Reeves v Bennett [2007] NSWSC 1265

New South Wales Supreme Court

CITATION : Reeves v Bennett [2007] NSWSC 1265

HEARING DATE(S) : 7 November 2007

JUDGMENT DATE : 14 November 2007

JURISDICTION : Common Law Division

JUDGMENT OF : Associate Justice Malpass

DECISION : The summons is dismissed. The plaintiffs are to pay the costs of the summons.

CATCHWORDS : Appeal from Consumer Trader & Tenancy Tribunal - ambit of appeal - importation of contractual term - breach and assessment of damages.

LEGISLATION CITED : Home Building Act 1989 (NSW) Consumer, Trader & Tenancy Tribunal Act 2001 (NSW)

CASES CITED : Chapman v Taylor & Ors; Vero Insurance Ltd v Taylor & Ors [2004] NSWCA 456

William F Reeves (1st Pl) S A Reeves (2nd Pl) PARTIES : Judith Ann Bennett (1st Def) Daniel James Bennett (2nd Def) Consumer Trader & Tenancy Tribunal (3rd Def)

FILE NUMBER(S) : SC 2007/30067

COUNSEL : R N O'Neill (Pls) P Meehan (sol) (Defs)

McDonnell Schroder (Pls) SOLICITORS : Meehans Solicitor Corp (1st & 2nd Def) I V Knight, Crown Sol (3rd Def)

LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW

LOWER COURT FILE NUMBER(S) : HB 05/03569

LOWER COURT JUDICIAL OFFICER : Mr J Bordon

LOWER COURT DATE OF DECISION : 8 May 2007

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

ASSOCIATE JUSTICE MALPASS

14 NOVEMBER 2007

30067/07 William Reeves & Anor v Judith Ann Bennett & Ors

JUDGMENT 1 HIS HONOUR: The plaintiffs carry on business in partnership. Mr William Reeves ("Mr Reeves") is a licensed builder and a family friend of the first and second defendants (the defendants). The defendants are mother and son. 2 The defendants had contemplated the purchase of a property at Picton ("the property"). There was also a contemplation that, if the property was purchased, a part of it (which has been described as "an outdoor area") would be converted into a sitting room for the son (which has also been described as Daniel's TV room). It was further contemplated that other work would be done on the property. 3 Prior to the purchase, Mr Reeves made an inspection of the property. A building report was obtained (from Mr Benad). A copy of it was given to Mr Reeves. The building report recommended that the structure on the property be checked with Council to ensure that there had been Council approval. 4 The defendants entered into a contract to purchase the property. MLG Conveyancing were engaged to handle the transaction on their behalf. An inquiry was made by them of the vendor concerning the matter of Council approval. Inquiries were then made of the Council. Council advised that there had been, inter alia, approval for an awning. The purchase was completed on 21 August 2003. 5 At the time of the completion of the purchase, the outdoor area comprised more than just an awning. Other work had been done subsequent to the approval for the awning. 6 An agreement was reached between the plaintiffs and the defendants for the doing of work on the property (including work to be done in respect of the outdoor area). There was no written agreement. Work was done on what has been referred to as a "do and charge" basis. Mr Duncombe was engaged as the certifying authority. 7 Work on what has been referred to as the structure was completed. On 6 April 2004, Mr Duncombe attended the property and made an inspection. There had been a problem of leaking water in respect of the gyprock roofing. Following the inspection, it became known that the awning only had been erected with Council approval and that there was no prospect of approval of the structure for habitable purposes. The defendants were then facing a demolition order. 8 The other work done by Mr Reeves was also completed. Part payment of the amount claimed by Mr Reeves had been made and there was an issue concerning the arrears of his claim. All of these matters were resolved. The only matter left in dispute was the work done in respect of the outdoor area. 9 Proceedings were brought by the defendants in the Consumer, Trader and Tenancy Tribunal ("the Tribunal"). In essence, the defendants brought a claim for damages founded on breach of contract. The matter proceeded to a hearing. The parties were legally represented. The hearing extended over about one and a half days. The defendants and Mr Reeves gave evidence. The defendants called two experts (Messrs Adams and Salerni). The plaintiffs relied on the evidence of Mr Duncombe. 10 The Tribunal member (Mr Bordon) found in favour of the defendants. The plaintiffs were ordered to pay the sum of $55,500. 11 The Tribunal delivered written reasons for the decision ("the reasons"). I shall now refer to certain of the contents thereof. 12 After a presentation of the respective cases of the parties and an analysis of the evidence, two findings were made. The Tribunal Member rejected "the submission that it was for the applicants to obtain Council approval rather than the builder" and a finding was made that the agreement was subject to the warranties in s18B of the Home Building Act 1989 (NSW) (the HBA). The warranties (a) to (f) thereof were then set forth. 13 The reasons continued, inter alia, with the following:- "The building works have been performed in a defective manner. In particular, the result has been a structure which does not conform to the Building Code of Australia for a habitable room. The applicants are entitled to rely on the builder to ensure that the works conform and have the requisite council approval. The present works cannot be said to have been performed in a proper and workmanlike manner nor can it be said that the works were done in accordance with and will comply with the Home Building Act 1989 or any other law. As indicated, I have accepted the evidence of Mr Adams and Mr Salerni where such evidence is in conflict with the evidence adduced by the respondents. … In the present case it may be that the builder's motivation was to attempt to achieve a certain result, 'Daniel's TV room', at a budget which was acceptable to the Bennetts. It is quite probable that what was required for a habitable room to be constructed could never be achieved for the amount paid by the Bennetts. The fact remains that this is what the contract between the parties, determined objectively, was, when one examines the works which were agreed upon and the discussions between the parties. On balance I accept the evidence of Judith Ann Bennett in this regard as corroborated by Daniel James Bennett. In short, Daniel's TV room was to be part of the house not a Class 10(a) awning or some other exempt structure. It was to be a habitable room which conformed with Council requirements and the Building Code of Australia. What has been achieved does not amount to this. To achieve conformity with the contract would require the respondents to pay the costs of demolition and rebuilding. I note that the applicants claim a total sum of $67,159.00. This appears to include the costs of the original amount paid and attributed to the work done to achieve 'Daniel's TV room'. I cannot see the basis for this. The costs of demolition and reinstatement will put the Bennetts in the position which the contract requires. I note that the costs of demolition and rebuilding are not in dispute. A question which had been raised in submissions (by implication at least) is whether in all the circumstances the costs of making the works conform to the contract while necessary are also reasonable." 14 There seems to be a consensus between the parties that the Tribunal Member came to a decision which saw the importing into the agreement of a contractual term (that the plaintiffs were obliged to ensure that the outdoor area conformed to the Building Code of Australia for a "habitable room" and that there was the requisite Council approval). There seems to be no dispute that a clear finding was made that the structure did not so conform and accordingly there was breach of the term. 15 However, when it came to addressing the question of breach the Tribunal Member seems to have dealt with it ostensibly in terms of breach of the warranties implied by s18 B of the HBA (rather than as expressly a breach of the contractual term). He appears to have so treated the breach as being in the nature of defective performance of building works and as a transgression of warranties (a) and (c).