Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Gorr v Minkley [2017] NSWCATAP 13 Hearing dates: 10 January 2017 Date of orders: 19 January 2017 Decision date: 19 January 2017 Jurisdiction: Appeal Panel Before: M Harrowell, Principal Member G Walker, Senior Member Decision: 1. The time to appeal is extended to 17 October 2016. 2. To the extent necessary, leave to appeal is granted and the appeal is allowed in part; 3. Order 1 made by the Tribunal on 7 September 2016 is set aside and in lieu thereof the following order is made: The respondent is to pay the applicants the sum of $9,328.61 immediately. 4. The appeal is otherwise dismissed with each party to pay their own costs. Catchwords: Building contract- adjustment to contract sum following deduction of work for which provisional allowance made. Damages- set-off of balance of unpaid contract price. Decision- inferences to be drawn from amount awarded in decision, express reasons contrary to inference. Legislation Cited: Civil and Administrative Tribunal Act, 2013 Category: Principal judgment Parties: Amanda Gorr and Travis Lochert (Appellants) Peter Minkley (Respondent) Representation: Appellants in person Respondent in person File Number(s): AP 16/45829 Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 28 June 2016 Before: K Holwell, General Member File Number(s): HB 16/12717 reasons for decision Introduction 1. This is an appeal in respect of a decision made by the Tribunal on 7 September 2016. That decision related to Home Building application HB 16/12717 brought by the appellants who were the homeowners of a property located at Myocum in New South Wales. 2. The appellants had entered into a building contract with the respondent, who is a builder, to carry out residential building work at the property. The appellants said that the works undertaken by the respondent were defective and that the respondent had breached the statutory warranties applicable to the works under the Home Building Act, 1989. 3. The proceedings were heard by the Tribunal on 23 June 2016. On 7 September 2016 the Tribunal made the following orders: 1. The respondent is to pay the applicant's $7269.61 immediately. 2. The applicants are relief from payment of the respondent invoice dated 12 April 2015 in the sum of $7161.70 because this amount has been deducted from monies found to be payable by the respondent to the applicant's. 1. The appellant filed the Notice of Appeal on 17 October 2016, having received notice of the Tribunal's decision on 14 September 2016. The appeal is therefore out of time by 5 days, the time for lodging an appeal being on or before 12 October 2016. Notice of Appeal and submissions 1. The appellants sought leave to appeal out of time. The reasons why an extension were should be granted were as follows: 1. We did not receive the Decision until the 14/09/2006 been, we live in a rural area. 28 days from 14/09/2016 is the 12/10/16 which is the day this application will be posted. 2. After reading the decision and all our avenues to dispute the decision, we wrote to Tamworth NCAT informing them of their simple error. After deliberating for a week and a half we received a response further delaying the process. 3. The guidelines for appeal suggesting getting independent legal advice. After receiving a negative result from our "Simple Error" application we have contact different legal services, which took another week. 1. Also, the Notice of Appeal sought leave to appeal to the extent such leave was necessary. 2. As to the substantive appeal, the appellants say that the Tribunal made an error in calculation in that it failed to allow an amount of $4400.00 which was owed by the respondent to the appellants in respect of electrical work. Consequently, the appellants say that the Tribunal should have made an order that the respondent pay to the appellants the sum of $11,669.61. 3. The appellants do not challenge the findings made by the Tribunal as to the amount they are entitled to as damages for defective work and the other claims for breach of contract for which they were awarded $14,431.31. The only challenge relates to the failure of the Tribunal to award him the sum of $4400.00 in respect of the electrical work. 4. Under item 5B- Grounds of Appeal, the appellants say that the Tribunal made an error in paragraph 16 of the decision. The appellants say: 1 The following statement from Paragraph 16 is incorrect: "The contract price was reduced to $151,470.00 after the plumbing work and electrical work were removed from being work to be done or arranged by the builder". The original quote (attached) of $181,582.70 had the stipulation that 6 items (5 plumbing items and 1 surveyor item) would be the full responsibility of the (appellants) and taken off the quote, (see page 3 of the contract) reducing the contract price to $151,470.00 (see page 1 of the contract). The electrical allowance is NOT 1 of 6 items to be taken off. As expected, if you take off the 6 items (not electrical) as detailed in the contract you get the electrical allowance of $4400, then the contract price would have been $147,070.00 instead of $151,470.00. The Tribunal has mistakenly also taken off the electrical allowance of $4,400 and consequently the math does not add up. In summary, the electrical allowance is part of the contract price of $151,470.00 and therefore should be paid by the respondent. 2 The statement "the applicant would engage the electrician and pay for his work" is incorrect. The (appellants) helped engage the electrician. The $4400 electrical allowance is clearly marked on pg 2 of the contract where it states: Electrical: Provisional allowance $4400. There was no evidence to say that the respondent was not fully responsible to pay the electrical allowance. 1. As can be seen from the grounds of appeal, the appellants say that the contract price was to be adjusted by deleting from it amounts in respect of plumbing and surveying costs. Secondly, the appellants say that the respondent remained responsible to pay for the electrical work. Consequently, because the appellants had paid the electrician directly, they were entitled to be reimbursed this sum by the respondent. 2. In written submissions filed 2 December 2016, the appellants also said that "no evidence was provided to dispute what the contract states, or to demonstrate there was an alteration to the contract regarding the electrical provisional sum". Also, the appellants rely on an email dated 26 April 2015 (page 10 of the appellants' bundle filed 2 December 2016) as corroborating their assertion that the electrical work was not deleted from the contract. 3. At the hearing of the appeal, there were extensive discussions between the parties and the Appeal Panel concerning the calculations made by the Tribunal and whether or not they were correct. There were also discussions concerning the reasons for decision and the adjustments which the Tribunal had made to the contract sum in determining the amount to be offset against the appellant's claim for defective work. 4. In essence, the appellants made submissions similar to those in the Notice of Appeal, namely that: 1. The respondent was obliged to pay for the electrical work. Because the appellants had paid the electrician directly, the respondent was obliged to pay this sum of money to them; and 2. The contract sum was to be adjusted to remove the allowance for surveyor costs. 1. In making these oral submissions, the appellants referred the Appeal Panel to a bundle of documents filed in support of the appeal which contained Schedule 1 to the contract dated 9 October 2014 setting out the original contract price of $181,582.70 and one page of a three-page quotation provided by the respondent setting out how this sum was calculated. 2. The respondent filed a Reply to Appeal and made oral submissions at the hearing. 3. The respondent agreed with the Tribunal's decision and said at 3B of the Reply to Appeal "the electrician was directly employed by the appellants, just as the plumber was directly employed and was a verbal agreement, so there was not any formal documentation to present." 4. At the hearing of the appeal, the respondent said there was no agreement to remove the allowance for surveying costs which he incurred and paid. 5. In relation to the late filing of the appeal, the respondent opposed leave to appeal out of time and said that the original decision should be regarded as final. 6. In his written submissions in reply, the respondent also challenged the Tribunal's decision at [13] to award the appellant is the sum of $1150.00 in respect of the western veranda eaves, which the respondent said was not part of the contract. In relation to this submission the Appeal Panel noted at the hearing of the appeal that no Notice of Appeal had been filed by the respondent, nor had any of the evidence from the original hearing been filed. Consequently, this matter could not be challenged by the respondent in the present appeal. 7. In oral submissions, the respondent again stated that it had been agreed the electrician would be paid for by the appellants. Therefore a deduction should be made to the contract sum. Consideration 1. At the commencement of the hearing of the appeal, in which the parties appeared by telephone, the Appeal Panel identified documents upon which the parties intended to rely. These consisted of the Notice of Appeal, the Reply to Appeal, and written submissions filed by each of the parties which had attached to them some of the documents provided to the Tribunal at the original hearing. Relevantly, these documents were limited to Schedule 1 of the contract, page 28 of 44 of the general conditions of contract, and the quotation of the respondent dated 7 October 2014 setting out the work included in the contract price totalling $181,582.70 and an email dated 26 April 2015 to which we have referred above. 2. The Appeal Panel noted that the parties had not provided all of the evidence that was presented to the Tribunal at the original hearing nor had the parties provided a sound recording of that hearing. The Appeal Panel asked the appellants whether they wished to apply to adjourn the proceedings to obtain this material, the Appeal Panel having indicated that if it was not provided then the appeal hearing would be limited to a determination on the documents presented. The appellants indicated they did not wish to have the proceedings adjourned and wanted the matter finalised. The respondent did not take a different position. 3. In order to succeed in the appeal, the appellants must demonstrate that the Tribunal made an error of law for which there is a right of appeal. Otherwise, the appellants must obtain leave to appeal and demonstrate that they may have suffered a substantial miscarriage of justice. In the present case, this involves satisfying the Appeal Panel that the decision of the Tribunal was not fair and equitable or was against the weight of evidence: see Sch 4 cl 12(1) of the Civil and Administrative Tribunal Act, 2013 (NCAT Act). 4. Because the parties have not provided evidence from the original hearing, including the sound recording, the Tribunal's decision is to be evaluated by the Appeal Panel in the context of the documents which have been provided and on the basis of the facts as found by the Tribunal. Leave to appeal out of time 1. The appellants were 5 days late in filing the appeal. 2. It is apparent from the submissions which the appellants have made that they believe mathematical and other errors were made by the Tribunal. We would infer from the content of the Notice of Appeal that they applied to the Tribunal at first instance to have these errors corrected. Such a process is available under s63 of the NCAT Act. It is also apparent that their attempts to have the "errors" corrected were not successful and that this appeal was subsequently lodged. In addition, the appellants say that being in rural New South Wales the time to communicate with the Tribunal was necessarily lengthened. 3. In relation to the process of communication and any delay that might arise, we have some doubt that this of itself would be a sufficient excuse in circumstances where the appellants have email available to them as indicated on the Notice of Appeal. However, the delay is only 5 days and having regard to our conclusions below in respect of the original decision, we are satisfied that an error has been made in determining the amount which the respondent should pay to the appellants and that this error should be corrected. 4. Accordingly, the time to file the Notice of Appeal should be extended until 17 October 2016. 5. There are two issues to be determined in order to resolve this appeal. First, were the appellants entitled to be paid $4400.00 in respect of the electrical work. Secondly, in calculating the amount to be set off for the unpaid contract sum against the appellant's entitlement to damages of $14,431.31, did the Tribunal allow and/ or determine there should be allowed the sum of $440 in respect of surveyor costs. Claim for electrical work - $4,400.00 1. It is common ground in the appeal that the provisional allowances in the original contract sum of $181,582.70, as set out on page 3 of the respondent's quotation dated 7 October 2014, are as follows: 1. Plumbing- $29,672.70 (made up of the amounts of $8965.00, $12,650.00, $2535.00, $1940.00 and $3582.70 as detailed on page 3); and 2. Surveyor set out of house-$440.00. 1. It is also common ground that a provisional allowance for electrical work in the original contract sum was $4,400.00, again an amount recorded in the quotation dated 7 October 2014 at page 2. 2. The appellants contend that the respondent remained liable to pay the sum for the electrical work to the electrician engaged to do this work and that because they paid this amount directly to the electrician they are entitled to be reimbursed. 3. This submission assumes that the respondent was in fact liable to pay the sum of $4,400.00 to the electrician, having contracted with the electrician as his subcontractor. In this case, the appellants would have had no obligation or entitlement to pay the electrician directly. Rather, they would have been obliged to pay this sum to the respondent if the electrical work was equal to or greater than $4,400.00 and they could not discharge their obligations under the contract with the respondent by making an unauthorised payment directly to the electrician. 4. If this was the agreed position and there was no variation to the original contract then (subject to the issue of the surveyor costs) the following amount would have been the adjusted contract sum payable by the appellants: Original contract sum $181,582.70 Less: Deduction for plumbing $29,672.70 Adjusted contract sum $151,910.00 (No deduction for electrical provisional allowance) 1. The Tribunal found that the appellant had only paid the respondent $142,407.30: decision [24]. This finding was not challenged on appeal. 2. Therefore, if the provisional sum for the electrical work had not been deducted, the amount remaining to be paid to the respondent would have been $9,502.70 (being the difference between $151,910.00 and $142,407.30). 3. As is evident from the above calculation, the amount that would have been payable by the appellants includes the amount of $4400.00 being the provisional allowance for the electrical work, the only deduction being made in respect of the provisional allowance for plumbing. 4. However, the Tribunal determined that the contract had been varied by agreement between the parties and the electrical work removed: see decision at [7], [14] and [16]. The evidence presented in the appeal does not demonstrate any error by the Tribunal in reaching this conclusion and nothing in the decision would otherwise suggest this conclusion was wrong. 5. The appellants refer to an email dated 26 April 2015 and submit that this email suggests the respondent and electrician had not been paid and that it corroborates their submission that the electrical work remained part of the contract work and that there was no variation to the contract to delete that work and the provisional allowance. The Appeal Panel assumes for the purpose of considering this submission that the recipient of the email, Mr Trent Bailey, was the person who did the electrical work. 6. The problem with this submission is that the language in the email is equivocal as to whether the obligation to pay the electrician remained with the respondent (as provided in the original contract) or the obligation was with the appellants in consequence of a variation (as found by the Tribunal). In this regard the respondent says in his email to Mr Bailey: Trent, I gave them a final invoice two weeks ago and I am also waiting to be paid… I am hoping to meet with them this week to finalise payments for everyone… 1. The use of the words "I am also waiting to be paid" and the reference to "payments for everyone" suggest that there were separate payments to be made by the appellants to each of the respondent and the electrician. Otherwise, there is no evidence provided in the appeal (such as a contract with the electrician or any invoice from the electrician) to establish whether the appellants or the respondent contracted with the electrician for any electrical work. There is also no evidence provided in the appeal from the original hearing to prove what the work referred to in the email was or what was its value. 2. Lastly, in the absence of all evidence from the original hearing, we do not accept the submission that that there was no evidence to support the Tribunal's conclusion that the contract had been varied to delete the electrical work to which the provisional allowance of $4,400.00 related. 3. Consequently, the Tribunal should have adjusted the contract sum as follows: Original contract sum $182,582.70 Less: Deduction for plumbing $29,672.70 Deduction for electrical $4,400.00 Adjusted contract sum $147,510.00 1. As the Tribunal found an amount of $142,407.30 had been paid, this means that the unpaid balance to be offset against the award for damages in favour of the appellants was $5,102.70 ($147,510.00 minus $142,407.30) and not $9,062.70 as found at [24] of the decision. 2. The Tribunal said at [16] of the decision: The (appellants) need to realise that they cannot have the lump sum contract price reduced to take out the electrical work and get the previous allowance paid to them as well. 1. The problem with this statement, as demonstrated by the reconciliations set out above, is that the Tribunal failed to make an appropriate deduction. Rather, the Tribunal only allowed an amount of $440.00. This error is demonstrated by the following calculation. Adjusted contract sum (plumbing only removed) $151,910.00 Adjusted sum as found by the Tribunal (at [16]) $151,470.00 Difference $440.00 1. Consequently, it is the amount of $5,102.70 which represents the unpaid contract sum which the Tribunal should have set off against the award for damages of $14,431.31. That is, the Tribunal should have made an award in favour of the appellants for a net amount of $9,328.61. 2. In reaching this conclusion, we should deal with the Tribunal's finding at [24] of the decision. There, the Tribunal said: The Tribunal finds that the (appellants) owed the respondent the amount of his final invoice being $7,161.70 rather than $1,033.04 suggested by the applicants. The adjusted lump sum contract was $151,470.00. The (appellants) have paid $142,407.30 leaving a balance of $9,062.70 which is much closer to the amount claimed by the respondent than that suggested by the applicants. 1. The Tribunal made an order which relieved the appellants of the obligation to pay the final invoice. In making this order it made reference to the calculated balance due under the contract as being "much closer to the amount claimed by the respondent then suggested by the (appellants)". We do not understand the relevance of this comment. 2. The task of the Tribunal was to determine what was the balance of the contract sum which had not been paid by the appellants. The final invoice may be some evidence of an amount which remained unpaid. However, in a building contract involving progress payments, for the purpose of determining the final amount which remained unpaid in the present circumstances it was necessary for the Tribunal to determine the adjusted contract sum and deduct from it the amount actually paid in order to determine what amount, if any, remained unpaid. It is this unpaid amount which is to be accounted for in any set off against the appellants' claim for damages. 3. In the present case, the Tribunal found in paragraph 24 that a balance of $9,062.70 was payable under the contract. For reasons set out above, this conclusion was in error. Having regard to the proper amount by which the contract should have been adjusted, the unpaid balance due under the contract was only $5,102.70. 4. The Tribunal was correct to make an order that the final invoice of $7,161.70 was not payable because the appellants' claim for damages exceeded any amount that remained outstanding under the contract. 5. However, the Tribunal was incorrect to set off the amount of this invoice against the sum of $14,431.31 which was payable as damages. As we have explained above, this is because, after adjustment for the Tribunal's error in calculating the adjusted contract sum, the balance due under the contract to be offset against the claim for damages was $5,102.70 only, not the amount of the final invoice being in excess of the actual amount due. Surveying costs 1. The surveying costs, as recorded on page 3 of the respondent quotation, were a provisional allowance for $440. The appellants submitted that this amount should also be deducted from the original contract sum, the parties having agreed to its deletion and that this is what the Tribunal did. 2. The appellants accepted that the decision of the Tribunal does not record any finding to the effect that there was an agreement to reduce the provisional allowance for the surveying costs. No evidence from the original hearing was provided in the appeal to support the view that such an agreement had been made. However, the appellants submitted that a finding to this effect is implicit in the Tribunal's decision at [24]. The appellants said a mathematical calculation demonstrates that that the Tribunal allowed an amount of $440.00 as a reduction from the original contract sum in addition to the amount allowed for plumbing of $29,672.70, being a total reduction of $30,112.70. This is the difference between the original contract sum of $181,582.70 and the adjusted contract sum of $151,470.00 as recorded in the decision at [24. In short, the appellant said that it should be inferred from the reasons set out at [24] that there was an agreement that the surveying cost be deducted. 3. In reply, the respondent denied such an agreement. The respondent said he had paid these costs and no reduction should be allowed from the original contract sum for this amount. 4. As noted above, the appellants did not provide in the appeal all of the documents provided to the Tribunal at the original hearing. Nor did the appellants provide a copy of the sound recording of the original hearing. Accordingly, a resolution of this issue must be reached on the basis of the written reasons of the Tribunal. 5. The Tribunal made the following findings. At [7] the Tribunal found: The contract originally had a fixed price of $181,582.70. Then there was agreement between the parties for the electrical and plumbing work to be arranged by the (appellants) and the contract price was reduced by the respondent to $151,470. The (appellants) have done an adjustment schedule whereby they claim that the contract price should be readjusted to $143,440.34. However, they have signed a lump sum contract to initially pay $181,582.70 and subsequently $151,470.00 and they may be held to those sums. It is common ground that they have paid $142,407.30 1. Then, at [14], the Tribunal said: As previously stated the original contract was varied to enable the (appellants) to enter into contracts with a plumber and an electrician. The lump sum contract price was varied considerably to allow for these changes… 1. Finally, at [16], the Tribunal said: The (appellants) claim that the respondent owes them $4,400.00 for an allowance in the contract details for the electrician. Yes it was an allowance in the contract when the original lump sum contract was $181,582.70. Subsequently it was agreed that the applicants would engage the electrician and pay for his work. The contract price was reduced to $151,470.00 after the plumbing work and electrical work were removed from being work to be done and arranged by the builder. This part of the claim is also misconceived and cannot be accepted. The (appellants) need to realise that they cannot have the lump sum contract price reduced to take out the electrical work and get the previous allowance paid to them as well. 1. It is absolutely clear from these findings that the Tribunal was intending to allow an amount of $4,400.00 as a deduction from the original contract sum on the basis that the parties had agreed to delete the electrical works from the contract. Further, the Tribunal was attempting to explain to the appellants that having made a deduction from the contract price for the electrical work in determining what if any amounts were still payable to the respondent (and therefore should be offset against the appellants' damages claim), the appellants were not also entitled to be paid an amount of $4400.00 from the respondent in these circumstances. 2. Otherwise, the paragraphs to which we have referred provide no basis on which it could be inferred the Tribunal intended to allow a further deduction from the original contract sum of $440.00 because the work for which the provisional allowance for "Surveyor set out of house- $440.00" was work which the parties had agreed to be deleted from the contract by variation. 3. There are no other parts of the decision to which we have been referred or which we could identify that might lead to a contrary conclusion and there is otherwise no evidence provided from the original hearing to substantiate this claim. 4. Accordingly, no adjustment should be made to the original contract sum to delete this amount. The only adjustment that should be made is in respect of the provisional allowance for electrical work of $4,400.00. Leave to appeal 1. As stated above, the error made by the Tribunal is clear. Whether this error is categorised as an error of law (for which there is a right of appeal) or whether the error is properly characterised as arising from an error other than an error of law (for which leave is required) is unnecessary to decide. This is because it is clear that the appellants may have suffered a substantial miscarriage of justice because the decision is not fair and equitable and leave should be granted in such circumstances. 2. Accordingly, to the extent necessary leave to appeal should be granted. Orders 1. The Appeal Panel makes the following orders: 1. The time to appeal is extended to 17 October 2016. 2. To the extent necessary, leave to appeal is granted and the appeal is allowed in part; 3. Order 1 made by the Tribunal on 7 September 2016 is set aside and in lieu thereof the following order is made: The respondent is to pay the applicants the sum of $9,328.61 immediately. 1. The appeal is otherwise dismissed with each party to pay their own costs. ********** 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: 19 January 2017