Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Roberts v Morphett Constructions Pty Ltd [2018] NSWCATAP 33 Hearing dates: 4 December 2017 Date of orders: 01 February 2018 Decision date: 01 February 2018 Jurisdiction: Appeal Panel Before: K Rosser, Principal Member DAC Robertson, Senior Member Decision: 1. Leave to appeal refused 2. Appeal dismissed 3. Either party may within 14 days of the publication of these orders file and serve upon the other party written submissions seeking an order in respect of the costs of the appeal 4. If submissions are filed by either party in accordance with order 3 the other party may within a further 14 days file and serve submissions in response. Catchwords: Appeal – Home Building – dispute clause in contract – whether clause had been complied with – clause imposes no substantive requirement – no basis for stay of proceedings – Leave to appeal – interlocutory decision to refuse an adjournment – no error of principle – Content of contract – issue of fact – no error Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Cases Cited: Abdel-Messih v Lobo [2016] NSWCATAP 143 Armee v Brealey [2017] NSWCATAP 141; Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246; Cessnock City Council v Aviation and Leisure Corporation Pty Ltd [2012] NSWSC 221 Collins v Urban [2014] NSWCATAP 17 Donna O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77; Dubois v R&V Bergin Pty Ltd [2011] NSWCA 309; Eastman v Director of Public Prosecutions (ACT) (2003) 214 CLR 318 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303; Grozdanov v N&T Buildings Pty Ltd [2015] NSWCATAP 107) NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90 Santos Limited v Fluor Australia Pty Ltd [2016] QSC 129; Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563; [2005] QSC 129; Category: Principal judgment Parties: Raymond Roberts (Appellant) Morphett Constructions Pty Ltd (Respondent) Representation: Counsel: J Doyle, solicitor, Appellant N Hammond, Respondent Solicitors: Doyles Construction Lawyers, Appellant RJ O'Halloran & Co, Respondent File Number(s): AP 17/41221 Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Date of Decision: 25 August 2017 Before: G Meadows, Senior Member File Number(s): HB 16/17709 & HB 16/21913 REASONS FOR DECISION Introduction 1. This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal on 25 August 2017, in proceedings which were brought under the Home Building Act 1989 (the HB Act). The appellant ("the owner") is the owner of land at Tamworth on which, pursuant to a contract dated 9 May 2015, he contracted with the respondent ("the builder") for the construction of a home. 2. For the reasons set out below, we have decided to refuse the owner's application for leave to appeal and to dismiss the appeal. Scope and nature of internal appeals 1. Pursuant to s.80 of the Civil and Administrative Tribunal Act (NCAT Act) an appeal against a decision of the Tribunal may be brought as of right on a question of law or by leave of the Appeal Panel on other grounds. 2. As this appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, pursuant to clause 12 of Schedule 4 to the NCAT Act, leave to appeal may be granted only if the Appeal Panel is satisfied 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. Background 1. The work under the contract between the parties commenced on 21 July 2015. Issues arose concerning what the owner alleged were defective works. Work was suspended in January 2016 while a consultant's report was obtained and recommenced in February 2016. A mediation was arranged with an inspector from Fair Trading NSW in March 2016 resulting in a rectification order regarding about nine defects. 2. On 4 April 2016 the builder issued a progress claim for stage 4 of the works in the sum of $74,900. The owner disputed this claim by notice dated 10 April 2016 in which the owner listed the items disputed, which extended beyond the works constituting stage 4. 3. On 18 April 2016 the builder issued a formal notice alleging breach of the contract by the owner's failure to pay progress claim 4 and other amounts claimed by the builder. The notice sought payment of the amount owing within 10 business days and stated that if the amount was not paid within that time the builder would terminate the contract. The owner did not make any payment to the builder and the builder issued a further notice terminating the contract on 5 May 2016. 4. Clauses 26 and 27 of the contract relevantly provided: "26. If the owner: … fails to pay a progress payment or other amount due under the contract … the contractor may, where such default can be remedied, notify the owner in writing that unless the default is remedied within 10 business days or such longer a period as specified the contractor will terminate the contract. Unless the owner complies with the contractor's request within the time allowed, or if the default cannot be remedied, the contractor may terminate the contract by giving written notice to this effect to the owner. 27. If the owner or contractor considers that a dispute has arisen in relation to any matter covered by this contract, either during the progress of the work, after completion of the work or after the contract has been terminated, that person must promptly give to the other party written notice of the items of dispute. If the dispute is not resolved informally following such notification, the parties may confer with a mutually agreed third party whose role will be to assist in the resolution of the dispute by mediation or expert appraisal of the work. If the parties do not agree to confer with the third party to assist in the resolution of the dispute, or if the dispute is not resolved following the assistance of such a third party, the owner may notify Fair Trading that a building dispute exists and seek the assistance of Fair Trading to resolve the dispute. Even if a dispute has arisen the parties must, unless acting in accordance with an express provision of this contract, continue to perform their obligations under the contract so that the work is completed satisfactorily within the agreed time." 1. One issue between the parties is whether the builder's termination of the contract was valid. 2. Another issue which arose in the proceedings concerned the content of the contract, in particular whether a quotation provided by the builder to the owner, which the owner had included in the exhibit to his affidavit as part of the contract, was in fact part of the contract. Proceedings in the Tribunal 1. The owner and the builder each commenced proceedings in the Tribunal. The builder lodged its application on 13 April 2016 seeking the amount of $112,592 alleged to be the value of works completed to that date. The owner lodged his application on 9 May 2016 seeking the rectification of alleged defects "to the approximate value of $102,900". 2. The proceedings were listed for hearing before Senior Member Meadows on 28 July 2016. On that occasion the owner obtained an adjournment of the hearing and leave to file further evidence. The hearing proceeded on that date to the extent of the Senior Member undertaking a view of the property. 3. The hearing resumed on 2 November 2016. In the course of the hearing, in circumstances which we will describe further below, the appellants sought a further adjournment. The Senior Member refused that application for reasons which he gave orally at the time but subsequently set out at length in his written decision. 4. On 21 December 2016 the owner forwarded to the Tribunal a document described as "Application for re-convening of the hearing". By that document the owner sought to re-open the hearing and lead further evidence, in particular concerning the classification of the soil on which the house was constructed. On 2 March 2017 the Senior Member refused the application to re-convene but invited further submissions concerning the classification of the soil on the site. 5. By his decision dated 25 August 2017 the Senior Member ordered that the appellant pay the respondent the sum of $112,592 and that the respondent pay the appellant the sum of $12,157. In his reasons the Senior Member found that the builder had validly terminated the contract on 5 May 2016, that the quotation was not part of the contract and that the builder was entitled to the amount of the claims submitted. Notice of Appeal 1. The owner filed his Notice of Appeal on 22 September 2017. Although the Notice of Appeal sought the setting aside of both the order requiring payment by the owner to the builder and the order requiring payment by the builder to the owner, in his written submissions the owner only sought to set aside the order requiring payment by the owner to the builder. 2. The schedule attached to the Notice of Appeal identified seven grounds of appeal and also sought leave to appeal on the basis that the decision was not fair and equitable, that the decision was against the weight of evidence, and that there was significant new evidence now available that was not reasonably available at the time of the hearing. 3. The grounds of appeal were not expressed with clarity and there was overlap between the grounds of appeal and the grounds requiring leave to appeal. At the hearing of the appeal, Mr Doyle, who appeared for the owner, clarified the bases upon which the owner challenged the decision of the Senior Member. Grounds of appeal 1. As elucidated in Mr Doyle's oral submissions and in exchanges with the Appeal Panel, we understand the appellant's grounds of appeal to be as follows: 1. That the Tribunal erred in finding that the respondent builder had been entitled to terminate the contract in May 2016 by reason that: 1. The builder had not complied with the dispute clause (clause 27 of the contract); and 2. The owners were not in default at the date of termination as they were, pursuant to clause 26 of the contract, entitled at that date to withhold payment by reason of a dispute concerning their liability to make progress payment 4. (This reflects ground 1 set out in the schedule to the Notice of Appeal.) 1. That the Tribunal erred in failing to find that the quotation included in the exhibit to the owner's affidavit, as part of the bundle of documents identified by the owner as "the contract", was in fact part of the contract. (This reflects grounds 4 and 5 set out in the schedule to the Notice of Appeal.) 2. That the Tribunal erred in failing to grant an adjournment to permit an investigation of whether the soil underlying the house was classified H2 or E and in failing to permit the appellant's representative to cross examine Mr Morphett to establish that there had been no "typo" or error in the quotation (in this context it is appropriate to note that the issue of whether there had been a "typo" or error is only of potential significance if the quotation was part of the contract). (This reflects ground 7 set out in the schedule to the Notice of Appeal.) 3. That the Tribunal erred in awarding to the builder the amounts of progress claims 4 and 5 in the absence of evidence that the work was complete. (This reflects grounds 2 and 3 set out in the schedule to the Notice of Appeal.) 1. We note that ground 6 set out in the schedule to the Notice of Appeal asserted that the Senior Member had erred by: failing to properly consider and provide a determination on the defects set out in the Joint Expert Report dated 17 October 2016, despite acknowledging in the Decision (at paragraph) [sic] that it would consider the effect of the evidence given by the parties as to those defects. 1. It is not clear what this ground is intended to refer to and Mr Doyle did not provide elucidation in his oral submissions. The owner's written submissions in chief (dated 7 November 2017) refer to four items addressed in the Joint Report of 17 October 2017 in respect of which the experts (Mr Bryan, for the owner, and Mr Cant, for the builder) disagreed. It is apparent that each of those four items relates to the adequacy of the support for the house and its roof trusses, which was the subject of lengthy reasons from the Senior Member culminating in the Senior Member's finding at [104] that he preferred the evidence of Mr Cant to that of Mr Bryan. Mr Cant assessed the value of the items in question as "nil" on the basis that no rectification was necessary. 2. As we understand Mr Doyle's submissions, he did not maintain that the evidence before the Senior Member established that the support for the house and its roof trusses was inadequate unless it were established that the house was constructed on extremely reactive (Type E) soil. Nor did Mr Doyle maintain that there was evidence before the Senior Member to establish that the soil was extremely reactive. 3. It follows from the foregoing that appeal ground 6 set out in the schedule to the Notice of Appeal is without substance and need not be further considered. 4. We also note that the evidence relied upon by the owner as "fresh" evidence consisted of further affidavits from the owner and his wife, concerning the circumstances surrounding the entry into the contract, and a Soil Engineer's Report dated 9 December 2016. 5. Mr Doyle did not seek to suggest that any of this evidence was not reasonably available at the time of the hearing. We did not understand Mr Doyle to press the application for leave to appeal on the ground that new evidence is available. 6. For the reasons set out below we have determined that none of the grounds of appeal are made out and that the appeal must fail. Ground 1(a) – Compliance with Clause 27 of the Contract 1. We have set out clause 27 at [8] above. Mr Doyle submitted that the builder had not complied with clause 27 before purporting to terminate the contract. The Senior Member held, at [81] to [87] that the builder had sufficiently complied with clause 27 and that, in any event, compliance with the clause was not a pre-condition to the maintenance of proceedings (and, implicitly, termination of the contract). 2. Mr Doyle relied upon decisions in which compliance with dispute resolution clauses had been sought to be enforced by a stay of proceedings: Santos Limited v Fluor Australia Pty Ltd [2016] QSC 129; Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563; [2005] QSC 129; and Cessnock City Council v Aviation and Leisure Corporation Pty Ltd [2012] NSWSC 221. 3. In Santos v Fluor and Cessnock Council v Aviation and Leisure Corporation the Court granted a stay of proceedings until a dispute resolution clause had been complied with. In Zeke Services v Traffic Technologies the Court declined a stay on the basis that the relevant dispute resolution procedure (which provided for expert determination of any claim by the purchaser of a business for breach of warranty by the vendor) was not appropriate in respect of some of the claims made by the purchaser and it would not be satisfactory to order a stay to allow an expert to determine only some of the claims (at [37]). 4. Mr Doyle relied upon a statement of Chesterman J in Zeke Services, at [21]. That paragraph reads, omitting references to authority: The discretion whether or not to grant the stay is obviously wide. The starting point for a consideration of its exercise is that the parties should be held to their bargain to resolve their dispute in the agreed manner. … However, a stay will not be granted if it would be unjust to deprive the plaintiff of the right to have his claim determined judicially or, to put it slightly differently, if the justice of the case is against staying the proceeding. The party opposing the stay must persuade the court that there is good ground for the exercise of the discretion to allow the action to proceed and so preclude the contractual mode of dispute resolution. The onus is a heavy one. The court should not lightly conclude that the agreed mechanism is inappropriate. 1. In that case, Chesterman J also stated (at [22]): Ordinarily I would think that that onus can be discharged only by showing that, in the particular case, the dispute is not amenable to resolution by the mechanism the parties have chosen. This consideration includes the procedure, if any, for which the parties have contracted, and the qualification of the expert or referee to embark upon the determination of the dispute. The parties are presumed not to have intended that their dispute should be resolved by someone not qualified for the task, or in some inappropriate manner. This presumption, based on legal theory, removes any violence to the agreement which refusing the stay would otherwise have done. 1. In each of the cases cited by Mr Doyle the relevant dispute resolution clause provided a clear mechanism for the resolution of a dispute. In Santos v Fluor that mechanism was mediation, and clearly there was no certainty that any mediation would resolve the dispute. Douglas J nevertheless granted a stay, notwithstanding that one party insisted there was no prospect of a mediation succeeding. His Honour referred (at [31]) to the fact that the parties had agreed to a "formal process of negotiation" which "not uncommonly helps parties reach an agreed position". His Honour also referred (at [28]) to the fact that the parties had "succeeded on compromising such disputes in the past". 2. By contrast, clause 27 of the contract does not provide a clear mechanism for the resolution of any dispute. It cannot be said to require any substantive act on the part of the party receiving notice of dispute. The clause clearly does not require the parties to proceed to mediation or make notification to Fair Trading. 3. Even if clause 27 is construed as imposing upon the parties a requirement that the parties attempt to resolve the dispute informally following notification of a dispute, it is impossible to give any substance to that requirement. 4. Mr Doyle did not point to any evidence of communications or the absence of communications between the parties following the notification of the dispute on 8 April 2007. 5. The Senior Member found that the parties had engaged in attempts at informal negotiation seeking to resolve the dispute prior to the issue of the notice. In our view there is no reason why any further obligation should have been imposed upon the parties upon the notification of the dispute. 6. Mr Doyle did not suggest that what he submitted was the non-compliance by the builder with clause 27 prevented the builder's application being commenced in the Tribunal. Rather he submitted that clauses 12 and 14 of the contract required that any dispute in relation to the value and quality of work done or relating to payment under the contract be resolved according to the dispute resolution procedure set out in clause 27. 7. Clause 12 of the contract relevantly provided: The owner must pay the contract price by progress payments within 5 business days of the completion of the stages of the work nominated in the schedule of progress payments. … If there is any bona fide dispute in relation to the value or quality of work done, the dispute must be dealt with in accordance with the dispute resolution procedure set out in Clause 27. In those circumstances, the parties agree as follows: (a) The owner may withhold from the progress payment, an amount estimated by the owner, acting reasonably, equal to the owner's estimate of the value of the disputed Item (b) The contractor must continue to carry out its obligations under this contract pending resolution of the dispute. 1. Clause 14 of the contract relevantly provided: When the contractor gives the owner a written claim for a progress payment or other amount due under the contract, the owner must pay unless the owner notified the contractor in the manner stated below, the amount of the claim within 5 business days of receipt of the claim (which must not be less than 5 business days). … If the owner disagrees that the contractor is entitled to be paid a progress claim or other amount due under the contract, the owner must notify the contractor in writing within 5 business days of receiving the claim setting out the reasons for that disagreement. If there is any dispute between the parties relating to a payment under the contract it must be resolved according to the dispute resolution procedure set out in Clause 27. 1. However, given the absence of mandatory substantive content in clause 27, there is no certainty that resort to clause 27 would result in resolution of any dispute. Even if all alternatives provided for by clause 27 are availed of by the parties, the dispute may remain unresolved and resort to litigation in court or the Tribunal be necessary. Accordingly it cannot be said that the builder's remedies in relation to the owner's failure to make Progress Payment 4 were limited by the requirement that the dispute be resolved according to clause 27. Ground 1(b) – Was the owner in default? 1. The owner's argument that the owner was not in default at the date of issue of the default notice on 18 April 2016, because the owner was entitled to withhold payment of the builder's claims pursuant to clause 12, cannot succeed in light of the Senior Member's determination, at [212], that the owner wrongfully withheld payment of Progress Claim 4. In our view that conclusion was correct and justified on the evidence. 2. Pursuant to the contract, Progress Claim 4 was payable on completion of "internal linings". As noted above, the builder issued Progress Claim 4 on 4 April 2016 and the owner issued a notice on 10 April 2016 disputing his obligation to pay Progress Claim 4. However, of the matters raised by the owner in response to Progress Claim 4, only one (an issue concerning "noggins in the main bedroom to mount TV not fixed" in the amount of $1,500) could have been part of the internal linings, the work the subject of Progress Claim 4. The provisions of clause 12 of the contract provide that, if there is a bona fide dispute, the parties agree that "the owner may withhold from the progress payment, an amount estimated by the owner, acting reasonably, equal to the owner's estimate of the value of the disputed item". 3. In our view that provision clearly does not permit the owner to withhold payment by reference to allegations of defective work relating to matters not the subject of the instant progress claim, including matters the subject of earlier progress claims. As noted above, with one minor possible exception, none of the items raised by the owner were relevant to the work the subject of Progress Claim 4. 4. In those circumstances it cannot be said the owner was acting reasonably in withholding the whole of Progress Claim 4 or that the owner was entitled by the terms of clause 12 to do so. In our view the owner was in default of clause 12 of the contract at the time of service of the default notice and, when that default was not remedied 10 days later, the builder was entitled to terminate the contract. Ground 2 – Was the quotation part of the contract? 1. The Senior Member determined, at [117], that the quotation was not part of the contract. In our view that was a finding of fact which the Senior Member was entitled to make. In the course of oral submissions Mr Doyle suggested that the Senior Member's reasons for so finding were not adequate and sought to amend his client's Notice of Appeal to raise that ground of appeal. 2. The Senior Member addressed this issue from [109] of his decision. Having noted that there was a dispute between the parties as to what documents constituted the contract, the Senior Member noted that the builder had attached to his original application the standard Fair Trading Home Building Contract for work over $20,000 and no other documents. The Senior Member did not accept that that was the complete contract. 3. The Senior Member noted that the copy of the contract in the owner's evidence was included as part of an exhibit to an affidavit of the owner. The relevant pages were identified as pages 4 to 107 of the exhibit and pages 435 to 538 of the joint tender bundle. 4. The Senior Member continued as follows: "114…It is appropriate to list all the documents in those pages, as follows: (i) Fair Trading Home building contract for work over $20,000 (pp 4 to 35, being pp 435 to 465 of the joint bundle) signed 09 May 2015; (ii) Quote (pp 35 to 41, being pp 466 to 472 of the joint bundle) signed 09 May 2015; (iii) M.J. Kelley Engineers Pty Ltd "Detailed Structural Analysis and Design" of the residence, dated 28 December 2014 (pp 42 to 48 being pp 473 to 479 of the joint bundle); and (iv) Proposed New Residence Project Specification" (Hotondo Homes) which includes the D&C Projects Specifications (pp 50 to 82 being pp 481 to 513 of the joint bundle), the BASIX documents (pp 83 to 100 being pp 514 to 531 of the joint bundle) and the D&C Projects Drawings (pp 101 to 107 being pp 532 to 538 of the joint bundle). 115 As previously noted, the parties seemed uncertain as to what documents were included in the contract, I note that p "6 of 29" of the contract (p 11 of RR-01 and p 442 of the joint bundle) lists under "Clause 1 Contract documents" the following: (i) "Specifications prepared by D&C Projects, 34 pages, dated 29.4.15"; (ii) "Plans prepared by D&C Projects, 7 pages, dated 7/5/15"; (iii) "Other documents prepared by MJ Kelley Engineers Pty Ltd, 2 pages, dated 24/11/14"; and (iv) "Certificate of Insurance under the Home Building Compensation Fund, State Government". I note neither party provided a document prepared by M.J. Kelley Engineers Pty Ltd dated 24 November 2014. Tab 11 includes the M.J. Kelley Engineers Pty Ltd document dated 28 December 2014. 116 I find that the contract documents were the standard contract itself and the documents mentioned therein, but that the engineer's specification is contained in the M.J. Kelley Engineers Pty Ltd document dated 28 December 2014. 117 I find that the quote was not part of the contract, despite it being the case that it was had been provided to the owners at least by 09 May 2015, and that it was signed or initialled on that date. 1. In our view, the Senior Member's reasoning is clear from these paragraphs. That reasoning is that page 6 of 29 of the Contract document executed by the parties identified as "contract documents" the four documents listed by the Senior Member at [115]. Those documents did not include the quotation. 2. There is nothing complex or unusual about the proposition that the prime contract document was the standard Fair Trading Home Building Contract executed by the parties and that that document identified the other documents which were incorporated within the contract. 3. The quotation, not being a document referred to in the prime contract document, was not included as part of the contract. 4. There was no evidence from the owner or any other witness which suggested that there had been any particular agreement to the effect that the quotation would be part of the contract. The entirety of the owner's evidence concerning the content of the contract was to attach the bundle of documents including the quotation and state that that was the contract. 5. The Senior Member clearly concluded that the documents listed at page 6 of 29 of the Fair Trading Home Building Contract document were the documents which constituted the contract. That in our view was a correct conclusion and the Senior Member's reasons for reaching that conclusion were adequate. Ground 3 – The refusal of an adjournment 1. The Senior Member concluded, in reasons delivered orally on the day of the hearing and set out in full in his written reasons, that it was not appropriate to grant the adjournment sought by the owner because the owner had been aware at least since July 2016 of the issue which he sought the adjournment in order to address (see [133] of the Senior Member's decision). 2. In relation to the owner's challenge to the Senior Member's reasons for refusing the adjournment, a number of points may be noted. 3. First, the decision to refuse the adjournment was an interlocutory decision of the Tribunal and, pursuant to s80(2)(a) of the NCAT Act can be the subject of appeal only by leave of the Appeal Panel. The principles governing the grant of leave were outline by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at [84]: The general principles derived from these cases can be summarised as follows: In order to be granted leave to appeal, the applicant 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: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; 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, BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and the authorities cited there, SAB v SEM [2013] NSWSC 253 at [8] and [9] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; In relation to an application for leave to appeal relating to a question of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21] and the authorities cited there. 1. Second, the nature of Mr Doyle's application in the course of the hearing below was not made clear either in the transcript of that hearing or in the submissions on the appeal. The application arose in circumstances where Mr Doyle had sought to cross examine Mr Morphett, the principal of the builder, about his assertion that a reference in the quotation (which we note was found not to be part of the contract) to the soil on the site being Class E was a typographical error. 2. Mr Doyle sought to cross examine Mr Morphett by reference to a bundle of documents which had not been previously put forward as part of the evidence to be relied upon. It is not clear for what purpose Mr Doyle was seeking to utilise the documents. It was suggested before the Appeal Panel that it was to challenge the proposition that the reference to Class E was a typographical error. As Mr Doyle did not identify for the benefit of the Appeal Panel exactly what documents he had been prevented from cross examining Mr Morphett on, we are unable to assess in any way whether the cross examination was justified or warranted. 3. We note that pursuant to s38 of the NCAT Act the Tribunal may determine its own procedure, is not bound by the rules of evidence and "is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms" (sub-s (4)). In the exercise of its powers the Tribunal has capacity to limit cross examination. The decision to prevent Mr Doyle pursuing a particular line of cross examination was a discretionary decision and we find no error of principle in the Senior Member's reasons for that decision. 4. In any event, we have concluded that the Senior Member was correct in determining that the contract did not include the quotation and, in those circumstances, we are unable to see what relevance the reference to type E soil in the quotation could have had to the determination of the proceedings. 5. Third, to the extent that Mr Doyle was seeking an adjournment in order to investigate whether the soil on which the house was being constructed was in fact Class H2 or Class E and whether the building as designed and/or as constructed was adequate or appropriate for soil which was classified E (that is "extremely reactive" as opposed to Class H2 which is "highly reactive"), that was an issue which Mr Doyle had himself referred to at the initial hearing on 28 July 2016, which was adjourned in order to enable the owner to obtain further expert evidence on three issues including in relation to the structural adequacy of the roof trusses. 6. Whether or not the soil classification was relevant to the issue of the adequacy of the roof trusses (we note that it was in that context that it arose in the course of the hearing on 2 November 2016), it is clear from the transcript of the hearing on 28 July 2016 that, as at that date, the owner was aware of the possibility that the soil was Class E and the possibility that the building may not have been designed for Class E soil or constructed for Class E soil. The owner thereafter had a period of three months during which that issue might have been investigated and, if considered significant, raised prior to the hearing. 7. No such investigations were undertaken and it was only at the hearing that, in the course of the two structural engineering experts called by the parties giving concurrent evidence, Mr Bryan, the civil and structural engineer retained by the owner, stated in response to a question from Mr Doyle for the owners, that he believed the soil was actually Class E. 8. The transcript records that Ms Hammond, who appeared for the builder, had concluded her questions concerning the design of the roof trusses, and in particular the appropriateness of having one particular truss spanning across a load bearing wall, when Mr Doyle asked: "What is the soil type on this particular locality?" to which Mr Bryan responded: "That is actually a little bit contentious as well. Mr Kelley [the design engineer] has classified the site as a Class H2 site. I believe that the soil is actually a Class E site". 1. There was no application by the owner at that time to adjourn the proceedings to enable further investigations. It was only later in the hearing in the course of cross examination by Mr Doyle of Mr Morphett that the application for an adjournment was made in circumstances where Mr Doyle was prevented from cross examining Mr Morphett in relation to the bundle of documents. 2. After referring to the principles relevant to the adjournment of proceedings as set out in the authorities (including Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303; Dubois v R&V Bergin Pty Ltd [2011] NSWCA 309; Armee v Brealey [2017] NSWCATAP 141; Donna O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77; and Grozdanov v N&T Buildings Pty Ltd [2015] NSWCATAP 107), the Senior Member stated his reasons for refusing the adjournment, at [143] to [147], as follows: "143 In my opinion, applying those principles to the current circumstances, the central issue in relation to refusing to adjourn the hearing with consequential orders for a timetable to conduct inspections and/or investigations (including soil testing) and the service of further evidence, is whether the owners were denied a "reasonable opportunity of presenting their case". 144 Returning to my brief oral reasons for refusing the application for an adjournment, it is appropriate to emphasise that there is a distinction between preventing further cross-examination of Mr Morphett in relation to the issues of whether the contract was signed on the basis of a soil classification of either "H2" or "E" and whether the contract price had been increased by a sum to take into account additional costs for designing and constructing appropriate to an "E" classification on the one hand, and refusing an adjournment application on the other. As stated already, it does not appear to me that the owners submit that the former was wrongful, their submissions relate to the refusal to adjourn. 145 I have found that the reference to "E" in the quotation document was an error or a "typo" as it was referred to in the hearing. I have found also that the contract was concluded and the pricing based on the engineer's specifications that the soil was class "H2". 146 I have found that from the date proceedings were commenced by the builder until just prior to lunch on the final day of hearing, there was no further reference, let alone issue being joined, in relation to either of the issues now alleged in relation to the "E" classification, until the matter was raised just prior to the lunch adjournment on the final day of hearing. This is not a case in which a party has obtained evidence in the form of professional tests or written opinions which they seek to tender, as is often the factual situation in the cases referred to above. 147 In my opinion the owner has had a reasonable opportunity to present his case including in relation to the soil classification issue which was or should have been obvious as a potential issue at least from the time the respective applications were filed. On the owner's own submissions it was also obvious from 28 July 2016, yet still it did not emerge clearly until 02 November 2016, that is, with plenty of time to be raised in a more timely fashion. As I have suggested above, in fact the additional expert evidence did refer to soil movement, but in accordance with the "H2" classification, no issue being raised with regard to the "E" classification until the hearing." 1. We find no error in the Senior Member's reasons for refusing the adjournment. The owner had had ample opportunity to raise any issue concerning the soil classification and had been aware of those issues at least since 28 July 2016 and probably earlier. 2. The Senior Member's decision to refuse the adjournment was an interlocutory decision and as such reviewable only by leave. The owner has not identified any error of principle in the decision or any other justification for the grant of leave to appeal save that the owner's written submissions assert a denial of procedural fairness arising by reason of the termination of cross-examination and the refusal of the application to re-open. 3. The application to re-open was made without leave of the Tribunal and, in our view, effectively did no more than seek, on the basis of evidence which could have been obtained prior to the hearing, to dispute the refusal to grant an adjournment of the hearing. As such, its peremptory refusal was warranted (see Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246, at 258; Eastman v Director of Public Prosecutions (ACT) (2003) 214 CLR 318, at 329-330 [27]-[31], 368 [143]; NT Power Generation Pty Ltd v Power and Water Authority (2004) 219 CLR 90, at [191]-[192]; Abdel-Messih v Lobo [2016] NSWCATAP 143 at [69]-[70]). 4. In any event, Mr Doyle did not explain either in written submissions or in oral submissions at the hearing of the appeal why the refusal to permit cross-examination or to adjourn or re-open the hearing, constituted a breach of procedural fairness. As we have noted, the Tribunal has the power to determine its own procedure and may limit cross-examination. 5. We have found no error in the Senior Member's limitation of Mr Doyle's cross-examination or his refusal to grant an adjournment. It adds nothing to the owner's argument to suggest that those decisions involved a denial of procedural fairness. Ground 4 - Progress Claims 4 and 5 1. In respect of Progress Claims 4 and 5 Mr Doyle may have been correct in submitting that the builder did not lead specific evidence to establish the value of work it performed to the date of the termination and that there was no contractual provision which entitled the builder to the amounts of claims to progress payments lodged prior to termination. 2. Nevertheless, as Ms Hammond submitted, the case before the Senior Member was conducted on the basis that the progress claims reflected the value of the work completed to the date of those claims. The issues raised by the home owner concerning the progress claims were not related to the proposition that the progress claims did not reflect the value of work completed, but rather related to specific defects in relation to the work the subject of Progress Claims 1 to 3 and, in relation to Progress Claim 5, the proposition that that claim sought payment for specific items which had not been delivered or installed on site. 3. In relation to Progress Claim 4, we have carefully reviewed the owner's submissions to the Senior Member below and cannot identify in those submissions any suggestion that the progress claims themselves did not reflect the value of the work for which payment was being claimed. The owner's submissions included a schedule of amounts payable which the Senior Member sought to construe. As far as that schedule is capable of comprehension, it is consistent with the proposition that the owner was not disputing that, subject to his claims in respect of alleged defective works and his allegation that he should not be obliged to pay for items which had not been delivered or installed on site, the amounts in the progress claim did fairly reflect the value of work performed by the builder. 4. Progress Claim 5 was as follows: Kitchen Cabinetry less installation $15,136.00 Garage door less installation $3,886.00 Floor & Wall Tiles $5,470.00 Installation of External Drainage & Septic $13,200.00 Total including GST $37,692.00 1. The owner's submission in respect of Progress Claim 5 was that the Senior Member erred in finding that the payment claim was due and payable "where there was no evidence to support that items 48, 49 and 59 of the joint expert report dated 7 June 2016 were complete or that the materials were on site." 2. Items 48, 49 and 59 related respectively to the kitchen cabinetry, the floor and wall tiles and the garage door. The owner's submissions identified that the experts' conclusions regarding items 48, 49 and 59 were as follows: ITEM 48 kitchen has been manufactured off site but as the kitchen has not yet been installed on-site the kitchen is still considered incomplete ITEM 49 the tiles have previously been purchased and are held off site however as the tiles have not been installed on-site the works are considered incomplete ITEM 59 garage door has already been made and is stored off site however as the garage door has not yet been installed on site the works are considered incomplete. 1. In the experts' joint report (that is a report of Messrs Moane and Hill dated 8 June 2016) the experts agreed amounts of $14,456 in respect of kitchen installation; $4,978 in respect of wall and floor tiling; and $6,000 in respect of the fitting of the garage door. It is clear from the report that each of these amounts is the cost to complete the relevant element of the works. It is equally clear from Progress Claim 5 that the amount sought is the value of the work completed to the date of the progress claim, that is, in respect of the kitchen, the manufacture of the cabinets ready for installation, and in respect of the tiles and garage door, the acquisition of those items. 2. Ms Hammond acknowledged on the record on behalf of the builder that those items remain in the possession of the builder and are available to be delivered to the owner upon payment of the amounts outstanding, including the cost of manufacture and acquisition of those items. 3. The builder did not seek to recover in the proceedings below the loss of profit on the balance of the contract remaining to be completed at the date of termination. The builder's claim was limited to the value of the works completed to the date of termination. In circumstances where the parties accepted the progress claims as an accurate assessment of the value of that work, the Senior Member was entitled to accept the amounts of the progress claims as being an appropriate measure of compensation to the builder for work performed and not paid for. 4. We note that pursuant to the contract, Progress Claim 5 was payable upon the premises being "ready for tiling". Progress Claim 5 as rendered by the builder was not founded upon the premises being "ready for tiling". In those circumstances the owner may have been justified in objecting to payment of the progress claim on the basis that it was not a payment to which the builder was entitled under the contract. However, once the builder validly terminated the contract for breach by the owner, the builder was entitled to compensation which, at the least, reflected the value of the work which had been performed under the contract. In our view the Senior Member correctly allowed the amount of Progress Claim 5 on that basis. Conclusion 1. Accordingly all grounds of appeal fail and no basis has been shown for the grant of leave to appeal. The application for leave to appeal will be refused and the appeal will be dismissed. Costs 1. The parties did not address the Appeal Panel in relation to the costs of the appeal. We note that the Senior Member made orders for the filing of submissions by the parties in respect of the costs of the proceedings below. We are not aware of what, if any, orders were made in respect of those costs. As the appeal is to be dismissed there is no reason to consider any variation of any orders made in respect of the costs of the proceedings at first instance. However there remains the question of appropriate orders concerning the costs of the appeal. 2. The proceedings below were brought in the Consumer and Commercial Division of the Tribunal and the amount in issue both before the Senior Member below and before the Appeal Panel exceeded $30,000. Accordingly, by reason of rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW), it would not be necessary for the Appeal Panel to find special circumstances before making an award of costs in respect of the appeal. 3. However, as the Appeal Panel has not received submissions from the parties concerning the appropriate costs orders we will not at this stage make orders in respect of the costs of the appeal. Rather we will permit either party to file written submissions within 14 days of the date of judgment seeking an order in respect of the costs of the appeal. If a party files such submissions the other party may file written submissions in response within a further 14 days. 4. Any written submissions should address the question whether the question of costs should be determined on the papers and without further hearing. Orders 1. The orders of the Appeal Panel will be: 1. Leave to appeal refused 2. Appeal dismissed 3. Either party may within 14 days of the publication of these orders file and serve upon the other party written submissions seeking an order in respect of the costs of the appeal 4. If submissions are filed by either party in accordance with order 3 the other party may within a further 14 days file and serve submissions in response. ********** 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: 01 February 2018