Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Anderson v J W Lanfranchi Pty Ltd [2018] NSWCATAP 195 Hearing dates: 10 July 2018 Date of orders: 15 August 2018 Decision date: 15 August 2018 Jurisdiction: Appeal Panel Before: Dr R Dubler SC, Senior Member J T Kearney Senior Member Decision: 1. Allow the Appeal, 2. Set aside the orders of the Tribunal of 2 May 2018 in HB17/40792 & HB1742496, 3. Remit the matters for re-hearing by a differently constituted Tribunal . Catchwords: APPEAL – whether error of law – failure to provide proper reasons HOME BUILDING CLAIM – whether Schedule of Works formed part of the contract Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Home Building Act 1989 (NSW) Cases Cited: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 Collins v Urban [2014] NSWCATAP 17 DAG Aviation Pty Ltd v Kirk [2017] NSWCATAP 41 Mifsud v Campbell (1991) 21 NSWLR 725 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Segal v Waverley Council (2005) 64 NSWLR 177 at 201 Soulemzis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Thompson v Chapman [2016] NSWCATAP 6 Category: Principal judgment Parties: Stephen John Anderson & Rosalie Ann Anderson (Appellants) J W Lanfranchi Pty Ltd (Respondent) Representation: Appellants - self represented Skinner & Associates, Respondent File Number(s): AP 18/21771 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 2 May 2018 Before: Dr P Briggs, Member File Number(s): HB17/40792 & HB17/42496 reasons for decision Introduction 1. This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 against a decision made in the Consumer and Commercial Division of the Tribunal on 2 May 2018 ("the Decision"). 2. The application to the Tribunal was brought by the appellants, against the decision that they owe the Respondent the sum of $9,786.90. 3. For the reasons set out below, we have decided to allow the appeal and remit the matter for re-hearing by a differently constituted Tribunal. Background 1. The Respondent (hereafter called "the Builder") offered house and land packages for sale in Jindera NSW (a village near Albury). The appellants (hereafter called "the Owners") approached the Builder seeking to purchase a home. 2. Negotiations were held between the parties. An initial contract price of $272,715.12 for construction of the home was not acceptable to the Owners' lender as its valuation of the property was less than the contract price. It appears the Owners were released from any obligation under this contract by the Builder. 3. Amendments were made to the original proposal so that, in summary and according to the Builder at least, the Owners were to be responsible for parts of the building works, chief among them being the erection of a 6 x 6 metre shed, landscaping and part of the fencing. 4. A contract was entered into between them for construction of the home for a lower price than originally agreed. This contract price was acceptable to the lender. Building work commenced. 5. During the building work, the parties fell into dispute over certain items including the shed and fencing. Eventually, the Builder purported to terminate the contract for, amongst other things, the Owners' failure to make certain payments. The Owners denied the breach. 6. The Tribunal member found the Owners had accepted the Builder's repudiation of the contract and terminated the contract for breach by the Builder: [55] of the Decision. This termination of the contract was one of the issues in the appeal but as a result of our decision, we did not deal with this, as well as many other issues raised in the appeal by the parties, because we have found that there was a more fundamental error. 7. By this stage, the house was at practical completion and an occupation certificate was issued. The land was transferred to the Owners and the Owners moved in. 8. The Owners brought proceedings in the Tribunal seeking damages for the shed, fencing and landscaping as well as a number of other claims. The Builder, by a cross application, claimed for outstanding payments due. Tribunal proceedings and decision 1. Both applications to the Tribunal were heard by the Tribunal in Albury on 23 February 2018. The Tribunal reserved its decision. The decision was handed down on 2 May 2018. 2. The Tribunal relevantly found that the parties entered into a written contract on 26 January 2017 ("the contract") which was in the form of a NSW Residential Building Contract for New Dwellings (HIA edition 7). 3. The most important finding of the Tribunal relevant to the appeal concerns the identification of the "scope of works" in the contract. 4. The Tribunal held it was confined to the short description in Schedule 4 of the contract comprised in total by 25 words, as follows: "Four bedrooms, Ensuite, Bathroom, Kitchen/Family/Meals, Living, Study, Laundry, WIR robe, WC, covered Alfresco, and attached double garage plus a 6m x 6m shed". It did not include landscaping, fencing, or the slab on which the shed is to be assembled: [48] of the Decision. 5. That finding regarding the scope of works then led to the Tribunal to find the Builder was not liable for the cost of fencing or landscaping ([88]) and only liable to provide a shed "kit". It was also held liable for some minor defects. After dealing with the other claims and counter claims of the parties, the Tribunal found the Owners liable to pay the Builder $9,786.90. The Owners have appealed. Scope and nature of internal appeals 1. Internal appeals may be made as of right on a question of law, and otherwise with permission (that is, the "leave") of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). 2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: * Whether there has been a failure to provide proper reasons; * Whether the Tribunal identified the wrong issue or asked the wrong question; * Whether a wrong principle of law had been applied; * Whether there was a failure to afford procedural fairness; * Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; * Whether the Tribunal took into account an irrelevant consideration; * Whether there was no evidence to support a finding of fact; and * Whether the decision is so unreasonable that no reasonable decision-maker would make it. 1. 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 on the basis that: 2. the decision of the Tribunal under appeal was not fair and equitable; or 3. the decision of the Tribunal under appeal was against the weight of evidence; or 4. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 5. 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. 1. In cases involving a self-represented litigant who cannot clearly articulate grounds of appeal and distinguish between questions of law and errors of fact in relation to which leave to appeal is required, it is appropriate for the Appeal Panel to consider the material provided on the appeal to identify the grounds of appeal (Prendergast at [12]). Submissions and evidence 1. In deciding the appeal, we have had regard to the following: * The Notice of Appeal lodged on 11 May 2018 * The Reply to Appeal lodged on 21 June 2018 * The written and oral submissions of each party. Notice of Appeal 1. The Notice of Appeal was lodged within the 28 day time period specified in cl 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules). Grounds of Appeal 1. While a number of grounds of appeal are raised in the Notice of Appeal, the Appeal Panel has determined that it is only necessary to consider the first ground. It was prepared without legal assistance and so we re-state it as follows: "The member found that there is no schedule of works as part of the contract and preferred the 25 word description in Schedule 4. Both parties allege a schedule of works was part of the contract. The member ignored this evidence." 1. The Builder, who was legally represented in the appeal, made an important concession in the appeal that a separate schedule of works did form part of the contract and the Tribunal failed to have regard to it when deciding the contents of the contract. Consideration 1. We will consider the Tribunal's findings regarding this issue because it was fundamental to the decision that led to many of the other findings. It is necessary to examine those parts of the Decision dealing with the content of the contract. 2. At [2] and [3] of the Decision, the Tribunal refers to the initial signed contract price of $272,715.12. This contract was abandoned in the circumstances outlined above. 3. At [4] and [5] of the Decision, the Tribunal refers to the Builder's evidence concerning the amended proposal prepared for the purpose of obtaining finance in which the Owners were to undertake some of the works including parts of the shed, fence and all the landscaping. The Tribunal then stated the following: "6. An Agreement and separate Schedule of Works, identifying these proposals was prepared by Mr Lanfranchi and signed off by Mr Lanfranchi for the company and Mr & Mrs Anderson on 21 January 2017. 7. Mr Lanfranchi's company then prepared a NSW Residential Building Contract for New Dwellings (HIA edition 7), which was signed by the parties, 5 days later on 26 January 2017. (Contract Price $254,829.90) 8. It is common ground that the terms and conditions of the building contract make no reference to the Agreement and Schedule of works and that those documents are not included in, or appended to, the contract which consists of the plans including a brief specification and the terms and conditions of building contract and the DA and CC" 1. The Tribunal then discusses the significant terms of the contract and decides the scope of works is restricted to the 25 word description already stated above. The Tribunal (at [15]) stated that the Builder alleged the building work was identified as part of the contract for the purposes of finance approval, and warranty under the Home Building Act 1989 (NSW) notwithstanding that he believed that the Agreement and Schedule under which the Owners were to undertake some of the works including parts of the shed, fence and all the landscaping would be honoured by the Owners. 2. At [16] the Tribunal records the Owners view that the contract between the parties prepared by the company represents the entire agreement between the parties. Paragraphs [42] to [50] appear under the heading "What were the Terms of the Contract?" 3. At [16] the Tribunal adopts the contract as he understood it without any detailed scope of work, stating: "I find it would be unjust and inequitable to have regard to the extrinsic evidence of the two prior agreements, reached a few days prior to the signing of the contract." 1. At [47] the Tribunal records: 47 The Company accepts that it was the author of the contract and it did not include as terms of the contract the Agreement and Scope of Works which it contends were agreed between the parties. The Company's position is that it included, in the Terms and Conditions of the Contract all of the scope of the works, but did not include or refer to separate arrangements for payment of the disputed works, in the contract for two purposes intended to assist Mr and Mrs Anderson (a) To ensure that finance would be available to enable the purchase of the house land package to proceed. (b) To have all of the works covered by the Homebuilding Compensation Fund insurance. Considering the contract as it has been executed I accept Mr and Mrs Anderson's submission and rely upon the document, as clear and unambiguous evidence of the agreement between the parties. Codelfa Constructions Pty Ltd v State Rail Authority of NSW (5) (1982 149 CLR 337 at 347. In Brambles Holdings v Bathurst City Council (2001) 53 NSWLR 135 Heydon JA said; First relevant principle of law is that pre-contractual conduct is only admissible on questions of construction if the contract is ambiguous and if the pre-contractual conduct casts light on the genesis of the contract, its objective aim, or the meaning of any descriptive term." 1. The Tribunal then finds the scope of works is defined in the contract by the 25 word description given above. The Appeal and the submissions of the Parties 1. The Owners first and main ground was that the Tribunal had ignored evidence. The evidence referred to was the scope of work represented in a document called "Schedule of Work to be Provided For" (attached to the Owners' bundle but more conveniently located at R9 of the Builder's bundle in the appeal). For convenience, we will refer to this document as "the Owners' schedule of works R9". The parties agreed this was before the Tribunal, and that the Builder provided this document at the same time as the contract. The Appeal Panel notes it was listed in a schedule of documents which had been provided to the Tribunal (attached to Owners' statutory declaration dated 29 May 2018). 2. The document is signed by each party at the end and dated 26 January 2017 beside each signature although the Builder says the handwritten numerals "26" beside his signature should be read as "28" because the contract and the Owners' schedule of works R9 was signed by the Owners on 26 January then couriered to him and he signed both documents on behalf of the company on 28 January. The date is a factual matter which will need to be determined. 3. The Owners' schedule of works R9 is a 5 page document with 29 numbered sections with detail of the work the Owners say was to be performed by the Builder. Relevantly, the work includes all the fencing, landscaping and shed. The Owners submitted this document was part of the contract and was the relevant scope of works. The Owners said this argument had been put to the Tribunal. 4. There was another document referred to by the Tribunal. at [6] (found at R11 in the Builder's bundle) being a cover page labelled "Rose & Steve Anderson – Agreement" which had a printed date of 21 January plus 3 pages. It appears to the Appeal Panel that this is the document referred to by the Tribunal at [6] as "an Agreement and separate Schedule of Works". It was prepared by the Builder and signed by both parties. In effect it provides for the Owners to be responsible for the landscaping and for part of the fencing and shed. The Tribunal said this document is dated 21 January but the date beside the Owners' signature is 26 January and 28 January appears beside the Builder's. 5. This document was alleged by the Builder to record the parties' agreement to the reduced scope of works in return for a reduced contract price satisfactory to the lender. The Tribunal did not find this document to be part of the contract as it was held to be part of the negotiations leading up to the contract. 6. The Builder submits that this document incorporated important amendments to the scope of works as detailed in the Owners' schedule of works R9. For convenience we will call it "the Builders' amendments R11". The Builder had submitted to the Tribunal that the Builders' amendments R11 formed part of the contract which operated as an amendment to the scope of works set out in the Owners' schedule of works R9. The parties agreed that the Builder provided this document at the same time as the contract and it was executed by the parties at the same time as the contract. 7. It is important to note that the Appeal Panel is unable to confirm the assertions of the parties that certain arguments were made to the Tribunal because the sound recording of the proceedings before the Tribunal could not be located. This situation is not ideal but as there was no dispute between the parties about that issue, the Appeal Panel accepted the parties' assertions about it. 8. The Tribunal said at [8] that "it was common ground" that the contract made no reference to the Builders' amendments R11 to the scope of works which was not included in or appended to the contract. At [42] the Tribunal said that it would not have regard to the extrinsic evidence of the "..two prior agreements" of a few days prior to the contract. 9. The following appears tolerably clear from the material before the Appeal Panel: 10. The original contract price was too high for the Owners to obtain finance so the parties reached a new agreement. 11. Central to that new agreement was the scope of works. 12. The Owners contended the scope of works was defined by the Owners' scope of works R9 which was supplied by the Builder with the contract and executed by the parties at the same time. 13. The Builder accepted that the Owner's scope of works R9 formed part of the contract but contended that Builders amendments R11, which was supplied by the Builder with the contract and executed by the parties at the same time, was also part of the contract forming, in effect, an agreed variation or amendment to it. 14. Both documents have the same date appearing beside the Owners' signatures, being 26 January 2017. The same date appears beside the Owners' signatures to the contract. 15. The documents contain conflicting descriptions of the scope of works. 16. The Tribunal decided that the scope of works was just the 25 word summary in Schedule 4. 17. We are unable to discern why the Tribunal reached that conclusion or the process of reasoning that led to it. In essence, there were competing documents that conflicted. The documents appear to be dated the same day as the contract. It is unclear if one, both or neither formed part of the contract. They were the result of some co-operation between the parties regarding the lender. 18. The Builder's amendments R11 was held to be part of pre-contractual negotiations, but what of the Owners scope of works R9? If the Builder's amendments R11 was to be ignored, then the Owners' scope of works R9 was a critical piece of evidence regarding the scope of works. There appears to be no reference to what the Tribunal found regarding it. 19. Further, why did the Tribunal find at [39] and [42] that there were two prior agreements, reached a few days prior to 26 January? If the Builder's amendments R11 was one such agreement, what was the other? The reasons are silent as to the other. It could not be the agreement about the information provided to the lender as this occurred well outside that time frame. 20. Perhaps one explanation is that the member intended when referring to the "Agreement and separate Schedule of Works" at [6], to refer to the Builder's amendments R11 as the "Agreement" and the Owners' scope of works R9 as the "separate Schedule of Works", but it is unclear from the reasons if this was the case. 21. Perhaps the Tribunal misunderstood the submissions of the Owners as [45] of the Decision suggests the Owners did not submit that the Owners' scope of works R9 was part of the contract. We are unable to confirm the Owners' submissions because the sound recording is unavailable and we have decided, in the circumstances to accept the parties' assertions to us. In doing so, we may be doing a disservice to the Tribunal but we have decided to give the parties the benefit of the doubt. 22. We have concluded that considering the dates appearing beside the signatures on the contract, the Owners' scope of works R9 and the Builder's amendments R11, the Tribunal has not adequately explained the conclusion about the agreed scope of works. While the Notice of Appeal suggests the issue is ignoring evidence, we propose to treat the characterisation of the error as a failure to give adequate reasons. 23. A failure to provide reasons or adequate reasons is an error of law. However, the nature and extent of the reasons required are variable, depending on the circumstances of the particular case: Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430; Collins v Urban [2014] NSWCATAP 17 at [57]; DAG Aviation Pty Ltd v Kirk [2017] NSWCATAP 41 at [28]. 24. A decision maker is obliged "to state generally and briefly the grounds which have led him or her to the conclusions reached concerning disputed factual questions and to list the findings on the principal contested issues" Soulemzis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 per Kirby P at 259. 25. The duty to give reasons is confined to the "..essential ground or grounds upon which the decision rests" Segal v Waverley Council (2005) 64 NSWLR 177 at 201. 26. A "failure to refer to some of the evidence" is not necessarily fatal, but "for a judge to ignore evidence which is critical to an issue in a case and contrary to an assertion of fact made by one party and accepted by the judge" may be an error of law: Mifsud v Campbell (1991) 21 NSWLR 725 (per Samuels JA at 728. 27. The Appeal Panel is satisfied that in failing to refer to Owners scope of works R9, the Tribunal failed to refer to critical evidence contrary to the argument of the Owners. This issue was central to the dispute between the parties and this failure amounts to an error of law. 28. The matter must be returned for re-hearing before a differently constituted Tribunal so the relevant facts can be established. 29. In making this finding, the Appeal Panel emphasises that it has not had access to the sound recording of the proceedings and has accepted the assertions of the parties, for the reason already stated. The Appeal Panel makes no findings about what was the content of the contract between the parties as these are matters of fact to be found by the Tribunal at re-hearing. Costs 1. In its written submissions, the Builder indicated that it sought a costs order. 2. The general rule in relation to costs in the Tribunal is that unless special circumstances are established, the parties pay their own costs: s 60(1) of the NCAT Act. 3. However, r 38 of the Rules modifies the application of s 60 such that in proceedings before the Consumer and Commercial Division the Tribunal may award costs in the absence of special circumstances warranting such an award if the amount claimed or in dispute in the proceedings is more than $30,000. Rule 38A modifies the position in respect of appeals by directing that the Appeal Panel must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal. 4. In Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 the Appeal Panel found at [57]: Adapting these principles to the circumstances of the present appeals and having regard to the specific wording of r 38, it appears to us that in applying r 38(2)(b): The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance; The phrase "in dispute" is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; Whether "the amount … in dispute" in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000. 1. The amount in dispute on appeal was more than $30,000 as the Owners sought on appeal to "prejudice" the Builder by the relief sought by an amount in excess of $30,000. Accordingly, by operation of r 38 (2)(b) costs may be awarded in the absence of special circumstances being shown. 2. Rule 38(2)(b) gives us a wide discretion to make an order for costs. It does not specify the factors we must take into account in exercising the discretion, although the discretion must be exercised judicially: Thompson v Chapman [2016] NSWCATAP 6. The starting point in exercising such discretion is that the "usual order for costs" is that a successful party should be entitled to an order for costs in their favour: see Latoudis v Casey [1990] 170 CLR 534 per Mason CJ at 554. 3. The Owners, who were self-represented, were successful on the appeal. The appeal was allowed. The Builder's written submissions assert that 50% of its costs should be awarded because the Owners argued, contrary to its contention, that the Builder's amendments R11 did not form part of the contract. 4. However, we have made no finding as to what documents form part of the contract. This is a matter to be decided at the re-hearing. Hence, the application that the appellants pay the respondent's costs is refused. Conclusion 1. The orders of the Appeal Panel are: 2. Allow the Appeal, 3. Set aside the orders of the Tribunal of 2 May 2018 in HB17/40792 & HB1742496, and 4. Remit the matters for re-hearing by a differently constituted Tribunal. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Principal Registrar ********** 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: 15 August 2018