Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Ideal Constructors Pty Ltd v Wikeepa [2015] NSWCATAP 131 Hearing dates: 28 April 2015 Date of orders: 06 July 2015 Decision date: 06 July 2015 Jurisdiction: Appeal Panel Before: M Schyvens, Deputy President K Rosser, Senior Member Decision: (1)The appeal is allowed. (2) Orders 1 and 2 made on 26 November 2014 in matters HB14/34559 and HB14/45456 are set aside. (3)The whole of the proceedings in matters HB14/34559 and HB14/45456 are remitted to the Consumer and Commercial Division for rehearing before a differently constituted Tribunal. Catchwords: Civil and Administrative Tribunal NSW - Appeal Panel - residential building work - Tribunal decided on a basis that was not argued in the proceedings - denial of procedural fairness Legislation Cited: Civil and Administrative Tribunal Act 2013; Home Building Act 1989 Cases Cited: Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc [2014] NSWCA 105 Category: Principal judgment Parties: Ideal Constructors Pty Ltd – appellant Jardin Wikeepa - respondent Representation: Adams Partners, Lawyers for the appellant Respondent in person File Number(s): AP 14/59816 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 26 November 2014 Before: T Simon, Tribunal Member File Number(s): HB14/34559 and HB14/45456 REASONS FOR DECISION Introduction 1. This is an appeal against decisions made in related proceedings in the Tribunal's Consumer and Commercial Division - HB14/45456 and H413/34559 - which were heard and determined on 26 November 2014. Those proceedings came before the Tribunal as applications under the Home Building Act 1989 [the HB Act]. The dispute between the appellant and the respondent arose from building work the respondent had undertaken as the appellant's subcontractor. Earlier proceedings in the Tribunal between the appellant and the home owner for whom the building work was done, Mr Quach, had been settled by the time the applications came before the Tribunal for determination. 2. The Tribunal dismissed the appellant's application and made an order for payment of $4180 in favour of the respondent on the respondent's application. 3. For the reasons set out below, we have decided to allow the appeal and have remitted both applications to the Tribunal to be heard and determined according to law. Background 1. The appellant was engaged to conduct residential building work for Mr Quach. The appellant and the respondent entered into an oral agreement on 2 March 2014, pursuant to which the respondent was to undertake work as the appellant's subcontractor, specifically timber roof framing work, at the rate of $50 per hour per tradesperson. The appellant also claims that this agreement was varied in that the respondent agreed to and did build a wall. The respondent denies having done so. 2. At the time the parties entered into the agreement, the respondent did not hold an individual licence under the HB Act, which he was required to do to perform the agreed work. 3. Mr Quach commenced proceedings in the Tribunal against the appellant, alleging defects in work the appellant says was undertaken by the respondent. Those proceedings were settled. 4. In its application (HB 14/45456), the appellant sought an order requiring the respondent to pay it the sum of $23,066.19. This consisted of $5000 for building defects (this was the sum that had been paid by the appellant to Mr Quach in settlement of Mr Quach's application), $7,426.19 being the claimed value of materials used by the respondent but allegedly paid for by the appellant and $10,640 being legal fees the appellant had incurred in settling its dispute with the homeowner. 5. In his application, the respondent sought payment of $4180 for payment of an invoice relating to works completed by the respondent. The sum claimed was set out in an invoice dated 3 April 2014. Tribunal hearing and decision 1. Both applications were listed for hearing on 26 November 2014. The hearing notices were sent on 1 October 2014. A prior application made by appellant for leave for legal representation had been refused. 2. According to an unofficial transcript of the hearing tendered by the appellant, the accuracy of which was not disputed by the respondent, at the beginning of the hearing the appellant's director, Ms Kaur, applied for an adjournment because the appellant's expert witness was not available to attend the hearing and also because the respondent had filed his evidence late. The Tribunal refused to grant an adjournment, on the basis that: * the notice of hearing had been sent on 1 October and at no time had the appellant advised that its witness would not be available; * there was no evidence to support the claim that the appellant's witness was not available; and * the appellant's expert witness had not undertaken an inspection of the work and no attempt had been made to have the work inspected. 1. During the hearing, the Tribunal Member said to the respondent: If I find that you were unlicensed or didn't have a contract at the time, then I can only award you, based on what we call quantum meruit. …. Which means the value of the works provided. 1. In dismissing the appellant's application, the Tribunal found that the appellant had not established the basis for the application to the requisite standard. The Tribunal preferred the respondent's evidence, finding that the first time the appellant suggested that there were any defects in the respondent's work was when the respondent's application was first listed before the Tribunal. In relation to the appellant's expert report, the Tribunal found that the expert's opinion and comments were limited "by the fact that they are based on photographs and that he had never inspected the site". The Tribunal also found that "the works were completed under the supervision of the builder [the appellant] and in accordance with his instructions". The Tribunal noted that the expert report provided very little detail of the method of rectification and how quantum had been established. In addition, the Tribunal accepted the respondent's evidence that he had not built the brick wall that the appellant's expert said was defective. 2. In finding in favour of the respondent on his application, the Tribunal found that that in respect of the agreement between the parties there was a breach of S 4 of the HB Act because the respondent was not licenced to do the work he was engaged to do, but that on the basis of the decision in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 [Pavey & Matthews], the respondent was not prevented from bringing an action on a quantum meruit basis for the value of the work done. The Tribunal found that it was fair in the circumstances that an award be made to the respondent on a quantum meruit basis. The Tribunal further found that the tax invoice provided by the respondent recorded the number of hours worked by the respondent and his workers. As the appellant did not dispute the hours worked, the Tribunal was satisfied that $4180 was owing to the respondent on the basis of quantum meruit. Appeal framework 1. The Civil and Administrative Tribunal Act 2013 [the CAT Act] sets out the basis upon which decisions of the Tribunal may be appealed. This is an internal appeal pursuant to S 80(2)(b) of the CAT Act. An internal appeal may be made as of right on any question of law, but only with leave of the Appeal Panel on any other grounds. 2. Appeals on any other grounds from decisions made in the Consumer and Commercial Division are governed by Sch 4, cl 12 of the CAT Act. This clause provides that an Appeal Panel may grant leave to appeal if satisfied the appellant may have suffered a substantial miscarriage of justice because: * the decision of the Tribunal under appeal was not fair and equitable, or * the decision of the Tribunal was against the weight of the evidence, or * significant new evidence is now available that was not reasonably available at the time of the hearing (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. Pursuant to S 81 of the CAT Act, in determining an internal appeal, the Appeal Panel may make such orders as it "considers appropriate in light of its decision" on the appeal. Those orders include but are not limited to orders that: * the appeal be allowed or dismissed, * the decision under review be confirmed, affirmed or varied, * the decision under appeal be quashed or set aside, * the decision under appeal be quashed or set aside for another decision to be substituted, * or that the whole or part of the case be reconsidered by the Tribunal, either with or without further evidence, according to the directions of the Appeal Panel. Notice of Appeal 1. In support of the appeal, the appellant filed a Notice of Appeal and two volumes of material. This material included the Tribunal applications and the evidence relied on by the parties, directions and notices received from the Tribunal in respect of the Tribunal proceedings, the Tribunal's reasons for decision, an affidavit by the appellant's director Ms Kaur dated 10 December 2014, an unofficial transcript of the Tribunal hearing, the record of the hearing on CD and the appellant's written submissions. 2. The Notice of Appeal raises both questions of law and grounds requiring leave to Appeal. In summary, the grounds of appeal are as follows. 3. First, there was a lack of procedural fairness afforded to the appellant because the Tribunal: 1. refused the appellant's request for leave to be legally represented prior to the hearing in circumstances where the appellant's director's first language is not English, she had been threatened by the respondent at her home and the issue of quantum meruit had not been raised by the respondent and was not known to the appellant; 2. refused the appellant's request for an adjournment made at the commencement of the hearing and again later in the hearing when the respondent had, for the first time, denied building a brick wall that the appellant claimed was defective; and 3. prevented the appellant from asking questions in cross-examination. 1. Second, the Tribunal made an error of law in: 1. finding that the requisite standard of proof had not been met in respect of the appellant's claim in respect of defective work; and 2. finding that the respondent was entitled to an award on a quantum meruit basis and that the decision in Pavey & Matthews assisted the respondent, in that the respondent had not provided evidence that the monies charged by him were "a reasonable remuneration for the executed consideration". 1. Third, the decision is against the weight of evidence because the appellant filed the only expert evidence in relation to defective work, which provided evidence that there was a defective brick wall, wall framing, beam support, fastening of ceiling joists and roof beams. Reply to Appeal 1. The only material filed by the respondent is the Reply to Appeal, which was filed on 6 January 2015 and includes a two page attachment. In the Reply to Appeal the respondent states that he agrees with the Tribunal's decision. The attachment to the Reply to Appeal responds in more detail to the grounds of appeal. In this attachment, the respondent reiterates that he did not build the brick wall the appellant claims was defective. He states "at no time in the past had the issue of the brick wall been raised apart from in the expert report". Consideration and determination of the quantum meruit issue 1. In determining the appeal, we have considered the material filed by the parties and the oral submissions made during the hearing. In view of our findings on the quantum meruit issue, we do not consider it necessary to make findings in respect of the other grounds of appeal. 2. It is not in dispute that the respondent contracted with the appellant in his individual capacity and that the respondent was not licensed to undertake the contracted work. The Tribunal identified that the agreement between the parties was in breach of s 4 of the HB Act, but found that the respondent was entitled to succeed in his application against the appellant on a quantum meruit basis. 3. The appellant does not dispute the Tribunal's conclusion that a quantum meruit claim was available to the respondent to argue. However, the appellant submits that the Tribunal misapplied Pavey & Matthews in determining that issue because the respondent had not provided evidence that the sum sought by the appellant constituted "reasonable remuneration for the executed consideration". 4. The only material before the Tribunal which went to the reasonableness of the quantum of the respondent's claim was his invoice and the evidence that the appellant did not dispute the number of hours the respondent and his workers had spent on site. Arguably, this was insufficient material, given that success in a quantum meruit claim will require that the claimant establish that the sum sought is "fair and reasonable in the circumstances as compensation for the benefit of the work which he has actually done and which has been accepted by the building owner": See Pavey & Matthews per Deane J at [23]. 5. However, regardless of whether the invoice relied on by the Tribunal constituted sufficient evidence to establish a claim in quantum meruit, a fundamental issue emerged during the appeal hearing from an examination of the unofficial transcript and the submissions made by both parties. 6. As noted in paragraph 11 above, the Tribunal informed the respondent that if a finding were made that the respondent was unlicensed or that there was no contract, the Tribunal could only make an award in his favour on a quantum meruit basis, which was described as being "the value of the work done". 7. Unsurprisingly, given that the respondent was self-represented, he did not commence proceedings seeking an order based on quantum meruit. The only evidence provided by the respondent was his invoice, whereas in general terms additional material would be required to establish that the quantum sought was "fair and reasonable" compensation for work actually done. 8. During the appeal hearing, the respondent confirmed that he had not heard of the concept of quantum meruit before it was raised by the Tribunal during the hearing. The transcript shows that while the Tribunal gave the respondent a shorthand description of the concept of quantum meruit, the concept was not explained in any degree of detail to either party. The respondent put no argument as to whether he could establish his claim on a quantum meruit basis. Significantly, the appellant's representative was not asked whether the appellant was prepared to address the merits of such a claim. We conclude that the appellant was not given a reasonable opportunity to make submissions as to whether a quantum meruit claim should be upheld. 9. It is a denial of procedural fairness, and therefore an error of law, to determine a claim on a basis that was not in issue or argued in proceedings. In Warkworth Mining Limited v Bulga Milbrodale Progress Association Inc [2014] NSWCA 105 at [40] and [41] Bathurst CJ said: There will be procedural unfairness where information is used by a decision maker in a way that could not reasonably be expected by one party and that party is not given an opportunity to respond to that use... Another aspect of procedural fairness was argued in the present case, namely, that where a court determines a matter on a basis that was not in issue or argued in the proceedings, there have been a denial of procedural fairness: see Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141. This is a basic requirement for a fair trial. 1. We are satisfied that this is what occurred in the present case. Although the concept of quantum meruit was raised by the Tribunal during the hearing, it was not argued by the respondent and the appellant, being self-represented, did not have a reasonable opportunity to make submissions on whether such a claim should be upheld. Given that the appellant was self-represented, it was incumbent upon the Tribunal to take steps to ensure that the appellant understood the issue and had an opportunity to make submissions with respect to it. This is in accordance with the Tribunal's obligation under S 38(5) of the CAT Act. Accordingly, we have determined that the appeal should be upheld. 2. The appellant has appealed the decision made in both applications determined by the Tribunal. The issues in the two proceedings are interrelated. The respondent's claim for payment involves consideration of whether that work was defective. In these circumstances, the Appeal Panel considers that the respondent's claim for payment cannot be meaningfully decided without reference to the appellant's allegations as to defective work. 3. The Appeal Panel is satisfied that it is appropriate to set aside the orders made in both proceedings. This will avoid the possibility that inconsistent findings could be made in relation to whether or not the respondent's work was defective, as alleged by the appellant. In reaching this conclusion, the Appeal Panel makes no finding about the merits of either application and with that in mind, the parties may wish to have further settlement discussions prior to the Tribunal re-hearing the applications. 4. The Appeal Panel accordingly makes the following orders: 1. The appeal is allowed; 2. Orders 1 and 2 made on 26 November 2014 in matters HB 14/34559 and HB14/45456 are set aside; 3. The whole of the proceedings in matters HB 14/34559 and HB14/45456 are remitted to the Consumer and Commercial Division for rehearing before a differently constituted Tribunal. I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar Amendments 07 July 2015 - amount corrected in paragraph 7 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: 07 July 2015