Onslow v Cullen

By contract dated 22 January 2016, Adam Onslow, the plaintiff (the builder) agreed with Gary and Melanie Cullen, the defendants (the owners) that he would perform certain building work on their residential property at Neutral Bay (the contract). On 6 April 2017, before the work was completed, the builder left the property.

On 14 August 2019, the owners commenced proceedings in the New South Wales Civil and Administrative Tribunal (NCAT) (the NCAT proceedings). On 13 July 2020, the proceedings were transferred from NCAT to the Local Court (the Court below).

On 20 August 2020, the owners filed a statement of claim in the Court below in which they claimed, of present relevance, damages for breach of contract. In his defence filed on 16 September 2020, the builder relied on s 18E(1) of the Home Building Act 1989 (NSW) (the Act), which provides that proceedings for a breach of statutory warranty must be commenced before the end of the warranty period, being two years, for defects other than major defects. All references to legislation in these reasons are, unless otherwise stated, references to the Act.

On 19 November 2021, Hosking LCM ordered judgment for the owners in the sum of $35,634.37, including pre-judgment interest from 4 April 2017 in the sum of $6,686.87 on the principal sum of $28,947.50. Her Honour also ordered the builder to pay the owners’ costs as agreed or assessed on the ordinary basis up to and including 18 June 2021, and thereafter on an indemnity basis.

By summons filed on 16 December 2021, the builder appeals (or, in the alternative, seeks leave to appeal), against the orders of Hosking LCM made on 19 November 2021 in the Court below. It was common ground that the summons was filed within 28 days of the material date, being the time prescribed by Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 50.3(1)(a).

As the owners were the plaintiffs in the Court below and the defendant in this Court and the builder was the defendant in the Court below and the plaintiff in this Court, it is convenient to describe the parties as owners and builder to avoid confusion.

The summons was amended on 16 March 2022. The grounds of appeal, which are currently pressed, are, in substance, as follows:

Ground 3(a), which turns on construction, corresponds to ground 1. Ground 3(b), which relates to the acknowledged credit for $1,321, corresponds to ground 2.

The owners have filed a notice of contention in which they contend that the decision of the Court below on the limitation question can be supported by reference to the principle of contra proferentem.

The contract was in the standard form issued by the Housing Industry Association (HIA) and entitled “NSW Residential Building Contract for Renovations and Additions.” It was edition 5, being the form dated May 2015. The contract price was $211,528, exclusive of GST. The contract provided that the building works were required to reach a stage of practical completion no more than 20 weeks after the building period commenced. The defects liability period under cl 24 was 13 weeks after practical completion: that is, the builder is obliged to remedy any defects which the owners have notified within 13 weeks of practical completion.

The top of the signature page of the contract (which is on page 10 of 32 and appears before the substantive clauses of the contract), said:

Clause 39 provided as follows:

Clauses 40.1 and 40.3 (“Mandatory Conditions”) are also prefaced with the words “To the extent required by the Home Building Act …”.

The Consumer Building Guide, entitled “Fact Sheet”, is included in the contract document at pages 31 and 32 of 32, thereby complying with the builder’s obligation under s 7AA of the Act to provide the document to the owner before entering into a contract. It includes the following:

Section 56(1) of the Civil Procedure Act identifies the “overriding purpose of this Act and of rules of court, in their application to civil proceedings, as being to facilitate the just, quick and cheap resolution of the real issues in the proceedings.” Under s 56(2), the court “must seek to give effect to the overriding purpose” and under s 56(3), the parties are “under a duty to assist the court to further the overriding purpose and, to that effect, to participate in the processes of the court and to comply with directions and orders of the court.” Section 57 of the Civil Procedure Act identifies the following objects: “the just determination of the proceedings”, “the efficient disposal of the business of the court”, “the efficient use of available judicial and administrative resources” and “the timely disposal of the proceedings”. Sections 56 and 57 of the Civil Procedure Act are within Part 6.

Section 39(1) of the Local Court Act provides for a right of appeal to this Court from a judgment or order of the Local Court on a “question of law”. Section 40(1) provides for a right of appeal to this Court by leave from a judgment or order of the Local Court on a “mixed question of law and fact”.

Practice Note Civ 1, which applies to civil claims in the Court below, was issued pursuant to s 15 of the Civil Procedure Act and s 27 of the Local Court Act (the Practice Note).

The Practice Note relevantly provided:

The standard directions in Annexure A of the Practice Note relevantly provide:

Section 7 of the Act relevantly provided:

Part 2C of the Act relevantly provided as follows:

It can be seen from a comparison that cl 39 of the contract replicates the statutory warranties in s 18B(1).

Schedule 1 of the Act defined statutory warranty as “a warranty established by Part 2C”. Thus the warranties in s 18B are statutory warranties.

Section 7 of the Limitation Act relevantly provides:

Section 14 of the Limitation Act relevantly provides:

In their statement of claim, the owners claimed the following relief:

Before the commencement of the hearing in the Court below on 21 June 2021, the parties had filed case summaries and statements of facts and issues in compliance with the Practice Note referred to above.

The builder submitted, in his case summary, that the warranty period started, at the latest, from 31 October 2016 when the work was completed (albeit not to the owners’ satisfaction). Thus, he submitted that even the NCAT proceedings were out of time since the effect of s 18E is that the proceedings had to be brought by 31 October 2018. Accordingly, the builder contended that the owners’ claim for damages under cl 31 of the contract, in so far as it related to completed works (items 1 and 3, which amounted to a total of $15,641.25, not including interest), ought be dismissed.

The owners relevantly submitted, in their case summary filed on 18 June 2021, as follows on the limitation question:

Of present relevance, the owners submitted in their case summary as follows on the question of quantum:

On 21 June 2016, the first day of the hearing, the parties’ representatives outlined the agreed facts. Mr Snelgrove, who appeared for the owners in the Court below, identified three main defects: item 1, the multiple cavity door stacker; item 2, incomplete works (outdoor paving); and item 3, incorrect doors, and a further amount for unapproved variations. As to the unapproved variations, the following exchange occurred:

I infer that the “very small amount” was a reference to the $1,321 which the owners accepted in their case summary to be a credit to the builder.

The expert witnesses, Michael Waddell, a building consultant of Broadscope Building Consultants for the owners, and Doug Coombes, chartered builder for the builder, gave concurrent evidence. Documents were tendered. The proceedings were adjourned part-heard to 17 November 2021.

On 17 November 2021, the owners each gave affidavit evidence in their case and were cross-examined. Neither of the owners was asked about the disputed variations, for which the builder claimed an additional $7,051. As referred to below, the builder submitted in this Court that no questions were asked because of the owners’ concessions made in their case summary (extracted above) that they accepted that they were obliged to pay $6,073 (of the total claimed for additional variations of $7,051), and the builder’s margin of $3,134, which totalled $9,207 and that the builder was entitled to a credit of $1,321.

At the conclusion of the owners’ case in chief, there was evidence to support the following:

Mr Bogg, a plumber, gave evidence in the builder’s case, as did the builder himself. In his evidence in chief, the builder claimed an additional $7,051 in variations over and above those which had been approved, which comprised $1,889 (main bathroom mosaic feature wall tiling and en-suite stacker feature wall tiling); $681 (to patch gyprock after air-conditioner installed by owners); $1,584 (Thermoglaze laundry floor tiles and skirting tiles); and $2,897 (supply and install new wardrobes in second bedroom and linen press to the landing). The builder’s evidence was that the owners had requested that this additional work be done. These figures had been referred to in the owners’ case summary set out above.

Her Honour invited Mr Guy, counsel for the builder in the Court below, to address first on the limitation defence. Mr Guy addressed the builder’s case summary (and submitted that the limitation period for minor defects was two years. In argument, her Honour expressed the view that by inserting the statutory warranties into cl 39, the builder had lost the benefit of s 18E, and that the owner was entitled to sue for damages for breach of contract, for which the limitation period was 6 years. Mr Guy submitted that it was not just the warranty, which was implied into agreements, but also the limitation period. He relied on the prefatory words to cl 39(1): “To the extent required by the Home Building Act,” in support of that submission. The owners’ counsel, Mr Snelgrove, submitted that the pleaded claim was a claim for breach of contract and not for breach of statutory warranty and that, accordingly, s 18E did not apply.

Before hearing submissions on other topics, her Honour proceeded to give what her Honour subsequently identified as her reasons as follows:

There were further exchanges between Bar and Bench regarding authorities before her Honour said:

The owners’ counsel proceeded to address the Court below about the particular items in respect of which damages were claimed. When addressing the damages claimed by the owners in respect of the courtyard, the following exchange occurred between her Honour and the owners’ counsel:

Before the Court below adjourned at the conclusion of the second day of hearing, the builder’s counsel raised the issue of a credit of $1,321 to the builder which had been conceded in the owners’ case summary. The following exchange occurred:

It is important to explain at this juncture that the “$2,900” referred to by Mr Snelgrove corresponded with the sum of $2,219 in paragraph 12(iii) of the statement of claim. However, paragraph 19 of the owner’s case summary (as set out above), about which her Honour asked, did not concern the $2,219 credit, which was not pressed by the builder. Rather, it concerned the owners’ acknowledgement (in paragraph 19) that they owed the builder $9,207 for the new variations, being the sum of $6,073, the total of the variations, and $3,134, for the builder’s margin, and that the builder was entitled to a credit of $1,321. This passage of transcript is relevant to ground 2 and ground 3(b) (addressed below).

Shortly after the commencement of the third day of hearing, the following exchange took place between her Honour and the builder’s counsel regarding the limitation issue:

The builder’s counsel then drew her Honour’s attention to the concession made by the owners (referred to in the passage extracted from the first day’s transcript in which Mr Snelgrove described it (the $1,321) as a “very small amount”) in the following passage:

Her Honour, at that point, invited the owners’ counsel to respond. The following exchange occurred:

It would appear that both Mr Snelgrove and her Honour had forgotten that the discussion on the first day in the passage to which Mr Guy referred was a reference to the $1,321, a concession by the owners on which the builder relied and not to the figure of $2,219, which was no longer pressed by the builder.

The issue continued to be debated with the following exchange between her Honour and the builder’s counsel:

At the conclusion of submissions, her Honour gave ex tempore reasons. It is not necessary to reproduce them in full. Her Honour said, of present relevance:

It was common ground that there was no reference in the reasons to the admitted credit of $1,321 due to the builder.

On 19 November 2021, her Honour made the orders set out above.

The first question that arises is whether leave is required to argue ground 1. I consider ground 1 to involve a process of construction and therefore to constitute a question of law. It is not a question of law alone: see the distinction drawn by Spigelman CJ (McClellan CJ at CL and R A Hulme J agreeing) in R v PL [2009] NSWCCA 256; (2009) 199 A Crim R 199 at [27]. However, s 39(1) of the Local Court Act does not require that it be a question of law alone for there to be a right of appeal without leave.

Section 7(a) of the Limitation Act has the effect that, if there is another limitation period specified in another “enactment”, the other limitation period will apply rather than the one specified in the Limitation Act. Thus, if the owners’ claim is properly to be characterised as one for breach of statutory warranty, the limitation period of two years in s 18E applies and not the limitation period of six years in s 14 of the Limitation Act for claims for breach of contract.

In the present case, the owners argued, and the Court below found, that the owners’ claim was not one for breach of a statutory warranty, but rather a claim for breach of contract. Thus, it is necessary, for the purposes of ground 1 to examine this proposition to assess whether such a distinction is maintainable in the present case.

It was common ground that, if cl 39 had not been included in the contract, the owners had a claim against the builder for breach of statutory warranty (under s 18B) but that their right to commence proceedings had become statute-barred by the time they in fact commenced proceedings either in NCAT or in the Court below: (s 18E).

Section 7(2)(f) of the Act required that the statutory warranties (defined as a warranty established by Part 2C) be included in the contract. If her Honour’s construction were correct, it would mean that a builder who complied with s 7(2)(f) by expressly including the warranties implied by s 18B into the contract would be in a worse position than a builder who was party to a contract which did not contain warranties in its written form. On her Honour’s construction, a builder who had not included the warranties would be entitled to rely on s 18E but one who had would not be.

It is important to read the contract in light of the Act. Clause 39 of the contract is plainly designed to comply with s 7(2)(f) and replicate the warranties in s 18B. The prefatory words of the clause, “[t]o the extent required by the [Act], the builder warrants that” (emphasis added) are, in my view significant because the warranties in sub-clauses (a)-(f) are given subject to the rider in the prefatory words. Thus, the objective intention of the parties is that the warranties are given only in so far as they are required by the Act. The Act requires only warranties in respect of non-major works that are enforceable for two years. In these circumstances, the builder ought not to be taken to have given wider warranties than those which the Act implied into the contract.

If there is any ambiguity in cl 39, regard can be had to the surrounding circumstances: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 (Mason J); [1982] HCA 24. Such surrounding circumstances include matters known to both parties at the time the contract was entered into. In the present case, such matters included the Consumer Building Guide which was Attachment B to the contract which said in part, of the statutory warranties (in s 18B):

Nor is there a sensible distinction in these circumstances between an action for “breach of statutory warranty” and an action for “breach of contract”. A warranty is merely a term of a contract, which is neither a condition (any breach of which will entitle the injured party to terminate), nor an innominate or intermediate term (a fundamental breach of which will entitle the injured party to terminate), breach of which will not entitle a party to terminate: see the summary of principles in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [47]–[53] (Gleeson CJ, Gummow, Heydon and Crennan JJ) and the discussion in John Carter, Carter on Contract (7th ed, 2018, LexisNexis) at Ch 14 “Classification of Terms”. A statutory warranty is a term which is implied, by legislation, into a contract, irrespective of the intentions of the parties. It thereby becomes a term of the contract between the parties. In the present case, the warranties in cl 39 did not lose their character as statutory warranties merely by having been expressed in the contract document. As referred to above, s 7(2)(e) required that they be included in the contract.

Further, s 18G makes it clear that the parties cannot exclude the statutory warranty “to remove the rights of a person” and any provision which purports to do so, is void. It is significant that s 18G refers to “rights of a person”. The word “person” in this context includes not only the owners but also the builder. The owners have a right to the benefit of the statutory warranties in terms but the builder has the right not to be sued in respect of non-major defects after the two year period has elapsed. That “person” ought be construed in this way derives some support from the use of the different expression “person entitled to the benefit of a statutory warranty under this Act” in s 18D(1). The owners might reasonably be thought to be the persons entitled to the benefit of a statutory warranty but “person”, without that qualification in s 18G, includes not only the owners but also the builder.

While it may be accurate to describe Part 2C of the Act as “consumer protection legislation”, this description is unhelpful. The legislature has inserted into contracts to do residential building work the warranties in s 18B(1), subject to the limitation in s 18E that proceedings for breach of them must be commenced within 2 years.

In their notice of contention, the owners argued that the principle of contra proferentem had the effect that, as the builder had prepared the contract, the contract should be construed against the builder. They argued that, on this basis, her Honour had been correct to find that the 6-year limitation period applied.

The form of the contract was a standard form issued by the HIA. In these circumstances, I do not accept that it was “prepared” by the builder. However, in any event, I consider the effect of the statutory provisions referred to above, and in particular s 7(2)(f), which requires the statutory warranties to be included in the written contract is such as to put beyond doubt that the limitation in s 18E applies to the warranties replicated in cl 39.

Accordingly, ground 1 has been made out. Mr Klooster, who appeared for the builder in this Court, submitted that the judgment for incomplete works (item 2) of $13,306.25, excluding interest, was not affected by the error and ought, accordingly, stand. However, he submitted that the recovery of the amount of $15,641.25 (for items 1 and 3) was statute-barred and that this part of the judgment ought be set aside. Mr Walsh, who appeared on behalf of the owners in this Court, accepted that, if ground 1 was made out, this would be the consequence.

Mr Klooster submitted on behalf of the builder that the owners, in their case summary, acknowledged that they owed the builder $1,321, and that the builder conducted his case, and was entitled to conduct his case, on that basis. I accept that an important forensic effect of these acknowledgments or admissions in the owners’ case summary was that the builder’s counsel in the Court below did not ask either of the owners any questions about the disputed variations or about the credit of $1,321. Mr Klooster submitted that, because the owners accepted, in their case summary, that they owed the builder a credit of $1,321, the net amount had to be adjusted by that sum. He contended that, on the basis that ground 1 had been made out, this would result in the amount of $13,306.25 being reduced by $1,321, thereby giving a net amount of $11,985.25.

Although the builder’s counsel in the Court below relied on the concession made in the owners’ case summary, her Honour considered that the builder was not entitled to a credit in the absence of a cross-claim having been put on by the builder. Her Honour did not make findings about monies owed to the builder (this is the subject of ground 3(b)).

Written submissions were made about the proper measure for damages for breach of contract: the injured party (in this case, the owners) is to be put in the same position, as far as money can do it, as if the contract had been performed: Robinson v Harman (1848) 1 Exch 850; 154 ER 363, approved in Commonwealth v Amann Aviation (1991) 174 CLR 64 at 80-82 (Mason CJ and Dawson J); [1991] HCA 54. However, it does not appear that these principles are at issue. Nor were they referred to in the proceedings in the Court below.

The builder’s entitlement to a credit of $1,321 turns on the way in which the case was conducted. As set out above, the owners accepted the credit in their case summary. The case summary was prepared and served to comply with the standard directions, which are annexure A to the Practice Note, which, in turn, were intended to serve the purpose in s 57 of the Civil Procedure Act.

Thus, the case summary was a significant document which, in addition to the pleadings, notified the Court below of the “real issues in the proceedings”. Having regard to the contents of the owners’ case summary, the builder and the Court below were entitled to proceed on the basis that it was common ground that the builder was entitled to a credit of $1,321.

Pleadings have a significant function to delineate the issues in the case (Dare v Pulham (1982) 148 CLR 658 at 664 (Murphy, Wilson, Brennan, Deane and Dawson JJ); [1982] HCA 70; Banque Commerciale SA (En Liqn) v Akhil Holdings Ltd (1990) 169 CLR 279 at 286 (Mason CJ and Gaudron J); [1990] HCA 11. Although the pleadings are the traditional foundation for the identification of the issues, documents such as case summaries, which are required by the standard directions in the Practice Note, can further refine the issues, just as oral concessions in the course of litigation are capable of doing so.

As the owners made an express concession in their case summary of a credit to the builder of $1,321, it was not necessary for the builder to file a cross-claim or plead a set-off by way of defence. Even aside from Part 6 of the Civil Procedure Act, the owners’ concession and the builder’s reliance on it amounted to an exception to the general principle that the parties are bound by the pleadings. In Dare v Pulham, the High Court said, at 664:

Her Honour (and the owners’ representative in the Court below) appears to have failed to appreciate that the circumstance that the builder no longer pressed his claim for $2,219 was separate from, and irrelevant to, the owners’ concession that the builder was entitled to a credit of $1,321. Her Honour’s failure to give effect to the way in which the owners had conducted their case and on which the builder was entitled to rely amounted, in the circumstances of the present case, to a denial of procedural fairness: see the discussion of the principles of procedural fairness in the context of court proceedings in Seltsam Pty Limited v Ghaleb [2005] NSWCA 208 at [69]-[79] (Ipp JA, Mason P agreeing). The present falls into the category described by Ipp JA in that case at [91]:

The procedural fairness arose from the detriment suffered by the builder as a result of her Honour disregarding the concession. In Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 (a case concerning an administrative decision), Gleeson CJ said at [37], in terms apposite to the present case:

I am satisfied that the builder did not challenge the owners about the credit of $1,321 because the owners had conceded a credit in that sum. Her Honour’s disregard of the concession, despite the builder’s counsel reminding her of it on more than one occasion after the evidence had closed, amounted to a denial of procedural fairness which resulted in practical injustice in the present case.

The owners were bound by the way in which their case was conducted, including as to the contents of the case summary served on their behalf in which the concession as to $1,321 was contained: see the discussion in R v Birks (1990) 19 NSWLR 677 at 684–685 (Gleeson CJ, McInerney J agreeing).

For these reasons, I am satisfied that ground 2 has been made out and the builder is entitled to a credit of $1,321. As I have found that the error amounted to a denial of procedural fairness, I am satisfied that the appeal is on a question of law within the meaning of s 39(1) of the Local Court Act. Accordingly, leave to appeal is not required.

Mr Klooster contended that the Court below had failed to give adequate reasons in three respects: the related questions of the proper construction of the contract and the limitation defence; and with respect to the disallowance of the credit of $1,321.

I propose to address the first two aspects together.

The issue to be decided was whether, having regard to the terms of cl 39 of the contract and ss 18B and 18E of the Act, the owners were required to bring proceedings within a time limit of two years or whether they had the benefit of the longer period provided for under s 14 of the Limitation Act. If they were required to bring proceedings within two years, a substantial portion of their claim against the builder would be out of time. The determination of this issue required her Honour to construe the Act and the contract.

Her Honour’s approach to the delivery of reasons was unorthodox. After hearing argument on the limitation issue, her Honour purported to give reasons. However, her reasons were not related to orders since she had not assessed damages and therefore was in no position to determine the effect of her finding on the limitation issue on the quantum of damages, if any, for which the builder was liable to the owners. Moreover, her reasons, in terms, expressed a preliminary view in that they were couched in the qualification that they were subject to the parties finding authorities on the question and bringing them to her attention after the delivery of reasons.

Some latitude is to be given to magistrates when giving reasons, which are commonly given ex tempore and without the benefit of the timely provision of transcript. The most charitable construction of the reasons was that, on 17 November 2021, her Honour articulated her reasons for her preliminary view regarding the limitation issue (whether the limitation in s 18E of the Act applied to the owners’ claim), which was expressed to be subject to any authorities to which the parties might direct her attention on 18 November 2021. On 18 November 2021, when no authorities were forthcoming, her Honour confirmed that her preliminary view was her final view.

As no point was raised about the unorthodox timing of the giving of reasons, it need not be addressed further.

Mr Klooster’s sole challenge to the reasons was that they failed to address the builder’s argument that the prefatory words of cl 39 meant that the warranties contained in that clause were statutory warranties under s 18B and that s 18E applied to them.

Taking into account the latitude to be extended to ex tempore reasons given by magistrates, I read her Honour’s reasons as disclosing the following path of reasoning:

Mr Walsh argued that it was necessarily implicit in her Honour’s reasons that the effect of the prefatory words, “[t]o the extent required by the [Act], the builder warrants …”, was limited to the warranties in s 18B and did not extend to the limitation in s 18E.

In some cases, findings which are “necessarily implicit” will be sufficient to discharge the judicial obligation to give reasons. However, in the present case, her Honour failed to address the builder’s principal contention: that the prefatory words of cl 39.1 imported the limitations in ss 18E and 18G of the Act into the warranties given in that clause. Her Honour did not purport to engage in a process of construction to ascertain the meaning of these words in cl 39.1.

While this question had been the subject of debate between her Honour and the builder’s trial counsel (extracted above), her Honour did not refer to the debate in her reasons or endeavour to explain why she rejected the builder’s submission. It is open, in certain circumstances, for a court to express reasons in a short-hand way, by adopting the submissions made by one party. For example, in Scoway Pty Ltd v Faxon Pty Ltd [2004] FCA 249, Hely J said:

Her Honour did not employ this shorthand method in the present case.

In order to be sufficient, the Court below was required to explain why the prefatory words in cl 39.1 added, in effect, nothing to the words which followed and were insufficient to qualify the balance of the clause. No such explanation is apparent from the reasons given. Accordingly, I am persuaded that ground 3(a) has been made out in respect of the construction argument.

This finding has no consequential effect (except on costs) since it was common ground that, the question of construction being one of law for this Court to determine, inadequacy of reasons would not result in the matter being remitted to the Court below.

The sole complaint made by the builder in respect of her Honour’s reasons was that there was no reference to the amount of $1,321 which the owners had accepted in their case summary ought be credited to the builder.

There was discussion about this figure in the transcript and it is plain from what her Honour said in the course of debate that she did not propose to allow any such credit.

Exchanges between Bar and Bench cannot be used to augment or challenge reasons for decision. In the context of sentencing, the Court of Criminal Appeal (Wood CJ at CL, Hulme and Bell JJ agreeing) in R v A [2004] NSWCCA 292 said at [12]:

In Director of Public Prosecutions (NSW) v Illawarra Cashmart Pty Ltd (2006) 67 NSWLR 402; [2006] NSWSC 343 (DPP v Illawarra Cashmart), Johnson J said, in the context of reasons given by a magistrate:

This passage from DPP v Illawarra Cashmart has been applied in a civil context in Fillipou v Coates Hires Operations Pty Limited [2011] NSWSC 986 at [34] (Johnson J) and MGIL Pty Limited v Maria Di Giannantonio as Executrix of the deceased estate of Michele Di Giannantonio [2013] NSWSC 1113 at [86] (Bellew J).

The builder was entitled to reasons which explained why he was not entitled to an admitted credit of $1,321, particularly in circumstances where he had conducted his case on that basis. It is not sufficient to leave the builder and this Court “to speculate from collateral observations as to the reasoning on which a critical decision is made”: Wright v Australian Broadcasting Commission [1977] 1 NSWLR 697 at 701 (Moffit P, Glass JA agreeing). Although the amount concerned was $1,321, the issue was nonetheless important to the builder and to the requirements of procedural fairness.

It would appear, as set out above, that her Honour misunderstood the effect of the owners’ concession. This misunderstanding serves to explain, but not excuse, the lack of adequate reasons.

In this respect, her Honour’s reasons were inadequate. I am satisfied that ground 3(b) has been made out.

The parties asked that I reserve the question of the costs of the Court below, with the intention that such costs could be determined on the papers. They accepted that it would be appropriate to make provision for an order that the costs of the proceedings in this Court follow the event in accordance with the usual rule in UCPR, r 42.1, but allow for applications to be made in the event that a party seeks a different order.

For the reasons given above, I make the following orders: