Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Sea Breeze Homes v Heffley [2017] NSWCATAP 99 Hearing dates: 7 April 2017 Date of orders: 04 May 2017 Decision date: 04 May 2017 Jurisdiction: Appeal Panel Before: K Rosser, Principal Member F Corsaro SC, Senior Member Decision: 1. Leave to appeal is refused. 2. The appeal is dismissed. Catchwords: Appeal – No question of law – Whether leave ground established Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Rules 2014 Fair Trading Act 1987 Home Building Act 1989 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Westport Insurance Corporation v Gordian Runoff Ltd (2011) CLR 239 Category: Principal judgment Parties: Sea Breeze Trading Pty Ltd t/as Sea Breeze Homes (Appellant) Susan Heffley (Respondent) Representation: Mr Hing (Director, applicant) S Heffley (Respondent in person) File Number(s): AP 16/54589 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 24 November 2016 Before: W Priestley, General Member File Number(s): HB16/33939 (previously GEN 16/33939) reasons for decision Introduction 1. This an internal appeal against a decision made on 24 November 2016 in the Consumer and Commercial Division of the Tribunal in proceedings HB16/33939. The Tribunal ordered the appellant (Sea Breeze) to pay the respondent (Ms Heffley) the sum of $7,255. This decision took into account findings made in a related application brought by Sea Breeze against Ms Heffley: HB16/42577. 2. Mrs Heffley's application was originally filed as a consumer claim under the Fair Trading Act 1987 and was allocated file number GEN16/33939. However, both applications were decided under the Home Building Act 1989 (the HB Act), the Tribunal having found that the services Sea Breeze provided to Mrs Heffley were building services as defined in s 48A of that Act. 3. Sea Breeze disputed two findings made by the Tribunal. First, it disputed the Tribunal's findings in relation to a $5,500 "engagement deposit". Second, it disputed the Tribunal's finding in relation to an architect's second fee, also in the sum of $5,500. 4. Appeals made in respect of decisions other than in residential proceedings must be filed within 28 days from the day on which the appellant was notified of the decision to be appealed or given reasons for the decision, whichever is the later: cl 25(4)(c) of the Civil and Administrative Rules 2014 (the Rules). 5. Sea Breeze filed the notice of appeal on 19 December 2016, which means that the appeal is within time. 6. For the reasons set out below, we have refused leave to appeal and dismissed the appeal. Scope and nature of the appeal 1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NCAT Act). 2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1. the decision of the Tribunal under appeal was not fair and equitable, or 2. the decision of the Tribunal under appeal was against the weight of evidence, or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. 1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 2. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed, Background 1. The applications before the Tribunal arose from an oral contract between the parties. In May 2015, Sea Breeze contracted with Mrs Heffley to have an architect prepare a master plan and schematic design for a house to be built on land owned by Mrs Heffley and to submit the resultant plans to the Council for development approval. Sea Breeze provided a written estimate of costs up to the development approval stage in the sum of $18,150. This included $4,000 for architectural drawings. The parties expected to formally enter into a building contract once the construction costs were known and the plans approved. 2. On 26 May 2016, Mrs Heffley paid Sea Breeze $9,500. This sum included $4,000 for the architectural drawings and $5,500 which, according to Mrs Heffley, Sea Breeze's representative Mr Hing told her would be "treated as part of [her] construction payments". 3. Prior to travelling overseas for two months, Mrs Heffley paid Sea Breeze a further $11,000 to cover the development application costs. 4. When Mrs Heffley returned to Australia, she discovered that the development application had cost only $5856.50. She asked for a refund of the difference between this sum and the $11,000 she had paid. Sea Breeze did not make the requested payment. 5. The parties subsequently fell into dispute about payments and Mrs Heffley decided to terminate the agreement. She eventually put her land on the market and in February 2016 asked Sea Breeze to refund the balance of her account ($8,573.50). Sea Breeze did not do so. 6. Mrs Heffley filed her application in the Tribunal on 25 July 2016. In her application, she sought payment of $8573.50. Sea Breeze's cross application was filed on 23 September 2016. Sea Breeze sought an order for payment of $3,746, which it argued was owed to it by Mrs Heffley. 7. Both applications were heard on 24 November 2016. The Tribunal made orders on that date and gave reasons for decision orally. The Tribunal's decision 1. Mrs Heffley provided a partial transcript of the Tribunal's reasons for decision, which sets out the findings made in respect of the two issues in dispute in the appeal. At the hearing, Mr Hing, who is Sea Breeze's director, agreed that the transcript accurately reflected the Tribunal's findings and reasons. 2. As noted above, Sea Breeze disputes the Tribunal's findings in relation to: 1. The "engagement deposit" of $5,500 and 2. Additional architects' fees of $5,500. 1. In relation to the engagement deposit, on the basis of an email dated 25 May 2015, the Tribunal found that it was an amount to be deducted from the contract price if a contract was entered into for the construction of a dwelling. The Tribunal found that it was a term of the contract between the parties that Sea Breeze was to do the work necessary to obtain development approval on behalf of Mrs Heffley and that it was not a term of the contract that Sea Breeze would charge for its work in obtaining the development approval. The Tribunal went on to find that the consideration for the builder to enter into the contract to provide coordination services at no charge was "the possibility or likelihood of obtaining the contract to construct the dwelling, which would have rewarded the builder with 10% of the contract price, which would have given the builder $50,000 - $60,000 in earnings in relation to this project". 2. In relation to the additional architect's fee, the Tribunal found that there was an implied term in the oral contract that the work Sea Breeze was arranging to be done would be charged at reasonable rates and in line with the estimate provided to Mrs Heffley on 22 May 2015. The Tribunal found that the architect's second fee of $5,500 was only levied after the contract was terminated and was outside the scope of what had been agreed. The Tribunal found that the initial estimate for architect's fees was $4,000 and that $4,400 was a reasonable variation on an estimate. However, to charge almost 125% more than the estimate was not in accordance with the oral contract. 3. The Tribunal noted that Sea Breeze had been given an opportunity to argue that the work was reasonable on a quantum meruit basis. However, the Tribunal was not satisfied that Sea Breeze's evidence – an extract from an email – established a claim in quantum meruit. Evidence and submissions 1. In making a decision on the appeal, we have considered the Notice of Appeal filed by the appellant, the Notice of Reply filed by the respondent, the evidence and written submissions filed by both parties and oral submissions made during the hearing by Mr Hing and by Mrs Heffley, who represented herself. Notice of appeal 1. Sea Breeze has sought to appeal on the basis of a question of law, arguing that the Tribunal erred in law in finding that the $5,500 engagement deposit was to be refunded to Mrs Heffley. 2. Sea Breeze has sought leave to appeal on the basis that significant new evidence is available that wasn't reasonably available at the time of the hearing. The new evidence on which Sea Breeze seeks to rely is a statutory declaration by Scott Carpenter, architect, dated 24 November 2015. Consideration Ground 1 – Engagement deposit Sea Breeze's submission in relation to the engagement deposit 1. Sea Breeze asserts that the Tribunal's decision to order the refund of the engagement deposit was an error of law. 2. Sea Breeze's argument in relation to this issue, as set out in the Notice of Appeal, is that while the preliminary contract between the parties was "oral in principle", it was "expanded on in subsequent correspondence, meetings and actions" and "accepted by virtue of progress invoices" that Mrs Heffley paid. Sea Breeze states that the engagement deposit was included in the invoiced total of $9,500, which Mrs Heffley paid in May 2015. Sea Breeze further argues that the Tribunal accepted the validity of all of the other items on the invoiced list and it was inconsistent not to accept that the engagement deposit was payable. 3. Sea Breeze submitted that it offered to apply the equivalent of the engagement deposit against the value of a building contract, but terminating the contract does not entitle Mrs Heffley to a refund. 4. At the hearing of the appeal, Mr Hing argued that Sea Breeze had contracted to build a house for Mrs Heffley and not merely to have architectural drawings prepared and to submit a development application to Council. In effect, he argued that there was only one contract between the parties and that Sea Breeze was entitled to be paid for the services it had performed. Mrs Heffley's submission in relation to the engagement deposit 1. Mrs Heffley argued that the Tribunal made no error of law regarding the engagement deposit. She stated that in the written estimate of fees up the development approval stage, there was no mention of an engagement fee or of any fee for Sea Breeze's services. She stated that Sea Breeze confirmed in writing that the engagement deposit was to be treated as part of the construction payments. Decision in relation to Ground 1 1. The correct construction of a contract is a question of law: Westport Insurance Corporation v Gordian Runoff Ltd (2011) CLR 239 at 279. Sea Breeze has a right to appeal on this ground. 2. As noted above, the Tribunal decided that Mrs Heffley was entitled to a refund of the engagement deposit because it was an amount to be deducted from the contract price if a contract was entered into for the construction of a dwelling. The Tribunal also found that it was not a term of the contract that Sea Breeze would charge for its work in obtaining the development approval and that the consideration for entering into such a contract was "the possibility or likelihood of obtaining the contract to construct the dwelling". 3. We do not accept Sea Breeze's submissions in relation to the engagement deposit. Although Mr Hing may have believed that Sea Breeze contracted to build Mrs Heffley's house, this was not the case. This is because, as at May 2015 when Sea Breeze contracted with Mrs Heffley, there were no architectural plans in existence, no building works had been approved and the construction cost could not be estimated. The evidence before the Tribunal supported a conclusion that the contract between the parties was preliminary to a construction contract, but not itself a construction contract. 4. At the appeal hearing, Mr Hing did not dispute that the estimated costs associated with the preliminary contract (which were set out in an email Sea Breeze sent to Mrs Heffley on 22 May 2015) did not include any reference to an engagement deposit. Nor did Mr Hing dispute that an email was sent to Mrs Heffley on 26 May 2015, which stated that the engagement deposit of $5,500 would be "treated as part of [her] construction costs". 5. In these circumstances, we conclude that there was no error in the Tribunal's interpretation of the contract between the parties as it related to the engagement deposit. In effect, the engagement deposit was a deposit on a construction contract that the parties did not enter into and not a payment in respect of the preliminary contract to have architectural plans prepared and to submit a development application to Council. 6. In any event, even if the contract between the parties could be characterised as a construction contract, the contract was not in writing as required by s 7 of the HB Act and accordingly could not be enforced by Sea Breeze because of s 10 of that Act. At no stage, either before the Tribunal at first instance or on the appeal, did Sea Breeze provide any evidence to demonstrate that it had performed work to the value of $5,500, assessed on a quantum meruit basis. 7. As we are not satisfied that the Tribunal erred in its construction of the contract between the parties, we reject this ground of appeal. Ground 2 – Architect's fees Sea Breeze's submission concerning the new evidence 1. Sea Breeze relies on the ground in cl 12(1)(c) of Schedule 4 to the NCAT Act. Under cl 12(1)(c) the Appeal Panel may grant leave to appeal if it is satisfied that the appellant may have suffered a substantial miscarriage of justice because: significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. The new evidence on which Sea Breeze seeks to rely is an affidavit dated 24 November 2016, by Scott Carpenter. Mr Carpenter is the architect engaged by Sea Breeze to produce a master plan and schematic design to submit for development approval. 2. In his affidavit, Mr Carpenter states that the fees generated for the work were $9,900, which represents 64 hours of work at the standard rate and 75 hours of work at the partner builder discounted rate. He states that 102 hours of work are substantiated by time sheets. According to Mr Carpenter, other hours worked - principal architect's design time estimated at 36 hours, client meetings estimated at 5 hours and liaising with Council, the builder, suppliers and contractors estimated at 10 hours – are not substantiated by time sheets. Mr Carpenter claims that 153 hours were spent on the project. 3. In the Notice of Appeal, Sea Breeze claimed that this affidavit was not available at the hearing because of Mr Carpenter's travel commitments. However, the affidavit does not state when Mr Carpenter was asked to provide the affidavit. Nor does it refer to Mr Carpenter being prevented from providing it because of travel commitments. 4. At the hearing, Mr Hing stated that he had not asked Mr Carpenter to provide an affidavit until after the hearing when he became aware of what the Tribunal had decided. Mr Hing claimed that he had not known what was required of him, although he conceded that he knew that he had to prove costs, including those costs that had been incurred by Mr Carpenter. Mr Hing argued that had he asked Mr Carpenter to provide an affidavit prior to the hearing, Mr Carpenter might not have been able to do so because of his travel commitments and the fact that he had to go through his records. Decision in relation to Ground 2 1. In order to fall within cl 12(1)(c) of Schedule 4, Sea Breeze must be able to point to evidence which: 1. is significant; and 2. has arisen and is new in the sense that it was not reasonably available at the time the proceedings in the Tribunal were being heard. 1. We are not satisfied that the Mr Carpenter's affidavit constitutes significant evidence. This is because in the affidavit, Mr Carpenter makes assertions as to the amount of work that was done without providing any substantiation such as time sheets or diary notes. We conclude that if this affidavit had been before the Tribunal, it is likely that the Tribunal would have given it little weight. 2. In any event, we are not satisfied that Mr Carpenter's affidavit was not reasonably available at the time the proceedings in the Tribunal were being heard. As noted above, Mr Hing conceded that he had not asked Mr Carpenter to provide the affidavit until after the hearing, even though he knew that he had to prove the value of the work undertaken by Mr Carpenter. While Mr Hing claims that Mr Carpenter might not have been able to provide the affidavit if he had been asked to do so because of factors including his travel commitments, no evidence has been provided to support that proposition. 3. We conclude that Sea Breeze has not established that Mr Carpenter's affidavit is significant new evidence that was not reasonably available at the time of the hearing before the Tribunal. We therefore reject this ground of appeal. Conclusion 1. We conclude that Sea Breeze has not established a question of law or one of the grounds listed in cl 12(1) of Schedule 4 of the NCAT Act. We have therefore not considered whether Sea Breeze may have suffered a substantial miscarriage of justice or the discretionary factors relevant to the granting of leave to appeal. 2. Leave to appeal is therefore refused and the appeal is dismissed. ********** 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: 04 May 2017