Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Yong v Antworks Pty Ltd [2016] NSWCATAP 14 Hearing dates: 26 August 2015 Date of orders: 18 January 2016 Decision date: 18 January 2016 Jurisdiction: Appeal Panel Before: J Redfern, Principal Member D Goldstein, Senior Member Decision: The substantive appeal against the decisions and orders made on 14 April 2015 in HB 13/11421 and HB 66466 allowed in respect of Grounds 1 to 3, 7 to 10 and 20 and 21, dismissed in respect of Grounds 4 to 6 and 11 and leave to appeal refused in respect of Ground 19. The costs appeal allowed. The decisions and orders made on 14 April 2015 and 3 August 2015 in HB 13/11421 and HB 66466 are set aside and the proceedings are remitted to the Consumer and Commercial Division for reconsideration by a differently constituted Tribunal. Catchwords: APPEAL – Civil and Administrative Tribunal (NSW) – home building claims – dispute about contract – claim for defects – claim for payment and for variations alleged not to be in writing – construction of Home Building Act and Regulation – whether Tribunal failed to exercise its statutory function – failure to make findings on material issues in dispute – whether reasons adequate – principles to be applied – no denial of procedural fairness where expert relied on letter attached to report – question of weight – whether expert independent – decisions set aside and proceedings remitted for reconsideration PRACTICE AND PROCEDURE – whether the proceedings should be remitted to differently constituted Tribunal – principles to be applied COSTS – where costs decision based on substantive decision which has been set aside – decision set aside and remitted for reconsideration Legislation Cited: Civil and Administrative Tribunal Act 2013 Home Building Act 1989 Home Building Regulation 2004 Cases Cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27 BCS v NSW Civil and Administrative Tribunal [2015] NSWSC 126 Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430 CIC Allianz Australia v Daniel Luke McDonald [2012] NSWSC 887 Collins v Urban [2014] NSWCATAP 17 Fox v Australian Industrial Relations Commission [2007] FCAFC 150 IW v City of Perth [1997] HCA 30; 191 CLR 1 Khan v Kang [2014] NSWCATAP 48 McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323 Newcastle City Council v GIO General Ltd [1997] HCA 53; 191 CLR 85 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221 Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 Seltsam Pty Limited v Ghaleb [2005] NSWCA 208 Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority 24 NSWLR 156 Category: Principal judgment Parties: Mr Robby Yong (Appellant) Antworks Pty Ltd (Respondent) Representation: Mr C Lambert, Barrister (Appellant) Mr P Tahar, Solicitor (Appellant) PWT Legal (Appellant) Mr I George, Barrister (Respondent) Mr J Gould, Solicitor (Respondent) JP Gould Solicitors (Respondent) File Number(s): AP 15/33772 Publication restriction: Unrestricted Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: [2015] NSWCAT Date of Decision: 14 April 2015 Before: Dr P J Briggs, Member File Number(s): HB 13/11421 and HB 13/66466 Reasons for Decision Introduction 1. The appellant, Mr Robby Yong, is the owner of a property at Narwee. On 30 June 2012 he contracted with the respondent, Antworks Pty Limited (Antworks), to construct a 'granny flat' at his premises. The contract price was $172,013.60. 2. There were disputes between the parties about the basis of the contractual arrangements between them, the quality of the work and the payments said to have been made. Mr Yong commenced proceedings against Antworks in the former Consumer, Trader and Tenancy Tribunal on 21 February 2011, claiming $30,000 which was later reduced to $11,492.93, for rectification and completion costs. 3. Antworks claimed, by way of cross application, the sum of $61,917.25 for the balance of money said to be owing under the contract, including a claim for certain variations. 4. The claim and cross application were heard by the Consumer and Commercial Division in a hearing which occupied five days over a period of eight months. Both claims were made under the Home Building Act 1989 NSW (the HB Act). The Tribunal found in favour of Antworks in the sum of $67,462.46, which comprised two components, being $52,780.35 for the balance found to be owing under the contract and $14,682 for variations. Except for a concession from Antworks about steps valued in the sum of $893.00, Mr Yong's claim for defective and incomplete work failed and his application was dismissed. The decision was made on 14 April 2015. On 3 August 2015, after considering submissions on costs, the Tribunal ordered that Mr Yong pay Antworks' costs, as agreed or assessed. 5. Mr Yong appealed both decisions, which will be referred to in these Reasons for Decision as the substantive appeal and the costs appeal. Both appeals were listed for hearing before the Appeal Panel. 6. A party may lodge an internal appeal against a decision of the Consumer and Commercial Division as of right, on any question of law, and with leave of the Appeal Panel on any other ground: see s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the CAT Act). 7. Mr Yong has identified 21 grounds of appeal, 20 of which are said to raise errors of law. One ground raises an issue for which Mr Yong concedes leave is required. 8. The Appeal Panel has concluded that there were a number of errors of law made by the Tribunal below. The substantive appeal is allowed and the decisions made in respect of both applications are set aside. As a consequence, the whole of the proceedings, consisting of two applications, should be reconsidered by the Tribunal differently constituted. 9. Because the substantive decision, on which the costs decision was based, has been set aside, we have also set aside the costs decision and remitted this decision for consideration following determination of the substantive decision. Our reasons follow. Background to the dispute and the Tribunal's decision below 1. After negotiations in June 2012, Antworks provided Mr Yong with a quotation and copies of the Master Builders Home Building Contract in standard form, known as BC4, for the construction of a granny flat as an addition to Mr Yong's home at Narwee. 2. According to the Reasons for Decision at [3] the agreement was based on a written quotation, being quotation number 7082, which was prepared by Antworks and subsequently initialled by both parties. 3. There was dispute about the form of the contract. Mr Yong submitted that the contract was entered into on or about 30 June 2012 and comprised the signed quotation number 7082. The contract price and work to be performed by Antworks were alleged to have been set out in the quotation, with work to be commenced on 7 July 2012 and to be completed by 20 December 2012. In contrast, Antworks submitted that the contract comprised a standard form BC4 Master Builders Contract to which the quote was appended. 4. The dispute between the parties in relation to the terms of the contract was significant given the issues raised by the parties in the proceedings about liability for payment the work claimed by Antworks to be variations. 5. Work was commenced by Antworks but by November 2012 there were disputes between the parties in relation to the performance of the contract. Mr Yong alleged that Antworks abandoned the site on 16 December 2012. Antworks disputed this and made a claim for the balance of the contract price, including variations. 6. The Tribunal set out details of the claims made by Mr Yong and Antworks at [13] to [28]. 7. Mr Yong claimed rectification and completion costs of $11,492.93 being the amount set out in an estimate prepared by the expert engaged by Mr Yong. Mr Yong also contended that he had purchased materials throughout the construction works at the request of Antworks and he should be entitled to deduct these items from the construction price. In particular, Mr Yong alleged that he made payments on account towards the contract sum, including payment in kind in the form of the Mercedes-Benz motor vehicle which should have been credited to his account in the sum of $25,000, apportioned between three progress claims in varying sums. 8. The Tribunal noted at [26] that Antworks was claiming $61,917.25, comprising the balance alleged to be owing under the contract together with variations. It is not clear from the calculations contained in this paragraph how this sum was arrived at given the calculations do not reconcile. However, what is clear is that Antworks claim comprised the contract price of $172,013.60 (this was not in dispute) with deductions of $94,233.25 for payments said to have been received by Mr Yong and an allowance of $25,000 for the motor vehicle given to the Antworks by Mr Yong (this was also not in dispute). Added to this was a claim for variations. The variations claimed were said to total $17,283.60 with an additional $9,116.90 (referred to as variation 7) which was an amount claimed to be the value of the materials said to have been left by Antworks at the premises which Mr Yong has not returned. 9. The Tribunal noted that the claim by Antworks for variations was made under cl 14 of the BC4 terms and conditions, which provided for variations to be made through written instruction and authorisation. Antworks alleged that it submitted written variation quotations to Mr Yong. In contrast, Mr Yong disputed the variations on the grounds that they were either part of the contract works or that they were not completed by Antworks or, if completed, they were already paid for. Mr Yong further denied receiving the alleged written quotations for the variations until the commencement of the proceedings. 10. Relevantly, there was significant dispute between the parties about the payments said to have been made by Mr Yong under the contract, as opposed to payments for variations. There was also dispute about materials which Mr Yong alleged he purchased at the request of Antworks. In response, Antworks contended that the materials purchased by Mr Yong was for illegal work carried out by him in converting the garage and granny flat into accommodation. 11. The Tribunal considered Mr Yong's claims for completion and rectification costs at [51] to [64] of the Reasons for Decision. Expert evidence was provided by both parties. The Tribunal observed at [67] as follows: I note that neither of the expert reports have assisted the Tribunal to any significant degree in this application. 1. The Tribunal as set out it findings on both applications at [68] to [115] of the Reasons for Decision. In summary, the Tribunal found as follows: 1. The contract between the parties was in a conventional form consisting of the quotation and the BC4 conditions of building contract issued by the Master Builders Association, read together with the specifications and drawings (at [68]). 2. The variations comprised 10% of the contract sum but the Tribunal was unable to find evidence that the work of the variations was carried out by Antworks, except for variation 2, being the variation relating to the colourbond fence (at [69]). 3. Mr Yong alleged that he paid the fencing contractor directly and that progress payments made to Antworks in amounts that were identical to variation claims were either coincidence or work for variations that were later fabricated by Antworks to match progress payments received. This was "highly improbable" at [71]. Mr Yong was "well aware" of the variations, notwithstanding that he says they were never provided in writing, because he paid for variation works which were consistent with the variation claims invoiced by the builder. Even if these invoices were not issued until the proceedings were commenced, they were still recoverable under a 'purposive view' of the requirement under s 7E of the HB Act and cl 12 of the Home Building Regulation 2004 (at [72] and [73]). 4. Mr Yong was unable to fund the works, which is why part of the payment included the transfer of the Mercedes Benz motor vehicle to Antworks (at [75]). 5. When disputes emerge between the parties, neither followed the contract termination protocol set out in BC4 at clauses 26, 28 or 29. Neither party "evinced an attitude" to be bound by the terms of the contract. When the Mr Yong breached the contract by occupying the premises, Antworks failed to accept the repudiation by Mr Yong and did not issue the required request for payment or invoice. Antworks therefore waived the contractual right to practical completion of the works. Similarly, Mr Yong did not accept or identify in writing Antworks' repudiatory conduct and failed to issue notices in accordance with clause 28 (at [78] to [83]). 6. At or around December 2012, neither party intended to be bound by the contract and terminated the contract by mutual action or inaction (at [84]). The parties' rights under the contract were therefore extinguished on or about 18 December 2012 and their rights and obligations reverted to common law (at [85]). 7. Antworks was entitled to claim remuneration for the work carried out but must meet the costs of rectification of any defective work (at [87]); 8. In relation to the claims for the cost of rectification or completion of work that was said to form part of the contract, the Tribunal found: 1. Mr Yong had not established his claim for the costs of completing the decking because the Tribunal was not satisfied that this work formed part of the contract (at [90]); 2. There was no entitlement for rectification costs in relation to the recycled water tank and pump because the Tribunal was persuaded that any existing defects were as a result of work by contractors employed by Mr Yong (at [91]); 3. The claim by Mr Yong for the installation of a window in the garage toilet was rejected because the Tribunal accepted the evidence of Antworks that an extractor fan was installed instead and should be taken into account as a set-off (at [92]); 4. The roof water system was incomplete but Mr Yong had no entitlement to completion costs by virtue of the mutual termination of the building contract (at [93]); 5. The claim in relation to the alleged incomplete back venting of the sewage lines was rejected on the basis of evidence from Antworks' expert that there was no apparent defect with the installation of the sewer or its fittings (at [94]); and 6. The claim for the external lighting was rejected because the Tribunal was satisfied that the external light points required under the contract had in fact been provided (at [95]). 1. The claim by Mr Yong for 'completion works', being item 7 of Mr Yong's claim, was unquantified and no evidence had been offered except 'by inference' to materials which had been purchased by Mr Yong. However these materials "could have been directed towards the illegal works" carried out by Mr Yong after Antworks left the site (at [96]) 2. The claim by Antworks was restated at [98] as comprising $172,013.60 for the contract price inclusive of GST, less $94,233.25 received from Mr Yong with a credit of $25,000 for the motor vehicle leaving a balance remaining under the contract of $52,780.35. The Tribunal noted that Antworks claimed seven variations and, apart from variations 2, 3, 4 and part of 6 which were accepted, the Tribunal rejected the other variations on the basis that Antworks had failed to discharge the onus of proof that the variations were outside the ambit of the contract works (at [100]). 3. The Tribunal's findings in relation to the variations 1 to 6 were as follows (at [101] to [111]): 1. The claim for the colourbond fence was outside the scope of works but it had nonetheless been constructed and there was no evidence of payment by Mr Yong to any other contractor for this item. The Tribunal was satisfied that Mr Yong had paid the sum of $3,388 to either the builder or his recommended contractor as a progress payment but it should be accounted for as a variation; 2. Variation 3 related to the retaining wall which was not included in the drawings or the scope of works but was nonetheless constructed. The Tribunal was therefore satisfied that this was a variation for which Antworks should be paid. The Tribunal was not satisfied that Mr Yong had made a cash payment of $3,000 for this work but accepted he had paid $3,401.36 as a progress payment when it was in fact a variation; 3. Variation 4 related to awnings in the sum of $6,941.25 which was alleged by Mr Yong to have been paid as a progress payment. While it was noted by the Tribunal that the awnings were shown on the plans, the Tribunal was nonetheless satisfied that this should be treated as a variation and brought into account as part of the reconciliation; and 4. Variation 6 related to the preparation of the site for the installation of a stencil concrete driveway which did not proceed. There was dispute between the parties about whether Antworks had in fact provided steel as part of the preparation. The Tribunal accepted the contention of Antworks and allowed $951.50 as a variation. 1. The Tribunal rejected Antworks variation 7, being a claim for the abandoned materials in the sum of $9,116.90, on the basis that Antworks had failed to discharge the onus of proof (at [112] to [113]). 1. The Tribunal therefore rejected Mr Yong's claims for rectification and completion costs and dismissed his application and allowed Antworks' claim for the balance of the contract price (being $52,780.35) and variations totalling $14,682.11, being amounts Mr Yong alleged were paid as progress claims but which the Tribunal rejected. Antworks application was therefore allowed in the sum of $67,462.46. The logic and analysis about how the variations should be accounted for is somewhat difficult to understand because if Mr Yong paid for variations of $14,682.11, which were said to be incorrectly described as 'progress payments', there would be no further payments required for the variations but the claim for the balance of the contract would increase by the same amount. This one of the confusing aspects of the reasoning process adopted by the Tribunal which is referred to in more detail later in these Reasons. Grounds of appeal and reply to appeal 1. Mr Yong's grounds of appeal fall into eight broad categories: 1. Failure to discharge statutory function by failing to exercise jurisdiction (Grounds 1 to 3 and 7 to 10); 2. Adequacy of reasons (Grounds 2, 3 and 7 to 10); 3. Incorrect interpretation of the HB Act (Ground 7); 4. Expert evidence (Grounds 4 and 5) 5. Denial of procedural fairness (Ground 6); 6. Errors of law relating to the contractual arrangements between the parties (Grounds 8 to 12); 7. Failure to properly account for payments found to have been made (Grounds 20 and 21) ; and 8. The findings of the Tribunal in respect of the variations were against the weight of evidence and therefore leave to appeal should be given (Ground 19). 1. Grounds 7 and 13 to 18 relate to the variations claimed by Antworks. The submission made by Mr Yong, which we have accepted, is that if Ground 7 is allowed, there is no need to consider Grounds 13 to 18. Because we have allowed Ground 7 for the reasons later outlined, we have not sought to characterise these Grounds under the foregoing headings. However, broadly speaking these Grounds raise issues about whether the Tribunal failed to exercise its statutory function by failing to determine critical issues in dispute, for instance, whether the terms of the contract governed the variations (Grounds 13), the basis for recovery of the variations (Ground 14), how payments for variations should be accounted for (Ground 15) and when and whether written variations were issued (Grounds 16 and 17). 2. A number of the grounds of appeal were not clearly expressed but when they are closely examined, together with the Tribunal's Reasons for Decision and the submissions made by the parties at first instance, it is apparent that those grounds also raise other questions of law. For instance, Grounds 2 and 3 raise the question of whether the Tribunal had failed to discharge its statutory function (by failing to determine a critical issue in dispute) as well as the question of whether the Tribunal's reasons were adequate. For the reasons outlined by the Appeal Panel in Khan v Kang [2014] NSWCATAP 48, these questions of law are may be raised in the alternative. Relevantly, Grounds 7 to 10 may also be properly characterised as failure to exercise jurisdiction or a failure to provide adequate reasons. Grounds 20 and 21 are properly characterised as a failure to provide adequate reasons. 3. Antworks' reply to appeal is brief. Antworks contended that Mr Yong's appeal did not raise any error of law but rather errors of fact. The factual findings were open to the Tribunal on the basis of the available evidence and, as such, Mr Yong did not raise any questions of law. Leave was therefore required to appeal and, pursuant to cl 12 of Schedule 4 to the CAT Act, the Appeal Panel could only give leave if satisfied that there may have been a substantial miscarriage of justice because the decision was not fair and equitable, against the weight of evidence or because significant new evidence had arisen, which was not reasonably available at the hearing. This could not be established. 4. Antworks expanded its opposition to the appeal in written submissions filed. In summary, Antworks submitted the appeal should be dismissed for the following reasons: 1. When the Reasons for Decision of the Tribunal at first instance are examined, it is clear that the Tribunal preferred the evidence of Antworks over Mr Yong. Having regard to the principles set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at [77], this is not enough: 2. Antworks disputed that the Tribunal failed to make determinations regarding various items claimed by Mr Yong for materials and noted that the Tribunal had in effect found that Mr Yong failed to prove his case by failing to establish the materials were not related to "illegal work" said to have been carried out by Mr Yong after Antworks left the site; 3. Antworks also disputed that there had been a denial of procedural fairness and that the Tribunal had erred in its application the HB Act and the 2004 Regulations; and 4. Even if the proceedings were remitted to the Tribunal for reconsideration, there is "no possibility of a different outcome". Failure to discharge statutory function 1. Grounds 1, 2 and 3 may be grouped under this heading. 2. As already noted and for the reasons later outlined, when Grounds 7 to 10 (and possibly also 12 to 17) are closely examined, it is apparent that those Grounds also raise questions of law about whether the Tribunal failed to discharge its statutory function by failing to determine critical issues in dispute. These Grounds 7 to 10 are considered at [85] and [103] to [114] of these Reasons. Accordingly, the following principles apply equally to the issues raised later in these Reasons in respect of Grounds 7 to 10. 3. In Grounds 1 to 3, Mr Yong submitted that the Tribunal failed to discharge its statutory function by failing to exercise its jurisdiction in respect of three matters which were relevantly before it and which required determination. 4. In Yates Property Corporation Pty Ltd (In Liquidation) v Darling Harbour Authority 24 NSWLR 156 at 186 Handley JA stated: The duty of a judicial officer to hear and determine a claim made in judicial proceedings conducted before that officer is also an incident of the judicial process. Since breaches of the duty to give proper reasons and to observe procedural fairness involved errors of law, there seems every reason to hold that a breach of the duty to hear and determine a claim made in judicial proceedings also gives rise to such an error. 1. In Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323 Gaudron J in context of the Migration Act (Cth) discussed a constructive failure to exercise jurisdiction stating: It follows from what has been written above that the failure of the Tribunal to make findings with respect to a particular matter may, at the same time, reveal failure to exercise jurisdiction, whether actual or constructive, and, also, failure to conduct a review as required by the Act. 1. In Fox v Australian Industrial Relations Commission [2007] FCAFC 150 Marshall and Tracey JJ stated at paragraph 38: In the present case the complaint is not that the full bench ignored the evidence but rather that it did not deal with an important ground raised by Mr Fox. This case is more akin to one where there is a failure by a Tribunal to deal with necessary issues. Such a failure constitutes a jurisdictional error. 1. In Khan v Kang (supra) the Appeal Panel found that the Tribunal had made an error of law by failing to consider a claim made by Mr Khan. The Appeal Panel observed at [28] as follows: It is possible to characterise what occurred either as a failure to give reasons for the Tribunal's decision or a failure to exercise the jurisdiction conferred on the Tribunal and invoked by the appellant in relation to this claim in respect of excess timber - see Waterways Authority v Fitzgibbon [2005] HCA 57 at [129] - [130] and Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [42]. Whichever way it should be characterised, the Tribunal's failure to consider such a claim at all in its Reasons for Decision amounted to an error of law by the Tribunal below. 1. The first ground of appeal is narrow and relates to steps to the northern entry of the granny flat the subject of the contract between the parties. Mr Yong claimed that Antworks had carried out defective work, that such defective work and the rectification cost of $893.00 was conceded by Antworks' expert, but the Tribunal made no ultimate finding in connection with the item. 2. At [27] of its Reasons the Tribunal stated "[o]f the alleged defective and incomplete work, the builder has conceded that $893.00 for 2 steps that have not been installed". At [57] the Tribunal makes similar observations in considering and summarising Antworks' expert evidence. Later at [87], the Tribunal found that Antworks is required to "meet the cost of rectification of any work that is defective" but made no finding in connection with the amount of $893.00 for the steps that were not installed by Antworks. 3. Mr Yong asserts that the Tribunal failed to discharge its jurisdiction to determine this item of his claim. 4. Mr Yong applied for the determination of a building claim under s 48I of the HB Act. This claim comprised a defective work claim which was made up of six separate items. There was no dispute that Mr Yong's claim was a building claim under the HB Act. The Tribunal was therefore required to determine Mr Yong's building claim, which included the claim for defective work or on the steps. Section 48O contains the powers of the Tribunal in determining a building claim, which includes the power to make a monetary order. 5. Despite the fact that it was recorded at [27] that the "builder has conceded that $893.00 for 2 steps that have not been installed", at [96] of the Reasons for Decision the Tribunal stated: For the above reasons I dismiss the claims by the home owner for defective and incomplete work by the builder of the 6 items identified by the expert engaged by the home owner'. 1. Antworks contended that because of the concession, recorded at [27], this issue was not in dispute. However, the Tribunal did not make an order in respect of this claim or allow the amount claimed. The Appeal Panel therefore finds that the Tribunal erred in law by dismissing this claim because it failed to resolve an issue in the proceedings which was one of the elements of Mr Yong's building claim that he was required to determine. 2. Grounds 2 and 3 relate to Mr Yong's claim that he supplied materials and paid sub-contractors for work that was not completed by Antworks and, as a result, he should receive a credit against the contract sum. 3. Ground of Appeal 2 relates to the claim for the supply of materials and the payment of a sub-contractor. Mr Yong's evidence before the Tribunal at first instance, which was tendered in the Appeal and referred to in the submissions in support of Ground 2, indicates that Mr Yong alleged he had purchased materials and paid subcontractors in connection with work that Antworks was contracted to undertake. 4. Ground 3 is similar to Ground 2 but relates to Mr Yong's claim that he supplied materials to Antworks and paid a sub-contractor in connection with the works to be performed by Antworks. 5. The exhibits in the Appeal include the submissions made by the parties to the Tribunal at first instance. Relevantly, the submissions of Mr Yong claim credits in his favour for materials provided and subcontractors paid as follows: 1. Paragraph 4.4 of the submissions filed on 17 January 2014 (at Tab 23 of Exhibit 1) state: These credits consisted of material supplied by the applicant to Antworks; payments made for the purchase of goods and materials by the applicant and direct payments to other contractors made by the applicant at the instruction of the builder. 1. Paragraph 4.6 of the same submissions refers to additional claims for credits for materials and payments to others, allegedly at the instruction of Antworks. 2. Mr Yong's submissions dated 2 March 2014 (at Tab 24 of Exhibit 1) repeat these claims at paras 90 – 93. 3. In further submissions (at Tab 26 of Exhibit 1) ordered by the Tribunal on 6 August 2014 and provided by Mr Yong on 22 October 2014 these issues are again raised at paras 118 – 129. 1. Antworks submissions address these issues in it submissions (at Tabs R3 and R4 of Exhibit 2 in the Appeal). 2. The references to these issues in the submissions of both parties makes it plain that the question of material allegedly supplied by Mr Yong to Antworks, payments alleged to have been made for the purchase of goods and materials by Mr Yong and direct payments alleged to have been made to contractors by Mr Yong at the instruction of Antworks were before the Tribunal for the determination of whether these amounts claimed were to be credited against amounts payable to Antworks on account of the contract price. 3. Grounds 2 and 3 are advanced on the basis that the Tribunal failed to discharge its jurisdiction by failing to make any determination regarding these items of claim. 4. The Tribunal refers to Mr Yong's claim at [15], [28] and [96] of the Reasons for Decision, although the amount claimed was not quantified or particularised in the Reasons for Decision. 5. At [15] the Tribunal described the evidence in support of this claim stating: The homeowner's evidence is that at various times throughout the construction works the builder asked him to purchase a variety of materials such as tiles kitchen fittings, toilets, shower basins laundry tub, clothes line, wardrobes, skirting boards, cement sand, door and other small things and pay the bi-fold door installer. The home owner contends that he should be entitled to deduct these items, for which he has supplied receipts, from the construction price. 1. Later at [28] of the Reasons for Decision the Tribunal states: The builder's explanation for the materials purchased by Mr Yong is that they were for illegal work carried out by Mr Yong in converting the garage and granny flat into accommodation. The photographic evidence and expert report by Mr Shamieh supports this proposition. The building in its present form is not the same building that was contracted for and for which plans were approved. Concluding at [96] as follows: For the above reasons I dismiss the claims by the homeowner for defective and incomplete work by the builder of the 6 items identified by the expert engaged by the home owner and the seventh item, "Completion works by the home owner" which is unquantified and for which no evidence has been offered except by inference the materials which have been purchased by the home owner but which could have been directed towards the illegal works which have been carried out by the home owner since Antworks departed the site. 1. Antworks contended that the Tribunal did consider these claims and made findings at [15], [28] and [96]. The Tribunal therefore turned its mind to the issues but was not satisfied with the evidence of Mr Yong. 2. Although the paragraphs quoted suggest the Tribunal was inclined not to accept Mr Yong's claim for a credit against the contract price on account of the supply of building materials and the payment of a tradesman, no clear findings have been made on this aspect of Mr Yong's claim. The statement made at [96] is not expressed as a finding or conclusion and it is not clear how the Tribunal disposed of Mr Yong's claim, as referred to in [15]. For instance, what was the quantum of this claim? Why was the Tribunal not satisfied with the evidence provided? 3. The paragraphs quoted indicate that the Tribunal considered this claim but failed to definitively determine it. This was a critical and significant issue raised by Mr Yong in the proceedings and the Tribunal was required to determine this aspect of Mr Yong's case. In our view, the Tribunal failed to do so and this was an error of law. 4. Even if, at its highest, the Tribunal has made a determination by reason of the statement in [96] that the Tribunal dismissed the seventh claim, the manner in which the Tribunal disposed of the claim is wholly inadequate. In this regard, the observations of the Appeal Panel in Khan v Kang are apt. The Tribunal either failed to determine the claim or failed to give adequate reasons to explain why the claim was rejected. We deal with this ground below. Inadequate reasons 1. Grounds 2 and 3 are also advanced on the basis that, in dealing with Mr Yong's claims referred to in Grounds 2 and 3, the Tribunal failed to provide adequate reasons and failed to expose the reasoning process. These are also questions raised in respect of Grounds 7 to 10 and 21 and 122 (refer [85], [103] to [114] and [121] to [123] below). 2. Section 62(3) of the CAT Act provides: A written statement of reasons for the purposes of this section must set out the following: (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, (c) the reasoning processes that lead the Tribunal to the conclusions it made.' 1. In Khan v Kang the Appeal Panel stated at [41]: The reasoning processes referred to in s 62(3)(c) include the reasoning by which the law was applied to the facts as found to reach all intermediate and ultimate conclusions. It is important to bear in mind, however, that these reasoning processes also encompass the reasoning which led the Tribunal to reach its factual conclusions: why certain evidence was accepted and other evidence rejected; why a factual conclusion was reached; and similar matters.' 1. In Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430, at p443, Meagher JA, having set out the purpose of providing Reasons for Decision, said the following in regard to the content of adequate reasons: It follows, that reasons need not necessarily be lengthy or elaborate: Ex parte Powter; Re Powter (1945) 46 SR (NSW) 1 at 5. The scope of the reasons to be given is, as Mahoney JA said in Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386, related "to the function to be served by the giving of reasons". Accordingly, the content of the obligation is not the same for every judicial decision. No mechanical formula can be given in determining what reasons are required. However, there are three fundamental elements of a statement of reasons which it is useful to consider. First, a judge should refer to relevant evidence. There is no need to refer to the relevant evidence in detail, especially in circumstances where it is clear that the evidence has been considered. However where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435. Where conflicting evidence of a significant nature is given, the existence of both sets of evidence should be referred to. Secondly, a judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. The obvious extension of the principle in North Sydney Council is that, where findings of fact are not referred to, an appellate court may infer that the trial judge considered that finding to be immaterial. Where one set of evidence is accepted over a conflicting set of significant evidence, the trial judge should set out his findings as to how he comes to accept the one over the other. But that is not to say that a judge must make explicit findings on each disputed piece of evidence, especially if the inference as to what is found is appropriately clear: Selvanayagam University of the West Indies [1983] 1 WLR 585. Further, it may not be necessary to make findings on every argument or destroy every submission, particularly where the arguments advanced are numerous and of varying significance: Rajski v Bainton (Court of Appeal, unreported, 6 September 1991). Thirdly, a judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found. Those reasons or the process of reasoning should be understandable and preferably logical as well. 1. The nature and extent of the obligation to give written reasons under the general law and pursuant to s 62 was also discussed by the Appeal Panel in Collins v Urban (supra) at [43] to [64]. Relevantly, the Appeal Panel referred to Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 in which Basten JA observed at [48] as follows: When an appellate court is invited to find that a trial judge provided inadequate reasons, it is important to understand the nature of the function being invoked. It is not the function of an appellate court to set standards as to the optimal, or even desirable, level of detail required to be revealed in reasons for judgment. Rather it is to determine whether the reasons provided have reached a minimum acceptable level to constitute a proper exercise of judicial power. Transparency in decision-making is an important value, but it is not cost free, and may involve separate parameters of quantity and quality. 1. The Tribunal's reasoning process in connection with this issue was brief. In our view, the Reasons were inadequate and the deficiency was material for the following reasons: 1. As already noted, this was a critical and significant issue raised by Mr Yong in defence of the claim by Antworks for the payment of the alleged balance of the contract price; 2. Mr Yong had filed evidence to support the claim and both parties filed submissions addressing the issue; 3. The evidence filed by the parties on this aspect is not referred to in the Reasons for Decision other than in very general terms and it is not possible to assess or understand the nature of the evidence filed; 4. The Tribunal has not set out the material findings of fact in relation to this issue nor the reasoning process for dismissing the claim; 5. The Tribunal has apparently accepted the explanation given by Antworks (referred to at [28]) but it is unclear why these materials were not covered by the contract and why the contention made and evidence filed by Mr Yong was rejected; 6. The findings in relation to the "illegal works" are unclear and confusing, For instance, did the Tribunal find these works were not part of the contract because they were for works undertaken by Mr Yong converting the granny flat for accommodation? This could be inferred from the last sentence in [28] but it is not clear because, relevantly, there was no finding to this effect; and 7. It was not possible for the Appeal Panel, let alone the parties, to discern why Mr Yong's claim was dismissed and whether this was justified. Both parties attempted to take the Appeal Panel to the evidence at first instance to clarify aspects of the case. As observed by Hidden J in CIC Allianz Australia v Daniel Luke McDonald [2012] NSWSC 887 at [14] it is impermissible for the parties to "enunciate the reasons the assessor might have given in arriving at the conclusion he did" when "the assessor himself did not express any such reasons." In other words, it is not for the Appeal Panel or the parties to make good inadequate Reasons for Decision by assessing what evidence was available and expanding or reinterpreting the reasoning process. 1. Accordingly, the Appeal Panel finds that the Tribunal failed to give adequate reasons for dismissing this part of Mr Yong's claim and this was an error of law. Incorrect interpretation of the Home Building Act 1. The Grounds of Appeal identified under the heading "Incorrect interpretation of the Home Building Act" relate to the issue of variations and how they were dealt with by the Tribunal. Grounds 7, 12, 13, 14, 15, 16, 17 and 18 all deal with the variation claims. 2. Mr Yong raised two issues in relation to the variations in his case before the Tribunal at first instance. First, he argued that the variations claimed were part of the contracted works. Secondly, he argued that a builder has no entitlement to payment for variations executed without first giving the owner the opportunity to form a view as to whether or not the variation should be carried out. He contended that under the HB Act and the Home Building Regulations in force at the relevant time variations must be authorised in writing before Antworks would be entitled to payment. He submitted that he had not been served with written notice nor had he given authorisation of the variations. 3. As already noted, the Tribunal considered Antworks' claim for variations at [69] to [73] and at [99] to [113] of the Reasons for Decision. 4. At [69] of the Reasons for Decision the Tribunal stated: I am unable to find evidence that the work of the variations was carried out by the builder, except perhaps for Variation 2 – the "colourbond" fence. 1. After discussing whether or not payments on account of contract work matched variation claims or whether Antworks manipulated the cost of variations to match part progress claims received, the Tribunal stated at [72] and [73] as follows: 72. The significance of that finding is that the owner was well aware of the variations notwithstanding that he says that they were never rendered into writing as they are required to be under the Home Building Act. If I take a purposive view of the requirement under the Act it must be that the essence of the need for writing is to confirm that the parties are in agreement that the variations have been raised and agreed. There can be no better confirmation of that than by the home owner's payment for them. 73. I find the owner did make payments for variations to the works, even if the invoices for these were not issued until the proceedings commenced. I have been unable to account for the home owner's payments of amounts of money which correspond exactly to the variation claims or why the homeowner would write consecutive consecutively numbered checks in those sums on same day if they were in fact payments to Antworks for progress claims. 1. At [99] the Tribunal, in referring to these earlier paragraphs, stated: As noted earlier there are certain conditions precedent to the acceptance of the claimed variations apart from the requirement in the Act for writing it must be established that the work was not part of the contract work, that the owner was aware of the work and required that it be undertaken for a cost that was reasonable. 1. At [100] the Tribunal stated in connection with variations: Apart from variations 2, 3, 4 and part of 6, I am unable to accept that the builder has discharged his onus of proof in respect of the variations being outside the ambit of the contracted works. 1. The Tribunal then proceeded to consider those variations and made findings in connection with them (at [101] to [113]). The total value of variations 2, 3, 4, and 6 found by the Tribunal at [114] was $14,682.11. As stated at above, the Tribunal made an order in Antworks' favour in this amount for variations. This was at odds with the finding at [69]. This inconsistency was not explained in the Reasons nor did the parties raise it in the Appeal which leads the Appeal Panel to the conclusion that the statement made in [69] was in error. In any event, it is not material because the Tribunal at first instance analysed and made findings in relation to each of the variations the Tribunal accepted were valid. 2. While this was not an issue raised by Mr Yong at the Appeal, it is not apparent that the Tribunal made specific findings on whether the variations were either inside or outside the ambit of the contract. It is implicit in [100] that the Tribunal found variations 1, 5 and part of 6 were outside the contract works. There was clearly a finding that variation 2 (the colourbond fence) and variation 6 (the driveway) were outside the scope of works. There was no specific finding about this but it can be inferred that the Tribunal was satisfied variation 3 (the retaining wall) was outside the scope by the reference to the fact it was not shown on the drawings or noted in the scope of works (at [103]). In relation to variation 4 (the awnings) there was no finding made by the Tribunal that this was outside the scope of works and indeed the Tribunal noted that the awnings were shown on the plans. The Tribunal stated that there was "some difficulty in understanding why Mr Yong treated them as a variation" but accepted them as variations based on Mr Yong's acceptance they would be variations (refer [106]). 3. Mr Yong contended if these works were variations and because they were not in writing and not authorised in writing, they could not be recovered under the contract (having regard to the provisions of the HB Act and the 2004 Regulations). He also contended they could not be recovered by other means because Antworks had not made a quantum meruit claim in line with the authority in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221. This was a submission made by Mr Yong at first instance although it is not referred to in the Reasons for Decision. 4. There was no finding by the Tribunal about whether or not the variations were in writing and authorised in writing but it is apparent the Tribunal proceeded on the basis that they were not. This is why the Tribunal referred to the 'purposive interpretation' that a builder would be able to recover variations if the owner was aware of the variations in [72] and [99]. 5. The issue is whether the Tribunal erred in failing to take into account and properly apply the relevant legislative provisions when considering the variations claimed. 6. Mr Yong contended that the Tribunal erred at law in using: ..an unreasonable and unnatural purposive interpretation of the Act and the Regulation to find a payment of an inexact amount for alleged variation satisfied the requirements of s. 7E of the Act as it was then and Part 1 of Schedule 2 of the Regulation as provided for in Clause 12 of the Regulation as it was then. 1. There have been amendments to the HB Act and the Home Building Regulations since the contract was entered into in 2012. 2. Section 7E of the HB Act at the relevant time provided: 7E Regulations concerning contracts (1) The regulations may make provision for or with respect to: (a) clauses or matter that must be included in a contract or a class of contracts, or (b) clauses or matter that must not be included in a contract or a class of contracts. (2) If the regulations require a contract or class of contracts to contain a clause in prescribed terms, a contract of the kind to which the prescription relates is taken to include the clause in the terms prescribed. A contract that contains a term that is inconsistent with any such clause is unenforceable to the extent of the inconsistency. (3) If the regulations provide that any matter must not be included in a contract or a class of contracts any contract that contains that matter is unenforceable to the extent that it includes or applies to that matter. (4) Any regulations made under this section do not apply to a contract in force at the time that the regulations commence. (5) This section does not limit section 7 (3).' 1. Clause 12 (1) of the Home Building Regulation 2004 (NSW) (the 2004 Regulation) which was the regulation in force at the relevant time, provided: (1) Pursuant to section 7E of the Act, a contract to do residential building work must include each of the conditions set out in Part 1 of Schedule 2.' 1. Part 1 of Schedule 2 of the 2004 Regulation provided: 1 Plans and specifications (1) All plans and specifications for work to be done under this contract, including any variations to those plans and specifications, are taken to form part of this contract. (2) Any agreement to vary this contract, or to vary the plans and specifications for work to be done under this contract, must be in writing signed by or on behalf of each party to this contract. (3) This clause does not apply to a contract of the kind referred to in clause 16 of the Home Building Regulation 2004. 1. The Tribunal found that the contract between the parties was comprised of the quotation and the BC4 contract. The contract complied with Clause 12 (1) and Part 1 of Schedule 2 of the 2004 Regulation because cl 14 of the contract, among other things, provided for variations to be in writing. 2. Mr Yong submits that the Tribunal's purposive interpretation was an error of law. He cites the judgments of Brennan CJ and McHugh J in IW v City of Perth [1997] HCA 30; 191 CLR 1 and the judgment of McHugh J in Newcastle City Council v GIO General Ltd [1997] HCA 53; 191 CLR 85 in support of his submissions. 3. In IW v City of Perth the court was considering the Equal Opportunity Act (WA). Brennan CJ and McHugh J also had regard to the effect of section 18 of the Interpretation Act (WA). At p11 Brennan CJ and McHugh J stated: Section 18 of the Interpretation Act 1984 (W A) requires preference to be given to the construction of a written law that would promote the purpose or object underlying that more to a construction that would not promote that purpose or object. At page 12 their Honours further stated: The injunction contained in section 18 of the Interpretation Act is reinforced by the rule of construction that beneficial and remedial legislation like the Act is to be given a liberal construction. It is to be given "a fair, large and liberal" interpretation rather than one which is literal or technical. Nevertheless the task remains one of statutory construction. Although provision of the Act must be given a liberal and beneficial construction, a court or Tribunal is not at liberty to give it a construction that is unreasonable or unnatural. 1. In Newcastle City Council v GIO General Ltd 191 CLR 85 McHugh J stated at p113: If the legislature uses language which covers only one state of affairs a court cannot legitimately construe the words of the section in a tortured and unrealistic manner to cover another set of circumstances. As Brennan CJ and I said in IW v The City of Perth even when a court adopts a purposive construction to remedial legislation 'it is not at liberty to give it a construction that is unreasonable or unnatural. 1. The principles of statutory construction are well settled. The task of statutory interpretation must begin with a consideration of the text itself. The starting point is to consider the ordinary and grammatical sense of the statutory words to be interpreted having regard to their context and legislative purpose: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; (2009) 239 CLR 27, Hayne, Heydon, Crennan, Kiefel JJ, [47]. 2. In our view, the language in s 7E of the HB Act, cl 12 (1) and Part 1 of Schedule 2 of the 2004 Regulation is clear. The combination of these provisions has the effect of ensuring, as a mandatory requirement, that contracts for residential building work contain provisions that agreements to vary the plans and specifications for work to be done under the contract (commonly referred to as 'variations') should be in writing and signed by or on behalf of each party to the contract. 3. Accordingly, the approach taken by the Tribunal in adopting a purposive interpretation which is inconsistent with the clear legislative provisions and was in error. 4. However, this was not the only error made by the Tribunal in dealing with the variations. The Tribunal made no findings about whether Antworks provided written quotations to Mr Yong before performing the work (as contended by Antworks in the proceedings at first instance) or whether the works, or some of them, were part of the scope of works of the contract (as contended by Mr Yong in the proceedings at first instance). The Tribunal's findings in relation to these matters are set out in [72], [73], [88], [99] and [100]. The Tribunal has either failed to make findings of fact on the material matters in dispute, and thereby failed to properly exercise its jurisdiction, or failed to provide adequate reasons explaining the basis for its findings. These errors are in similar terms to the errors of law referred to in respect of Grounds 1, 2 and 3 (refer [27] to [60] of these Reasons and Khan v Kang). 5. The errors of law identified affect the Tribunal's finding of $14,682.11 in favour of Antworks for variations. 6. At the appeal hearing counsel for Mr Yong stated that if the Appeal Panel were to find for Mr Yong on this Ground the other Grounds relating to variations would not require determination. Those Grounds were identified as being Grounds 12, 13, 14, 15, 16, 17 and 18. We accept this submission. Given Mr Yong's success on Ground 7, it is unnecessary to consider Grounds 12 to 18. Expert opinion 1. Grounds 4 and 5 of the Grounds of Appeal relate to the Tribunal's treatment of expert evidence in respect of Mr Yong's claims for defective and incomplete works, namely the recycled water tank and pump, the rear metal framed awning, venting in the sewerage system and the garage western wall. 2. In summary, Mr Yong contends that the Tribunal erred in law in preferring and accepting Antworks' expert when: 1. The expert's opinion was not impartial and was not based on his specialised knowledge; 2. The expert's opinion was based on instructions from Antworks; and 3. Antworks' expert opinion was, in part, based on hearsay material, that could not be tested. 1. We reject these Grounds for the reasons that follow. 2. Antworks' expert report was clear in that it referred to the background to the report, the instructions and documents provided and the methodology used in the preparation of the report. The report records the matters identified by the expert and the basis for the opinion. We are satisfied that the report sets out the facts, matters and assumptions on which the opinions in the report were prepared, in accordance with para 3(d) of the Tribunal Expert Witness Code of Conduct that was applicable at the time the report was prepared. 3. Provided proper disclosure of the matters referred to or relied on is set out in the report, it was open to the Tribunal to admit the report into evidence and to rely upon it in determining Mr Yong's defects claim. The fact that an expert has regard to the facts and circumstances upon which he or she is briefed, or makes assumptions on facts and circumstances upon which he or she is briefed (so long as the basis of the assumption is identified) does not mean that the expert opinion is not impartial or is not based on specialised knowledge possessed by the expert. 4. Mr Yong also submitted that in so far as the Tribunal preferred the evidence of Antworks' expert to the expert of Mr Yong based on a letter from Topgal Pty Ltd (Topgal), plumbing contractor, to the effect that the sewerage vent was installed internally complete with a 'Durgo' valve, this was in error. We reject this submission. 5. The Tribunal was entitled to accept Antworks' expert report into evidence and to consider the opinion evidence of both experts in coming to a conclusion as to which expert evidence would be preferred. It is apparent that the Tribunal was persuaded by the evidence of Antworks' expert on a number of aspects, including on whether the sewer system was complete. The expert for Antworks not only referred to the Topgal letter but made his own observations about whether there was any defect in the installation of the sewer or its fittings (refer [94]). 6. Ultimately, it is a matter for the Tribunal as to the weight that will be attributed to expert opinion. For instance, it was open to Mr Yong to establish that any fact or assumption upon which Antworks' expert's opinion was based was either non-existent or incorrect. It was also open to Mr Yong to make submissions that hearsay material or information provided by Antworks was partial or not probative and therefore any opinion based on this material should be discounted or disregarded. 7. Accordingly, there is no error of law identified in Grounds 4 and 5 and these grounds are rejected. At best, this may be an issue the goes to the issue of whether leave to appeal should be given. Denial of procedural fairness 1. Ground 6 raises the issue of whether Antworks should have been able to rely on the Topgal letter in circumstances where the Tribunal had made an order on 1 October 2103 noting that Antworks would not be relying on witness statements other than those referred to in the order. It is contended that the Topgal letter was in effect a witness statement. This is said to be in breach of the order and a denial of procedural fairness. 2. The submission overstates the position. Antworks' expert attached a letter from Topgal to his report, disclosed that fact and referred to that letter in his consideration of item 5 of the Scott Schedule. 3. Mr Yong attached the orders made in the Tribunal on 1 October 2013 in support of this Ground. The orders were made in an endeavour to prepare the proceedings for hearing and recorded who the witnesses would be. It was noted that Antworks' expert would give evidence. Relevantly, the expert report was dated 23 September 2013 and was filed and served before the directions hearing. The report contained a copy of the letter from Topgal upon which Antworks' expert relied. 4. The Appeal Panel is not persuaded that the order made on 1 October 2013 operated to make the Topgal letter inadmissible or required the letter to be put into evidence through a statement from a representative from Topgal. Mr Yong and his representatives were on notice the expert for Antworks placed reliance on the Topgal letter. In so far as the Topgal letter might have been considered hearsay evidence, Mr Yong would also have been on notice that the Tribunal was not bound by the rules of evidence (refer s 38(2) of the CAT Act). He was legally represented. Mr Yong could have either filed evidence to refute the Topgal letter or made a submission that the information contained in the letter, because it could not be tested or substantiated, lack probity and should be given little or no weight. 5. The decision by Mr Yong not to call or require the author of the Topgal letter be present for cross examination was a decision that Mr Yong took with all relevant facts plainly before him and his representatives. In any event, it is clear that the Tribunal primarily relied on the evidence of the expert which it found to be "convincing" and gave little weight to the Topgal letter, although it was noted that the letter supported the conclusion drawn by the expert (at [91]). 6. We therefore reject Mr Yong's contention that he was denied procedural fairness in connection with the Topgal letter and this ground fails. Errors of law in relation to the contract 1. Mr Yong makes a number of submissions in relation to findings made by the Tribunal about the contract. Grounds 8, 9, 10 and 11 fall within this heading. When these Grounds 8, 9 and 10 are closely considered, it is apparent they raise questions about whether the Tribunal failed to determine an issue in dispute in exercise of its jurisdiction or whether the Tribunal simply failed to give adequate reasons (refer Khan v Kang). 2. In Grounds 8 and 9, Mr Yong contends that the Tribunal erred in law in failing to take into account "the apparent lack of credibility of the builder on the builder's claim" when considering the evidence regarding the formation of the contract between the parties. No authority is cited by Mr Yong to support the contention that the matter complained of constitutes an error of law. 3. The disputes between the parties included the issue of whether the BC4 conditions of building contract issued by the Master Builders Association formed part of the contract. Mr Yong's position was that it did not and even though he had initialled some pages of the contract, he had not signed the contract. Antworks' position was that the parties had signed a BC4 contract with all necessary elements completed. 4. Mr Yong submitted that that in reaching its conclusion, the Tribunal relied upon Antworks' evidence and took into account photographs of what was alleged to be Mr Yong's copy of the building contract. It was submitted that this evidence was a fabrication and inherently unreliable because the photographs of Mr Yong's copy of the contract were taken on 1 September 2012 but they depicted information that was only available on 12 September 2012. 5. The Tribunal referred to the contest between the parties on this issue (at [4], [5], [11], [12], [23] and [24] of the Reasons for Decision) and found at [68] that the contact was in a conventional form consisting of a quotation and the BC4 conditions of building contract issued by the Master Builders Association read together, and specifications and drawings. 6. The Tribunal Member also stated: In reaching this finding I have taken account of Mr Yong's commercial background as a manufacturer or purveyor of solar panels. I have considered that neither party to this whole contract has English as a first language but I find it inconceivable that any person engaged in commercial life in Australia would sign blank copies of a contract and allow the other party to take the documents away. 1. In reaching a conclusion regarding the form of the contract the Tribunal made a finding of fact. That process would not ordinarily result in an error of law. The difficulty is that the reasoning process adopted by the Tribunal to make this finding is not clear. It is implicit in [68] that the Tribunal preferred the evidence of Mr Lee, the director of Antworks, to the evidence of Mr Yong. However, the Tribunal does not state this nor does it explain the basis on which the findings in [68] are made. The reasons do not comply with s 62(3) of the CAT Act, which is why it is difficult for Mr Yong or the Appeal Panel to discern whether this finding of fact was open to the Tribunal, against the weight of evidence or otherwise in error. 2. As stated by Meagher JA in Beale v Government Insurance Office of New South Wales (supra): However where certain evidence is important or critical to the proper determination of the matter and it is not referred to by the trial judge, an appellate court may infer that the trial judge overlooked the evidence or failed to give consideration to it: North Sydney Council v Ligon 302 Pty Ltd (1995) 87 LGERA 435.' 1. The Tribunal's failure to refer to the evidence and submissions regarding the photographs may lead to the inference that the Tribunal failed to give proper consideration to what appeared to be a critical issue. If the Tribunal did give consideration to this issue, there is no reference to this in the reasons. Either way, this discloses an error of law (refer Khan v Kang). 2. Accordingly, Mr Yong has made out Grounds 8 and 9. 3. Ground 10 also related to the critical issue of what constituted the contract between the parties. Mr Yong submitted that the Tribunal erred in failing to find that the parties had entered into an oral contract that provided for a 10% discount when Mr Yong paid Antworks in cash. This Ground raises a similar issue as that raised by Grounds 8 and 9. This was a significant issue raised by Mr Yong before the Tribunal at first instance which was in dispute yet there is no reference to this submission or findings about the issue in the Reasons for Decision. 4. Accordingly, the Appeal Panel finds that Ground 10 discloses an error of law, either because the Tribunal failed to consider the issue and make a determination or because the Tribunal failed to give adequate reasons. 5. In Ground 11 Mr Yong contends that the Tribunal's findings at [85] constituted an error of law. The Tribunal found that: ..the parties' rights under the contract were extinguished on or about 18 December 2012 and that their rights and obligations revert to common law. 1. The basis for this finding was set out at [76] to [83] with the Tribunal concluding at [84]: I find that neither party, at or around December 2012 intended to be bound by their contract and I find that they terminated it by mutual action or inaction. 1. At the hearing, counsel for Mr Yong submitted that the Tribunal's reasons for its findings in [84] and [85] were inadequate. 2. The Appeal Panel is not persuaded that the reasons are inadequate in so far as the Tribunal concluded that the contract had been terminated at or about December 2012. The Tribunal set out its reasons in [76] to [83] and those reasons explain the basis for the finding. 3. What is not explained is why the rights of the parties were "extinguished". Rights that have accrued under a contract are enforceable and are not extinguished by reason of termination. As stated by Dixon J in McDonald v Dennys Lascelles Ltd [1933] HCA 25; (1933) 48 CLR 457 at p476: When a party to a simple contract, upon a breach by the other contracting party of a condition of the contract, elects to treat the contract as no longer binding upon him, the contract is not rescinded as from the beginning. Both parties are discharged from the further performance of the contract, but rights are not divested or discharged which have already been unconditionally acquired. Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. 1. Accordingly, if the Tribunal made a finding that all rights under the contract had been extinguished this would be an error of law. However, on examination of the whole of the Tribunal's reasoning, it is readily apparent that the Tribunal did not intend to make a finding that previous rights had been extinguished. Indeed, the Tribunal went about the task of assessing compensation on the basis of the rights that had accrued until the date of termination. What the Tribunal intended to convey was that the contract came to an end in December 2012 and thereafter any rights of the parties would be governed by the common law. This is a correct proposition. Accordingly, the Appeal Panel rejects this ground. Grounds 20 and 21 1. It is submitted in Grounds 20 and 21 that the Tribunal, having found that Mr Yong paid for variations 2, 3 and 4 (as recorded in [102], [105] and [106]), failed to deduct these amounts from the value of the variations it ordered to be paid to Antworks. 2. The manner in which the Tribunal dealt with the calculation of money due to Antworks is difficult to understand and does not allow a clear understanding of the accounting process used. The Tribunal's reasoning in setting out the mathematical process by which it arrives at the sum of $52,780.35, which is stated to be the balance owing under the contract, is far from clear. Relevantly, neither party could explain the accounting process to the Appeal Panel at the hearing. 3. This discloses an inadequacy in the Reasons for Decision and therefore an error of law. Leave to appeal 1. Ground 19 is made on the basis that the findings of the Tribunal at [102], [105] and [106] of the Reasons for Decision in respect of cheques 196, 198 and 199 were contrary to the evidence. Mr Yong concedes that he requires the leave to appeal on this ground. He submits that the transcript of the proceedings (T468 and T482 to T484) show that Antworks gave evidence that the cheques were received by him as payments for progress claims. 2. The principles are well settled. In Collins v Urban the Appeal Panel of the Tribunal conducted a review of the relevant cases and set out the principles at [84]. 3. In summary, for leave to appeal to be granted, an appellant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact. Ordinarily it is appropriate to grant leave to appeal only in matters that involve issues of principle, questions of public importance or matters of administration or policy which might have general application, an injustice which is reasonably clear, a factual error that was unreasonably arrived at and clearly mistaken; or that the Tribunal went about its fact finding process in such an unorthodox manner that it produced an unfair result. 4. We have reviewed the transcript in question, which records the cross examination in relation to this issue. It is far from clear that the Tribunal made material factual errors. 5. The Appeal Panel is therefore not persuaded that there has been an injustice that is reasonably clear or that it would be unjust to allow these findings to stand. Accordingly, Mr Yong's application for leave to appeal in respect of in Ground 19 is refused. Conclusion 1. Mr Yong has succeeded in respect of a number of the grounds that he is raised in his appeal. In this case, the errors are so fundamental to the critical issues in dispute between the parties that the only appropriate order is for the substantive decision made on 14 April 2015 to be set aside. 2. The question is, having decided the Reasons for Decision were inadequate in a number of material matters (or, in the alternative, that the Tribunal failed to exercise its jurisdiction to properly determine the claim), whether the decisions made in respect of both applications should be set aside and remitted for reconsideration. As noted in Beale at p 444: ..an appealable error arising from inadequate reasons does not necessarily mean that a new trial is required. An appeal court is entitled to consider the matter and, if appropriate reasons are given, may itself decide the matter. Thus, if the only conclusion open on the evidence available at trial was the conclusion reached by the trial judge, then, notwithstanding an inadequate statement of reasons, the matter need not go to a new trial: NSW Insurance Ministerial Corporation (formerly GIO of New South Wales) v Mesiti (Court of Appeal, 1 December 1994, unreported). 1. The errors identified not only impact the findings about the contract and the balance owing under the contract but the claim for variations and part of Mr Yong's claims for defects and incomplete works. This taints the decisions made on both applications. 2. Furthermore, the Appeal Panel is not in a position to determine these matters without undertaking a significant and lengthy re-examination of the evidence in the case at first instance. Accordingly, the most appropriate course is to set aside the decisions and remit the matter to the Consumer and Commercial Division for reconsideration. 3. An issue was raised by the parties about whether the matter should be remitted to the same member or to a Tribunal differently constituted. 4. Mr Yong submitted the decision-making process was so compromised that the matter should be reconsidered by a differently constituted Tribunal. Antworks submitted it would be more efficient for the matter to be reconsidered by the same Tribunal. 5. While the Tribunal did not make adverse findings about the credibility of witnesses, it did, by inference, prefer the evidence of Antworks over the evidence of Mr Yong on a number of critical issues that will need to be reconsidered. 6. This issue was considered by Adamson J in BCS v NSW Civil and Administrative Tribunal [2015] NSWSC 126 (citing Seltsam Pty Limited v Ghaleb [2005] NSWCA 208). Her Honour observed at [54] that while the power to make such an order should be exercised with caution, such an order should be made in the interests of justice in the circumstances of the case. In making the order, her Honour had regard to that fact that the applicant may have grounds for an apprehension of bias where the Senior Member failed to undertake the statutory task required of him, there may be a risk or the appearance of risk of compensatory bias and the Tribunal Member may feel obliged to recuse himself if the matter were remitted. Her Honour also took account of the fact that both parties requested that the Tribunal be differently constituted. 7. While the Appeal Panel accepts that making such a direction should be exercised with caution and that there are advantages in proceedings being remitted for reconsideration to the same Tribunal, this is a case where the matter should be remitted to a differently constituted Tribunal. First, this case is similar to BCS in that we have concluded that the Tribunal failed to discharge the statutory task required in a number of material respects. Secondly, given the observations of the Tribunal in its Reasons for Decision about Mr Yong, Mr Yong may have an apprehension that the Member will be biased in the conduct of the rehearing. Thirdly, there is a real prospect Mr Yong will request that the Member recuse himself and that the Member may feel obliged to do so. 8. These matters have the potential to unduly delay the finalisation of proceedings that have already been before the Consumer and Commercial Division, and its predecessor, for a number of years. Having regard to the guiding principle for the Tribunal in the exercise of its functions as set out in s 36 of the Cat Act, namely "to facilitate the just, quick and cheap resolution of the real issues in dispute", the Appeal Panel determined that the most appropriate course to give effect to these principles is to remit the proceedings to a differently constituted Tribunal for rehearing. Costs 1. The parties made submissions in relation to the costs appeal. Mr Yong submitted that if the substantive appeal was allowed, the cost decision should also be set aside. There were further submissions made by both parties in the event the substantive appeal was dismissed. It is not necessary to deal with those submissions given we have decided to set aside the substantive decision. 2. Given substantive decision, on which the cost decision was based, has been set aside and remitted for reconsideration it is appropriate that the cost decision also be set aside and remitted to the Consumer and Commercial Division for reconsideration following the hearing of the substantive claim. Orders 1. The Tribunal makes the following orders: 1. Grounds 1 to 3, 7 to 10, 20 and 21 of the substantive appeal allowed. 2. Grounds 4 to 6 and 11 are dismissed. 3. Leave to appeal on Ground 19 refused. 4. The costs appeal allowed. 5. The decisions and orders made on 14 April 2015 and 3 August 2015 in applications HB 13/11421 and HB 13/66466 are set aside and the proceedings are remitted to the Consumer and Commercial Division for reconsideration 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: 18 January 2016