Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Parsons v Adams [2019] NSWCATAP 301 Hearing dates: 24 September 2019 Date of orders: 20 December 2019 Decision date: 20 December 2019 Jurisdiction: Appeal Panel Before: A Britton, Principal Member G Sarginson, Senior Member Decision: (1) Appeal is dismissed. Catchwords: BUILDING AND CONSTRUCTION — liability of contractor for breach of statutory warranty under s 18B of the Home Building Act 1989 (NSW) — scope of s 18F defence to a contravention of a statutory warranty under s 18B of the Home Building Act CONTRACT — ascertaining parties to contract Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Home Building Act 1989 (NSW) Cases Cited: Boral Limited v Foley & Bear Pty Ltd trading as J&R Industries [2016] NSWCA 373 Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 Kapeller v BH Australia Constructions Pty Ltd [2019] NSWCATAP 40 Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262; (2012) 38 VR 509 Pastrovic & Co Pty Ltd v Farrington [2011] NSWDC 94 Stefanis v Oneview Construction Pty Limited [2019] NSWCATAP 218 The Craftsmen Restoration and Renovations v Thomas Boland, Thomas Boland v The Craftsmen Restoration and Renovations [2008] NSWSC 660 Texts Cited: None cited Category: Principal judgment Parties: Dennis Malcolm Parsons (Appellant) Sarah Adams (Respondent) Representation: Solicitors: Barry Marshall, (Applicant) Respondent (Self Represented) File Number(s): AP 19/33668 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 25 June 2019 Before: D Moss (General Member) File Number(s): HB 19/14711 Decisions under appeal REASONS FOR DECISION 1. In 2017, homeowner, Ms Sarah Adams, engaged a contractor, Mr Dennis Parsons, to construct a concrete slab on which to erect an outdoor "alfresco room". Two months after the slab was poured, Ms Adams noticed that parts of it had started to lift, creating a "trip hazard". In a report prepared in September 2018, structural engineer, Mr Peter McDonald, confirmed Ms Adams' belief that the slab was "defective". Mr McDonald recommended that the slab be demolished and replaced. 2. In November 2018, an inspector appointed by the Department of Finance, Services and Innovation issued Mr Parsons a "rectification order" under s 48E of the Home Building Act 1989 (NSW) ("the Act"). Mr Parsons did not comply with that order. Ms Adams then made an application to the NSW Civil and Administrative Tribunal (NCAT) seeking an order for compensation in the sum of $22,000. Ms Adams asserted that this represented the cost of rectifying the alleged defective work for which Mr Parsons was liable. 3. In a decision made on 25 June 2019, the Tribunal ordered Mr Parsons to pay Ms Adams $18,726 for the cost of demolishing and replacing the "defective concrete slab". The Tribunal gave oral reasons for that decision. Mr Parsons now appeals against that decision. 4. Two questions arise in this appeal. First, whether Mr Parsons was a party to the contract with Ms Adams for the construction of the slab (the subject contract) and if so, whether Mr Parsons was liable for the subject work. 5. For the reasons that follow, the answer to each question is, "Yes". The appeal must be dismissed. Grounds of appeal 1. Mr Parsons has a right to appeal against the Tribunal's decision on any question of law: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). 2. The notice of appeal listed two grounds of appeal: 1. "The Appellant was not a party to the appeal. The parties were Mark and Sara Adams and D & J Parsons Pty Ltd. The Appellant as a director or employee is not personally liable for the company. 2. The Appellant relied on plans provided by the owners and the site classification provided by the owner's certifier. The owner's certifier instructed the Appellant of the required piers, the certifier inspected the piers and approved them before they were poured." 1. As formulated, neither ground identifies a question of law. Each is a factual assertion and, in effect, is a challenge to the merits of the Tribunal's decision. Having heard the oral submissions made for Mr Parsons, we understand the purported questions of law to be: 1. Whether the Tribunal misapplied the principles which govern the task of ascertaining the parties to a contract. 2. Whether the Tribunal failed to consider, or to properly consider, the defence advanced by Mr Parsons, namely that he was not liable for the defective work because he had relied on advice given by "the owner's certifier" and plans provided by Ms Adams. 1. Being satisfied that Ms Adams would not be prejudiced by this reformulation, we permitted Mr Parsons to amend the grounds of appeal. Ground 1 : the identity of the parties question 1. Mr Parsons contends that there was no basis for the conclusion reached by the Tribunal that he was a party to the subject contract. In support of that contention, he relies on the quotation he gave to Ms Adams for the subject work. The letterhead of that quotation bore the name "D & J Parsons Pty Ltd". Mr Parsons is the sole director of that company. Citing the doctrine of privity of contract, Mr Parsons contends that he is not personally liable for the defective work because he was not a party to the contract with Ms Adams. He asserts that he did not raise this issue in the original proceedings because at the time he was not legally represented and did not appreciate the significance of the issue. 2. Ms Adams disagrees. She contends that the Tribunal did not err in identifying Mr Parsons as a party to the contract, pointing out that the first time Mr Parsons claimed that he was not a party to the subject contract was when he filed the notice of appeal. 3. The work the subject of the contract constitutes "residential building work" as defined by cl 2 of Sch 2 to the Act. The Tribunal's decision about whether Mr Parsons was a party to the subject contract 1. The initiating application made by Ms Adams to NCAT identified "Dennis Malcolm Parsons" as the respondent to the proceedings. 2. The issue of the identity of the parties to the contract was touched on during the hearing in the following exchange about which entity held the contractor licence to undertake the subject work. As the following extract from the transcript of the hearing reveals, the Tribunal decided that Mr Parsons was a party to the subject contract: Member: "Actually, that is a good question because was this job actually done by your company D &J Parsons Pty Ltd trading as Dennis the Concreter?" Mr. Parsons: "Yes, and Fair Trading have already pointed out to me, which I didn't realise that it's me that has the licence, not the company". Member: "So, since you're the licensee is it right that Ms. Adams is suing you personally rather than the company?" Mr Parsons: "I don't know. I can't answer that." Member: "I just saw that we had a licence check on file. Ms Adams, with the quote it was in the name of the company, D&J Parsons Ply Ltd trading as Dennis the Concreter and did you deposit the money into that bank account?" Mr Parsons: "Yeah". Member: "But that company doesn't have the licence, you have the licence. Are you going to make any change to that?" Mr Parsons: "When Fair Trading have alerted me to it, they just gave me a formal warning, there was no fine, and I just had to change it [in] contracts. Member: "So, is D &J Parsons Pty Ltd, trading as Dennis the Concreter, now licensed to do concrete work at residential building sites?" Mr Parsons: "No, I have changed it to Dennis Parsons". Member: "Okay, thank you. We will just leave it as Dennis Parsons". (Emphasis added.) Consideration 1. As explained by the NSW Court of Appeal in Boral Limited v Foley & Bear Pty Ltd trading as J&R Industries [2016] NSWCA 373 at [22], the task of identifying the proper parties to a contract requires consideration of the particular contract and ascertaining objectively who were the parties to the contract: The identity of a contracting party is to be determined by looking at the matter objectively, examining and construing any relevant documents in the factual matrix in which they were created and ascertaining between whom the parties objectively intended to contract. That is a process of construction not dissimilar from the task of identifying whether a clearly contractual document, such as a bill of lading, is made with one party or another. Where the documents are silent or ambiguous, but there is undoubtedly a contract, the identity of the parties must be determined objectively from the surrounding circumstances: Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429 at [28] 1. In Lederberger v Mediterranean Olives Financial Pty Ltd [2012] VSCA 262; (2012) 38 VR 509 the Victorian Court of Appeal stated that the identification of the parties to a contract "must be in accordance with the objective theory of contract" explaining at [19]: [T]hat is the intention that a reasonable person, with the knowledge of the words and actions of the parties communicated to each other, and the knowledge that the parties had of the surrounding circumstances, would conclude that the parties had. The process of construction requires consideration of not only the text of the documents, but also the surrounding circumstances known to the parties and the purpose and object of the transaction. This, in turn, presupposes knowledge of the genesis of the transaction, the background, and the context in which the parties are operating. [Footnotes omitted.] 1. The following evidence was before the Tribunal and is not in dispute: 1. The only document confirming the agreement reached by the parties in relation to the subject work was the quotation Mr Parsons gave to Ms Adams. Headed "D & J Parsons Pty Ltd, trading as Denis the Concreter", the quotation bore the number of Mr Parsons' "contractor licence". 2. The quotation did not expressly state who were the parties to the contract. 3. At all relevant times, Mr Parsons held a contractor licence issued by the Secretary of the Department of Fair Trading. (Part 3 of the Act gives the Secretary power to issue a "contractor licence", authorising the licence holder to do "residential building work" of the trade category described in the licence, here "general concreting".) 4. The agreed fee for the subject work was $10,400. Ms Adams paid a total of $8,400 in cash, in two equal instalments. Mr Parsons gave Ms Adams receipts for those payments. The receipts contained no reference to D & J Parsons Pty Ltd and bore Mr Parsons' signature. It is not clear from the material before the Tribunal how the balance of the agreed fee was paid. 5. Before entering into the contract, Ms Adams asked Mr Parsons whether he "had insurance, a concreter's licence". Mr Parsons stated that he did. D & J Parsons Pty Ltd is not the holder of a contractor licence. 1. The quotation given to Ms Adams was a partial record of the terms of the contract. It recorded the fee for the work, a brief description of the work and Mr Parsons' contractor licence number. The quotation did not expressly state who were the parties to the contract. Nor, as required by s 7AAA(3) of the Act, did it contain the names of the parties, the name of the holder of the contractor licence and any plans or specifications for the work. 2. On the face of the quotation, the identity of the party contracted to perform the subject work is ambiguous. On the one hand, the reference to the company in the letterhead of the quotation tends to suggest that the company was the contracting party. On the other hand, the reference to the contractor licence number tends to suggest that the licence holder was the contracting party. The only other contemporaneous documents relating to the agreement between the parties are the receipts which Mr Parsons gave Ms Adams. Neither refer to the company. 3. Given this ambiguity, it is permissible to have regard to the surrounding circumstances and the subject matter of the contract: Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 at 352; Kapeller v BH Australia Constructions Pty Ltd [2019] NSWCATAP 40 at [18]. Of particular significance in this case is the regulatory framework which governed the subject work and the parties' understanding of that framework. 4. The Act requires a person who contracts to do residential building work to hold a contractor licence authorising the person to do that work. The Act makes it an offence for a person to contract to do any residential building work "except as or on behalf of an individual, partnership or corporation that is the holder of a contractor licence authorising its holder to contract to do that work": s 4(1). 5. The evidence reveals that both parties had a general, though no doubt imperfect, understanding of the statutory requirement that the subject work must be undertaken by a licensed contractor. The verbal assurance given to Ms Adams by Mr Parsons that he was licensed to undertake the work, is significant. It indicates that Ms Adams understood that she was contracting with an entity who was licensed to undertake the work. At no time before accepting the quotation did Mr Parsons expressly state that the contract to do the subject work was with his company or that it would be unlawful for the company to contract to do that work. Indeed, as the statements made by Mr Parsons to the Tribunal set out at [14] indicate, he appears to have wrongly assumed that the company held the contractor licence. 6. In our view, a reasonable observer of the communications which led to the entering of the subject contract, who was aware of the background facts known to the parties, would conclude that the parties intended that the contract would be with whomever was the holder of the contractor licence. 7. The finding made by the Tribunal that Mr Parsons, not his company, was a party to the building contract was one open to the Tribunal on the available material. The Tribunal did not err in concluding that Mr Parsons, not his company, was a party to the building contract. This ground of appeal must be dismissed. Ground 2: the liability question 1. Mr Parsons does not dispute that the slab was defective but contends that he is not liable for the defective work because he relied on the advice given by the Private Certifier and plans provided by Spanline Australia. Ms Adams contracted with Spanline Australia to supply and install the gazebo roof. 2. The notice of appeal asserts that Mr Parsons "relied on plans provided by the owners". That was not the evidence before the Tribunal. Mr Parsons testified that because Ms Adams did not provide him with any plans or engineering specifications for the slab, he took steps to obtain engineering specifications from Spanline. When that was not possible, he claims he contacted the Private Certifier: Mr Parsons: "I rang Spanline, because the engineers, they had the plans for the slab and they gave me a plan of the slab but there was no engineers details on it so I rang them up what the go was and they talked about a thickened beam under where the columns are and said that would do and I wasn't satisfied with that. So I rang up the Private Certifier and asked them what they wanted to have a look at, so they told me the piers have got to be 400. I can't remember if it was 400 below the slab or 400 from the top of the slab, it is normally from the top of the slab and they give you dimensions That's what they want to see you know I would have had to have had some sort of engineer's plans or instructions and they came out and they passed it" … Mr Parsons: "No, basically this is my conclusion that I did what I was told to do by an engineer, and it was inspected by a private certifier who was satisfied that I did the job to engineer's plan." 1. In finding Mr Parsons liable for the defective work, the Tribunal reasoned: Member: "[I] think you have failed to protect yourself from liability by entering into this contract and hindsight's a wonderful thing, isn't it? And if you knew what you know now, you would never have done the work in the way you did it. But you accepted the job and you accepted responsibility for ensuring the work was not defective and although you telephoned Spanline to get engineering specifications, that was insufficient." … Member: "I think you've been let down by Spanline, and by the Private Certifier and I think in hindsight Ms Adams should have gone to the trouble of getting the engineering drawings herself at the beginning and provided them to you particularly having regard to the fact that it was reactive clay and there was a long period of rain and a long period of drought and now we've got the rain again … Mr Parsons could obtain some advice as to whether Spanline is negligent is providing the oral advice to him about the slab requirement and also more importantly perhaps, the private certifier, whether the private certifier has been negligent. Because if the private certifier has passed the work without there being any engineering drawings the private certifier may well be liable to Mr Parsons and hopefully the private certifier has professional indemnity insurance that will indemnify Mr Parsons for the amount that I am going to order him to pay Ms Adams." 1. It is implicit from its reasons that the Tribunal accepted Mr Parsons' account of having obtained plans from Spanline and having spoken to the Private Certifier. However, it is not clear from its reasons whether the Tribunal accepted Mr Parsons's claim that the certifier inspected the formwork before the concrete was poured. Nor is it clear whether the Tribunal accepted Ms Adams' claim that the certifier was engaged by Spanline solely to certify the construction of the gazebo, not the concrete slab. 2. The Act implies into every contract to do residential work, statutory warranties by the person required to hold a contractor licence, including warranties that the work "will be done with due care and skill" and "will be reasonably fit for the particular purpose for which the work is required": ss 18B(1)(a), 18B(1)(f). While not expressed in these terms, a fair reading of the reasons for decision indicates that the Tribunal found that Mr Parsons had breached those statutory warranties. 3. In rejecting Mr Parsons' defence that he had relied on advice given by Spanline and the certifier, the Tribunal was apparently referring to s 18F of the Act. Section 18F provides a defence to a holder of a contractor licence in proceedings for a breach of a statutory warranty where the licence holder can prove that the work was completed in accordance with instructions provided by the person for whom the work was performed contrary to the licence holder's written advice, or the licence holder relied on written instructions provided by a "relevant professional" acting for that person. Section 18F states: 18F DEFENCES 1. In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from: 1. instructions given by the person for whom the work was contracted to be done contrary to the advice of the defendant or person who did the work, being advice given in writing before the work was done, or 2. reasonable reliance by the defendant on instructions given by a person who is a relevant professional acting for the person for whom the work was contracted to be done and who is independent of the defendant, being instructions given in writing before the work was done or confirmed in writing after the work was done. 1. A relevant professional is independent of the defendant if the relevant professional was not engaged by the defendant to provide any service or do any work for the defendant in connection with the residential building work concerned. … (4) In this section, "relevant professional" means a person who: (a) represents himself or herself to be an architect, engineer or surveyor, or (b) represents himself or herself to have expert or specialised qualifications or knowledge in respect of residential building work or any particular aspect of residential building work, or (c) represents himself or herself to be engaged in a profession or to possess a qualification that is recognised by the regulations as qualifying a person as a relevant professional. (Emphasis added.) 1. The defence in s 18F(1)(a) is not available to Mr Parsons because on the evidence before the Tribunal the defective work did not arise from instructions given by Ms Adams. 2. Nor is the defence in s 18F(1)(b) available to Mr Parsons, even if it is accepted that the certifier was "a relevant professional" and, as claimed by Mr Parsons, had inspected the work and given him "verbal approval" for the work before the concrete was poured. This is because there is no evidence, and nor is it suggested, that the certifier gave Mr Parsons instructions in writing in relation to the work before the work was done or that the certifier confirmed those instructions in writing after the work was done. We note that there was no evidence before the Tribunal to suggest that the certifier had issued a construction certificate in respect of the slab. 3. The Tribunal did not err in finding that the defences in s 18F were not available to Mr Parsons. Section 18F: the only defences to a breach of statutory warranty? 1. Mr Parsons contends that his reliance on verbal advice given by the certifier and the generic plans provided by Spanline provide a complete defence to Ms Adams' claim of breach of the s 18B warranty. This contention was unsupported by any authority and was not based on any provision of the Act. 2. In addition, that contention is contrary to The Craftsmen Restoration and Renovations v Thomas Boland, Thomas Boland v The Craftsmen Restoration and Renovations [2008] NSWSC 660. In that decision, when considering an appeal from one of NCAT's predecessors, the NSW Consumer, Trader & Tenancy Tribunal, Howie J held (at [95]) that although it was unnecessary for the Court to decide, it would seem that the legislative intention was that the only defence available for contravention of the s 18B warranties was the defence provided by s 18F. (The version of s 18F considered by Howie J has subsequently been amended but not so to affect its interrelationship with s 18B.) Howie J's interpretation has been adopted in a number of decisions of the Appeal Panel of NCAT, including Stefanis v Oneview Construction Pty Limited [2019] NSWCATAP 218 at [48]. See also the decision of the District Court in Pastrovic & Co Pty Ltd v Farrington [2011] NSWDC 94. 3. This ground of appeal must be dismissed Claim for alleged additional damage 1. In written submissions opposing the appeal, Ms Adams sought an order for compensation for alleged additional damage caused by the defective building work. Even if it is assumed that further damage has occurred, it is not open to the Appeal Panel to determine whether Mr Parsons is liable for that damage. It is a new claim. Our role is confined to determining whether, as Mr Parsons asserts, the decision under appeal gave rise to an error on a question of law. Orders 1. Appeal is dismissed. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 December 2019