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District Court New South Wales

Case Title: Fordham v Dewsash Pty Ltd t/as S.P. & W. Hobson

Medium Neutral Citation: [2012] NSWDC 109

Hearing Date(s): 25/05/2012 and 28/05/2012

Decision Date: 27 July 2012 Jurisdiction:

Before: P Taylor SC DCJ

Decision:

1. Allow the appeal.

2. Set aside the orders of the Tribunal. 3. Remit the matter to the Tribunal for a rehearing in accordance with these reasons,

pursuant to ss 67(3)(b) and (4) of the CTTT Act.

4. Order that the plaintiff's costs of the appeal be costs of the proceedings in the Tribunal.

Catchwords: Appeal from Tribunal - question with respect to matter of law - no evidence - agreement - mitigation of loss - quantum of damages -

estoppel - costs

Legislation Cited: Consumer, Trader and Tenancy Tribunal Act 2001

Cases Cited: Kostas v HIA Insurance Services Pty Limited [2010] HCA 32

Mahlo & Ors v Westpac Banking Corporation Ltd [1999] NSWCA 358 Pavey & Matthews v Paul (1987) 162 CLR

221

Texts Cited: Category: Principal judgment

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Parties: James Arthur Fordham (plaintiff)

Dewsash Pty Limited t/as S.P. & W. Hobson (defendant)

Representation

- Counsel: Mr J Young (plaintiff) Mr S V Shepherd (defendant)

- Solicitors: Blackwell Short Lawyers (plaintiff)

Creaghe Lisle Solicitors (defendant)

File number(s): 2011/165234

Decision Under Appeal

- Court / Tribunal:

- Before: Tribunal Member S Smith - Date of Decision: 17 March 2011

- Citation:

- Court File Number(s) HB 09/25483; HB 10/21874

Publication Restriction: No

JUDGMENT

A. Introduction

1 This is an appeal from a decision of the Consumer, Trader and Tenancy

Tribunal ("the Tribunal") under s 67 of the Consumer, Trader and Tenancy

Tribunal Act 2001 ("the CTTT Act"), in respect of a building dispute.

B. Background

2 The facts as found by the Tribunal were as follows.

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3 Mr Fordham, the plaintiff, owned some rural land at Bendick Murrell in the

central west of New South Wales. He had plans to build a cottage. He

negotiated with Mr Hobson, the owner of the defendant's building

company, and on 25 June 2002 the parties entered a standard HIA

contract for the building of the house. The contract provided for a price of

$187,000 with no deposit, and a schedule of progress payments

commencing with $50,000 when the slab and underfloor plumbing were

complete.

4 Site work commenced in November 2002, and after many inspections and

rectifications the main part of the slab was poured on 13 May 2003.

5 In April 2003, shortly before the slab was poured, the defendant presented

the plaintiff with invoices totalling $36,000. As the slab had not been

poured, the plaintiff may have been within his rights to make no payment

until all works referable to the first progress payment were substantially

complete. In any event, on about 28 April 2003 the plaintiff paid the

defendant $29,000.

6 After the slab was poured, a further dispute arose between the parties

concerning the adequacy of the slab. Experts were retained. After some

debate those experts, Mr Simpson for the defendant, and Mr Noonan for

the plaintiff, agreed on a rectification procedure whereby a concrete

topping would be put on the existing slab to allow for a shower set down

and to provide some stiffening of the overall structure.

7 Ultimately, no concrete topping was installed. The plaintiff engaged a new

builder, and demolished the existing slab.

C. The Tribunal proceedings

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8 The Tribunal member determined that the matter required him to

determine three issues:

(a) Was the slab as built a breach of the building contract;

(b) Did the plaintiff mitigate his loss if there was a breach; and

(c) Which party had the right to terminate the contract.

9 In the course of dealing with these three issues, the Tribunal member

made findings which can be summarized as follows:

(i) Contrary to the defendant's contention, there was no agreement prior to 28 April 2003 (when the invoices were supplied) that $36,000 was payable upon the pouring of the main slab with the veranda slab to be poured separately.

(ii) On about 28 April 2003 the contract was varied by agreement (or by the plaintiff allowing the defendant to imagine that he agreed) so that a further amount of $7,000 (in addition to the $29,000 paid on that day) was to be paid on completion of the slab.

(iii) The refusal by the plaintiff to pay the additional $7,000 indicated an unwillingness by the plaintiff to be bound by the contract as agreed and empowered the builder to stop work.

(iv) This variation of the contract was an informal variation, such that the builder could not assert a right to payment under the contract but was entitled to rely on a quantum meruit.

(v) The plaintiff was estopped from disputing that the value of the slab was an additional $7,000 in addition to the $29,000 already paid.

(vi) The builder was entitled to succeed on the cross-claim for $7,000.

(vii) There is an argument that the slab satisfied the contractual requirements, but because other aspects of the case are fatal to the

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plaintiff's claim the question of breach of contract need not be decided.

(viii) The compromise reached between the experts about a topping slab was binding on the parties, and governed their rights and responsibilities.

(ix) The need to strengthen the slab was a consequence of the way the builder constructed the slab and so the builder must bear the cost of the extra works.

(x) The only evidence of the value of the extra works was Mr Simpson's estimate of $8,000, which was accepted.

(xi) Were there a breach of contract by the builder, the plaintiff had a duty to take all reasonable steps to mitigate his loss, by selecting the cheapest solutions reasonably available.

(xii) The plaintiff's expert, Mr Noonan, withdrew his approval to the slab topping even though he had agreed previously. It was possible he had succumbed to pressure from the plaintiff, and as a result, little weight could be given to Mr Noonan in measuring reasonableness. Mr Simpson seemed ready, willing and able to certify the slab topping, and his evidence was preferred to Mr Noonan's.

(xiii) The plaintiff unreasonably refused to proceed with the topping slab and failed to mitigate his loss, which would otherwise be $8,000.

(xiv) The plaintiff should pay the defendant's costs.

D. The Appeal

10 The plaintiff appealed from the Tribunal decision pursuant to section 67 of

the CTTT Act. Section 67 contains the following provisions:

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"(1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the District Court against the decision. ... (3) After deciding the question the subject of such an appeal, the District Court may, unless it affirms the decision of the Tribunal on the question:

(a) make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or (b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal.

(4) If such a rehearing is held, the Tribunal is not to proceed in a manner, or make an order or a decision, that is inconsistent with the decision of the District Court remitted to the Tribunal."

11 The plaintiff may have commenced the appeal shortly after the prescribed

statutory period, without leave. The defendant did not oppose an order for

leave to be granted, and accordingly I granted an extension of time for the

filing of the appeal to the date of the filing of the appeal.

12 In Kostas v HIA Insurance Services Pty Limited [2010] HCA 32, French CJ

at [25] held that:

"The words "question with respect to a matter of law" are wide enough to encompass a question of mixed law and fact. Questions of fact and law are often closely intertwined."

13 The plurality in Kostas (Hayne, Heydon, Crennan, Bell JJ) determined at

[90] and [91]:

"It is sufficient, for present purposes, to determine that the ground usually described as a "no evidence ground" raises a question of law... Whether there was no evidence to support a factual finding is a question of law, not a question of fact...What amounts to material that could support a factual finding is ultimately a question for judicial decision. It is a question of law."

14 The plurality declined at [88] to determine in the abstract the precise ambit

of the words "question with respect to a matter of law".

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15 The plaintiff asserted the following errors by the Tribunal:

"1 The finding that the there was an agreement for the Plaintiff to pay $36,000 on completion of the slab. 2 The finding that the Defendant is entitled to a quantum meruit. 3 The finding that the Plaintiff is estopped from asserting that the value of the work related to the completion of the slab was other than $7,000. 4 The finding that the Defendant was entitled to stop work until the $7,000 was paid. 5 The Tribunal failed to make any finding as to Plaintiff's claim for breach of contract. 6 The finding without evidence that Mr Simpson would have certified the slab as built and will certify the slab as augmented. 7 The finding that there was a compromise agreement binding on the parties. 8 The finding without evidence that Mr Noonan resiled from his previous opinion offered. 9 The finding without evidence that Mr Simpson had designed the topping slab and was ready, willing and able to certify it. 10 The finding without evidence that the Plaintiff's entitlement to a quantum of loss of $8,000. 11 The finding that the Plaintiff had failed to mitigate his loss. 12 The finding without evidence that the Plaintiff's claim demolition and reconstruction was (as pleaded) $91,000 in round figures. 13 The Tribunal treated the hearing as a final hearing when it was a hearing on liability and part of quantum only."

Ground 1: The agreement to pay $36,000.

16 This ground relates to finding (i) and (ii) of the Tribunal set out in

paragraph 10 above.

17 The plaintiff alleges that the finding of an agreement falls within s 67 on

two bases: it is a mixed question of fact and law, and in any event there

was no evidence to support the finding. It is clear from Kostas that the

second basis falls with the ambit of the appeal jurisdiction created by s 67.

I am also of the view that in the circumstances of this case, a finding of an

agreement is a mixed question of fact and law, which would fall within the

ambit of s 67 according to the decision of the Chief Justice in Kostas at

[25].

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18 The undisputed evidence was that on or about 28th April 2003, before the

slab was poured, the defendant gave the plaintiff three documents, these

being:

(a) Tax Invoice 0184 for $36,000; (b) Part A Progress Claim No. 1 for $29,000 dated 27th

April 2003; and (c) Part B Progress Claim No. 1 for $7,000 dated 27th

April 2003.

19 On 28 or 29 April 2003, the plaintiff paid the defendant $29,000. The

plaintiff's evidence as to the circumstances under which this amount was

paid is set out in detail in Annexure "K" to his witness statement dated 30

November 2009 filed with the Tribunal and adhered to under cross-

examination at T28/7/2010 p 23.5:

Q: I mean the reality is, Mr Fordham, if you haven't paid the builder the $29,000, he wouldn't have poured the slab. A: Would have been good if he hadn't. Q: But he wouldn't have poured it if you hadn't paid it. A: Paul rang me a couple of days before that date that I paid, and asked me, because of the delay in time, and the fact that his contract - he couldn't pay his contractors, he'd outlaid a lot of money and he couldn't pay his contractors, the kids were - their kids were starving, could I make an advance on progress payment number 1, and I agreed to that. He couldn't tell me how much he wanted upon that date. Three or four days later when he turned up on the Sunday, he had these payments already - progress payments already made out, and I was astounded at the amount, because the amount of work that had been done to that date didn't amount to $29,000. Nevertheless, I paid him the $29,000 which is what he asked for, and then when I saw the second progress payment, number 2B or whatever he called, for $7,000, that's when I said, "No, that's $21,000, its not due until the veranda slabs are done and all that sort of thing". Q: Would he have poured the slab if you hadn't paid him the $29,000? A: I doubt it, I'm sure that he wouldn't have.

20 This evidence denies an agreement to pay the further sum of $7,000. The

defendant asserted that it was open to the Tribunal to reject the plaintiff's

evidence, and, in that event, the Tribunal's finding of an agreement to pay

a total of $36,000 was not so illogical or against the weight of the evidence

as to constitute an error of law.

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21 The difficulty with the defendant's submission is that the rejection of the

plaintiff's evidence does not operate to supply the contrary evidence. The

Tribunal accepted that the sum of $50,000 was due under the contract

when the slabs were complete. I accept that the invoices delivered to the

plaintiff constitute evidence of an offer by the builder for a variation to the

effect that $29,000 be paid on 28 April 2003 and that $7,000 be paid after

the pouring of the main slab.

22 However, I do not think that the payment of $29,000, without more, is

sufficient to support a finding of an agreement that a further $7,000 would

be paid after the main slab was poured.

23 The evidence of Mr Hobson was as follows (T29/7/2010 pp 6.45-7.11):

Q: What you were saying yesterday is the contract says, "slab complete $50,000". You were saying, "Oh no, that's what it might say, but in my mind, slab complete means the home and the house slab because I built the veranda later". Mr. Shepherd led evidence from you yesterday to indicate that there was a variation to that $50,000, based on conversations which allowed you then to submit a claim for $36,000, remember that? A: Mm-hmm. Q: Why was it necessary to have a variation if the contract said $50,000 on completion of slab, and you, in your mind, had completed the slab that you thought was included in that $50,000? A: The word variation, wasn't actually a variation. Like it was - it was just - the figures were all there, and because the time lapse went on for so long, I had made a claim for the money that I actually put into the place at that time, and that came to that amount for the slab, and the difference was for the veranda slab. Now, to me, a variation is when there's a plus or minus cost, and there's no plus or minus, I was just requesting a payment for what I've done.

And at T28/7/2010 p 63.45-63.50:

Q: If the contract was to be varied by postponing the construction of the veranda, why did you not document it as you did with the three minor variations? A: Possibly because I didn't believe it as a variation because no money is going to be on it, plus or minus. Like to me, it's not a variation, it's just a different program of work. Wasn't going to cost me any money or Mr. Fordham.

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24 This evidence does not seem to me to support a variation of the

agreement to require a payment of a total of $36,000 after the pouring of

the main slab. The Tribunal member noted that no claim of duress or lack

of consideration was maintained by the plaintiff in respect of the variation

but the absence of such a claim does not supply evidence of acceptance

by the plaintiff of the obligation to pay a further $7,000. There is no

conduct or words by the plaintiff in any of the evidence that indicates an

acceptance of the proposal by the defendant. I do not regard invoices sent

after the event as supplying evidence of an agreement.

25 Accordingly, I find that there was no foundation for any findings of a varied

agreement by the Tribunal other than an agreement to pay $29,000 in late

April 2003. To some extent this lack of evidence is recognized by the

Tribunal by its alternative finding of "allowing Mr Hobson to imagine that he

agreed". This alternative finding suggests that there was no acceptance,

rather that the conduct of the plaintiff gave rise to some form of estoppel.

An estoppel by conduct requires that there be evidence of the conduct

giving rise to an assumption, or reliance, by the defendant so as to act to

its detriment. These are not matters the subject of findings by the Tribunal,

and do not appear to be supported by evidence. I do not regard the finding

quoted earlier in this paragraph as sufficient to establish an estoppel.

26 It follows that ground 1 is established: the finding by the Tribunal of an

agreement between the parties for the plaintiff to pay a further $7,000 on

the pouring of the slab is an erroneous finding with respect to a matter of

law.

Ground 2: the defendant is entitled to a quantum meruit

27 The Tribunal also relied upon quantum meruit and the decision in Pavey &

Matthews v Paul (1987) 162 CLR 221 (see finding (iv) in paragraph 9

above.

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28 An action in indebitatus assumpsit for the value of the work done and

materials supplied, otherwise known as an action on a quantum meruit,

depends on proof by the builder that he did the work and that the owner

accepted the work without paying the agreed remuneration: Pavey v

Matthews at 228.

29 In the present case, it is not in dispute that the builder did the work, but the

owner's acceptance of the work and the agreed remuneration remain

matters in dispute. I have already decided that there was no evidence of

an agreed remuneration upon the pouring of the primary slab. Nor do I

think, in circumstances where the parties have been found to have agreed

upon the need for a topping slab, that there was acceptance of the work

done, at least not without rectification.

30 The defendant submitted (at [53] of its submissions):

"...the position as at the time the applicant terminated the contract was that the common ground was that the builder had completed this work and therefore must be entitled to payment for what he had done as at the time the contract was terminated. Any putative entitlement to damages for breach of the contract must nevertheless account for the builder's entitlement to payment for work done."

31 Of course, the owner must give credit for any work done. But if the owner

has terminated the contract for breach, the builder is only entitled to

payment for work done to the extent that the costs to complete the work

(including payments already made to the builder) are less than the contract

value. So much was provided for in clause 36.4 of the contract which

stated:

36.4 If the costs incurred by the owner are:

(a) more than the unpaid balance of the contract price the builder must pay the difference to the owner within 7 working days of receiving the notice from the owner; or (b) less than the unpaid balance of the contract price the owner must pay the difference when giving the notice as a debt due and payable. [emphasis omitted]

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32 It follows that the value of the work done by the builder must take account

of the cost of the remedial topping slab, and, potentially, the cost to

complete the work. It was an error for the Tribunal to ignore these costs

and simply award the builder the $7,000 as the additional value of the work

done to date.

Ground 3: the plaintiff is estopped from asserting the value of completing the slab was other than $7,000.

33 This finding of the Tribunal ((v) in paragraph 9 above) is dependent upon

the finding of an agreement. The Tribunal member found:

"I note that at least one count in the builder's claim was founded on an estoppel. In my opinion the part played by estoppel in this matter goes to the amount of the quantum meruit being the value of the work done. Because Mr Hobson acted to his detriment on the promise of Mr Fordham to pay the outstanding balance of $7,000 for the completion of house slab, I do not think he can be heard now to say that its value is other than $7,000.00 and that it is payable forthwith."

34 The Tribunal's reasons indicate that the estoppel claim is not an alternative

to the agreement, but an addendum: there was an agreement to pay for

the value of the work on completion of the slab, and the plaintiff is

estopped from denying (for the purposes of that agreement) that the value

of the slab is a further $7,000.

35 If there is no evidence of agreement, this finding also must be in error.

36 Further, an estoppel by conduct requires a party to act to its detriment. The

detriment in this case was alleged to be the pouring of the slab.

37 There was evidence from Mr Fordham that the builder would not (or would

not likely) have poured the slab if the $29,000 was not paid. But there was

no evidence from either party that the builder would not have poured the

slab if the owner had not promised to pay a further $7,000 on completion

of the slab, and no questions to that effect were directed to the owner. I do

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not accept that the mere tendering of an invoice for $7,000 by the builder

can be conduct sufficient to support an estoppel, in circumstances where

there was discussion and agreement in respect of payment of the invoice

for $29,000 in return for the pouring of the slab.

38 The builder submits that it was:

"...entirely open to the tribunal to conclude that the applicant encouraged the respondent to act on an assumption that a contact would come into existence or a promise be performed by the applicant (i.e. payment of $36,000) and the applicant intended the respondent to act on that assumption (by part performance of that promise in paying $29,000) and the respondent did act on that assumption to his detriment in that work was performed that otherwise would not have been done and he has not been paid the outstanding amount for which he undertook that work."

39 To make out this submission, there needed to be some evidence, perhaps

from the builder, to the effect that he poured the slab because of some

conduct of the owner in respect of the invoice for $36,000, or the invoice

for $7,000. No such evidence was identified. In the absence of evidence of

"encouragement" or "acting on an assumption", there was no basis for the

Tribunal's finding. I have already found that the mere tender of an invoice

is insufficient.

Ground 4: the defendant could stop work until the $7,000 was paid.

40 Again, finding (iii) in [9] above is dependent upon an agreement in respect

of the $7,000, which I have rejected on the basis that there was no

evidence to support it. It follows that there was no evidence to support an

entitlement in the builder to stop work until the $7,000 was paid.

Ground 5: failure to make a finding of breach of contract by the builder.

41 It is correct that the Tribunal did not make a finding in respect of breach of

contract and expressly reserved that question. However, the Tribunal's

finding (based on the finding of a varied agreement) that the builder was

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"empowered to stop work" precluded a finding of breach by the builder in

so doing.

42 In the absence of a valid variation, the Tribunal would need to determine

whether either party was in breach of the agreement.

Conclusion to Grounds (1) - (5)

43 All of these grounds arise out of the Tribunal's decision that there was an

agreement between the plaintiff and the defendant to pay $7,000 on

completion of the pouring of the main slab. I have found that there is no

evidence to support such an agreement, so these grounds are made out. It

follows that findings (ii) to (vii) are not supported by any evidence and must

be rejected.

Grounds 6 and 9: Mr Simpson designed and would have certified the topping slab

44 These grounds concern finding (xii) in [9] above.

45 Mr Noonan, the plaintiff's expert, wrote on 5 August 2007:

"The topping slab rectifications proposal by Mr Simpson is a suitable strength rectification provided it is designed and installed correctly."

46 On 24 August 2007, Mr Simpson noted that he was:

"...preparing a rectification plan and specification. The plan will involve a systematic inspection of the underside of the edge beam, the removal of any soft plant material found; the refilling of any gaps with compacted granite or high strength concrete slurry: the machine grinding/roughening of the slab surface; the installation of [unreadable] placing of reinforcing mesh and the pouring of a topping slab in two or three segments." "The structural characteristics of the new slab are intended to easily accommodate any movements in the founding soil through settlement or moisture content related shrinking and levelling. In reality the rectified slab will be far stiffer than the original design."

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47 The evidence also included a facsimile to Mr Fordham from Mr Simpson

dated 28 October 2007 which comprised a topping slab plan with notes

and specifications, a rectification procedure, and detailed sections at the

edges of the existing slab and at the construction joint.

48 Mr Noonan responded on 19 November 2007, writing:

"We therefore advise that method of rectification is acceptable provided the additional notes are included in the design drawings for the edge beam rectification."

49 In these circumstances it seems clear to me that there was evidence on

which the Tribunal could conclude that Mr Simpson had designed the slab

and was willing to certify as built. I therefore reject grounds 6 and 9 of the

appeal.

Ground 7: there was a compromise agreement concerning the slab rectification which was binding on the parties

50 This ground concerns finding (viii) in [9] above.

51 I refer to the evidence quoted under the previous ground. That evidence

supports a finding that there was a compromise agreement concerning the

slab rectification, which was binding upon the parties. The plaintiff did not

appear to submit otherwise. The primary submission on this ground was

that it did not relieve the Tribunal of the need to determine breach (a

matter dealt with under another ground of appeal):

"If, as it appears, the Tribunal found that there was a compromise agreement between the parties that would govern the way the rectification of the slab progressed, then the Tribunal did not then go to decide which party was in breach of that compromise agreement. This was an error with respect to a matter of law."

52 The plaintiff also submitted that no final plans were prepared. The

evidence indicates that an updated plan was to be prepared which might

not have been completed, but I think the plans provided at pages 105-106

of the Blue Appeal Book, together with the specifications and rectification

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procedure recorded thereon, were sufficient to enable a finding that a

compromise agreement had been reached.

53 Accordingly, I reject ground 7 of the grounds of appeal.

Ground 8: Mr Noonan resiled from his previous opinion.

54 This ground concerns finding (xii) in [9] above.

55 It does not appear to be in contest that Mr Noonan did resile from his

previous opinion of agreement with Mr Simpson's slab topping proposal. At

least Mr Noonan thought that, for reasons which he set out, demolition of

the slab was a preferable course.

56 Save for one matter, which is dealt with below, I do not find any errors with

the way the Tribunal dealt with Mr Noonan's evidence. Mr Noonan

withdrew his approval of the agreed topping slab solution, as the Tribunal

found. Also, as the Tribunal found, Mr Noonan's reasons for so doing were

not relevantly technical. Mr Noonan did not find that the topping slab would

be defective or inappropriate in some way, but was concerned with matters

of liability and costs.

57 I think it was open to the Tribunal to adopt Mr Simpson's topping slab

solution, as a reasonable and cost effective procedure, on the basis that

Mr Noonan had once agreed with it but subsequently changed his mind.

However, the Tribunal did not proceed on this basis. Rather, it found that

there was a "possibility that Mr Noonan succumbed to pressure from Mr

Fordham", and that "as a result" Mr Noonan's revised opinion was given

little weight.

58 The defendant refers to a letter from the plaintiff's solicitor (Blue AB 492-3)

as "evidence to support that the change of opinion had been encouraged

by the plaintiff's solicitors". Although that may be so, I do not think it was

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open to the Tribunal to attribute this possible motivation for Mr Noonan's

change of mind and to reject his evidence because of it, in circumstances

where Mr Noonan was not cross-examined and the possibility was not put

to him. The Tribunal must be cautious before attributing an extraneous

motive to an expert, and should not do so unless there is some factual

foundation for it.

59 Notwithstanding this error, as I have said, the ultimate finding of the

Tribunal on the reasonable rectification procedure was open to it. It would

be a matter for the Tribunal to decide whether it now makes the same

finding in circumstances where (in the absence of further evidence) it was

not entitled to reject Mr Noonan's revised view on the basis of the alleged

possibility that Mr Noonan had succumbed to pressure from Mr Fordham.

Ground 10: plaintiff entitled to $8,000 only

60 The plaintiff submits that there was no evidence to support the finding that

the cost of rectification of the slab was $8,000 (see finding (x) in [9]

above).

61 The Tribunal found:

"As it turns out, Mr Simpson's estimate of the cost of rectification was the only one before me. He indicated the cost at about $8,000 and I accept that estimate".

and

"In the circumstances of the present case I am well satisfied that Mr Fordham has not acted reasonably in rejecting the topping slab and has failed to mitigate his loss which would otherwise be $8,000."

62 The basis of this finding is that in re-examination of Mr Simpson on the

topic of the topping slab, the following exchange occurred:

"Q. Would that have been cheap? A. Without doing the - work, it would have been in the ballpark of $8,000 to $10,000, maybe $12,000."

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63 It may be that the Tribunal has elevated the evidence of the cost of a slab

topping to a level slightly higher than it bore. However, I think the evidence

of Mr Simpson is some evidence that the cost of the slab may be $8,000.

The fact that a finding of a cost of $9,000 or $10,000 may sit more

comfortably with that evidence is not sufficient, in my view, to allow a

finding by this court that the cost of $8,000 for the topping slab as found by

the Tribunal had no evidentiary basis.

64 The question whether the cost of the topping slab was the proper amount

of the plaintiff's damage under the contract, if any, is another matter. I

have already dealt with this issue under grounds 1 to 5. I should note that

the Tribunal did not find that the plaintiff's loss was $8,000, rather that if

there was a breach of contract, "it would sound in damages equal to the

homeowners loss according to law, here the $8,000 for the topping slab".

Ground 11: the plaintiff failed to mitigate his loss.

65 The finding at (xiii) in [9] above is criticised by the plaintiff on the basis that:

"such a finding is relevant where a breach of contract is established [but that] the Member...expressly stated that he was making no finding of breach by the defendant."

66 I accept the plaintiff's submission that the question of a failure to mitigate

loss only arises where the Tribunal is endeavouring to assess the damage

consequent upon a breach of contract. In the absence of a finding of

breach of contract, a finding of a failure to mitigate loss is unnecessary.

However, that does not assist the plaintiff on this appeal. If anything, it may

support an argument that the $8,000 awarded to the plaintiff could not be

sustained.

67 This is another reason (or perhaps the same reason expressed another

way) as to why the Tribunal needed to make a finding about breach of

contract by the defendant. Unless it did so, there was no cause of action

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established which justified an award of $8,000 or some other sum, in

favour of the plaintiff.

68 However, there was a basis (as set out above with respect to grounds 6 to

10) for the Tribunal to find that by not installing a topping slab the plaintiff

had failed to mitigate any loss to which he was entitled. I would therefore

not reject this finding of the Tribunal.

Ground 12: the plaintiff's claim was for $91,000.

69 On 19 October 2009, Member Durie noted:

"That the owner has now obtained an owner/builder license and is proceeding with works. It may be necessary (with the consent of the parties) to have an initial hearing on liability and part of the quantum, and a later hearing on the balance of quantum."

and on 19 November 2009, Tribunal Member Rossa noted:

"The Tribunal further notes that the parties are agreed that the hearing of the application will be in two parts, with liability and part of the quantum to be determined initially, with the balance of the quantum to be determined at a later stage (if liability is established)."

70 It was proposed that, as the Plaintiff submitted:

"...the hearing was to determine liability on all issues and, subject to that decision on liability, then go on to determine quantum for the limited component of demolition and reconstruction of the slab."

71 It is not readily apparent to me how the Commissioner could determine

"part of the quantum". The difference between the cost of the slab, and the

amount paid by the plaintiff to the defendant, is not a proper amount of

damage. Certainly the cost of the slab is a component of the overall cost,

and the amount paid to the builder is a relevant component of the

calculation of the damages to which the plaintiff may become entitled. But

the proposal by the parties to separate the cost of the slab from the

amount of damages suffered by the plaintiff was misconceived, and seems

likely to have contributed to the error made by the Tribunal.

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72 In the result, nothing turns on this ground, other than perhaps the question

of costs. The plaintiff argued that on the question of costs:

"...the amount awarded of $8,000 has been compared to the total claim of $91,129.91 instead of the amount referable to the more limited claim for the defective slab claim of $58,790.91. This has had an effect on the costs analysis".

73 I do not accept this submission. Although the Tribunal member noted the

claim for $95,000 in deciding the question of costs, the Tribunal member

reserved liberty to the parties to make submissions on costs.

74 The Tribunal member revisited the question of costs on 21 April 2011, and

gave a decision which, although not in the Blue Appeal Book, was

annexed to an affidavit of the plaintiff's solicitor read on the appeal and

was thus part of the evidence before the court.

75 The Tribunal member decided:

"In response to orders and reasons published on 17 March 2011 the parties have filed and served detailed submissions on the question of costs. I have considered those submissions in deciding the question of costs. As I indicated in my written reasons, the builder has achieved substantial success in his claim but the homeowner's claim in the final analysis was more like $50,000.00, not over $90,000.00 as mentioned in my reasons. While that may be so, the claim as pleaded was in the higher amount and the bulk of the litigation was conducted on that basis. In any event, the difference between the two amounts in relation to the whole of the case and its outcome would have little effect on the exercise of the costs discretion."

76 In the circumstances, I do not think that the Tribunal's decision on costs

miscarried because of a failure to recognise that the claim was for $58,000

approximately rather than $91,000. The final decision by the Tribunal in

respect of costs contemplated the lower value of the claim.

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77 However, the decision on costs was affected by the findings considered

under grounds 1 to 5 above, which I have found to be in error. Accordingly,

the question of costs will need to be revisited by the Tribunal.

Ground 13: not a final hearing

78 I have dealt with this matter above. The Tribunal needed to determine

whether there was a breach of contract in order to determine whether the

plaintiff was entitled to an award of $8,000 on the primary claim. Such an

award would have an impact on the appropriate costs order. Generally a

plaintiff is entitled to the costs of a successful claim and the defendant

would be entitled to the costs of the successful cross-claim, but the costs

of a cross-claim would only be those costs which were in addition to those

which were incurred in the primary claim: see Mahlo & Ors v Westpac

Banking Corporation Ltd [1999] NSWCA 358 at [88]. Whether that general

rule should apply in this particular case would be a matter for the Tribunal.

Conclusion

79 The parties jointly submitted that if the Tribunal's decision was in error

such that the orders could not be affirmed, I should send the matter back

to the Tribunal for further consideration. In view of my findings in respect of

grounds 1 to 5 of the appeal, the findings of the Tribunal must be set

aside, and the matter remitted to the Tribunal for further consideration in

accordance with these reasons. In accordance with s 67(7) of the CTTT

Act, further evidence "may be given on the rehearing".

80 As to the question of costs, the plaintiff has had some success on the

appeal but not on all points. In these circumstances I propose to order that

the plaintiff's costs on the appeal be costs of the proceedings in the

Tribunal.

E. Conclusion and orders

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81 Accordingly, the orders are:

1. Allow the appeal.

2. Set aside the orders of the Tribunal.

3. Remit the matter to the Tribunal for a rehearing in accordance with

these reasons, pursuant to ss 67(3)(b) and (4) of the CTTT Act.

4. Order that the plaintiff's costs of the appeal be costs of the proceedings

in the Tribunal.

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