District Court New South Wales Medium Neutral Citation: Vicki Brimelow v Gregory Sharpe [2011] NSWDC 127 Hearing dates: 24 August 2011 Decision date: 02 September 2011 Jurisdiction: Civil Before: Judge M Sidis Decision: In addition to the sum of $9,500 provided for in Order 1 of the orders of the Consumer Trader and Tenancy Tribunal dated 19 October 2010, Gregory Sharpe is to pay Vicki Brimelow the sum of $476. In all other respects the appeal is dismissed. The appellant is to pay the respondent's costs of the appeal. This order is suspended for seven days to allow the parties within that period to relist the matter for argument on the issue of costs. The exhibits are returned. My reasons are published. Catchwords: BUILDING CONTRACT: alleged inadequacy of reasons of CTTT Member for calculation of award for defective building work - extent of work contracted to be undertaken - whether provisions of Home Building Act 1989 mandated that all work shown in building plan be performed - failure to identify plan or attach it to contract - availability of the doctrine of estoppel by representation - parole evidence rule - construction of contract by reference to circumstances, context and a reasonable person in the parties' position. Legislation Cited: Consumer Trader and Tenancy Tribunal Act 2001 Home Building Act 1989 Home Building Regulation 2004 Cases Cited: Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 Texts Cited: N C Seddon and M P Ellinghaus, Cheshire and Fifoot's Law of Contract, (Lexis Nexis, 9th ed, 2008) 2.5. Category: Principal judgment Parties: Vicki Brimelow (Plaintiff/Applicant) Gregory Sharpe (Defendant/Respondent) Representation: Mr N. Coren (For the Plaintiff/Applicant) Mr FFF. Salama (For the Defendant/Respondent) Thomas Mitchell Solicitors (For the Plaintiff/Applicant) Moray & Agnew (For the Defendant/Respondent) File Number(s): 2010/00390944 Judgment 1The disputes between the parties in this matter arose out of residential building work undertaken by the respondent, Gregory Sharpe, for the appellant, Vicki Brimelow, at a property at Stockton. 2The appellant claimed that certain parts of the work were defective. She also claimed that the respondent failed to complete all of the work that was the subject of their contract. The claims were heard by Tribunal Member Smith in the Consumer Trader and Tenancy Tribunal and decided by him on 19 October 2010. He ordered the respondent to pay the appellant $9,500 as compensation for defective building work and dismissed the balance of the claim. He made costs orders on 10 November 2010. 3The appellant brought an appeal pursuant to s 67 of the Consumer Trader and Tenancy Tribunal Act 2001 seeking orders: (1)increasing the amount to be paid to the appellant in respect of defects; (2)determining liability and damages in respect of the plaintiff's claim for distress and inconvenience; (3)setting aside the Tribunal Member's findings concerning the claimed failure to complete the building works in accordance with plans forming part of the contract. 4There were 45 paragraphs that were described as grounds of appeal . These paragraphs in fact set out facts, submissions and propositions. 5The respondent conceded that the Tribunal Member inadvertently omitted to include in the award of damages for defective work the agreement reached between the parties concerning the cost of rectifying the defects identified in items 47, 49 and 50 of the Scott Schedule. The respondent therefore accepted he was liable to pay an extra $476 on account of defective work. 6The appellant did not pursue her claim for distress and inconvenience. 7There remained for determination the appellant's claims for the balance of $1,440 in dispute concerning defects and the issue of whether the respondent completed the works he was contracted to perform. Defects 8The appellant claimed that a point of law arose because the Tribunal Member did not provide adequate reasons for reducing the total arrived at for defects from $11,416 to $9,500. 9The Tribunal Member set out in his reasons his adjudication of the claims for defects, allowing sums agreed by the experts in conclave and making his own decisions concerning those that remained in dispute. He determined the claims by reference to the numbers allocated to them in the Scott Schedule, allowing in total $11,416. 10The Tribunal Member then explained that he reduced this amount to $9,500 because the value of each claim had been established on an individual basis. He considered that there were economies of scale available to the appellant that would be achieved by allowing one builder to undertake the work involved. 11This was an approach that was fairly available to the Tribunal Member. He accepted the guidance of the experts where they were able to agree, he reached his own conclusions on those items where they disagreed, and he used his discretion to assess the amount that he considered, in fairness to the respondent, was adequate to compensate the appellant for defects in the building works. 12I understood fully the reasons why the Tribunal Member took this approach and did not accept the appellant's argument that his reasons for doing so were inadequate. 13This ground of appeal is dismissed. By consent the order for the payment of compensation for defects will be amended to provide for the respondent to pay the appellant a further sum of $476. The works covered by the contract 14The respondent argued that the appeal raised no question of law when challenging the reasons of the Tribunal Member concerning the provisions of the contract. Although the grounds of appeal are confusingly drafted, I accepted that the task undertaken by the Tribunal Member involved the application of principles of contract law in order to construe the terms of the contract. I accepted that this task involved questions of law. 15Items 51 and 52 of the Scott Schedule claimed $48,191 for the installation of solar panels on the roof of the building and $4,123 for the installation of a water tank to the rear of the garage. 16The appellant claimed that these items were shown on the plan provided to the respondent, that the plan formed part of the contract and thus depicted the residential building work that he contracted to perform. The respondent denied that the contract required the installation of these items, pointing to the scope of works that he provided to the appellant that itemised the work and prices quoted for the work that made no reference to them. He claimed that the work that he was required to perform was restricted to the items set out in this scope of works and the quotation dated 16 May 2007. 17The Home Building Act 1989 requires that residential building work be the subject of a written contract that is signed by the parties to it. It requires in s 7(c) that the work to which the contract relates be sufficiently described and in s 7(d) that the contract contain any plans and specifications for the work. 18On 28 May 2007 the parties entered into a written contract in the form published by the Housing Industry Association under the title NSW Residential Building Contract for Renovations and Additions. Schedule 1 to that document dealt with particulars of the contract. It provided for a contract price of $196,200 and the stages at which progress payments were to be made. 19Many of the items provided for in Schedule 1 were not completed. No provision was made for interest on late payments, for a contract period, date for practical completion or liquidated damages. 20Item 14 of Schedule 1 allowed for the recording of contract documents that were: In addition to these general conditions, any special conditions, the plans and the specifications ... . Nothing was entered into the space provided. Nor was there any reference in Schedule 1 that permitted me to identify the plans and specifications that were taken to form part of the contract through clause 43.3(a) of the contract and the provisions of Clause 1(1) of Part 1, Schedule 2 to the Home Building Regulation 2004. The plans and specifications were not attached to the contract. 21Clause 1 of the contract contained the following definitions of relevance: 'building works' means the building works to be carried out, completed and handed over to the owner in accordance with this contract as shown in the contract documents and including variations; 'contract documents' means these general conditions, any special conditions, the plans, the specifications and other documents specified in Item 14 of Schedule 1; 22Clause 38 of the contract set out the statutory warranties provided for in the Act, including: 38.1 To the extent required by the Home Building Act, the builder warrants that: (a) the building works will be performed in a proper and workmanlike manner and in accordance with the plans and specifications attached to this contract; 23The appellant argued that the combination of the provisions of the contract, the Act and Regulation imposed on the respondent the obligation to carry out and complete the totality of the building works depicted in the Council approved plan dated 16 May 2007. 24The respondent relied on a letter, undated, but sent to him by the appellant in February 2007 at the time that she originally requested that he provide a quotation for the work. The letter enclosed plans dated 7 February 2007 on which the solar panels were depicted but not the water tank. The relevant part of the letter stated: I am having solar energy back to the grid and have a Sydney based firm installing this system. Cost for this is $30,000. Also I wanted wide eaves as I plan to install water tanks down the track. 25The plan was subsequently amended at the respondent's suggestion to deal with the particular requirements of the appellant's disabled mother. The revised plan dated 16 May 2007 depicted the solar panels in the same position as shown on the plan dated February 2007 and also made provision for a water tank. The appellant said she gave the revised plan to the appellant and told him that she wished to have the solar panels installed at the same time as the balance of the work on the roof was performed. She agreed to send him a quotation she received from Natural Energy Sydney. 26The appellant attached to her statement a document from All Natural Energy dated 3 February 2007 that was headed Quotation and Grid Connected Power Systems. This document did not provide any quotation but stated that it enclosed: package prices, some general information and product brochures for your perusal. The enclosures referred to were not attached to the appellant's statement. 27The respondent denied that this conversation took place. On his version of events he told the appellant that he would not install the solar panels and that she would need to arrange for another contractor to install them. He said she responded by stating that she would do this at a later time. He denied receiving any quotation from Natural Energy. 28There was no evidence of any conversation on the question of whether the appellant had changed her position concerning the installation of the water tank down the track. 29In dealing with the dispute between the parties concerning the works that were the subject of the contract the Tribunal Member decided that the appellant's letter described the ambit of the works to be undertaken and could not be ignored. He described it as a letter of instruction and found that the letter raised an estoppel by representation to the effect that the scope of the works excluded the solar panels and the water tank. 30The appellant argued against this finding. 31Estoppel by representation or estoppel in pais is described by N C Sneddon and M P Ellinghaus, Cheshire and Fifoot's Law of Contract (Lexis Nexis 9 th Australian ed, 2008) [2.5] as operating to prevent departure from a representation, by words or conduct, of existing fact if the representee has acted in reliance on it. In Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387, Mason CJ and Wilson J at [12] of their joint judgment pointed out that: ... to make out a case of common law estoppel by representation, the representation must be as to an existing fact, a promise or representation as to future conduct being insufficient. (authority omitted) 32Justice Brennan at [13] of his judgment said: The scope of estoppel in pais does not extend to compel adherence to representations of intention. The limitation which Jorden v Money (1854) 5 HLC 185 (10 ER 868) placed on the doctrine of estoppel in pais was that it "does not apply to a case where the representation is not a representation of a fact, but a statement of something which the party intends or does not intend to do": pp214-215 (p 882). 33I accepted that the Tribunal Member did not adequately set out his reasons for deciding that the appellant's letter to the respondent raised an estoppel by representation. It was necessary, in my view, that he deal with the legal principles that lead him to this conclusion. Had he done so, he would have appreciated that such a finding was not open to him. 34The paragraph in the plaintiff's letter to which the Tribunal Member referred clearly dealt with representations concerning her future intentions with respect to the installation of solar panels and the water tank. 35The task that the Tribunal Member was required to undertake was to consider the building contract entered into by the parties to determine the extent of the building work that the respondent contracted to perform in return for the price of $196,200. 36The appellant's submission that the respondent was required to provide the solar panels and the water tank had two bases: (1) that the contract, governed by the provisions of the Home Building Act, compelled the respondent to perform all of the works depicted in the plan; or (2) that the appellant verbally instructed the respondent that he was to provide for the installation the solar panels and that in the absence of specific advice to the contrary she understood that the price quoted for the work included the cost of solar panels and the water tank. 37I did not accept the first of these arguments. The contract and the Act made reference to plans and specifications and required that building works be performed in accordance with the plans and specifications attached to this contract. I did not accept that the term in accordance with could, without more, mean that the contract required that the respondent perform all of the work that was depicted in the plan. 38The problem in this case was there were no plans and specifications attached to the contract and no means within the contract by which they could be identified. The result might be that the provisions of ss 7(c) and (d) of the Act were not fully complied with. It did not, however, result in a description of the work that was to be undertaken in the performance of the contract by reference to unidentified plans. 39This then raised the question of construction of the contract and whether, in construing the contract: (1) the parties agreed that the solar panels were to be included in the work to be performed so that the respondent should meet the cost of installing them; or (2) the parties agreed that the respondent would undertake all of the works that were depicted in the plans so that the respondent should meet the cost of installing both the solar panels and the water tank. 40The building contract was in writing and therefore the parole evidence rule applied to its construction. The Court of Appeal in Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 dealt at length with the principles governing the construction of commercial contracts by reference to the parole evidence rule. I did not consider that the clear purpose of consumer protection evident in the Home Building Act detracted from the commercial nature of the transaction between the appellant and the respondent to the point where these principles ceased to apply. 41The principles made clear in Franklins were: (1) The court's role is to determine objectively the parties' intentions. Justice Allsop at [6], referring to High Court authority said: ... the construction of a written contract is to be determined by what a reasonable person in the parties' position would have understood it to mean in the circumstances and context in question. How parties later acted, probative of what they themselves thought their obligations were, is difficult to reconcile with the objective paradigm. (2) In order to aid in this determination the court may examine the text of the written contract in the context of surrounding circumstances known to the parties. The context includes the purpose and object of the transaction by reference to how a reasonable person would have understood the terms of the contract. Justice Campbell at [288] cited the following from Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at 179 [40]: It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each person by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]. (3) Evidence of statements and actions that reflect the parties' actual intentions and expectations is not admissible and not to be taken into account. (4) It is not necessary that there be ambiguity in the terms of the contract to render admissible evidence of context and surrounding circumstances. (5) Post contract conduct is not, as a general principle, admissible as an aid in the construction of the contract. Justice Campbell indicated that there might be exceptions to this general rule but none of the instances that he suggested applied to the situation that arose between the appellant and the respondent. 42Taking these principles into account, the starting point for this exercise was to identify the plan. The plan was undoubtedly that dated May 2007. 43The next step was to consider the extent to which the respondent agreed to perform the works depicted on that plan. In February 2007 he was told that the solar panels shown on the drawings as they stood at that date were to be installed by another contractor. A reasonable person in his position might well consider, even if the later conversation alleged by the appellant in fact took place, that another contractor was to do the work. The appellant's evidence did not go so far as to assert that she asked the respondent himself to install the solar panels. Rather she wished him to include the work in his contract. She already had a quotation that she was to provide to the respondent. He stated that none was received. The letter from Natural Energy did not establish that she did. 44The appellant provided no evidence to indicate that she told the respondent to include the cost of the water tank in his price for the work. 45It was then necessary to consider the relevance of the scope of works in determining what a reasonable person in the appellant's position understood the contract to include. I did not consider that a person in that position would the document setting out the scope of works and quotation from the plan. The scope of works made no reference to the solar panels or water tank. It was reasonably comprehensive in detailing the items included in the scope of works and attaching a break down of the contract price of $196,200 for the purpose of progress payments. This price and the progress payments were subsequently entered into the contract. 46The damages claimed for the cost of installing the solar panels and water tank exceeded $50,000. If this were truly the value of those items, I would expect a reasonable person in the position of the appellant to appreciate that they were not allowed for in the scope of works. The document set out allowances for items costing as little as $35 per square metre. It detailed skytubes and skylights to be installed in the roof. In my view, it was not credible to suggest that a reasonable person would understand that the scope of works provided for items of considerable value that were not mentioned or provided for at all. 47The result was that, for different reasons, I agreed with the Tribunal Member's conclusion that the contract between the appellant and the respondent should be construed so that it did not provide for the respondent to install the solar panels and water tank depicted on the plans. 48This ground of appeal fails. ORDERS 49In addition to the sum of $9,500 provided for in Order 1 of the orders of the Consumer Trader and Tenancy Tribunal dated 19 October 2010, Gregory Sharpe is to pay Vicki Brimelow the sum of $476. 50In all other respects the appeal is dismissed. 51The appellant is to pay the respondent's costs of the appeal. This order is suspended for seven days to allow the parties within that period to relist the matter for argument on the issue of costs. 52The exhibits are returned. 53My reasons are published. ********** 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: 13 September 2011