New South Wales Supreme Court CITATION : Page v Home Team Constructions Pty Ltd [2008] NSWSC 613 HEARING DATE(S) : 23 May 2008 JUDGMENT DATE : 19 June 2008 JURISDICTION : Common Law Division JUDGMENT OF : Hislop J DECISION : (1) Appeal dismissed. (2) The plaintiffs (owners) are to pay the defendant's (builder's) costs of the appeal. LEGISLATION CITED : Local Courts Act, 1982 Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 Mifsud v Campbell (1991) 21 NSWLR 725 CASES CITED : Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 Trimis v Mina [1999] NSWCA 140 Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221 Steven Page (1st Plaintiff) PARTIES : Jacqueline Page (2nd Plaintiff) Home Team Constructions Pty Ltd (Defendant) FILE NUMBER(S) : SC 10200/08 COUNSEL : S.A. Benson (Plaintiffs) H.W.M. Stitt (Defendant) SOLICITORS : Michael Whittemore (Plaintiffs) Bruce Stewart Dimarco (Defendant) LOWER COURT JURISDICTION : Local Court LOWER COURT FILE NUMBER(S) : 3219/2006 LOWER COURT JUDICIAL OFFICER : Magistrate R. Williams LOWER COURT DATE OF DECISION : 19 December 2007 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION HISLOP J Thursday 19 June 2006 10200/08 STEVEN PAGE & ANOR v HOME TEAM CONSTRUCTIONS PTY LTD JUDGMENT 1 HIS HONOUR: Mr and Mrs Page ("the owners") contracted, in writing, with Home Team Constructions Pty Ltd ("the builder") for the erection of a dwelling house at 35 Austin Avenue, North Curl Curl. 2 A dispute arose between the parties as to the builder's entitlement to certain claims invoiced by it in respect of what may be generally termed extras. The builder took action in the Downing Centre Local Court to recover the moneys claimed. It was successful in the proceedings in respect of each of the items claimed and was awarded $49,234.06 together with interest. 3 The owners have appealed to this Court from the decision of the magistrate. The scope of the appeal is very limited. A party who is dissatisfied with the judgment may appeal against the judgment "but only as being erroneous in point of law" (Local Courts Act, 1982, s 73(1)). A party may also appeal on a question of mixed law and fact but only with the leave of the court (s 74(1)). There is no appeal on a question of fact, as such, with the consequence that a party cannot appeal a judgment on a pure question of fact even if the determination of fact is erroneous or perverse - Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139. No application for leave pursuant to s 74(1) was made on the appeal. 4 The items the subject of the appeal were a variation of the on-ground floor slab, brick fence, door 6 and provisional cost items for engineering, scaffolding and on-site water detention and stormwater systems. 5 The amended summons pursuant to which the appeal is brought is cast in wide terms. Ultimately four alleged points of law were identified by the owners' counsel and were relied upon in the appeal. 6 The points of law were: (a) a failure to consider the evidence of a witness, Mr Molloy, or to give reasons for the rejection of his evidence; (b) a failure to apply settled legal principles in respect of the claim for variations; (c) allowing a variation of a fixed cost item; (d) a failure to consider the application of the duty of honesty in assessing the claim for the on-ground floor slab. The evidence of Mr Molloy 7 The managing director of the builder, Mr Goulding, gave evidence that the owners produced detailed architectural plans to him prepared by an architect, Kerry McGrath. The plans showed the ground floor slab as a suspended slab. As the plans had been professionally drawn, the accuracy of the plans and the ground level shown therein were taken as true and accurate. The plans showed the rear floor level as no more than 700 mm above natural ground. Mr Goulding informed the male owner that a suspended slab was unnecessary and a ground slab would be substantially cheaper. It was on this basis the builder submitted its tender and arranged new engineering drawings from Sydney Wide Engineers. Subsequently it became apparent the ground levels in the architectural plans were wrong and a suspended slab was required. The builder informed the male owner of this and that it would cost more. He was instructed to proceed with the suspended slab. As a result of the provision of the suspended slab, considerable additional costs were incurred. 8 The owners sought to rebut the claim for the additional cost of the suspended slab by asserting that they had given the builder the approved plans, a survey and engineering details for a suspended slab and that the original quotation was for a suspended slab. There had been no discussion in respect of substituting a floor slab for the suspended slab in the McGrath drawings. They were not informed of the extra charge until much later. 9 The owners tendered an affidavit of a civil engineer, Mr Molloy, in support of their assertion. 10 Mr Molloy's affidavit included the following paragraphs: "(2) I have previously prepared engineering details for premises at 35 Austin Avenue at North Curl Curl which were submitted to Warringah Council for approval of a Development Application. The plans originally drawn showed a house with a suspended concrete slab on the ground floor. (3) On Tuesday the 17th April 2007 I met with Stephen Page at the office of Northern Beaches Consulting Engineers at Dee Why. He showed me Home Team Drawings number HT/769/04 - 6&7 of 7. (4) I examined the ground floor slab in those drawings and am of the opinion that the drawings are general, and do not clearly define whether it is an onground or suspended slab. It is my opinion, the engineering detail could not be drawn without specific instructions independent to these drawings. (5) A suspended slab is normally shown with a 'hatching' or crosses through the sub-floor space and wording similar to 'Form-Fill' to indicate that the area is on fill. It is not shown in this way on these plans. (6) I note there is a dotted line indicating ground level but that does not indicate whether it is current or future levels. (7) I was then shown Home Team Drawing number HT/769/04 - 1&4 of 7. (8) Sheet 1 of 7 shows a site plan with a relative level (RL) of 31 running near to the southern side of the house. I compared this with Sheet 4 of 7, which shows the ground floor slab level of 32.15. I estimate from these figures that the ground floor slab to be in the vicinity of 1.1 meters above ground level. The drawings is on an A3 page and shown with a scale of 1:100. I examined the scale and it also clearly shows the height above ground level to be 1.1 meters." 11 On 23 April 2007 Mr Molloy was shortly cross examined on his affidavit as follows: "Q. Mr Molloy, you were involved in the preparation of engineering details relating to the development application to Warringah Council, is that right? A. Correct Q. So you had a narrow role in this transaction? A. Correct. Q. You were really only involved in the preliminary aspects of this construction project in relation largely to the DA application, is that right? A. Correct. I also prepared plans for a construction certificate application I believe. Those plans were never used for construction. Q. So thereafter you had no role in the building or the execution of the contract? A. No." 12 The magistrate in his judgment said: "Evidence in this matter was given as follows: Plaintiff: Leonard Charles Goulding Director of the plaintiff Graham Russell Cantrill Building foreman Arthur Spronk Bricklayer Anthony Tony Petkovich Building estimator Defendants: Steven John Page First defendant Jacqueline Page Second defendant Lucas Ian Molloy Engineer Each witness, with the exception of Mr Molloy, in accordance with the rules had previously prepared a statement of their evidence in chief and this had been served upon the other side or exchanged…" He did not otherwise expressly refer to Mr Molloy in his judgment. The ground floor cement slab/suspended slab 13 His Honour dealt with this issue as follows: "At issue is whether instructions were given for the construction of a suspended slab. Mr Goulding on behalf of the plaintiff has given evidence of the quotation being prepared on the basis of the architectural drawings of Kerry McGrath, Paragraphs 18 to 29 of Mr Goulding affidavit refer to this issue. A ground floor slab was quoted for in the original tender after discussion between the parties as the ground floor level was 700m [sic] off the ground. This discussion is denied by the Defendant. It became apparent that the site levels as contained on the drawings of Kerry McGrath were incorrect and in fact the ground floor level was 1.3m off the ground and a variation was required for a suspended slab. The plaintiff relies on discussions held between Mr Goulding and Mr Cantrill and the second defendant in relation to the building of the suspended slab. It is the defendant's evidence mainly through cross examination that he initially went to the plaintiff with approved plans and engineering details for a suspended slab and that the quote was for a suspended slab. He states that the first he knew of the variation was when he arrived at the site and the formwork was in the process of being completed…I accept the evidence of the plaintiff on this issue as there is little evidence of the defendant to contradict it. Some matters were put to Mr Goulding regarding other information supplied to him by the second defendant that clarified the levels however this was denied and further no evidence was given by the second defendant as to this information. It is clear the costs were increased as a result of the amendment or variation to the plans to install a suspended slab. Clause 6 of the contract also stipulates that a warranty is given on the documents supplied by the second defendant as being accurate. In this instance it is clear that it was not accurate and evidence was given from Mr Goulding that he relied upon plans of Kerry McGrath. For the reasons set out above I accept the evidence of the plaintiff over the evidence of the defendant and allow the sum of $17,180.64." 14 The error of law complained of by the owners is that his Honour did not expressly refer to the evidence of Mr Molloy in his judgment. They submitted his Honour either considered Mr Molloy's evidence and rejected it, in which event he gave no reasons for that rejection, or he simply overlooked it. That error of law impacted upon the claims for the slab, engineering costs, on-site water detention and the stormwater system. 15 It is, of course, an incident of judicial duty for the judge to consider all the evidence in the case - Mifsud v Campbell (1991) 21 NSWLR 725 at 728. It is well settled that a judge does not need to refer to all the evidence in the proceedings or to indicate which of the evidence is accepted or rejected. The extent of the duty to give reasons depends upon the circumstances of the individual case… If no right of appeal is given against findings of fact, a failure to state the basis of even a crucial finding of fact, if it involves no legal standard, will only constitute an error of law if the failure can be characterised as a breach of the principle that justice must be seen to be done - Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 at 281. 16 The builder submitted that this ground of appeal should fail as: (a) his Honour had Mr Molloy and his evidence in mind when writing the judgment, as evidenced by listing his name with the owners and referring to the non compliance with the witness rules in respect of his affidavit; (b) his Honour stated very clearly that he accepted the evidence of the builder and rejected the evidence of the owners. Clearly this was a reference to all of the evidence of the home owners, which included the evidence of Mr Molloy; (c) the submissions in relation to Mr Molloy's evidence were limited; (d) Mr Molloy's evidence was irrelevant to the issues before the Court. 17 Although a lengthy period of time elapsed between the tender of Mr Molloy's affidavit, his cross examination and the date of judgment, the references to Mr Molloy in the judgment provide acceptable evidence that his Honour did have Mr Molloy and his evidence in mind at the time of writing his judgment. His Honour was faced with an issue of fact as to whether the builder or the owners' version of events was to be accepted. He preferred the evidence of the builder and clearly so stated. He was critical of features of the evidence of the male owner. The relevance of Mr Molloy's evidence to the determination of the central factual issue was tangential. In my opinion, his Honour's reasons were adequate and the absence of reference to the content of Mr Molloy's evidence does not disclose error of law: Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 per Meagher JA at 442-444. Variations 18 Clause 17.1 of the building contract provided that "A variation must be in writing signed by the builder and the owner." 19 The variation in respect of the slab was not in writing signed by the builder and the owner. The builder sought to recover it by way of a restitutionary claim. 20 Counsel for the owners submitted that the claim for variations in respect of the floor slab was outside the building contract as it was not in writing or signed by the builder and the owner. 21 He further submitted that, in order to recover in respect of a claim "outside the contract" for a variation, the builder had to establish the obverse of the findings identified by Mason P in Trimis v Mina [1999] NSWCA 140 at [64], namely: (i) the owners agreed to pay extra for the variations; (ii) (a) the variations were costlier to the builder than contractual performance; or (b) the owners received benefit additional in value to that contracted for; (iii) the owner knew that the builder expected to be paid extra for his alternative (but not necessarily extra) work. 22 He submitted the magistrate did not make those findings and therefore there could be no recovery by the builder for variations for the floor slab or for the brick wall which was also treated as a variation. 23 The builder did not accept the application of Trimis v Mina as submitted by the plaintiff and submitted that Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221 had a more relevant application in this case. However, the builder submitted that even if the strict view being suggested by the owners as set out by Mason P in Trimis was required, the builder would still meet those requirements. Essentially he submitted that the requirements of Trimis had been found to exist by his Honour either by express findings in the judgment or by the incorporation into the judgment of evidence for the builder which his Honour had stated in the judgment he accepted. 24 I agree with this submission. In my opinion, his Honour did find in respect of the suspended slab and brick fence that the owners had agreed to pay extra for the variations, received benefit additional in value to that contracted for, the variations being costlier to the builder than contracted performance and that the owners knew the builder expected to be paid extra for the work. Door 6 25 His Honour held: "It is clear that Door 6 is not a provisional allowance item the issue arises as to whether it was a further variation to the original contract. Due to the fact that the item known as Door 6 was sourced by the second defendant and therefore it would follow that instructions were specifically provided for its installation, it would be unjust for the plaintiff not to be paid for the additional cost of this item over the original item quoted and on that basis I will allow the plaintiff's claim for item as a variation." 26 The owners submitted that as the magistrate found the door was part of the contract price, the builder was not entitled to any additional remuneration. As it was not a provisional allowance item but was to be treated as a variation, which was not in writing signed by the owner and builder, it was recoverable only if the requirements of Trimis were met and they were not. 27 However, in my opinion, the requirements of Trimis were met by reason of his Honour's preference for an acceptance of the builder's evidence in respect of this aspect of the matter. Honesty 28 It was submitted for the owners that the builder owed a duty to act honestly in relation to its estimate of the costs of provisional items such that the estimate should be reasonably near the ultimate cost. It was submitted the duty was breached in respect of the estimate of the cost of the floor slab. His Honour did not refer to this issue in his judgment. It is submitted he overlooked the matter, this giving rise to an error in point of law. 29 It appears his Honour either considered and determined the issue and failed to give reasons for his determination or he did not decide the question. 30 The submissions of the parties in the Local Court were not recorded. 31 Counsel for the builder submitted the question of honesty was never put in a way in which the magistrate was expected to make a decision about it. 32 Counsel for the owners seemingly accepted, at least, that the issue was not strongly argued. The solicitor who appeared in the Local Court for the owners said in an affidavit "I made no submissions, as such, as to an obligation of honesty and good faith but such was implicit in my submissions regarding negligent misstatement, in particular the first element of establishing same, namely, assumption of responsibility. The issue of honesty and good faith was pleaded by the plaintiffs in their defence." 33 If his Honour considered and determined (implicitly by rejecting it) this issue, his failure to give reasons does not supply a ground for appeal - see Soulemezis where at 270C Mahoney JA said: "In my opinion, it is not open to a party on appeal to complain that reasons were not given for the decision of a matter of fact or law which was, or must have been, decided, if the matter was not the subject of submissions made to the court below in a way which called for a reasoned consideration of them." 34 Alternatively, it has not been shown that any submission on this issue was made to his Honour in such a way as to bring home to him that a determination of the issue by him was called for. This is particularly likely to have been the case as it is conceded there is no authority that the builder is subject to such a duty and additionally the circumstances of this case were unlikely to establish a breach of that duty. Conclusion 35 The owners' challenge to the judgment of the Local Court has been unsuccessful. Orders 36 I make the following orders: 1. Appeal dismissed; 2. The plaintiffs (owners) are to pay the defendant's (builder's) costs of the appeal. ********** 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.