New South Wales Supreme Court CITATION : Hatfield v Home Team Constructions Pty Limited [2007] NSWSC 978 HEARING DATE(S) : 30/8/07 JUDGMENT DATE : 3 September 2007 JUDGMENT OF : Bell J at 1 DECISION : The amended summons is dismissed; The plaintiffs are to pay the defendant's costs CATCHWORDS : Appeal from Consumer Trader and Tenancy Tribunal - competancy Consumer, Trader and Tenancy Tribunal Act 2001 LEGISLATION CITED : Home Building Act 1989 Uniform Civil Procedure Rules 2005 CASES CITED : Yango Pastoral Company Pty Limited v First Chicago Australia Limited (1978) 139 CLR 410 PARTIES : Brett Hatfield and Lousie Becchio (Plaintiff) Home Team Constructions Pty Limited (Defendant) FILE NUMBER(S) : SC 30013/07 COUNSEL : F Corsaro SC / I George (Plaintiff) J Stevenson SC / H Stitt (Defendant) SOLICITORS : Russo & Partners (Plaintiff) Bruce Stewart Dimarco Lawyers (Defendant) LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW LOWER COURT FILE NUMBER(S) : HB0514813 LOWER COURT JUDICIAL OFFICER : Dr Briggs LOWER COURT DATE OF DECISION : 25/1/07 IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST BELL J Monday 3 September 2007 30013/07 Brett Hatfield v Home Team Constructions Pty Limited JUDGMENT 1 BELL J: By amended summons filed on 17 March 2007 the plaintiffs, Brett Hatfield and Louise Becchio, appeal from the whole of the decision of Member Briggs given on 25 January 2007 in the Consumer Trader and Tenancy Tribunal (the Tribunal). 2 The defendant, Home Team Constructions Pty Limited (Home Team), was the applicant in the proceedings (HBO5/14813), brought in the Home Building Division of the Tribunal. Home Team entered into a building contract with the plaintiffs on 3 October 2003 for the construction of a residential dwelling on land in Duffy's Forest. Home Team claimed the sum of $70,756 on invoices issued under the contract for work done and materials supplied. The plaintiffs brought a cross-application against Home Team claiming that certain of the work was defective and incomplete (HBO5/19077). The appeal is from the Tribunal's determination of Home Team's contractual claim (HBO5/14813). 3 The Tribunal found that Home Team was entitled to judgment in the sum of $70,756, with interest calculated under the contract, less any set-off arising from the plaintiffs' cross-application. 4 The Tribunal's reasons were published on 25 January 2007. On 25 February 2007 the Tribunal issued an amended statement of reasons. Nothing turns on this. The reasons are relevantly identical. 5 The appeal is brought pursuant to s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW), which provides: (1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the Supreme Court against the decision. (2) An appeal is to be made in accordance with the rules of the Supreme Court. The rules of the Supreme Court may provide that an appeal (or such classes of appeal as may be specified in the rules) may be made only with the leave of the Court. … 6 Part 50 of the Uniform Civil Procedure Rules 2005 deals with the conduct of appeals including appeals from the CTTT. Rule 50.14(1)(b) provides that unless the court otherwise orders, the plaintiff must prepare, file and serve not later than three days before the date fixed for the hearing of the summons, an affidavit that annexes or exhibits a copy of the transcript of the proceedings in the court below, unless a transcript cannot be obtained in respect of proceedings of that type. The transcript of the proceedings before the Tribunal is not in evidence. No application was made to dispense with the requirement of the rule and there is no evidence that a transcript cannot be obtained in respect of proceedings before the Tribunal. 7 Mr Corsaro SC, who with Mr George appeared on the plaintiffs' behalf, read the affidavit of Salvatore Russo, which was sworn on 10 August 2007. Annexed to the affidavit is a copy of Tribunal's reasons together with copies of some of the documents which were in evidence before it and copies of the written submissions on which the parties relied. 8 The appeal is brought on the following ground: The member erred in his findings of the legal effect of sections 16, 27 and 28 of the Home Building Act as amended in that the member held that the Respondent could regardless of the restriction on the license of its supervisor that prohibited the supervisor from carrying out residential building works for a sum greater than $12,000.00 could nonetheless contract for and carry out residential building words for a value in excess of $700,000.00 and recover monies under such contract. 9 The Tribunal's reasons, relevantly, were as follows: Home Team has referred to submissions made at the hearing on behalf of Mr Hatfield and Ms Becchio to the effect that the licences held by Home Team and Mr Goulding, one of its licensed supervisors, were inadequate for projects of the size of this house and that as a consequence, the provisions of the Home Building Act 1989 (HBA) are brought into effect. It is submitted that Home Team has no entitlement to recover payment under the contract or at all since the claim is made strictly in the terms of the contract and does not rely on the discretionary s 94(1)(a) of the HBA. It is submitted that the interpretations given on behalf of Mr Hatfield and Ms Becchio to both the HBA and the terms of the licences, are incorrect. It is further submitted that Home Team and Mr Goulding are and were properly licensed at all material times, and continue so to be, and that there is no prohibition of any kind which would prevent Home Team recovering the sum owed to it. … In submissions made on behalf of Mr Hatfield and Ms Becchio the respondent's position is put simply that as a matter of law Home Team cannot succeed in its claim, based as it is, in contract. No evidence has been called to support this contention which is based entirely upon the following submission. It is asserted that the HBA provides that a Corporation shall have at least two licences. One must be in the name of the Corporation and at least one other in the name of an employee or director permitted to undertake work of the type and value contracted by the Corporation. It is noted that the Home Team licence (ex R15) lists three supervisors, one of whom was not an employee at any relevant time. The other two, Leonard Charles Goulding and Bob Gorczyca were both effective at the relevant time and that of Mr Goulding remains so. It is not disputed that the value of the works was $700,000.00. It is submitted that the personal licence held by Mr Goulding (lic No. 37358) is endorsed: "Only for contracts not requiring Home Warranty Insurance from 19/01/04 to the date of this Certificate." That is to say works having a value less than $12,000.00. … Based upon the above it is submitted that Home Team held no appropriate licence in respect of the Supervision of the work of the contract and that the works are therefore unlicensed building work which offends against s 4 of the HBA. As a consequence of that and pursuant to s 10 of the HBA, Home Team is " not entitled to damages or to enforce any other remedy in respect of a breach of contract … ". Findings in Respect of the Contract Claim … The building contract is between Home Team Constructions Pty Ltd and Brett and Louise Hatfield (Becchio). Home Team Constructions Pty Ltd is a company authorised to do building work having a value in excess of the value of the Hatfield Becchio contract. The nominated supervisor for the company, in relation to this contract is Mr L C Goulding who is also a director of Home Team. I refer to s 3 Definitions HBA: Nominated supervisor means an individual (a) who holds and endorsed contractor licence or a supervisor certificate, and (b) who is for the time being registered in accordance with the regulations for the purpose of supervising the doing of residential building work or specialised work. Mr Goulding holds an endorsed contractor licence in his own right which authorises him to supervise the doing of residential work or to do residential building work provided the value of the work which he does under that licence does not exceed $12,000.00. Put more plainly Mr Goulding is licensed to supervise residential building work carried out by Home Team and he is licensed to do residential building work provided the value of that work does not exceed $12,000.00. A Certificate of Insurance has been issued in respect of a single dwelling at lot 29 (House No. 1 Kinka Road, Terry Hills NSW 2084, the subject property, through HIA Insurance Services Pty Limited (ex 31 Annexure "D")). I find that there is no restriction on the value of the work that Mr Goulding may supervise, up to the value of the work that the company is licensed to carry out, as the nominated supervisor of the Company which is authorised to do the residential building work. I find that the submission made on behalf of Mr Hatfield and Ms Becchio in relation to the impact of the licence held by the nominated supervisor on the company licence has no basis in fact or law. 10 In written submissions filed in support of the appeal it is contended that: At the hearing and by their submissions the Plaintiffs claimed that the builder was not entitled to recover in contract by virtue of restrictions in the licences of its supervisors. The question of law said to have been wrongly decided by the Tribunal, giving rise to a right of appeal was identified in the written submissions in this way: The Member correctly recorded the factual situation in relation to the Builders Licences at page 6.4 of the January judgment: "It is noted that the Home Team licence (Ex R15) lists three supervisors, one of whom was not an employee at any relevant time. The other two, Leonard Charles Goulding and Bob Gorczyca were both effective at the relevant time and that of Mr Goulding remains so. It is not disputed that the value of the works was $700,000.00. It is submitted that the personal licence held by Mr Goulding (lic No. 37358) is endorsed: "Only for contracts not requiring Home Warranty Insurance from 19/01/04 to the date of this Certificate. That is to say works having a value less than $12,000.00" These facts are correctly recorded by the Member and are the submissions of the plaintiffs in the Tribunal (Russo aff. Page 00089-90). The Tribunal made the following finding in the decision, January judgment p 7.5: Home Team Constructions Pty Ltd is a company authorised to do building work having a value in excess of the value of the Hatfield Becchio contract. The Tribunal gives no cogent reason for reaching this finding, notwithstanding that the Tribunal had correctly set out the terms of the respective licences of the Builder which were in accord with both the plaintiffs and the builder's submissions and Exhibit R15. 11 Annexed to Mr Russo's affidavit is a copy of Mr Goulding's contractor licence No. 37358, which was exhibit R15 before the Tribunal. It is reproduced below. Register: Section 120 of the Home Building Act 1989 When reading the information below, please note blank fields (ie where no information is entered) denote that at the time and date of this report there is no information recorded against that field regarding this licensee. The following details are maintained on the licence register of the Office of Fair Trading for LEONARD CHARLES GOULDING holding CONTRACTOR LICENCE number 37358. ________________________________________________ STATUS OF LICENCE NUMBER 37358 CURRENT CONDITIONS APPLY ONLY FOR CONTRACTS NOT REQURIING HOME WARRANTY INSURANCE FROM 19/01/2004 TO THE DATE OF THIS CERTIFICATE. ________________________________________________ (i) Name : LEONARD CHARLESS GOULDING Date of Birth : 16/04/1946 Business Address : 187-189 WINDSOR ROAD NORTHMEAD 2152 (ii) Licence Number : 37358 The licence authorises the holder to contract to do, do, and supervise: BUILDING, from 21/01/1986 up to and including the date of this certificate. (iii) Date of Issue : 21/01/1986 Expiry Date : 20/01/2007 (iv) Conditions : ONLY FOR CONTRACTS NOT REQUIRING HOME WARRANTY INSURANCE from 19/01/2004 to the date of this certificate. (v) Variations : (vi) Endorsed : Yes (vii) If the holder is a partnership, the names, dates of birth and addresses of the members of the partnership : Not Applicable (viii) If the holder is a corporation, the names, dates of birth and addresses of the directors of the corporation : Not Applicable (ix) Supervisors : (x) Exemptions : (xi) Determinations : (xii) Prosecutions : (xiii) Number of External Insurance Claims Paid : 0 These figures were supplied by the providers of insurance approached by the Minister of Fair Trading. Number of Statutory Insurance Claims Paid : 0 Approved by the Building Services Corporation / Office of Fair Trading under the Comprehensive / Special Insurance Schemes prescribed by the Home Building Act 1989. (xiv) Penalty Notices : (xv) Number of Tribunal orders not complied with : 0 (xvi) Public Warnings : (xvii) Formal Cautions : (xviii) Cancellations and Suspensions : 12 Mr Goulding's licence is expressed to be endorsed. Section 26 of the Act provides that if a contractor licence is issued to an applicant who the Director-General considers is qualified to hold a supervisor's certificate, the Director-General may, instead of issuing such a certificate, endorse the contractor licence to show that it is equivalent to such a certificate. 13 Mr Goulding's licence is subject to a condition: "ONLY FOR CONTRACTS NOT REQUIRING HOME WARRANTY INSURANCE from 19/01/2004 to the date of this certificate." It is accepted that contracts not requiring home warranty insurance are contracts where the value of the work to be done does not exceed $12,000.00. 14 Also annexed to Mr Russo's affidavit is a copy of the contractor licence issued to Home Team (No. 40995). Relevant parts of the Home Team licence are as follows: (i) Name : HOME TEAM CONSTUCTIONS PTY LIMITED Date of Birth : 12/06/1987 Business Address : 187/189 WINDSOR ROAD NORTHMEAD 2152 (ii) Licence Number : 40995 The licence authorises the holder to contract to do: BUILDING, from 24/02/1987 up to and including the date of this certificate. KIT SUPPLY, HOME ONLY from 22/06/2002 up to and including the date of this certificate. (iii) Date of Issue : 24/01/1989 Expiry Date : 23/02/2007 (iv) Conditions : ONLY FOR CONTRACTS NOT REQURIING HOME WARRANTY INSURANCE from 24/02/2006 to 15/03/2006. (v) Variations : SUPPLY ONLY KIT HOMES, from 1992 up to and including 22/06/2002. (vi) Endorsed : Not Applicable 15 In oral submissions Mr Corsaro SC noted that Home Team's licence authorised the holder "to contract to do" building work. Mr Goulding's licence authorised the holder "to contract to do, do, and supervise" building work. The condition attaching to Mr Goulding's licence was submitted to restrict his authority in each of the three capacities. 16 Mr Corsaro identified the Tribunal's error of law as the finding that Home Team was authorised to do the residential building work. In his submission the Tribunal conflated the concepts of being licensed "to contract to do" work and being licensed "to do" the work. Home Team was licensed to contract with the plaintiffs to do the residential building however it was incumbent on it to have the work done or supervised by a person holding a contractor licence (or a superviser's certificate) authorising him or her to do (or to supervise) residential building work (s 16). Mr Goulding was not such a person because his licence did not authorise him to do or to supervise residential building work in an amount in excess of $12,000.00. 17 The provisions of the Act which the plaintiffs contend the Tribunal misconstrued are s 16, 27 and 28: 16 Obligations of holders of contractor licences The holder of a contractor licence must ensure that, when residential building work, or specialist work, for which the contractor licence authorises the holder to contract is being done by or on behalf of the holder, the work is done: (a) by the holder of an endorsed contractor licence, or of a supervisor or tradesperson certificate, authorising its holder to do the work, or (b) under the supervision, and subject to the direction, of the holder of such an endorsed contractor licence or supervisor certificate, but only if the work is done so as not to contravene a requirement made by or under this or any other Act. Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case. 27 Authority conferred by certificates (1) A supervisor certificate authorises its holder to do (and to supervise) the following: (a) any residential building work that is described in the certificate when it is issued (being work of a category or categories prescribed by the regulations), (b) any specialist work that is described in the certificate when it is issued (being work of a category or categories prescribed by the regulations). … (3) The authority conferred by a supervisor or tradesperson certificate: (a) is subject to the conditions applicable to the certificate for the time being, and (b) may, on the application of the holder of the certificate, be varied by an order of the Director-General set out in a notice served on the holder of the certificate. 28 Authority conferred by endorsed contractor licences (1) An endorsed contractor licence authorises its holder to do (and to supervise) the same residential building work, or specialist work, as it authorises its holder to contract to do. (2) The authority conferred by an endorsed contractor licence is subject to the conditions applicable to the contractor licence for the time being. (3) The authority conferred by an endorsed contractor licence may be varied in the same way as that conferred by any other contractor licence. 18 In Mr Corsaro's submission the Tribunal correctly found that Mr Goulding's licence restricted him in the doing and supervising of residential building work to work where the contract price did not exceed $12,000.00. It erred in holding that Home Team's licence authorised the doing of the work. Mr Corsaro did not submit that the prohibition on unlicensed contracting under s 4 had been breached. He did not submit that the contract was unenforceable by Home Team under s10(1). His submission is that Home Team was in breach of the obligations imposed on it under s 16 and that the consequence of breach is unenforceability not by operation of any provision of the Act but on general law principles. In written submissions Mr Corsaro contended that the decision of the Tribunal should be set aside and a declaration made that Home Team did not have appropriate licensing for contracts of the value of these works, accompanied by a declaration that Home Team is thereby prohibited from recovering in contract. 19 Mr Corsaro's argument depends upon acceptance that the condition attaching to Mr Goulding's licence restricts not only the contracts that he is authorised to enter, but also building work done by him or supervised by him on behalf of the holder of a contractor licence. He contends that the provisions of s 27(1)(a) and s 28(2) provide support for this conclusion. Thus he submitted the reference to "any residential building work that is described in the certificate when it is issued" is a reference to residential building work that is the subject of a contract not requiring home warranty insurance. In his submission the argument was stronger when one looks at s 28(2) which speaks of the authority conferred by an endorsed contractor licence being subject to the conditions applicable to the contractor licence. 20 In Mr Stevenson's submssion the Tribunal had correctly held that Mr Goulding's endorsed contractor license permitted him to supervise residential building work done on behalf of Home Team. The endorsement on Mr Goulding's licence of the condition "only for contracts not requiring home warranty insurance" had the effect that he could only "contract to do" work not requiring home warranty insurance. Home Team contracted to do the work for the plaintiffs. Mr Goulding's licence did not impose any restriction on the residential building work he could "do" or "supervise". If the condition were intended to confine the licence holder's authority to do building work or to supervise building work one would expect that it would say so. The evident policy behind restricting the authority of a license holder who does not have home warranty insurance from contracting to do work for which the contract prices exceeds $12,000.00 has no application to a license holder doing building work, or supervising it, on behalf of a licensed contractor who is authorised to enter into a contract to do building work for a contract price exceeding $12,000.00. 21 In Mr Stevenson's submission Mr Goulding was an endorsed contractor licence holder and thus subject to s 28. The reference to the conditions applicable to the contractor licence in his submission is to be understood in the context of subs (1) which provides that an endorsed contractor licence authorises its holder to do (and to supervise) the same residential buidling work or specialist work as it authorises its holder to do. He pointed to the categories of residential building work and specialist work for which the Act and the Home Building Regulation 2004 make provision. A contractor may be licensed to do contract to do particular work, such as roof plumbing work. 22 Furthermore, even if Mr Goulding's licence was restricted in the way for which the plaintiffs' contend, Mr Stevenson contended in written submissions that it would remain that no breach of s 16 of the Act was established. This is because the plaintiffs do not allege that the work was carried out by persons who were unlicensed (s 16(a)). 23 In the event that Home Team, being the holder of a contractor licence, had failed to ensure that the residential building work done on the plaintiffs' behalf was carried out by the holder of an endorsed contractor licence (or of a supervisor certificate) authorising its holder to do the work or under the supervision and subject to the direction, of the holder of an endorsed contractor licence (or supervisor certificate) Home Team would be liable to be prosecuted for an offence. Mr Stevenson submitted that the scheme of the Act does not suggest that the consequence of breach of s 16 is to render the contract unenforceable. This is because the Act specific provision for the circumstances in which contravention leads to unenforceability (ss 10(1), 16G(1), 18R(1), 94(1) and 94A(1)). In the circumstances there were said to be sound reasons for favouring the policy that contracts otherwise properly formed be enforced: Karl Suleman Enterprizes Pty Ltd (in liqa) v Babanour [2004] NSWCA 214; 49 ACSR 612 per Beazley JA (with whom Spigelman CJ and Santow JA agreed) at 619 [43]; Yango Pastoral Company Pty Limited v First Chicago Australia Limited (1978) 139 CLR 410 per Mason J at 423. 24 Mr Stevenson SC, who with Mr Stitt appeared on behalf of Home Team, submitted that the appeal was incompetent: The Tribunal did not decide a question of law concerning the legal effect of sections 16, 27 and 28 of the Act. In his submission the defence advanced by the plaintiffs before the Tribunal was that the work was unlicensed contract work under s 4 and, accordingly, Home Team was barred from enforcing its contract. Mr Stevenson submitted that the only question of law that the Tribunal decided was that there was no bar to Home Team enforcing its contract and this question had been rightly decided: Home Team had a relevantly unconditional licence "to contract to do" building works. 25 There was some controversy over whether the argument now being put had been put to the Tribunal. 26 The written submissions filed on the plaintiffs' behalf in the Tribunal (annexed to the Russo affidavit at 89-94) were as follows: The defendants' position in relation to the plaintiff Home Team's claim is simple. It cannot as a matter of law succeed, at least not as a claim based, as it is, in contract. The Home Building Act 1989 provides that a Corporation shall have (at least) two (2) licences, firstly one in the name of the Corporation and secondly, at least one other in the name of an employee or director permitted to undertake work of the type and value contracted by the Corporation. In this matter, while Home Team has such a corporate licence no employee or director has a licence such as would permit (even at this date) or have permitted Home Team to carry out this building work for the Hatfield's. The Home Team licence (Ex R15) lists 3 supervisors, Brett Roger Garven up to 1994 and who has not been an employee at any relevant time, Lennard Charles Goulding from "23/05/1991" and continuing and Bob Gorczyca from 17/03/1994 and continuing. While it is not disputed that the value of the works was $700,000.00 the licence of Mr Gouldling (37358) is endorsed: " ONLY FOR CONTRACTS NOT REQUIRING HOME WARRANTY INSURANCE from 19/01/04 to the date of this Certificate " see Exh. R15, that is, for works valued less than $12,000.00. … It is quite clear that Home Team held no appropriate licence in respect of Supervision of these works, the works are therefore unlicensed building work contrary to s 4 of the Home Building Act 1989 and pursuant to s 10 of that Act Home Team "is not entitled to damages or the enforce any other remedy in respect of a breach of the contract … " (sic) and must fail in this claim. This is not to say that they are without remedy they would, had evidence been lead (sic) and the claim pleaded been entitled to a claim in Quantum Meruit. 27 Mr Corsaro did not submit that the plaintiffs' case had been put on a wider basis than is contained in the written submissions. The Tribunal's reasons insofar as they record the submissions put on the plaintiffs' behalf follow closely the outline of the written submissions. The reasons deal with the plaintiffs' submission that the contract is unenforceable by Home Team because of the operation of s 4 and s 10(1). They do not involve consideration of whether a claimed breach of s 16 should be treated as productive of unenforceability by the derelict holder of the contractor licence. 28 I am satisfied that the question with respect to a matter of law that is said to found the present appeal is one that the Tribunal was not asked to decide. This is sufficient to dispose of the appeal. 29 In my opinion, contrary to the submission put by Mr Corsaro, the Tribunal found that Mr Goulding's endorsed contractor licence authorised him to contract to do residential building work for a contract price not exceeding $12,000.00 and to supervise residential building work done on Home Team's behalf without such restriction. This conclusion underpins the Tribunal's reasoning. 1. The amended summons is dismissed; 2. The plaintiffs are to pay the defendant's costs. ********** 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.