Tanios v Baserite Constructions Pty Ltd  NSWCATCD 85 – construction law dispute
On 10 August 2021, White Knight Lawyers was resoundingly successful in a construction law dispute before the New South Wales Civil and Administrative Tribunal. Our law firm obtained substantive orders from the New South Wales Civil and Administrative Tribunal in favour of our homeowner client. You can find the judgment here at Tanios v Baserite Constructions  NSWCATCD 85 (Decision). The Tribunal ordered the respondent, Baserite Constructions (Builder), pay to our homeowner client, Mr Tanios (Owner), the whole of his claim. The Tribunal awarded the Owner the sum of $180,144.00.
The Owner is the registered proprietor and homeowner of a residential premises located in Concord, NSW (Property). The Owner is the successor in title of the Property. In or around June 2015, the Owner purchased the Property from the prior owners.
In April 2012, the Builder entered an agreement with the prior owners of the Property. Under this agreement, the Builder constructed a new two-storey dwelling on the Property. In or around December 2015, the Owner commenced living in the dwelling on the Property.
On or around 19 December 2018, the Owner commenced proceedings against the Builder in the Tribunal. The Owner claimed breaches of statutory warranties amongst other things (Original Proceedings). Those claims were under the Home Building Act 1989 NSW (HB Act). In the Original Proceedings, the Owner alleged defects in the house. The Owner alleged defects including external rock coat cracking, illegal wiring to the main electrical board, cracked granite tiles in the driveway, and failed waterproofing.
The Tribunal listed the Original Proceedings for a directions hearing on 8 February 2019. On 5 February 2019, the Owner, the Owner’s building expert witness, Mr Winton, and the director of the Builder, Mr Ayoub, attended the Property to discuss the defects. At this meeting, the parties agreed that the Builder would remedy four (4) of the seven (7) alleged defects. The Builder agreed to perform those works in consideration for the Owner forbearing from prosecuting the Original Proceedings. After this site meeting, Mr Winton drafted and circulated to the parties a document dated 5 February 2019 (Minutes). The Minutes described the scope of the rectification works as agreed during the site meeting.
On 8 February 2019, the Owner and Mr Ayoub attended a directions hearing of the Original Proceedings. During the directions hearing, the parties signed the Minutes (Work Agreement). Senior Member Thode made Consent Orders based on the same scope of work as the Work Agreement. The Tribunal ordered that the Builder carry out the agreed works on or before 17 May 2019. The Tribunal further ordered that if the Builder did not perform the works by 17 May 2019, the Owner could renew the proceedings. The Builder did not perform the works required by the Consent Orders by 17 May 2019.
On 22 May 2019, the Owner renewed the Original Proceedings. At the formal hearing, the Tribunal ordered that the Builder pay the Owner the amount of $175,750.25. On 5 November 2019, the Builder lodged a Notice of Appeal. In Baserite Constructions Pty Ltd v Tanios  NSWCATAP 77, the Appeal Panel granted leave, allowed the Builder’s Appeal, and remitted the matter for determination (Remitted Proceedings).
The Owner’s case against the Builder in the Remitted Proceedings
The Owner’s primary claim was breach of contract. Specifically, the Owner alleged that the Builder did not perform the remedial works in the Work Agreement. Alternatively, the Owner claimed relief under clause 8 of schedule 4 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) (renewal proceedings).
The Owner relied on the Consent Orders in the Original Proceedings for his alternative claim. Specifically, the Owner submitted that the Tribunal made a work order pursuant to section 48O(1)(c) of the HB Act in making the Consent Orders. The Owner further claimed that the Builder failed to comply with that work order.
The Builder’s defence to the Owner’s claim
The Builder defended the Owner’s primary claim by submitting that the Work Agreement does not set out certain terms. Those absent terms included the contract price, date of commencement, time for completion, and determination of the contract.
In answer to the Owner’s alternative claim, the Builder submitted that the Tribunal’s work orders were ultra vires. The Builder contended that the Tribunal did not have the jurisdiction to make the Consent Orders. The Builder alleged that the defects in the Original Proceedings were not “major defects” for the purposes of section 18E (4) of the HB Act. Therefore, the Owner’s claimed was allegedly outside of time.
The Builder’s claim
The Builder submitted that it carried out work it was not legally required to do because the Tribunal had no jurisdiction to make Consent Orders. Consequently, the Owner benefited from the building works and was not entitled to that benefit. Accordingly, the Builder claims it is entitled to be paid for the work it allegedly performed on a quantum meruit basis.
The Owner’s defence to the Builder’s claim
Answering the Builder’s claim, the Owner relied on submissions that the Builder had not performed the works in the Work Agreement. Alternatively, the Owner said to the extent that there had been any performance, such performance was defective and required remediation.
The Owner further submitted that there was a contract in the form of the Work Agreement between the Owner and the Builder. White Knight Lawyers submitted that the Owner gave valuable consideration for the Work Agreement by forbearing from prosecuting the Original Proceedings. The Owner alleged that the contract price for the Work Agreement was nil. The Builder agreed that it would do the works under the Work Agreement at its own cost and the Owner would cease prosecuting the Original Proceedings.
The main issues for determination included as follows:
- Whether the Work Agreement was a binding contract.
- If the Work Agreement was a binding contract, whether the Builder breached that agreement.
- Whether the Tribunal in the Original Proceedings had jurisdiction to make the Consent Orders and whether the Builder breached same.
The Tribunal decision
The Tribunal decided in favour of the Owner in regards to the first two issues. As regards the third issue, the Tribunal did not determine the third issue because the Owner was already successful in his primary claim.
The Tribunal applied Ermogenous v Greek Orthodox Community to objectively determine whether a contract existed. Specifically, the Tribunal considered the communications between the parties in their context and the parties’ dealings leading up to making the contract. The Tribunal held that the parties agreed to be bound by the Work Agreement for the following reasons:
- The parties were in a commercial relationship.
- The Owner commenced a claim in the Original Proceedings for the defective works. The Owner served an expert report setting out the alleged defects and the work required to rectify the defects.
- The language of the Work Agreement. This included that “(t)he following items were agreed to be remediated by Mr Ayoub”.
- The parties’ conduct in signing the Work Agreement.
- The parties consented to the Consent Orders.
- The terms of the Consent Orders reflected the terms of the Work Agreement.
First issue decision
The Tribunal found that the Work Agreement was a valid and binding contract. Further, the Tribunal held that the Tribunal did not force the parties to enter into the Work Agreement. Moreover, the Tribunal found no evidence that the Builder was mistaken as to a term of the Work Agreement.
The Tribunal decided the second issue in favour of the Owner. In that respect, the Tribunal held that the Builder breached the Statutory Warranties implied to the Work Agreement. The Tribunal found that the Builder failed to perform its obligations under the Work Agreement. The Tribunal did not consider whether the alleged defects were in fact defects, or even major defects.
Second issue decision
The Builder agreed to perform remedy works in accordance with the Work Agreement. Accordingly, the Tribunal held that the Builder had not upheld its obligations to complete the works. The Builder breached the Work Agreement.
The Tribunal made no finding as to the third issue because the Owner was successful in his primary breach of contract claim. Accordingly, the Tribunal did not address whether the Tribunal had jurisdiction to make the Consent Orders.
The jurisdictional issue was in relation to the Tribunal making the Consent Orders in the Original Proceedings. The Builder argued that the defects initially prosecuted in the Original Proceedings were not major defects. Further, the Builder argued that the Owner’s claim was brought after the statutory limitation period for defects which are not major defects.
Construction law takeaways
- The Tribunal will objectively examine the circumstances surrounding the making of the contract when determining whether there is a binding contract.
- A party forbearing from further prosecuting an application can be valuable consideration for the purpose of creating a contract.
- Builders cannot claim for work undertaken on a quantum meruit basis if the work is performed under contract and the contract price is nil (on account of the forbearance).
- A tribunal or court does not need to consider every issue in dispute. The Tribunal did not consider the Owner’s alternative claim because the Owner succeeded in his breach of contract claim. Accordingly, the Tribunal did not determine the jurisdictional issue.
The Tribunal’s decision is subject to an appeal, so stay tuned for more construction law developments.