Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Pattullo v EPK Kitchens Pty Ltd [2015] NSWCATAP 230 Hearing dates: 11 May 2015 Date of orders: 22 October 2015 Decision date: 22 October 2015 Jurisdiction: Appeal Panel Before: A Britton, Principal Member K Rosser, Senior Member Decision: 1. The appeal is allowed. 2. The decision of the Tribunal is set aside. 3. The proceedings are remitted to the Tribunal for reconsideration, in accordance with these Reasons with or without the hearing of further evidence, by a differently constituted Tribunal. Catchwords: APPEAL — appeal from Consumer and Commercial Division of NCAT — whether question of law is raised — construction of a contract — repudiation of contact — assessment of damages Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Home Building Act 1989 (NSW) Cases Cited: Alexander & Anor v Gregoriou & Ors [2010] NSWDC 15 Collins v Urban [2014] NSWCATAP 17 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR Fink v Fink [1946] HCA 54; (1946) 74 CLR 127 Kalokerinos & v HIA Insurance Services P/l & Anor [2004] NSWCA 312 Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 233 CLR 115 Murray v Shillingtonsworth (2006) 68 NSWLR 451 at 458 Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114 Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 Robinson v Harman (1848) 1 Ex 850; 154 ER 363 Category: Principal judgment Parties: Gavin Pattullo (Appellant) EPK Kitchens Pty Ltd (Respondent) Representation: Counsel: D Creais (Appellant) M Tanevski (Respondent) Solicitors: Bartier Perry (Appellant) Alexanders Lawyers (Respondent) File Number(s): AP 15/01098 Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 11 December 2014 Before: G Meadows, Senior Member File Number(s): HB 14/27173 reasons for decision 1. In September 2013 Gavin Pattullo and EPK Kitchens Pty Ltd entered into a contract for "residential building work" (the Contract). The Contract required EPK to construct and install in Dr Pattullo's home the following: joinery in the kitchen, laundry, bathroom and ensuite and, in addition, bookshelves, a linen cupboard and three bedroom robes (the Work). The agreed fee was $108,000. The Work was not complete when, in March the following year, EPK's premises flooded following a fire. By that time, EPK had been paid the sum of $84,000 under the Contract. Subsequently, Dr Pattullo discovered that, in contravention of the Home Building Act 1989 (NSW) (the Act), EPK was unlicensed and did not hold a contract of insurance covering the Work, as required by the Act. On making that discovery Dr Pattullo terminated the Contract. 2. Dr Pattullo subsequently made an application to the Consumer and Commercial Division of the New South Wales Civil and Administrative Tribunal (NCAT) seeking an order that EPK pay him approximately $82,000. Dr Pattullo based that claim on the difference between the estimated cost to complete the Work ($103,000), and the balance of the fee payable to EPK under the Contract ($24,000). (For convenience all figures in these Reasons are rounded.) 3. The Tribunal (constituted by SM Meadows) heard Dr Pattullo's application on 12 September 2014. On 11 December, 2014 the Tribunal dismissed Dr Pattullo's application and gave written reasons for that decision (the Reasons). Dr Pattullo now appeals from that decision. Background to the decision under appeal 1. The Contract included the following terms which are of some significance to this appeal: Part 2.2 Times of service 4 to 6 weeks from sign off of EPK shop drawings 2. The terms of payment 10% deposit on acceptance of tender 50% progress claim on approval of shop drawings 20% progress claim prior to delivery 20% final payment on practical completion. … 11. Strike and delay No liability will be accepted by the tendered for any loss, delay, damage, directly or indirectly caused by labour disputes, accident, fire, acts of God, or any other circumstances in whole or part beyond the control of the tenderer. 1. In his initiating application to NCAT, Dr Pattullo claimed that EPK failed, as required by the Contract, to complete the Work within four to five weeks from sign off of the "shop drawings". He asserted that by 3 December 2013 his architect, Duncan Reed had signed off on the shop drawings for all but the kitchen and living rooms and by 9 January 2014 had signed off on those rooms. At hearing, EPK managing director Emmanuel Karontonis disputed that contention, claiming that Mr Reed sought numerous revisions to the drawings after those dates and indeed only gave final approval for some drawings in early March 2014. 2. On 26 March 2014 a fire activated water sprinklers causing EPK's premises to be flooded. This destroyed the machinery EPK used to manufacture joinery. The parties agree that at the date of the fire, the Work was incomplete. Dr Pattullo asserts the Work was only 30% complete. EPK disagrees. 3. At hearing, Mr Karontonis said he initially thought the factory would "be down for a couple of days" but as things turned out the machinery had to be replaced and needed to be imported from Germany. He said the machinery was not expected to arrive before the second week of January 2016. 4. On 28 April 2014, Dr Pattullo lodged a complaint about EPK with the NSW Office of Fair Trading. At that point he discovered that EPK held neither a contractor licence nor a contract of insurance covering the Work as required by the Act. 5. On 6 May 2014, Dr Pattullo wrote to EPK advising he had terminated the Contract owing to EPK's failure to: hold the necessary licence to carry out the work hold a contract for "Home Warranty Insurance" to cover the work deliver the goods within the timeframe specified in the contract. The Tribunal's decision 1. In its Reasons, the Tribunal addressed two main issues: Whether, as asserted by Dr Pattullo and denied by EPK, the Contract required EPK to complete the Work before Christmas 2013, or, in the alternative, before the date of the fire in EPK's premises. The reasonable cost to complete the Work. 1. In relation to the first issue, the Tribunal found that "there was no contractual agreement that the works would be completed by Christmas 2013" (at [27]). The Tribunal identified as a "crucial issue" — "[W]hen … the drawings [were] finally agreed between the parties such as to enable the works to commence" (at [29]). The Tribunal rejected Dr Pattullo's contention that "the drawings were agreed and completed on 4 December 2013 and that construction should have commenced soon thereafter" (at [29]). The Tribunal wrote (at [29]) that after reading the voluminous email exchange between the parties "[I]t is perfectly clear that agreement was not reached on a number of items until February or March 2014". 2. The Tribunal found (at [31]) "the builder was not responsible for delays in the work": In no instance could I find an example of a delay caused by some error or misunderstanding on the part of the builder. lndeed, on a number of occasions, Mr Reed [Dr Pattullo's architect]) acknowledged he had made errors or overlooked items, and it was due to the obvious vigilance of the builder's draftsperson that the item was rectified. Both parties appeared to be working with full understanding and very quick communication at that time. 1. The Tribunal concluded (at [34]): I find that the builder was not contracted to provide the construction or delivery or installation of the whole of the works prior to the fire on 26 or 27 March 2014. I find that the contract itself provides that the builder is liable for any delays after that fire. It is apparent from a reading of the decision as a whole that this passage contains a typographical error, and should read "the contract itself provides that the builder is [not] liable for any delays after the fire". (emphasis added) 1. The Tribunal went on to consider the cost of completing the Work. The Tribunal found (at [35]) the quotation relied upon by Dr Pattullo provided by Crafty Kabinets, to be "most unsatisfactory as evidence … of the scope of works to complete the works or the reasonable cost of completing the works". 2. Based on the Tribunal's written reasons for decision, we find that it identified either expressly or impliedly, the following issues and gave the answers: 1. Question: Did EPK breach the implied warranty under s 18B(1)(d) of the Act to do the work with due diligence and within the time stipulated in the contract or, if no time is stipulated, within a reasonable time? (at [28])? Answer: No, for the following reasons: 1. there was no evidence of any verbal agreement that the works would be completed by Christmas 2013 (at [27]) 2. the contract stated that the time of services would be four to six weeks from sign off of the shop drawings (at [28]) 3. the shop drawings were signed off in February or March 2014 (at [31]) 4. EPK was not contracted to provide the construction, delivery or installation of the whole of the works prior to the fire on 26 March 2014 (at [31]) 5. there was no delay by EPK before 26 March 2014 (at [31]) 6. by the operation of the Strike and Delay provision in the Contract, EPK is not liable for any delays after 26 March 2014 (at [34]). 1. Question: apart from the alleged breach of the implied warranty under s 18B(1)(d) of the Act was EPK liable to pay the owner damages for any other breach of the contract? Answer: Unclear if answered but the Tribunal nonetheless went on to consider the evidence relating to damages for incomplete work. 1. Question: What amount of damages is Dr Pattullo entitled to for breach of the Contract? Answer: The Work was incomplete but the quotation from Crafty Kabinets was of "no assistance" in deciding the application. 1. The Tribunal dismissed the application. Statutory framework 1. The claim made by Dr Pattullo was a "building claim" within the meaning of s 48A of the Act. Section 48K of the Act confers jurisdiction on the Tribunal to determine building claims. Section 48O of the Act sets out the powers of the Tribunal in determining a building claim: 48O Powers of Tribunal (1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate: (a) an order that one party to the proceedings pay money to another party or to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings, (c) an order that a party to the proceedings: (i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or (ii) do or perform, or refrain from doing or performing, any specified act, matter or thing. (2) The Tribunal can make an order even if it is not the order that the applicant asked for. 1. Section 4 of the Act states that a person must not contract to do any residential building work except as, or on behalf of, an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work. 2. Section 18B of the Act provides for certain terms to be implied into every contract to do residential building work and relevantly states: Warranties as to residential building work (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work: … (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time, … 1. Section 92 of the Act requires a person who contracts to perform residential building work to hold what is commonly known as "home warranty insurance": 92 Contract work must be insured (1) A person must not do residential building work under a contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract. Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (2) A person must not demand or receive a payment under a contract for residential building work (whether as a deposit or other payment and whether or not work under the contract has commenced) from any other party to the contract unless: (a) a contract of insurance that complies with this Act is in force in relation to that work in the name under which the person contracted to do the work, and (b) a certificate of insurance evidencing the contract of insurance, in a form prescribed by the regulations, has been provided to the other party (or one of the other parties) to the contract. Maximum penalty: 1,000 penalty units in the case of a corporation and 200 penalty units in any other case. (6) To avoid doubt, this section extends to residential building work that is also owner-builder work (when the work is done under a contract between the person who contracts to do the work and the owner-builder). Scope and nature of the appeal 1. The Civil and Administrative Tribunal Act 2013 (NSW) permits a party to appeal a decision of the Tribunal as of right on any question of law or with the leave of the Appeal Panel on any other ground (s 80(2)(b)). 2. Where, as in this case, the decision under appeal is a decision of the Consumer and Commercial Division of NCAT, cl 12 to Schedule 4 of the Civil and Administrative Tribunal Act limits the circumstances in which an Appeal Panel may grant leave. The Appeal Panel may only grant leave where the appellant may have suffered a "substantial miscarriage of justice" because the decision was not fair and equitable, against the weight of evidence, or significant new evidence has arisen: 12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80 (2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). Note: Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. Grounds of appeal 1. The Notice of Appeal lists 14 grounds, which Dr Pattullo asserts raise "questions of law". He relies on a further five grounds which he contends establish that the decision was "not fair and equitable". There is significant overlap between these grounds. In essence they raise three discrete issues: The delay issue The repudiation issue The quantification of loss issue. The delay issue 1. Dr Pattullo contends that in respect of this issue six questions of law are raised. In addition, he contends that the decision was not "fair and equitable". 2. We deal first with what we regard to be the questions of law raised by Dr Pattullo, namely: 1. whether the Tribunal failed to afford Dr Pattullo procedural fairness by taking into consideration submissions made and defences asserted by EPK that were not the subject of an outline of defence 2. misconstruing the term "shop drawings" to mean drawings that are agreed between the parties and completed such as to enable construction to commence 3. making a finding that there was no agreement that the works would be completed by Christmas 2013 based on "no evidence". Taking into consideration submissions made and defences asserted by EPK that were not the subject of an outline of defence 1. Dr Pattullo contends that in taking into account submissions made and defences raised by EPK at hearing he was denied procedural fairness. 2. On 1 June 2014 the Tribunal made various directions including: EPK KITCHENS shall send to GAVIN PATTULLO, the Tribunal and any other respondents, a copy of all documents including expert reports, witness statements, scott schedule, on which the respondent intents to rely at the hearing by 07 July 2014. … 1. Subsequently the Registrar wrote to the parties enclosing a copy of these directions. Under the heading "Notes" was written: The documents to be provided will always include on the part of a respondent or cross-respondent a brief outline of the defence, the reasons for opposing the claim or cross-claim, in numbered paragraphs that correspond to the numbers in the outline of claim as far as practicable. 1. After the date for compliance had passed, Dr Pattullo contacted the Registry and complained that EPK had simply provided "a thick wad of emails" and had failed to comply with the Directions made by the Tribunal. Further directions were made extending the time for compliance. 2. EPK failed as directed to provide an outline of defence. The only documents provided by EPK at, or prior to hearing, were a copy of Mr Karontonis's contractor licence, a one-page document apparently prepared by Mr Karontonis purporting to set out when each part of the Work was approved, and 130 emails exchanged between the parties and their respective representatives. 3. Dr Pattullo claims he was "prejudiced and taken by surprise" by EPK's failure to provide a notice of defence. He asserts that had he been on notice that EPK would be submitting that the shop drawings were not signed off in early December 2013, or, at the latest, 9 January 2014, he might have provided additional evidence. The Contract permitted EPK to demand a 50% progress payment "on approval of shop drawings". Dr Pattullo contends that EPK's actions in claiming a 50% progress payment in early December 2013 constitutes an acknowledgement on its part that the shop drawings were approved at that time. 4. The Tribunal was obliged to afford all parties procedural fairness. It was required among other things, to take such measures as are "reasonably practicable" to ensure that the parties had a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings (s 38(5)(c) of the Civil and Administrative Tribunal Act). 5. There may be circumstances where permitting a party to raise issues in oral submissions where they had failed as directed to file an outline of defence, may result in the non-defaulting party being denied procedural fairness. Whether the non-defaulting party was denied procedural fairness will depend on the circumstances. These could include: whether any issues raised by the defaulting party in submissions were new or could not reasonably have been anticipated by the non-defaulting party; the complexity of any new issue(s) raised; and whether because of disadvantage, such as language, disability or lack of education, the non-defaulting party lacked the capacity to respond to issues raised without notice. A further relevant consideration may be whether the party claiming to have been taken by surprise had applied for an adjournment. 6. It was plain from the documents filed by both parties that, when the shop drawings were approved, whether Dr Pattullo's architect requested revisions to the drawings, and, if so, when those requests were made, were key issues in dispute between the parties. The submissions made by Mr Karontonis at the hearing about delay largely went to those issues. While self-represented there is no evidence and nor is it suggested that Dr Pattullo was incapable of responding at the hearing to those submissions. 7. The rules of procedural fairness are designed to "avoid practical injustice" (see Re Minister for Immigration and Multicultural Affairs; Ex parte Lam [2003] HCA 6; (2003) 214 CLR 1 at [37]). A breach of a procedural direction made by the Tribunal will not necessarily result in the non-defaulting party suffering a practical injustice. We do not accept the proposition that by permitting EPK to make oral submissions, Dr Pattullo was denied procedural fairness. 8. The ground is not made out. Misconstruing the term "shop drawings" / identifying the wrong issue, namely the date when the drawings were agreed and completed 1. As noted the Contract provided: Times of service 4 to 6 weeks from sign off of EPK shop drawings 1. Dr Pattullo contends that the Tribunal erred in interpreting the term "shop drawings" as used in the Contract to mean "drawings agreed between the parties and completed such as to enable construction to commence". In the Appeal he asserted: "Shop drawings are not final construction drawings, they are merely manufacturer's drawings for comparison with the architectural plans". 2. The Tribunal rejected Dr Pattullo's contention that "the drawings were agreed and completed on 4 December 2013 and that construction should have commenced soon thereafter" (at [29]). The Tribunal concluded "it is perfectly clear that agreement was not reached on a number of items until February or March 2014". 3. In determining whether, as alleged by Dr Pattullo, EPK was in breach of the "times of services" provision, the Tribunal was required to ascertain the meaning of the term "shop drawings". The term was not defined by the contract and there was no evidence before the Tribunal of any technical, trade or customary usage of the term. The assertion now raised by Dr Pattullo about the proper meaning of the term was not raised in the original proceedings. 4. In Peppers Hotel Management Pty Ltd v Hotel Capital Partners Ltd [2004] NSWCA 114, McColl JA (at [69]) enunciated the principles to be applied where the language in a contract is open to more than one meaning: If the words used [in a written contract] are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, 'even though the construction adopted is not the most obvious, or the most grammatically accurate': … However, in construing written contracts it should be presumed that the parties did not intend their terms to operate unreasonably. The more unreasonable the result a party's construction would produce, the more unlikely it is that the parties would have intended it. If the parties did intend an unreasonable result, it is essential that that intention be made "abundantly clear": ... [citations removed] 1. The Contract did not define "shop drawings". The term was potentially open to a number of meanings. Had the Tribunal adopted the meaning Dr Pattullo urges us to accept, it would have led to the unreasonable, if not absurd result of requiring EPK to complete the Work before all drawings were agreed and finalised. 2. In our view, the Tribunal did not err in interpreting the term "shop drawings" to mean "drawings agreed between the parties and completed such as to enable construction to commence". It follows that the Tribunal did not err in identifying the date those drawings were completed and agreed as a "crucial issue" (at [29]). Finding there was no evidence of any agreement that the works would be completed by Christmas 2013 1. The Tribunal wrote (at [27]): There was no contractual agreement that the works would be completed by Christmas 2013. There was no evidence provided of any verbal agreement to that effect between the parties. 1. As Dr Pattullo points out, there was some evidence before the Tribunal about a purported pre-Christmas completion date: Dr Pattullo's claim that "EPK Kitchens were instructed during the quotation stage that the job needed to be completed by Christmas 2013" (Dr Pattullo's statement, 21 July 2014) Mr Karontonis's email to colleagues on 14 November 2013 "This is a little embarrassing. Please action. We haven't even started this guy's job and it is going to fail". 1. However there was no evidence before the Tribunal that EPK had agreed to accept Dr Pattullo's "instruction" or that the parties had agreed that the provision in the Contract relating to the time the Work was required to be completed no longer applied. 2. It was open to the Tribunal to find that there was no agreement that the Work would be completed by Christmas. This ground of appeal is dismissed. Questions other than questions of law Failing to take into account EPK's demand for payment of a progress claim /taking into account "the usual Christmas break" 1. For the reasons given above neither issue was critical to the question of when the Work was required to be completed. Finding that EPK was not contracted to complete the works prior to 26 or 27 March 2014 1. Given the meaning adopted by the Tribunal of the term "shop drawings" this finding was open to the Tribunal. The repudiation issue Failure to address 1. Dr Pattullo contends that the Tribunal erred by failing to address whether he was entitled to terminate the Contract. He argues the Tribunal mistakenly treated his claim as a claim for "delay damages". He contends that even if accepted that EPK was not in breach of its obligation to complete the Work within time, he was entitled to treat the Contract as having been repudiated on account of EPK's inability to lawfully complete the Work because it was neither licensed nor held a contract of insurance covering the work, as required by the Act. 2. EPK contends that the Tribunal was asked to make an order for the payment of damages under s 48O(1) of the Act and not whether Dr Pattullo's notice of termination was valid. EPK asserts that the claim made by Dr Pattullo was simply one based on the alleged delay in completing the Work. EPK submits that even if the question of repudiation had arisen, any consequential liability was excluded by the "Strike and Delay" provision in the Contract. Accordingly, EPK contends that the Tribunal did not err by failing to determine whether its conduct amounted to a repudiation of the Contract. Consideration 1. Dr Pattullo's application to NCAT does not support EPK's contention that his claim was solely in the nature of a claim for "delay damages". In that application, he asserted he was entitled to terminate the Contract on three grounds, only one of which related to delay. In addition, that application makes clear that the order sought by Dr Pattullo was an order that EPK pay to him a sum, representing the cost to complete the Work (less the balance payable under the Contract). 2. As noted, the Tribunal rejected one of the three grounds relied on by Dr Pattullo in purporting to terminate the Contract, namely the failure to complete the Work within time. Perplexingly, having concluded that EPK had not failed to complete the Work within the time agreed and that EPK's failure to be licensed and hold insurance was "not relevant to the outcome of this application", the Tribunal nonetheless proceeded to determine the reasonable cost to complete the Work(at [36]): Without intending to suggest that failure to be properly licensed, or failure to obtain statutory warranty insurance is not a serious issue, I find that they are not relevant to the outcome of this application. There is no question that the builder would be required to return to the premises to complete the works. Further, because of the findings I have made above, there is no liability in the builder in relation to the cost of completion or rectification (the latter not being proved in any instance anyway) so the owner has not actually suffered a loss by the failure of the builder to obtain HOW insurance, in the circumstances of this case. [emphasis added] 1. The Tribunal failed to expressly address the question of whether Dr Pattullo was entitled to terminate the Contract on account of EPK's failure to hold a licence and/or home warranty insurance. This issue was squarely raised in both the letter of termination issued to EPK and by Dr Pattullo at hearing, see for example Dr Pattullo's statement 21 July 2015, paras [10], [18]. Indeed, it is implicit from the order sought by Dr Pattullo, that the Tribunal was required to determine the preliminary question of whether, as asserted Dr Pattullo was entitled to terminate the Contract. That issue was material to the application made by Dr Pattullo. The Tribunal's failure to address this issue demonstrates an error of law. Entitlement to terminate the Contract 1. Dr Pattullo contends he was entitled to terminate the Contract even if EPK was not in breach of its obligation to complete the Work within time. He submits that EPK evinced an intention not to be bound by the Contract, or an inability to perform the contract by its: breach of the warranty implied in the Contract by the operation of s 18B(d) of the Act inability to lawfully complete the joinery work due to not holding (i) a contractor licence as required by s 4 of the Act, and (ii) a contract of insurance covering the work as required by s 92 of the Act. 1. In support Dr Pattullo cites the following passage from the judgement of Gleeson CJ, Gummow, Heydon and Crennan JJ in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Limited [2007] HCA 61; (2007) 233 CLR 115 at [44]): The term repudiation is used in different senses. First, it may refer to conduct which evinces an unwillingness or an inability to render substantial performance of the contract. This is sometimes described as conduct of a party which evinces an intention no longer to be bound by the contract or to fulfil it only in a manner substantially inconsistent with the party's obligations. It may be termed renunciation. The test is whether the conduct of one party is such as to convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it. ... Secondly, it may refer to any breach of contract which justifies termination by the other party. ... There may be cases where a failure to perform, even if not a breach of an essential term (as to which more will be said), manifests unwillingness or inability to perform in such circumstances that the other party is entitled to conclude that the contract will not be performed substantially according to its requirements. This overlapping between renunciation and failure of performance may appear conceptually untidy, but unwillingness or inability to perform a contract often is manifested most clearly by the conduct of a party when the time for performance arrives. In contractual renunciation, actions may speak louder than words. (footnotes and citations omitted) 1. EPK, on the other hand, submits that its failure to hold the necessary licence and insurance could not be said to evince an intention on its part to no longer be bound by the Contract. EPK argues that any non-compliance with the Act on its part is irrelevant and did not make the Contract void but simply unenforceable as against Dr Pattullo, citing in support Alexander & Anor v Gregoriou & Ors [2010] NSWDC 15 (at [88] – [94]) and Kalokerinos & v HIA Insurance Services P/l & Anor [2004] NSWCA 312. In Kalokerinos, Bryson JA wrote (at [34]): A provision in legislation that a contract is not enforceable is not a provision that rights do not arise under it, and does not prevent establishment of and decision by reference to those rights, if they are relevant in some other context than enforcement of the contract by a person whose right to enforce the contract is forbidden. There is no provision to the effect that the contract is void; and the contract continues to exist and to have whatever effects its provision produce on the rights of other parties than the licensee referred to in s.10. Consideration 1. The above passage from Kalokerinos is not, as EPK suggests, authority for the proposition that a breach of a statutory warranty can never be said to manifest an inability to perform the contract or constitute a breach of contract. It simply states that a statutory provision that forbids a defaulting party from enforcing a contract, does not operate to extinguish any accrued rights that party might hold. 2. The Contract contained an implied warranty given by EPK that the Work would be done in accordance with, and would comply with, the Act (s 18B (1)(c)). The Act required EPK to hold a relevant contractor licence before contracting to do the Work. In addition, the Act required EPK not to undertake residential building work under a contract unless a contract of insurance in its name, that complies with the Act is in force in relation to that work (s 92(1)(a)). 3. A party is entitled to terminate a contract where another party repudiates the contract. The repudiation may involve a renunciation, namely conduct which would convey to a reasonable person, in the situation of the other party, renunciation either of the contract as a whole or of a fundamental obligation under it (Koompahtoo at [45]). Alternatively, the act of repudiation may involve any breach of the contract which justifies termination, namely a breach of an essential term, or a sufficiently serious breach of an intermediate or inominate term (Koompahtoo at [45]). 4. As noted, the Tribunal failed to consider whether the conduct of EPK in not holding a licence and in not insuring the work was a breach of an essential term of the contract or a sufficiently serious breach of a non-essential term. 5. While the parties made submissions concerning whether EPK's conduct constituted a repudiation of the contract, the submissions do not clearly address whether, if the conduct did not constitute a repudiation in the sense of a renunciation either of the Contract as a whole or of a fundamental obligation under the Contract, it nevertheless constituted a breach of an implied term that would entitle Dr Patullo to terminate the Contract. 6. In these circumstances, we consider that it is appropriate to remit the matter to the Tribunal to reconsider the repudiation / termination issue. Quantification of loss issue 1. As noted above, while the Tribunal failed to address whether Dr Pattullo was entitled to terminate the Contract, it nonetheless went on to assess the extent of the outstanding work and the cost to complete that work (see [35] of the Reasons). 2. Notwithstanding our decision to remit the repudiation/termination issue it is nonetheless necessary to deal briefly with this ground of appeal to provide guidance to the Tribunal, in the event that it finds that EPK's conduct constituted a repudiation of the Contract or a breach of an implied term that would entitle Dr Patullo to terminate the Contract. 3. Dr Pattullo relies on the following grounds which he contends raise questions of law and resulted in the decision not being "fair and equitable": * Taking into consideration submissions made and defences asserted by EPK that were not the subject of an outline of defence in relation to among other things the extent of the completion of the Work at the time of the termination and the reasonable cost of completing the Work. * Finding that the reasonable cost of completing the work was not as per the quotation from Crafty Kabinets, when there was no evidence in support of that finding. * Taking into account its own experience with respect to the reasonable cost of completion of the work, and not taking into account prevailing market prices and the reluctance of contractors to complete work partially undertaken by others without charging a premium. * Finding that more than 30% of the work had been competed at the date of termination of the contract. 1. The Tribunal's reasoning in relation to the cost to complete the Work is contained in the following passage of its Reasons (at [35]): There is no claim as such, or at least there is no evidence, for any alleged defective works. The evidence relates to incomplete works. The quotation from Crafty Kabinets is most unsatisfactory as evidence of any defective works and indeed as evidence of the scope of works to complete the works or the reasonable cost of completing the works. Various items are simply listed with a cost, but no explanation for that cost. I find that the bulk of the actual construction of the various joinery items was completed and also installed. Some items as listed above by the owner were, I accept, not installed. Some items were not agreed by the time the contract was terminated, or rather by the time the builder was prevented from undertaking further work by the fire in its premises. I accept the builder's submission in that regard, particularly in relation to the linen cupboard. In summary, the remaining work tended to be some further construction of some items, installation of those items and one or two items delivered but not installed, and then finishing the works by installing the veneered items and some hardware. I am not at all persuaded by the quotation from Crafty Kabinets of the reasonable cost of doing that work. The most extreme example of that issue is a quotation of $26,015.00 by Crafty Kabinets for "fit veneer and poly doors, stainless steel bench to cooktop area". That appears quite excessive to me, especially with no indication of what is involved. Note that it is simply to fit doors and a bench top. In my experience, whole kitchens are frequently built for less than that sum. Another example is $14,585.00 for "bed head": how can that work possibly attract such a charge? There is no evidence to support it. I note also that the quotation expressly provides for the client to provide "all veneer board" and further, that "[t]he joinery already installed will be do and charge with a maximum cost as stated above". What work is there to do with joinery already installed? Also, what does it mean to state "a maximum cost as stated above"? Is the quotation suggesting that the cost may be less than the "maximum" cost? The quotation is of no assistance to me in deciding this application. 1. In relation to the first issue the Tribunal found "the bulk of the actual construction of the various joinery items was completed and installed"; the Tribunal went on, "Some items as listed above by the owner were, I accept, not installed" (Reasons at [35]). The Tribunal then proceeded to consider the quotation provided by Crafty Kabinets, on which Dr Pattullo's claim for compensation was based. The Tribunal stated (at [35]) "I am not at all persuaded by the quotation from Crafty Kabinets of the reasonable cost of doing that work". The Tribunal described the quote as "excessive" citing the quote of $26,000 to complete the kitchen, as the most "extreme example" of this excess. 2. The finding made by the Tribunal "that the bulk of the actual construction of the various joinery items was completed and also installed" sits uncomfortably with its stated understanding of EPK's submissions (Reasons at [22]): In relation to the amount claimed by the owner, the builder submits that by the date of the fire, 26 March 2014, the works were about half complete, that there would not have been much work for Crafty Kabinets to do and their charges appear to be very high compared to the original EPK Kitchens quotation. [emphasis added] 1. This apparent inconsistency reflects statements made by Mr Karontonis at the hearing (Transcript at p 18): Member: What would you say is the value of the work that you have completed up until the 26th of March? Karontonis: In round ballpark figures, in or around half, without getting into too much detail. All cabinets were on site but one item. [emphasis added] 1. Later, he said (Transcript at p 19): Karontonis: So as ball-rough ballpark figure, I'd say taking the veneer into consideration that was already paid now, there was probably 15% to 20% on the job left complete in terms of the money value. As an ex-joiner, I only needed to, like I said, cut up the veneer, polish it, put it on doors and drawers. And I think that's boldly generous. [emphasis added] 1. Not only did the Tribunal fail to address these inconsistencies, it is difficult to discern precisely which part of the Work the Tribunal found to be incomplete, or indeed whether the issue was addressed with a reasonable degree of specificity. The most detailed finding on this issue made by the Tribunal was (Reasons at [35]): In summary, the remaining work tended to be some further construction of some items, installation of those items and one or two items delivered but not installed, and then finishing the works by installing the veneered items and some hardware. [emphasis added] 1. The submissions made by the parties in this Appeal further illustrate the difficulty of identifying what finding was made: Dr Pattullo contends the Tribunal found that at the date of termination more than 30% of the Work was complete; EPK, on the other hand, contends that the Tribunal did not made that finding. 2. The Tribunal concluded that the quote submitted by Crafty Kabinets was "most unsatisfactory evidence" of the scope of the work that remained outstanding. However it did not specify the part(s) of that quote it believed exceeded the scope of work that remained to be completed. Indeed, from the Reasons it is unclear whether this issue was addressed. 3. A further difficulty is that the Tribunal does not appear to have taken into account the evidence given by Dr Pattullo of his difficulties of finding a contractor prepared to complete the Work. 4. These were material matters of fact critical to the issue of the reasonable cost to complete the Work, which is the basis for Dr Patullo's damages claim. Ultimately, the Tribunal failed to carry out the task that it had set itself, that is to estimate the cost to complete the Work. Assuming that Dr Patullo is entitled to completion costs (and that it is a matter to be decided on reconsideration) there was no dispute that the Work was incomplete and that there would be a cost associated with completing those works. The Tribunal was required, to do its best to put a value on the loss (if any) suffered by Dr Pattullo even if the evidence was less than satisfactory. The authorities make clear that the mere fact that damages cannot be assessed without difficulty and uncertainty does not relieve a court or tribunal from the responsibility of attempting to assess those damages as best it can: per Deane J in Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 125; per Dixon J and McTiernan J in Fink v Fink [1946] HCA 54; (1946) 74 CLR 127 at 143; per Einstein J in Murray v Shillingtonsworth (2006) 68 NSWLR 451 at 458. 5. Even if unchallenged or uncontradicted, a tribunal of fact is not bound to accept evidence it believes to be incorrect, implausible or unreasonable. Where the evidence of quantum is unsatisfactory, a tribunal has a number of options available in carrying out its task of assessment. It can make its best estimate based on the available evidence. It can require further evidence or submissions from the parties. If it is a specialist tribunal it may, in some circumstances, be able to use its own experience and expertise. The one thing it cannot do is fail to undertake the task of assessment of damages. In this case the Tribunal, having found the quote provided by Crafty Kabinets to be deficient, sidestepped the question of assessing the reasonable cost to complete the Work and simply dismissed Dr Pattullo's claim. 6. The Tribunal was not as Dr Patullo's submissions suggest obliged to accept the Crafty Kabinets quote. However, if Dr Patullo is entitled to damages in the form of completion costs, the Tribunal was required to (i) identify with a reasonable degree of specificity those parts of the Work that were incomplete and (ii) estimate the reasonable cost to complete that work and (iii) deduct from that amount the balance of the Contract sum. 7. If on reconsideration the Tribunal finds that EPK repudiated the contract or that Dr Patullo was otherwise entitled to terminate the contract, it will be necessary for the Tribunal to decide whether, as claimed, Dr Patullo has suffered any loss and is entitled to an award of damages under s 49O of the Act. Orders 1. The appeal is allowed. 2. The decision of the Tribunal is set aside. 3. The proceedings are remitted to the Tribunal for reconsideration, in accordance with these Reasons with or without the hearing of further evidence, by 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 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: 22 October 2015