the CTTT) in proceedings HB00/70990 ('the application') and HB00/72239 ('the cross application') made on 19 January 2004 be set aside; secondly, an order that the order of Tribunal Member Mallan in the application and cross application made on 8 April 2004 be set aside; thirdly, an order that the orders of Tribunal Member Mallam in the application and cross application made on 19 January 2004 and amended in or about July 2004 be set aside; and fourthly, an order that the matter be remitted to the CTTT to be reheard and redetermined. 2 The plaintiffs relied on the affidavit of Maha Ramzy, sworn 3 September 2004, and the affidavit of Peter Michael Ives, sworn 16 June 2004. The second and third defendants relied on an affidavit of Peter John Adams, sworn 21 July 2004. The first defendant has filed a submitting appearance. 3 The plaintiffs are Ramez Ramzy and Maha Ramzy ('Mr and Mrs Ramzy'). The first defendant is the CTTT. The second defendant is Ausegy Construction & Development Pty Limited ('Ausegy'). The third defendant is Talaat Nasralla ('Mr Nasralla'). 4 Section 67 of the Consumer Trader and Tenancy Act 2001 (NSW) (the Act) allows for an appeal to be made to this court on a question of law. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal. The onus lies on the plaintiff to demonstrate that there has been an error of law. Section 67(3) of the Act provides that after deciding the question of the subject of an appeal the court may, unless it affirms the decision of the Tribunal on the question that should have been made by the Tribunal, remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal. 5 At the outset, it is helpful to set out some of the provisions of the Act. The functions of the Tribunal are to adjudicate disputes between consumers and commercial disputes between landlords and tenants. The Tribunal is not constrained by the rigour of the courtroom. Its objects are to ensure that the Tribunal is accessible, its proceedings are efficient and effective, its decisions are fair and to enable proceedings before the Tribunal to be determined in an informal, expeditious and inexpensive manner. The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (s 27(3)). 6 Evidence must be given on oath or statutory declaration (s 39(1)) but the Tribunal is not bound by the rules or practice of evidence and the Tribunal may inform itself on any matter in such manner as it considers appropriate (s 28(2)). The Tribunal must conform to the rules of natural justice, but broadly speaking, has control of and responsibility for its own procedures (s 28(1) and (2)). Its business is conducted in public (s 33). Section 35 provides that the Tribunal must ensure that each party in any proceedings is given a reasonable opportunity to call or give evidence and otherwise present the party's case (whether at a hearing or otherwise); and to make submissions in relation to the issues in the proceedings. Normally a party to the proceedings has carriage of his or her own case and is not entitled to be legally represented (s 36(1)). The Tribunal has the power to award costs (s 53), but usually each party bears its own costs. Pursuant to s 54 of the Act the Tribunal is obliged to use its best endeavours to bring the parties to a settlement before making an order. The Tribunal has a power to correct its decision (s 50) and the registrar can issue a certificate, which operates as a judgment (s 51). Grounds of appeal 7 The main grounds of appeal are against the whole of the decisions of the CTTT dated 19 January 2004, 8 April 2004 and 26 May 2004 and are firstly, that the Tribunal Member did not identify Mr Nasralla as a party to the cross application, yet made an order in Mr Nasralla's favour and failed to give reasons for doing so; secondly, in finding that the respondents were entitled to interest from 19 December 1999 and in imposing a rate of interest of 22.32% did not give reasons for failing to make an award for distress and inconvenience; thirdly, in failing to give reasons for determining to depart from the usual measure of damages for defective work (windows), that is, the costs of rectifications, and substituting a lesser measure of damages, namely compensation for "loss of enjoyment"; fourthly, in failing to make any allowance in the plaintiffs' favour in respect of a deletion from the contract of a patio roof and in applying the wrong principle in relation to the windows; and finally the Member erred in awarding to the respondents the costs of the application and cross application. Background 8 On 14 January 2000 Mr and Mrs Ramzy filed application No. 00/7090 (the application) against Ausegy. On 14 March 2000 Ausegy filed application No. 00/72239 (cross application) against the appellants seeking orders against Mr and Mrs Ramzy for the payment of monies. 9 The plaintiffs submitted that there is no cross application naming Mr Nasralla as a party to it and nor is there any reference in the first decision to Mr Nasralla being joined as an applicant in the cross application. The amended decision however, stated that Mr Nasralla was added as a respondent with the consent of all parties. This is disputed by Mrs Ramzy [aff 3/9/2004 at para 13]. In about June 2004 Ausegy and Mr Nasralla requested the CTTT to amend the decision. The plaintiffs submitted that they had not been given notice of this application and therefore had been denied the opportunity of being heard in that application. The Tribunal decisions 10 In his reasons dated 19 January 2004 Tribunal Member Mallam helpfully set out the history of the proceedings. The relevant portion is as follows: "Applications and Parties and Representation 1. On 29 June 1999 Talaat Nasralla contracted to build a two storey house for Ramez Ramzy and Maha Ramzy for the price of $255,000.00. 2. On 14 January 2000 application number 00/70990 (Exhibit 20) was lodged by Ramez Ramzy and Maha Ramzy against Ausegy Constructions & Development Pty Ltd. The applicants sought that the Tribunal make an order that the respondent carry out $50,000.00 to $80,000.00 of repairs to faulty goods or services. 3. On 1 March 2000 application number 00/72239 (Exhibit 00) was lodged by Ausegy Constructions & Development Pty Ltd against R Ramzy and M Ramzy. Ausegy Constructions & Development Pty Ltd again sought that the Tribunal make an order that the (sic) Ramez Ramzy and Maha Ramzy pay it $56,689.00. 4. By the consent of both parties both applications have been heard at the same time. 5. On 20 November 2002 with the consent of both parties Talaat Nasralla was included as a respondent on application number 00/70990. In these reasons I refer to R Ramzy and M Ramzy as the applicants and Talaat Nasralla as the respondent." 11 The transcript does not refer to either order that added Mr Nasralla as a party. Later on Mr Nasralla was joined as the second respondent to the application by way of amended application filed in the CTTT on 14 May 2002. The first decision stated that on 20 November 2002 Mr Nasralla was included as a respondent to matter 00/70990. However, the judgment dated 20 November 2002 does not refer to Mr Nasralla being included as a party in matter No. 00/72239. 12 However, on 26 May 2004 pursuant to s 50 of the Act Tribunal Member Mallan amended the orders made on 19 January 2004 as follows: "Ordered that the applicants R Ramzy and M Ramzy of '...' Voyager Point NSW 2171 pay the respondents T Nasralla and Ausegy constructions and Development Pty Ltd both of '...' Pendle Hill NSW 2145 the sum of $66,796.00 on or before 19 February 2004." 13 And the reason for the alteration to add Mr Nasralla as a party is as follows: "1. An order in relation to this matter was made on 19 January 2004 as follows: 'Ordered that the applicants R Ramzy and M Ramzy of "..." Voyager Point NSW 2171 pay the respondent T Nasralla of "...", Pendle Hill NSW 2145 the sum of $66,796.00 on or before 19 February 2004.' 2. There were two applications made in this matter, these applications involved four parties, R Ramzy and M Ramzy, hereinafter referred to as the applicants and Ausegy Construction and Development Pty Ltd and T Nasralla hereinafter referred to as the respondents. 3. Application 00/70990 had R Ramzy and M Ramzy as the applicants and originally Ausegy Construction and Development Pty Ltd as the respondent. Later with the consent of all parties T Nasralla was added as a respondent to this application. 4. Application 00/72239 has Ausegy Construction and Development Pty Ltd as the applicant and R Ramzy and M Ramzy as the respondents. Later with the consent of all parties T Nasralla was added as an applicant to this application. 5. With the consent of all parties both applications were heard at the same time. I made it clear in the order in file 00/72239 that the order in relation to these matters was to be found on application 00/70990. 6. Under section 50(1) of the Consumer, Trader and Tenancy Act 2001 the Tribunal had the power to correct a decision and make a direction to the Registrar to effect the correction. 7. Some examples under which the power to make such a correction is given are set out in section 50(3) of the Consumer, Trader and Tenancy Tribunal Act 2001. 8. It was my intention that the applicants par (sic) the respondent the sum referred to in the order made in 19 January 2004. 9. At the time when the order was made on file number 00/70990 on 19 January 2004 by me I included only T Nasralla as the respondent in whose favour to (sic) order was made. 10. To correct this omission the respondent Ausegy Construction and Development Pty Ltd should be added as a respondent in whose favour the order of 19 January 2004 was made." 14 The Tribunal Member has stated that Mr Nasralla was joined as a party in proceedings 00/72239 by consent of the parties. The Tribunal Member has given sufficient reasons. As the order joining Mr Nasralla had been made when the parties were legally represented, there was no obligation on the Tribunal Member to give the plaintiffs further opportunity to be heard. There is no error of law. Inte r est "49. The respondent claimed interest at the rate of 22.32% as per item 8 in schedule 1 of the contract. I accept that the date from which interest should be calculated is 19 December 1999. I will allow 4 years and 1 month's interest. 50. Interest to be paid is therefore $34,946.00 multiplied by 49 divided by 12 and multiplied by 0.2232. This comes to $31,850.00. 51. The applicants should pay the respondent $66,796.00." 15 The award of interest is discretionary. The Tribunal Member ordered interest at the rate stipulated in the contract from the date that the plaintiffs moved into the premises. It was open to the Tribunal Member to make this decision. And his reasons are adequate. There is no error of law. Rectification works 16 The plaintiffs submitted that, in determining that monies were owing to the builder under the contract, the Tribunal Member failed to take into account substantial non-performance of the contract by the builder. 17 At paras 11 and 12 the Tribunal Member recorded the agreement made between the parties. There are: "Payments Made 11. Both parties agree that monies owing by the applicants are as follows: Contract price: $255,000 Variations: $47,396 Items paid by respondent: $5,481 Total: $307,877 " 18 Except for the sum of $18,000.00, the parties agreed that monies paid by the applicants, credits allowed and credits for defective work are as follows: "Payments made by applicants: $226,850 Credits agreed: $17,877 Defective or incomplete work: $16,045 Total: $260,772 Preliminary amount payable to respondent: $47,105 " 19 The parties themselves agreed on what were credits allowed and credits for defective work and these parameters of the dispute were recorded by the Tribunal Member. The submission that there should be a reduction in the amount owing to the builder does not appear to have been raised. It cannot be raised as a fresh issue on appeal. Patio roof and windows 20 The plaintiffs submitted that the Tribunal Member erred in failing to go onto determining what allowance should be made by the builder in respect of non completion of the patio roof, or alternatively, the Tribunal Member failed to give reasons for not determining such an allowance. 21 The Tribunal Member stated [paras 35-37]: "With respect to the roof over the first floor bedroom 1 patio, it is noted that this item was the subject of letter from Mrs Ramzy to Mr Nasralla on 4 November 1999. Once again the respondent should not have changed the layout of plan 5959/1A without first obtaining a signed variation from the applicants. However, I am satisfied that the variation was discussed and the applicants agreed to the amendment. It follows therefore that the applicants would not be entitled to claim the $12,829.00 quoted by Mr Sawyers to fit the patio roof nor the $950.00 estimated by Mr Austin to fit the patio roof. I do not agree to a claim for compensation for the front patio roof." 22 The Tribunal Member found, as a question of fact, that the deletion of the patio roof had been agreed to by the parties. There are sufficient reasons given by the Tribunal Member. There is no error of law. 23 The Tribunal Member found that the builder had installed windows into bedroom 1, which were not in accordance with the contract. The Tribunal Member found that changes to the window in bedroom 1 had not been agreed to by the plaintiffs and awarded $2,000.00 in damages for 'solatium'. The plaintiffs submitted that the Tribunal Member erred in considering the only measures of loss available to the Ramzys to be solatium and/or diminution in value and should have awarded damages on the basis of the costs of rectification in accordance with Bellgrove v Eldridge (1954) 90 CLR 613. 24 In Bellgrove v Eldridge, Dixon CJ, Webb J and Taylor J turned their minds to the question of the measure of damages in respect of a deficient building project. They held [at 617] that: "In the present case, the respondent was entitled to have a building erected upon her land in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she sustained by the failure of the appellant to perform his obligations to her. This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract." 25 They continued at 618: "Indeed – and such was held to be the position in the present case – there may well be cases where the only practicable method of producing conformity with plans and specifications is by demolishing the whole of the building and erecting another in its place. In none of these cases is anything more done than that work which is required to achieve conformity… The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt." 26 The reasoning of Tribunal Member is as follows [paras 39 to 44]: "The applicants claimed $35,299.00 to fit windows as per the plan. I am required to consider whether the applicants are entitled to claim the cost of rectification or loss of enjoyment, solatium. I am not satisfied that the building has been diminished in value by reason of the windows being not as per plan. In this regard I accept the evidence of the valuer Mr Hausfield dated 29 June 2003. I am not satisfied that the applicants are entitled to have the front of the building demolished and windows fitted to bedroom 1 to make it as per the plan and hence I do not agree with the claim for $35,299.00. It would obviously be cheaper to fit the correct windows during construction than after completion. Insufficient evidence has put (sic) to satisfy me that the applicants objected immediately they became aware that the windows were not as per the plan or that the respondent refused to fit the correct windows during construction. The applicants are entitled to compensation for loss of enjoyment. This is a subjective matter and there is not a lot of case law on which I can draw for assistance. I will allow a figure of $2,000.00." 27 Further, the plaintiffs submitted that the Tribunal Member erred in placing an onus on them to satisfy the Tribunal that they had objected immediately after they became aware that the windows did not comply with the plans. The measure of damages is discretionary and the decision that the Tribunal Member reached was one which was open to him. Detailed reasons were given for his decision on this topic. In relation to a claim for distress and inconvenience, this issue was not raised in the CTTT. Costs 28 The plaintiff submitted that the costs decision made on 8 April 2003 was made without further notice to the Ramzys and without further directions or further hearing. But on 19 January 2004, the Tribunal Member stated: "52 The parties were advised at the hearing on 24 November 2003 that submissions as to costs could be made after final orders were made. 53. I note that the respondent included a submission as to costs in his final submission but that the applicants did not do so. 54. In view of this I do not propose to reach any conclusion as to the payment of costs. However I fell (sic) that it should be noted that costs normally flow to the successful party. I hope with this in mind the solicitors for the parties may be able to reach a settlement as to costs without the need to make further submissions." 29 Between 19 January 2004 and 8 April 2004, the plaintiffs had an opportunity to put submissions in relation to a proposed costs order and they did not do so. There is no error of law. The appeal is dismissed. The decisions of Tribunal Member Mallam dated 19 January 2004, 8 April 2004 and 16 May 2004 are affirmed. The second amended summons is dismissed. 30 Costs are discretionary. Costs usually follow the event. The plaintiffs are to pay the defendants' costs as agreed or assessed. The court orders: (1) The appeal is dismissed. (2) The decisions of Tribunal Member Mallam dated 19 January 2004, 8 April 2004 and 16 May 2004 are affirmed. (3) The second amended summons is dismissed. (4) The plaintiffs are to pay the defendants' costs as agreed or assessed. ********** 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.