Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Sewell v Bush [2019] NSWCATAP 161 Hearing dates: 20 June 2019 Date of orders: 20 June 2019 Decision date: 01 July 2019 Jurisdiction: Appeal Panel Before: Cole DCJ, Deputy President G Burton SC, Senior Member Decision: 1. The appeal is allowed. 2. The decision and the orders in claim numbers HB 18/17256 and HB 18/34797, published on 27 March 2019, are set aside. 3. In finalisation of both matters together, Gregory Bush must pay to Lynette Sewell the sum of $2,032.50 on or before 18 July 2019. 4. Lynette Sewell has leave to seek the payment out from the Tribunal of the sum deposited by her on account of the stay application. Catchwords: CONTRACTS – breach of contract – quantum of damages - procedural fairness Cases Cited: Bellgrove v Eldridge [1954] HCA 36 Kioa v West [1985] HCA 81 RCB v The Honourable Justice Forrest (2012) 247 CLR 304 Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, [2009] HCA 8 Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd [2017] NSWCA 27 Warkworth Mining Limited V Bulga Milbrodale Progress Association Inc [2014] NSWCA 105 Texts Cited: Hudson on Building Contracts (7th ed,1946) at 343 Category: Principal judgment Parties: Lynette Sewell (Appellant) Gregory Bush (Respondent) Representation: Solicitor: LS Legal Pty Ltd (Appellant) Respondent (self-represented) Counsel: M Klooster (Appellant) File Number(s): AP 19/17387 Publication restriction: Unrestricted Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: [2019] NSWCAT Date of Decision: 27 March 2019 Before: Ian Bailey AM SC, Senior Member File Number(s): HB 18/17256 HB 18/34797 REASONS FOR DECISION 1. On 27 March 2019, the Tribunal made a decision at first instance in relation to two claims arising from home building work performed by Mr Bush, a builder, namely a renovation at the home of Ms Sewell. The Tribunal's decision and orders dealt with both the claim made by Mr Bush against Ms Sewell (claim number HB 18/34797) and the claim made by Ms Sewell against Mr Bush (claim number HB 18/17256). 2. Ms Sewell has appealed against the decision and the orders. The decision at first instance 1. The Tribunal at first instance acknowledged that the entire claim by Mr Bush against Ms Sewell had been agreed and all but one issue of the claim by Ms Sewell against Mr Bush had also been agreed. The unresolved issue in the claim by Ms Sewell related to the allegedly defective flooring and its rectification. The parties asked the Tribunal to confine its decision to the unresolved issue, which the Tribunal referred to as 'the Flooring claim' (we will adopt this). The Tribunal said: 2. At the hearing of these two Home Building applications on 30 November 2018 the issues were narrowed and agreements noted: (1) The Concession by the Builder that HB 18/34797 could be resolved in the amount of $10,000, and (2) The Concession by the Homeowner that save for the Flooring claim HB 18/17256 could be resolved in the amount of $3,192. (3) The Tribunal will determine the Flooring claim on the basis of the evidence in the Agreed Bundles marked Ex TE1 and Ex TE2 and submissions from the parties. 1. The Tribunal at first instance set out an outline of the facts which led to the Flooring claim, which we will summarise. In early 2015, Ms Sewell set about making arrangements to undertake a comprehensive renovation and redecoration of her house. She engaged Mr Bush as her builder. The installation of new flooring in the house was not part of the scope of works originally agreed between Ms Sewell and Mr Bush, but was the subject of a variation. In March 2015, Ms Sewell uplifted the existing slate flooring. Ms Sewell selected engineered wood strip flooring which she purchased from Havwoods. Ms Sewell obtained advice about the installation of the strips from Havwoods, and discussed the method of installations with Mr Bush. There were two options for the method of installation. One method was "loose laying", which involved the laying of the strips on top of a layer of underlay which sat on top of the concrete slab. The other method was referred to as the 'direct stick' method and involved gluing the strips to the concrete slab. From Mr Bush's conversations with Ms Sewell, he understood that she had chosen the "loose laying" method. He quoted $3,400 to lay the floor. Ms Sewell accepted his quote. It was Mr Bush's evidence that he ground the glue from the concrete slab (ie the glue which had been used to keep the slate tiles in place) and laid the engineered wooden strips by the 'loose laying' method. Subsequently, Ms Sewell found that the floor would move and squeak when it was walked upon. The floor was not flat. A number of discussions took place between Ms Sewell and Mr Bush. Ms Sewell sought expert advice and obtained several reports. Ultimately, Ms Sewell removed the flooring and arranged to have a new floor installed. 2. At the hearing before the Tribunal at first instance, Mr Bush, through his lawyer, Mr Koops, conceded liability in relation to the Flooring claim. There was an express concession that the concrete slab should have been levelled by Mr Bush prior to the laying of the floor, though the means by which it should have been levelled was not specified. The only issue the parties sought to have the Tribunal decide was the quantum of damages in relation to the Flooring claim. 3. The Tribunal at first instance, in its written reasons, after some discussion of the evidence, made its decision on this basis: 30. The Tribunal concludes that there is no legal basis for the Builder to be found to be liable for the replacement of the original timber flooring which the Homeowner chose to install. The Appeal 1. Ms Sewell has appealed from that decision on the following grounds: 1. The Tribunal erred in not affording the Appellant procedural fairness. Particulars 1.1 The parties agreed at the hearing that the only question the Tribunal needed to determine was the question of quantum with respect to the Appellant's flooring claim. 1.2 Both parties agreed in written submissions that the only issue the Tribunal needed to determine is the rectification cost for the defective timber flooring. 1.3 Whether or not the timber flooring was defective was not an issue the Tribunal was required to determine. 1.4 The Tribunal determined a matter: (a) That was not raised by either party (b) That was not in dispute between the parties (c) That was raised by the Tribunal for the first time after the submissions were received. 1.5 The Tribunal did not afford either party to make submissions on the question of whether the timber flooring was defective. 2. The Tribunal erred in failing to provide reasons, or alternatively adequate reasons in reaching the conclusion at paragraph 17 that it was the Appellant needed to ensure that the existing flooring was made level and flat. 1. In the hearing before us, Mr Bush agreed that he made the concessions outlined above at first instance. Procedural Fairness 1. The aspect of procedural fairness pleaded in this case was described, in the context of administrative decision making, by Mason J in Kioa v West [1985] HCA 81: …recent decisions illustrate the importance which the law attaches to the need to bring to a person's attention the critical issue or factor on which the administrative decision is likely to turn so that he may have an opportunity of dealing with it. 1. The principle also applies to judicial decision making (see RCB v The Honourable Justice Forrest (2012) 247 CLR 304 at 42). 2. The principles applicable in this matter are conveniently summarised by the Court of Appeal in Warkworth Mining Limited V Bulga Milbrodale Progress Association Inc [2014] NSWCA 105 at paragraph 39 - 41: 39. A failure to afford a party procedural fairness will constitute an error of law: see Clements v Independent Indigenous Advisory Committee at [8] per Gray ACJ and North J. Where the relevant failure to afford procedural fairness is a failure to consider a substantial claim that has been advanced by a party, there will also be a constructive failure to exercise jurisdiction: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088, per Gleeson CJ at [24], Kirby J at [87] and Callinan J at [95]. Construing the legal limits of a court's powers to determine whether it has exceeded its jurisdiction in a particular case will involve, at least implicitly, a question of law within the meaning of the Court Act, s 57(1): see RTA v Peak at [15] and [141]-[151]; Kostas v HIA Insurance Services at [23]-[25] per French CJ, [69] per Hayne, Heydon, Crennan and Kiefel JJ. 40. There will be procedural unfairness where information is used by a decision maker in a way that could not reasonably be expected by one party and that party is not given an opportunity to respond to that use: see Re Minister for Immigration and Multicultural Affairs; Ex parte Miah [2001] HCA 22; 206 CLR 57 at [142] per McHugh J and Muin v Refugee Review Tribunal [2002] HCA 30;190 ALR 601 at [128]- [134] per McHugh J. 41. Another aspect of procedural fairness was argued in the present case, namely, that where a court determines a matter on a basis that was not in issue or argued in the proceedings, there will have been a denial of procedural fairness: see Stead v State Government Insurance Commission [1986] HCA 54; 161 CLR 141. This is a basic requirement of a fair trial. See also Re Minister for Immigration and Multicultural Affairs; Ex parte Miah in the context of administrative decision-making. 1. The Tribunal at first instance in this matter omitted to bring to the attention of the parties the issue on which its decision was to turn; namely the liability of the builder, Mr Bush, for the defects in the flooring which the owner, Ms Sewell, remediated by the installation of a new floor. That was a denial of procedural fairness and an error of law. The decision must be set aside on that ground alone. 2. The Tribunal at first instance also failed to consider the question of the quantum of damages to which Ms Sewell was entitled with respect to the Flooring claim. This error followed from the overlooking of the concession by Mr Bush with respect to liability. The question of quantum was, in fact, the sole question before the Tribunal at first instance. The failure to deal with it was a failure to exercise jurisdiction and an error of law. This is a further basis for the setting aside of the decision at first instance. Quantum of Damages 1. The parties sought to have the issue of the quantum of damages with respect to the Flooring claim finalised, so that the whole claim could then be disposed of on the basis of the concessions made at first instance. 2. Ms Sewell's Flooring claim was for $23,452, comprising $19593.75 paid to JAG Woodworks and $3,858.25 paid to D Anderson Carpentry. 3. Prior to the installation of the new floor, the concrete slab, which was uneven, was made even by means of the laying upon it of a quantity of fresh concrete, which was levelled and sealed. The new floor which Ms Sewell caused to be installed on the freshly levelled concrete slab was comprised of new Engineered Oak strips, laid by the 'direct stick' method. 4. The amount paid to JAG Woodworks included sums for the supply of a significant amount of concrete, which was used to make the surface of the concrete slab even, consumables which were used to seal the concrete and stick the new floorboards to the slab and freight charges. It was agreed by both parties, in the hearing, that these items should be excluded from the claim. They had not been items contemplated in the agreement with Mr Bush, and they were not part of his quote to perform the original flooring work. The 'direct stick' method was a superior, and more expensive, method of laying the floor to the 'loose laying method' used by Mr Bush. The amount paid to JAG Woodworks also included the supply of Engineered Oak strips in a quantity sufficient for an entirely new floor. It was properly conceded that some of the Engineered Oak strips should not form part of the claim, because a considerable quantity of the strips laid by Mr Bush were fit for reuse but were not reused. 5. We bear in mind the principle set out in Bellgrove v Eldridge [1954] HCA 36, in which the High Court quoted with approval the principle stated in Hudson on Building Contracts, 7th ed (1946) p 343: The measure of damages recoverable by the building owner for the breach of a building contract is, it is submitted, the difference between the contract price of the work or building contracted for and the cost of making the work or building conform to the contract, with the addition, in most cases, of the amount of profits or earnings lost by the breach The High Court added: The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt. We consider that the approach to arriving at the quantum of damages in relation to the Flooring claim is consistent with these principles (see also Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272, [2009] HCA 8 [13]-[20] and Walker Group Constructions Pty Ltd v Tzaneros Investments Pty Ltd [2017] NSWCA 27 at [186]). 1. D Anderson Carpentry had done most of the work to lay the new floor, so the whole of that account was properly claimed. 2. After some discussion with the parties, it was agreed by the parties that the Flooring claim should be settled in the sum of $8,840.50. 3. Mr Bush had agreed, at first instance, that the quantum of Ms Sewell's claim against him which should be allowed, excluding the Flooring claim, was $3,192. The agreement of the quantum of the Flooring claim at $8,840.50 takes the amount for which Mr Bush is liable to Ms Sewell to the sum of $12,032.50. 4. Ms Sewell had agreed at first instance that the quantum of Mr Bush's claim against her which should be allowed was $10,000. 5. The nett result, setting Ms Sewell's claim off against Mr Bush's claim, is that Mr Bush should pay Ms Sewell the sum of $2,032.50. 6. Ms Sewell had obtained a stay of the orders made at first instance, and had paid into the Tribunal a sum of money in that process. As the matter has now been finalised, leave was given to Ms Sewell to seek the payment out of that sum to her from the Tribunal. 7. At the conclusion of the hearing, we made the following orders: 1. The appeal is allowed 2. The decision and the orders in claim numbers HB 18/17256 and HB 18/34797, published on 27 March 2019, are set aside. 3. In finalisation of both matters together, Gregory Bush must pay to Lynette Sewell the sum of $2,032.50 on or before 18 July 2019. 4. Lynette Sewell has leave to seek the payment out from the Tribunal of the sum deposited by her on account of the stay application. ********** 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 July 2019