CTTT Legal Bulletin

Legal Bulletin Issue 23

Welcome to Issue 23 of the Legal Bulletin, the CTTT's e-newsletter providing an overview of recent appeals against decisions made by the Consumer, Trader and Tenancy Tribunal.

Thank you to all those who participated in the Legal Bulletin survey. Where possible your suggestions for improvement have been taken up. Send your questions or comments about this issue of the Legal Bulletin to:
LegalBulletin@cttt.nsw.gov.au.

The information contained in this Legal Bulletin is not legal advice and is intended as a general guide only. You should rely on your own advice or refer to the full cases and legislation in any proceedings.

Queens Lake Village Pty Ltd v Queens Lake Village Residents Association [2011] NSWDC 21

Division: Retirement Villages
Keywords: Apportionment of overheads of operator of retirement villages

Summary
The Tribunal found for the residents and excluded two items from a proposed budget of a retirement village. The operator appealed on the grounds that the Tribunal should have agreed with its apportionment of the expenses, or undertaken its own apportionment. On appeal the Court held that the onus was on the operator to provide evidence to allow a rational analysis of the expenses so as to enable a justifiable or reasoned apportionment, including confining such costs to only those costs permitted by statute as being legitimately relevant to expenses of the retirement village in question.

Background in the Tribunal
The operator of a retirement village was owned by a public company that operated 30 retirement villages and some 367 other facilities. For reasons of business efficiency, a number of activities and functions of the company were run from a central office. The company incurred significant expenses in connection with the running of its business and retirement villages at various locations.

The operator sought to rely upon a percentage method of dividing or assigning the insurance costs and corporate recharge expenses to Queens Lake Village.

The residents did not dispute the statutory entitlement of the operator to make levies of the kind sought. However, they disputed the proper identification of the amounts sought to be paid and the transparency of the particular amounts as sought. Specifically they challenged the characterisation of those amounts as outgoings reasonably assessed or chargeable in respect of Queens Lake Village.

The Tribunal found for the residents, making an order which excluded the disputed items from the budget pursuant to section 115(2)(e) of the RV Act.

District Court Appeal
Pursuant to section 67 of the CTTT Act the operator lodged an appeal with the District Court. The operator contended that the Tribunal erred:

(a) In excluding the charges having regard to the contractual obligations between the parties (the contractual ground)

(b) In failing to apportion the insurance premium to reflect charges that were permissible pursuant to s 115(2) (d), (e), (g) or (h) of the RV Act and in failing to determine an approximate cost for that insurance (the insurance apportionment ground).

(c) In failing to apportion the corporate recharge item to reflect charges that were permissible pursuant to s 115(2) (d), (e), (g) or (h) of the RV Act and, a related failure to consider the provisions of regulations 17(1)(g) and 17(2) of the RV Regulations to determine and apportion the approximate costs of that item (the corporate recharge apportionment ground).

Levy DCJ dealt shortly with the contractual ground by saying that the commonsense interpretation that must be given to the agreement between the parties meant that the definition of outgoings was to be assessed by reference to the particular village in question, and not by reference to an artificial formula that has no particular application to the retirement village.

In relation to the insurance apportionment ground, his Honour examined the quotation for insurance and found that it covered not just physical damage to the property insured but also consequential loss for business interruption. On his view of the evidence, it simply did not allow any rational analysis of the insurance costs so as to enable a justifiable or reasoned apportionment, including confining such costs to only those costs permitted by statute as being legitimately relevant to insurance of the retirement village in question. His Honour’s conclusion was that the Tribunal correctly decided the matter of insurance, declining, as it did, to undertake an arbitrary discretionary apportionment of the insurance charges.

In relation to the corporate recharge apportionment ground, his Honour stated:

“In my view the failure of the operator to seek such an apportionment before the CTTT, and the failure to introduce evidence before the CTTT that would enable a reasoned analysis of what expenses were properly assessed or chargeable as referring to the conduct, management and maintenance of the actual retirement village in question, necessarily disposes of the corporate recharge ground of appeal.”

Orders
The appeal by the operator was dismissed and the orders of the Tribunal affirmed.

Vero Insurance Ltd v Owners of Strata Plan No 69352 [2011] NSWCA 138

Division: Home Building
Keywords: Home owners warranty insurance claim by owners corporation in respect of common property – whether claim made on behalf of all lot owners – whether a single excess or multiple excesses applicable to claim

Summary
Vero issued identical certificates of home owners warranty insurance in respect of all 201 residential units being constructed to a developer. Later the owners corporation, successor in title to the developer, lodged a claim in an amount of approximately $80,000 for remedying defective work on the common property which was refused by Vero. Before the Tribunal, Vero argued that the claim was made on behalf of each proprietor, so that an excess of $500 per dwelling should be multiplied by 201 to arrive at the applicable excess. The Tribunal rejected that argument and held that the applicable excess was the first $500 of the claim. The District Court dismissed an appeal for the reason that the Tribunal’s decision rested upon a factual finding, and not a question of law. The insurer further appealed the decision of the District Court to the Court of Appeal. That appeal was dismissed.

Background
Vero issued a policy of insurance to a developer relating to the residential component of a large development. Vero issued certificates of insurance in respect of each of the 201 residential units to be constructed as part of the development. After the units were built, the registration of a strata scheme was undertaken, and upon registration the owners corporation was created. The registration of the strata plan had the effect that the common property in the plan vested in the owners corporation. No certificate of insurance was, however, issued to the owners corporation following registration of the strata plan.

Some years later the owners corporation notified Vero of a claim for the remedying of defective work on the common property, relating to air-conditioning, the pressurisation of a staircase and fire safety requirements, for approximately $80,000. Vero rejected the claim, relying on one of the policy terms which stated that: “You must pay the first $500 of each claim.” “You” was defined in the policy to mean: “The person on whose behalf the work under the contract is being done, together with any successor in title to that person.” Vero maintained that the policy had been taken out on behalf of each of the 201 lot owners and that the owners corporation had made a claim on behalf of each of them. Accordingly, it said, the relevant excess was $100,500 (201x $500) which exceeded the amount claimed.

The owners corporation lodged an application with the Tribunal against the refusal of its insurance claim. The parties agreed that the Tribunal should decide the preliminary question of what amount of excess was due in relation to the claim. The Tribunal determined that the excess payable by the owners corporation was the first $500 of the whole of the $80,000 claim. Vero’s appeal to the District Court was dismissed on the grounds that the Tribunal’s determination was a finding of fact not a decision with respect to a matter of law.

Court of Appeal
Vero made an application to the Court of Appeal under s69 of the Supreme Court Act 1970 for an order in the nature of certiorari to set aside the decision of the District Court. Vero asserted that the decision of the District Court was affected by jurisdictional error or by error on the face of the record.

There were four issues raised by the proceedings and the Court of Appeal answered them as follows:

Whether the owners corporation was entitled to make a single claim in relation to the common property under the policy.

On registration of the strata scheme, the owners corporation had an insurable interest in the common property. It had the legal title to the common property and was under a statutory obligation to maintain and repair the common property. The statutory scheme entitled the owners corporation to make a claim under the insurance policy regardless of whether a certificate of insurance was issued in its favour as it was a successor in title to the developer.
Whether a single excess or multiple excesses were applicable to the claim.

As the owners corporation was entitled to make a claim in its own right under the policy, it was unnecessary for lot owners to make individual claims. The owners corporation only made one claim under the policy in respect of common property, and therefore the excess was $500.
Whether the District Court erred in characterising the insurer’s appeal as a question of fact, and dismissing the appeal.

The primary judge erred in holding that the appeal from the Tribunal raised only a question of fact. However, had his Honour addressed the legal issues arising on the appeal, the same order would have been made.
Whether the decision of the Tribunal was correct.

As the owners corporation was entitled to make a claim under the policy in its own right, and only one claim resulting in an excess of $500 was made, the Tribunal’s answer was correct as a matter of law.

Order
The insurer’s application to set aside the decision of the District Court was dismissed.

Darin v Olzomer [2011] NSWDC 51

Division: Home Building
Keywords: Whether there was any material before the Tribunal to support its finding as to the amount of a quantum meruit.

Summary
The Tribunal determined a building dispute by concluding that there was an oral variation of the building contract for the construction of a house. This oral variation was not made in accordance with the procedures provided for in the contract. Thus the builder was not entitled to make any claim under the contract, but was at liberty to recover the cost of the variation on a quantum meruit. The owners appealed the Tribunal’s award of $58,313 to the builder claiming that the Tribunal had erred in law in the calculation of the award. The District Court dismissed the appeal holding that the Tribunal was entitled to take into consideration the evidence of the builder’s account summaries, and therefore made no erroneous decision with respect to a matter of law in the calculation.

Background
The owners and the builder entered into a contract for the construction of a house. Early in the construction the owners realised that a view from the kitchen window would not be achieved. The builder advised that the desired view could only be achieved by varying the house design to split level. He gave a ranged estimate of the increased costs. The owners authorised the builder to go ahead and amended plans were drawn up and council approval obtained.

At the Tribunal
The builder lodged an application seeking payment of a final sum due on the construction of a house. The owners cross claimed seeking an order for compensation for the house not being constructed according to the plans and specifications. The Tribunal determined that the owners should pay the builder $58,313. The owners’ claim was dismissed.

District Court appeal
The owners brought an appeal under section 67 of the Consumer, Trader and Tenancy Tribunal Act 2001, which provides for an appeal as of right from a decision on a question with respect to a matter of law.

Judge Johnstone stated,

“It is difficult to distil from the plaintiff’s submissions any decision by the Tribunal on a question with respect to a matter of law in respect of the calculation of the value of the quantum meruit. Properly analysed, the only matter of law that arises from the way in which the Tribunal made its calculation was whether it was entitled to utilise the material before it in the builder’s account summaries attached to his statement, or whether that material had no relevance at all to the ascertainment of a fair and reasonable value of the additional work necessitated by reason of the variation. If not, there was no evidence before it. If so, there was an abundance of evidence.”

Judge Johnstone cited the Victorian Court of Appeal case Sopov v Kane Constructions Pty Ltd (No 2) [2009] VSCA 141 for the proper approach to the assessment of a quantum meruit claim. In that case the Court stated that the measure of the restitutionary remedy was the value of the benefit conferred on the party which received it.

While the quantum meruit remedy rests on the fiction of the contract having ceased to exist (and therefore the remedy ignores the bargain which the parties struck), nevertheless in determining the value of the benefit the contract price is relevant, not because of any continuing influence of the contract, but because the price is a piece of evidence showing what value the parties attributed, at a particular time, to the work which the builder was agreeing to perform. Proof of the costs incurred in performing the work can also be used to establish the value of the work done. Furthermore the builder entitled to the quantum meruit is entitled to a margin for profit and overhead.

His Honour held that the Tribunal was entitled to utilise the builder’s account summaries, particularly when there was no other evidence before it to assist in the ascertainment of the fair and reasonable value of the work performed. His Honour also held that the evaluation of the claim by the Tribunal was carried out entirely in accordance with the principles in Sopov.

Order
The appeal was dismissed.

Edwards v Sydney Building Group Pty Ltd [2011] NSWCA 154

Division: Home Building
Keywords: Characterisation of “work under the contract” for the purpose of determining contractual accounts – whether appropriation of payments had taken place.

Summary
The parties entered into a contract for the construction of a house. Early in the construction it became clear that soil would need to be removed to allow building in accordance with the specifications. The contract did not make provision for this work. The builder did the work and issued an invoice. T he owner paid promptly but asked the builder to check the figures. Later the builder issued a progress claim, part of which the owner declined to pay. The builder suspended work pending payment. The owner treated the suspension as a breach and served a notice of termination on the builder. The Tribunal held that payment for the soil work was not a payment under the contract and that if that payment was deducted from the amount outstanding then the progress payments had been made in full. It followed that the builder was not entitled to suspend work and the owner entitled to terminate. On appeal in the District Court it was determined that although the Tribunal was correct in finding that the payment was not made under the contract, it committed an error in applying the payment to the contractual account. The Court of Appeal found no error with the determination of the District Court.

Background
The owner and builder entered into a standard contract for the construction of a house. The deposit and progress claim two were sent and paid. The builder then sent the owner an invoice, not contemplated as part of the progress payment schedule, for soil removal. The account was paid but the owner asked the builder to check the figures.

A third progress claim was made. The owner paid part of the claim and disputed a part requesting a review. That review was conducted resulting in a slight decrease in the amount claimed. When the fourth progress claim, the amount due at lock up, was made it included the reviewed amount in dispute. The owner paid only that amount which was referable to the lock up stage in the contract (that is the reviewed amount in dispute from the third progress claim remained unpaid).

The builder then gave notice and suspended work as it was entitled to do under the contract if a progress claim went unpaid for more than five days. The owner responded with a notice of breach for unlawful suspension of work and ultimately served a notice of termination of the contract.

The issue before the Tribunal was the validity of the owner’s termination of the contract. The argument of the owner was that progress claim three included a sum for work that could not legitimately be claimed under the contract. The owner had no obligation to pay for the soil removal work under the contract. The payment made ought to be applied to charges legitimately due under the contract and if that was done then there was no failure by the owner to make a progress payment.

The builder propounded the claim as a variation claim. The Tribunal did not accept that the invoices pointed to by the builder amounted to a variation that complied with the Home Building Act 1989 (HB Act). Such a variation was needed for the payment to be made under the contract. The Tribunal observed however, that it was common ground that the soil removal was necessary and that the owner would be responsible for the cost.

The Tribunal found that the owner was justified in treating the suspension as breach/repudiation and entitled to terminate the contract.

The District Court
In the District Court the builder argued that the charge for the soil work had nothing to do with the contract and was the subject of a separate agreement between the builder and the owner. His Honour rejected that argument and found that the claim for the soil work was made under the purported authority of the contract. His Honour agreed with the Tribunal that the variation did not comply with the HB Act however, concluded that an error of law had been made in applying the payment for the soil work to the contractual account. Accordingly, he set aside the findings of the Tribunal and ordered the matter remitted for rehearing.

Court of Appeal
On appeal the owners argued that as a matter of legal characterisation the payment for the soil work could only be under the contract. This characterisation arose from the facts as found set against the background of the HB Act. The HB Act made the claim unenforceable and the purported making of the variation without compliance an offence. The facts disclosed no arrangement made by the parties for the performance and payment of the soil work other than by and through the contract. It was further submitted for the owners that the payment could be recovered under a mistake of fact or law.

His Honour Allsop P, with whom Sackville AJA agreed, observed that there had been no finding by the Tribunal as to the relevant mental states of the parties as to what they thought they were doing. He pointed out that an important factual consideration against which to analyse the legal consequences of what occurred was that it was common ground that the owners were liable for the proper costs of the soil work in restitution.

The builder submitted that the payment was for soil work by reason of the substance of the invoice and by the terms of payment. Whether or not the parties intended or believed that it was a contractual claim, it was a claim (supportable as it turned out, upon restitutionary not contractual principles) that was lawful and enforceable. In these circumstances, it was submitted that the payment had been appropriated by the parties to payment for the soil work.

Allsop P stated that there had never been any contest about the liability of the owner for the cost of the soil work and it was this fact which critically distinguished the facts of this case from both Lamprell v The Guardians of the Poor of the Billericay Union, in the County of Essex (1849) 3 Ex 283 and A Smith & Son (Bognor Regis) Ltd v Walker [1952] 2 QB 319. Further the claim was on the face of the invoice a claim specifically for the soil work. It was a claim not enforceable as a contractual claim, but it was enforceable in law – under the law of restitution. Both bases for recovery – contract and restitution – depended upon the claim being for a sum honestly and reasonably arrived at. There was in the circumstances disclosed by the material before the Tribunal a clear appropriation of a payment to a claim, by the debtor and the creditor, which was otherwise enforceable.

Order
The Court ordered that the summons be dismissed.

Muldoon v Church of England Children’s Homes Burwood [2011] NSWSC 772

Division: Tenancy
Keywords: Difficulties in issuing certiorari in circumstances of earlier appeal to District Court, whether denial of natural justice because Tribunal failed to advise party how best to conduct case

Summary
A tenant was provided tenancy of part of a building by a landlord in return for providing caretaking and computer work. A number of attempts were made to terminate the tenancy some time after the fixed period ended. Ultimately the landlord was successful in obtaining termination orders from the Tribunal. The District Court on appeal affirmed the Tribunal’s order. A purported appeal to the Court of Appeal was dismissed as incompetent. The tenant then lodged a summons with the Supreme Court seeking orders to quash the decision of the Tribunal.

Background
Mr Muldoon and the Church of England Children’s Home entered into an agreement. Under the agreement the landlord provided tenancy for Mr Muldoon in part of a building. The agreed rental value was $190 per week. The agreement also provided that Mr Muldoon would perform caretaking work and computer consulting work in lieu of cash payment of rent. The term of the agreement was for six months. No extension was provided for but a term stated that if both parties were in mutual agreement a longer lease could be negotiated. The six month period expired in April 2006.

The computer work ceased in June 2007 and the next month the Council of the Home resolved to give notice to Mr Muldoon to vacate the premises. Two notices of termination were served and two applications were made to the Tribunal. They were both dismissed on technical grounds.

A third notice of termination was served requiring Mr Muldoon to vacate the premises on 7 April 2009. A third application was made to the Tribunal on the basis of that notice. At hearing in May 2009 the Tribunal made orders requiring Mr Muldoon to vacate the premises on 30 June 2009.

However, Mr Muldoon was successful in obtaining a rehearing. That rehearing application ultimately took place in August 2009 and orders were made terminating the lease and requiring possession on or before 25 August 2009.

Mr Muldoon filed an appeal summons with the District Court pursuant to s67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (CTTT Act). The District Court affirmed the decision of the Tribunal (except with regard to the date of possession) and dismissed the appeal summons.

Mr Muldoon filed a notice of appeal (purported) in April 2010 which was heard in August 2010. The Court of Appeal, in March 2011, delivered its judgment, dismissed the appeal and extended the execution of the order for possession for a further 21 days after the date of its order.

Appeal to the Supreme Court
Mr Muldoon filed a summons with the Supreme Court in March 2011 seeking orders in the nature of certiorari, pursuant to s 69 of the Supreme Court Act 1970 against the decision of the Tribunal.

His Honour Rothman J raised issues of difficulty which the application faced. Although there was nothing in the legislation precluding a party from seeking orders in the nature of certiorari quashing the same decision from which an appeal had already unsuccessfully been brought, issues in relation to abuse of process would necessarily arise.

His Honour pointed out that the District Court confirmed the decision of the Tribunal and that the decision of the District Court stood. Further the Court of Appeal gave leave to issue a writ of possession 21 days after the date of its reasons. The execution of the order for possession therefore depended on, not the original order of the Tribunal, but on the orders of the District Court and of the Court of Appeal. Moreover no challenge was or could be brought in the proceedings against those orders.

Ultimately his Honour found it unnecessary to determine finally whether orders in the nature of certiorari could issue in such circumstances, although it was his preliminary view that they could not. In his reasons he moved on to the substantive grounds raised by Mr Muldoon.

The first ground was that the agreement was not a residential tenancy agreement and therefore the Tribunal had no jurisdiction. Rothman J observed that if that were true the notice to quit was effective in and of itself to terminate the lease. However, his Honour stated that, though the agreement dealt with subject matter beyond residential tenancy, it fell within the terms and purpose of the Residential Tenancies Act.

The second and third grounds of appeal his Honour summarised as an allegation that there was a duty on the Tribunal to advise Mr Muldoon of his rights or the best way in which to prepare and present his case. His Honour stated that it is the duty of a tribunal to provide to a party an opportunity of properly presenting that party’s case but it is not part of that duty to ensure that the party takes the best advantage of the opportunity. Rothman J commented that the Tribunal afforded Mr Muldoon every opportunity to bring before it such material as he was able and allowed him significant leeway on account of the fact that he was not legally represented.

The fourth ground concerned an allegation that the solicitor representing the landlord misled the Tribunal and the District Court. His Honour said that even if the assertion was correct, the submission did not amount to the proposition that the decision of the Tribunal and/or District Court were obtained by fraud or would otherwise have been different. However, the assertion was found to be without supporting evidence.

The last ground was an allegation that the board of management of the Church was improperly constituted and could not validly act. His Honour also observed that Mr Muldoon must be taken also to have submitted that the officer that signed the application or termination notice did not have authority to do so.

Rothman J stated that a practical problem with this argument was, that if it was correct, it would also invalidate the lease upon which Mr Muldoon relied upon for occupancy of the premises. His Honour noted that the cases establish that if a person with general authority within a corporation gives a notice to terminate a tenancy, it was not necessary for the landlord to show that its governing board had authorised that notice. In Mr Muldoon’s case, it was quite clear that the relevant officer’s evidence, which was accepted, was that she was the General Manager and that she considered herself to have the authority to sign the notice.

Order
Summons dismissed.

Atkinson v Crowley [2011] NSWCA 194

Division: Home Building
Keywords: Substituted service, whether building claim available against spouse of person holding owner-builder certificate.

Summary
After purchasing a house, the Crowleys discovered defects in building works undertaken by the previous owners, the Atkinsons. The Crowleys applied to the Tribunal. There was considerable difficulty in locating the Atkinsons and an order for substituted service was made. An order was made for approximately $43,000. When the Atkinsons became aware of the order they brought proceedings in the Supreme Court alleging denial of procedural fairness and contending that the material available to the Tribunal did not justify an order for substituted service. Those proceedings were dismissed. In the Court of Appeal Mr and Mrs Atkinson divided their challenges, with Mr Atkinson seeking leave to appeal and Mrs Atkinson leave to cross-appeal. The issues for determination on the appeal were: (i) whether the Tribunal had jurisdiction to consider the claim against Mr Atkinson, and (ii) whether the Tribunal had jurisdiction to determine the claim, if the limitation period had expired. Issues for determination on the cross-appeal were: (iii) whether, in respect of the order for substituted service, the primary judge had failed to distinguish between Mrs Atkinson’s position and that of her husband, and (iv) whether, if the orders made by the Tribunal were bad as against her husband, they were not capable of severance and must be bad against her. The Court of Appeal dismissed both applications.

Background
Mr and Mrs Crowley purchased a house from Mr and Mrs Atkinson. After purchasing the property they discovered defects in certain building works undertaken by the Atkinsons. They commenced proceedings in the Tribunal seeking damages for the cost of the rectification of the works. They obtained a default judgment for approximately $43,000. The judgment was registered in the Local Court for enforcement purposes.

The Atkinsons each stated in affidavits that they did not become aware of the proceedings until after judgment and commenced proceedings by way of judicial review in the Supreme Court, seeking to set aside an order for substituted service made in the Tribunal and the subsequent default judgment. The principal ground of challenge was that the Atkinsons had been denied procedural fairness because they had had no opportunity to resist the proceedings in the Tribunal. They also contended that the material available to the Chairperson of the Tribunal did not justify an order for substituted service. The Supreme Court dismissed the summons with costs.

In the Court of Appeal
Mr and Mrs Atkinson divided their challenges. The principal application, brought by Mr Atkinson, asserted an entirely fresh ground: that was the Tribunal had no jurisdiction to consider the claim against him because the allegedly defective building works were undertaken by his wife, as the holder of an owner-builder permit. Consequently, Mr Atkinson submitted, although the Crowleys may have had a claim against his wife under section 18C of the Home Building Act 1989, they did not have an action against him.

The Court of Appeal stated that the Crowleys’ claim did not depend on the operation of section 18C alone. A person who carries out building work on his or her own land may well owe a duty of care to the purchasers to whom the land is sold, in respect of the quality of the building work. The Tribunal’s jurisdiction to hear a “building claim” was wider than just the statutory warranties. The fact that Mr Atkinson had not shown that “no building claim arose” together with the fact that the matter had not been argued before the Supreme Court resulted in the rejection of this ground.

Mr Atkinson also claimed, at a late stage of the proceedings in the Court of Appeal, and for the first time, that the Tribunal lacked jurisdiction by virtue of the expiry of a limitation period. The Court held that, not only did Mr Atkinson encounter difficulties in the application of those provisions to the facts of the matter, but even assuming they did apply, Mr Atkinson had failed to show as a matter of fact that the Crowleys’ claim had been lodged out of time.

Mrs Atkinson’s claim took issue with the finding of the primary judge that the challenge to the order for substituted service, on the basis of procedural unfairness, had not been made good. During the Tribunal proceedings, despite substantial efforts to identify where the Atkinsons were living, Mr Crowley had only been able to establish a business address. The Chairperson of the Tribunal directed that the application be sent to the Atkinsons, care of the business address.

The Court of Appeal noted that sending the application to Mr Atkinson’s last known business address might well have constituted adequate service on him for the purposes of the CTTT Act notwithstanding that it was viewed by all parties as substituted service.

The Court of Appeal quoted the judgment of the Supreme Court as follows:

“The direction given by the Chairperson as to the substituted service was open to her on the materials before her and it is reasonably probable both that the method of service adopted would have brought the proceedings to the attention of the plaintiffs and that they had knowledge of the proceedings.”

The Court of Appeal stated that the challenge before the primary judge was not formulated with any precision, but drawing on the materials before him, it was submitted that it was necessary for the Tribunal to be satisfied that the mode of service would “in all reasonable probability, if not certainty” bring the proceedings to the attention of the Atkinsons. The proper test, the Court stated, was that it was sufficient that the service would be “likely” to result in the party learning of the proceedings. No error had been demonstrated in the primary judge’s reasoning.

Mrs Atkinson submitted that the Supreme Court had not distinguished between her position and that of her husband in considering the issue of substituted service. The Court rejected that submission, noting that the Atkinsons were jointly represented in the court below and that no attempt was made to distinguish their positions.

Mrs Atkinson further submitted that the Supreme Court had taken the view that service at her husband’s business was “sufficient knowledge for her.” The Court however, found that the Supreme Court had determined that “on the probabilities if her husband had knowledge of proceedings involving each of them, he would have conveyed that information to her.”

Mrs Atkinson also claimed that, if the order made against her husband was invalid, it was also invalid against her; that is the order was not severable as between against the parties. Although noting that the question did not arise, as the order against Mr Atkinson was valid, the Court appeared to be of the view that this submission was incorrect.

Order
Proceedings dismissed.

Pastrovic & Co Pty Ltd v Farrington [2011] NSWDC 94

Division: Home Building
Keywords: Proportionate liability provisions in the Civil Liability Act 2002.

Summary
The owner was the successor in title to a developer. The developer had contracted with the builder for construction of a house and retaining walls. Following heavy rain there was a land slippage. The owner brought proceedings against the builder in the Tribunal. The Tribunal found the builder liable under the statutory warranties and in negligence. The builder appealed to the District Court on a number of bases. Most grounds of appeal were dismissed, but grounds involving the refusal of the Tribunal to consider apportioning liability amongst concurrent wrongdoers succeeded, with the result that the matter was sent back to the Tribunal on this issue.

Background in the Tribunal
The owner was a subsequent purchaser from a developer who, in turn, contracted with the builder to build a house and carry out landscaping works. Following heavy rain the retaining walls constructed by the builder at the rear of the premises failed to contain the slope behind, with the result that there was significant slumping of soil into the rear of the premises.

At the Tribunal there was a dispute at to the extent of cut and fill carried out by the builder, the builder’s contribution to the materials behind the retaining walls and landfill and the nature of the builder’s obligations under the contract.

On the evidence, the Tribunal was satisfied that the extent of the work was more than a minor excavation and that there was no reason to think that there was any imported fill. The walls built were in excess of 1.8 metres with capping. This counted against the builder’s submission that the wall was merely decorative. The size of the walls meant that compliance with an Australian Standard was required.

The Tribunal was of the opinion that the site classification, the slope, the fact that some excavation and filling was necessary, and the size of the walls should have alerted the builder to the need to obtain engineering advice. What was built did not comply with the standard and no engineering input was sought.

Appeal to the District Court
The builder based its appeal on a number of grounds including:

The Tribunal failed to identify the extent of the builder’s contractual obligation in respect of retaining soil at the rear of the premises.
The Tribunal erred in finding a breach of the builder’s duty of care without first defining the content of that duty of care.
The Tribunal erred in its findings concerning the cause of the land slump.

The District Court stated that the relevant decisions did not involve a decision with respect to a matter of law, and therefore could not be the subject of an appeal, and was of the opinion that each of the relevant decisions did not, in any event, involve an error on the part of the Tribunal.

Grounds 13 and 14 stated:

“The Tribunal erred in construing Part 4 of the Civil Liability Act 2002 to apply only in circumstances where notice was given by the builder to the owner of concurrent wrongdoers.

The Tribunal erred in failing to apply the provisions of Part 4 of the Civil Liability Act 2002 so as to apportion liability amongst concurrent tort feasors including Wollongong City Council and developer Johnson Property Group Pty Ltd and the landscaping contractors for the sub-division and the site.”

The Tribunal had recognised that the Civil Liability Act 2002 applied to matters determined by it where it otherwise had jurisdiction, but agreed with the owner’s submission that in this case, where there was no notification of a concurrent wrongdoer, it did not apply.

In the Court the builder argued that it had raised the apportionment provisions in the course of the hearing and in submissions. It submitted that section 35A did not preclude the application of the provisions, but only concerned the costs consequences of a failure to give the required notice.

The owner conceded that formal pleadings were not required in the Tribunal and that the builder had raised the provisions during the course of the hearing. However, the owner maintained that it was incumbent upon a party seeking to rely on the apportionment provisions to give the other party formal notification prior to hearing: Permanent Custodians Limited v King [2010] NSWSC 509.

His Honour Judge Peter Johnstone was of the view that Permanent Custodians v King could be distinguished as in that matter the defendant had sought to amend the defence to rely upon the apportionment provisions after judgment had been given. In the present case, he stated, the issue was clearly raised during the hearing, the owner did not seek an adjournment and therefore, it was not irretrievably late for the defence to be raised.

Order
The appeal was partly allowed. The matter was remitted to the Tribunal for rehearing of the question of the defence raised by the builder under the apportionment provisions of the Civil Liability Act 2002.