Petropoulos v CPD Holdings Pty Ltd t/as The Bathroom Exchange

1. [1]

   HER HONOUR: This is an appeal and an amended cross appeal of part of the decisions of the Appeal Panel of the Civil and Administrative Tribunal of New South Wales (“the Tribunal”) dated 27 March 2018, 8 October 2018 and the costs decision dated 13 March 2019.

2. [2]

   The plaintiff is Thea Petropolous. The first defendant/first cross claimant is CPD Holdings Pty Ltd t/as The Bathroom Exchange (“CPD Holdings”). The second defendant/second cross claimant is James Morphett, who is the director of the first defendant company and a builder. The parties relied upon 7 volumes of joint court books. For convenience, I refer to CBD Holdings as the defendant throughout this judgment, except with respect to the issue of costs as they relate to the second defendant.

3. [3]

   By summons filed 12 November 2018, the plaintiff seeks firstly, an order pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW) (“CAT Act”) that the plaintiff be granted leave to appeal to this Court; secondly, that pursuant to s 84(2)(b) of the CAT Act, time be extended to permit the plaintiff to appeal; thirdly, an order that order 6 of the decision dated 27 March 2018 and orders 1 and 2 of the decision dated 8 October 2018 be set aside and in lieu thereof, that orders be made that the defendants pay the plaintiff’s damages in the sum of $19,167.07 on a joint and several basis, and that the first defendant pay the plaintiff delay damages as determined by the Court on a joint and several basis.

4. [4]

   On 22 March 2019, the defendants filed an amended cross appeal seeking firstly, an order that leave be granted to cross appeal from the part of the decisions in relation to orders 2, 3, 4 and 5 made on 27 March 2018 and orders numbered 1 and 2 made on 8 October 2018; secondly, that the cross appeal be allowed; thirdly, that orders 2, 3, 4 and 5 of the Appeal Panel made on 27 March 2018 and 1 and 2 made on 8 October 2018 be set aside; and fourthly, in lieu thereof, ground 4(a) of the cross defendant’s appeal to the Appeal Panel be dismissed and that order 2 made by the Appeal Panel on 13 March 2019 be set aside and in lieu thereof ground 4(a) of the cross defendant’s appeal be dismissed and the cross defendant pay the costs of the cross claimants of proceeding number AP 17/45447 in the Appeal Panel; or in the alternative, in lieu of order (2) of the Appeal Panel made on 13 March 2019, the cross defendant to pay the costs of the second cross claimant of proceedings number AP 17/45447 in the Appeal Panel and the cross defendant to pay such costs of the cross claimant of proceedings number AP 17/45447 in the Appeal Panel.

Background

1. [5]

   On 30 June 2014, the plaintiff and the first defendant entered into a contract for the renovation of main and ensuite bathrooms in the plaintiff’s home. The contract sum was $39,786.40. The work under the contract was performed in 2014.

2. [6]

   In 2016, the plaintiff brought proceedings in the Tribunal against the defendants. The plaintiff made numerous allegations of defective work and of misleading or deceptive conduct.

3. [7]

   The first defendant brought an application in the Tribunal alleging that the plaintiff had repudiated the contract and seeking an order for payment of $4,761, referable to an outstanding amount under the contract. The two applications were heard together.

4. [8]

   On 22 September 2017, a Tribunal Member of the Tribunal issued a decision in Petropoulos v CPD Holdings Pty Ltd & Morphelt; CPD Holdings Pty Ltd v Petropoulos [2017] NSWCATCD, unreported. All of the plaintiff’s claims were dismissed except for one. The first defendant was ordered to repair a chip in a bath and the plaintiff was ordered to provide reasonable access to allow that to occur. It had never been in contest that the chip required repair. The Tribunal found that the first defendant had sought access to do so, but that access had been denied by plaintiff.

5. [9]

   The defendants’ application was upheld; it was determined that the plaintiff had repudiated the contract and she was ordered to pay $952.20 to the first defendant.

6. [10]

   The plaintiff appealed to the Appeal Panel of the Tribunal. The plaintiff appealed substantially the whole of the decision of the Tribunal Member. The first defendant lodged a cross appeal. The appeal and cross appeal generated two separate decisions, Petropoulos v CPD Holdings Pty Ltd t/as The Bathroom Exchange [2018] NSWCATAP 72 (“Petropoulos (No 1)”) and Petropoulos v CPD Holdings Pty Ltd t/as The Bathroom Exchange (No 2) (2018) NSWCATAP 233 (“Petropoulos (No 2)”).

7. [11]

   The Appeal Panel dismissed the appeal except on one ground, where it found that the defendant breached the statutory warranty in s 18B(1)(a) of the Home Building Act 1989 (NSW) in relation to the size of the shower screens in the bathrooms. It was found that the contract required shower screens of 900 mm x 900 mm in size, but that CPD Holdings had constructed the bathrooms with showers of 850 mm x 850 mm in size. It was common ground that this size difference was 11%.

8. [12]

   The Appeal Panel ordered the parties to provide further written submissions on the appropriate remedies, if any, in relation to the breach of statutory warranty by the defendants. That occurred and, in its second decision, the Appeal Panel decided the question of remedy on the papers. It ordered the defendants to perform work to make the showers support 900 mm x 900 mm custom shower screens and ordered the plaintiff to provide access to enable that to occur. The plaintiff had argued that there should be a compensation order made, including for claimed “consequential loss”, but the Appeal Panel declined to make such orders: see Petropoulos (No 2) at [31], [39]-[41].

9. [13]

   In the course of its second decision, the Appeal Panel observed that the sole defect, other than the very minor damage to the bath, was that the ensuite and shower recess areas were 850 mm x 850 mm rather than 900 mm x 900 mm.

10. [14]

    The Appeal Panel, in its decision dated 27 March 2018, refused the plaintiff leave to appeal on the grounds other than a question of law. Part of the appeal was upheld. The Appeal Panel set aside the Tribunal Member’s decision that the defendant did not breach any of the statutory warranties in the Home Building Act in relation to the size of the shower screen, and in lieu thereof, made an order that the defendant breached the statutory warranty in s 18B(1)(a) of the Home Building Act in relation to the size of the shower screen. The Appeal Panel ordered the parties to provide further written submissions on the appropriate remedies, if any, in relation to that breach and further written submissions in relation to costs of the appeal.

11. [15]

    The Appeal Panel in its decision dated 8 October 2018 made orders that the defendant was to perform the following work (“the rectification work”) using suitably licensed tradespersons and with due care and skill at the residence of the plaintiff on or before 7 weeks from the date of its decision. The defendant was to remove necessary tiles, bedding and screed adjacent to the water angle of the ensuite and shower recess areas; remove and replace the water angles and any necessary water bars of the ensuite and shower recess areas to ensure the dimensions of the ensuite and shower recess areas supported the installation of 900 mm x 900 mm x 200 mm custom glass shower screens; ensure that any waterproof membrane affected by the work was adequately repaired so that it functioned effectively as a waterproofing mechanism and that the area was adequately waterproofed; replace all necessary bedding, screed and tiles, which were to be of the same colour, dimensions and type as the tiles which had been removed, or if no identical replacement tiles were available, of a colour that most closely matched them; install 900 mm x 900 mm x 200 mm custom glass shower screens; repair the chip on the bath; and remove all debris and leave site in a clean condition. The plaintiff was ordered to provide reasonable access so that the rectification work could be performed.

The appeal to this court

1. [16]

   The parties now seek the leave of this Court to appeal the decisions of the Appeal Panel. In effect, they seek to agitate for the third time claims which have been heard and determined at length by the Tribunal Member and Appeal Panel. The plaintiff has twice agitated claims of misleading or deceptive conduct against the defendants, and twice been wholly unsuccessful in that regard. It is doubtful whether the proposed appeal raises any question of law. It does not raise any question involving real prospects of success. There is no doubt that there is a disproportion between costs and the importance of the dispute in relation to both parties, leaving aside that it has occupied court time and resources.

2. [17]

   The plaintiff seeks an extension of time to appeal. The appeal was filed seven days out of time.

3. [18]

   In Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30 (“Gallo”), McHugh J stated at [2]:

4. [19]

   The plaintiff submitted that firstly, the delay was not lengthy; secondly, there is no evidence of prejudice to the defendant; and finally, the defendant has a cross appeal on foot. The defendant does not oppose the granting of this application. In these circumstances, in the exercise of my discretion, I grant an extension of time for the plaintiff to file an appeal to 12 November 2018.

5. [20]

   Both parties seek leave to appeal pursuant to s 83 of the CAT Act. It reads:

6. [21]

   Two cases which deal with the principles governing leave to appeal are Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 (“Das”) and Lee v New South Wales Crime Commission (2012) 224 A Crim R 94; [2012] NSWCA 262 (“Lee”).

7. [22]

   In Das, the Court of Appeal set out the principles to be considered in deciding whether leave to appeal should be granted. At [32]-[33], [35], Basten JA stated:

8. [23]

   Similarly, in Lee, Bathurst CJ at [12] outlined the principles relevant to the granting of leave as follows:

9. [24]

   The nature of the proposed appeal is of relevance in an application for leave to appeal. Where, as here, an appeal can only be on a question of law, then the absence of identifiable questions of law will obviously be fatal to a leave application. There should be some specification of the questions of law which are the subject of the proposed appeal.

10. [25]

    The importance of finality in small claims is also relevant to the question of leave, because:

11. [26]

    This is also reflected in s 60 of the Civil Procedure Act 2005 (NSW). Consequently, where the costs of the trial are disproportionate to the amount in dispute, the incurring of additional costs, for a potentially uncertain return, will be a factor weighing heavily against a grant of leave. That principle must apply with even more force where there has already been a trial and a first appeal.

12. [27]

    Section 58 of the Civil Procedure Act, requiring a court to act in accordance with the dictates of justice, applies in respect of a leave application. One of the factors to be taken into account pursuant to s 58 is “the degree of injustice that would be stifled by the respective parties as a consequence of any order or direction”: s 58(2)(b)(vi). That provision recognises that questions of injustice are relative. The delay and cost of further litigation constitutes a form of injustice to the successful party below, whatever the outcome of the appellate process.

13. [28]

    Finally, in considering whether to grant leave to appeal, I adopt the approach that this Court should not read the Appeal Panel’s reasons “with an eye finely tuned for error”: McGinn v Ashfield Council [2012] NSWCA 238 per McColl JA at [17] (Sackville AJA and Gzell J agreeing); Walsh v Parramatta City Council [2007] NSWLEC 255; (2007) 161 LGERA 118 at [67] per Preston CJ citing Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 291.

14. [29]

    I also bear in mind that what constitutes sufficient reasons for a Tribunal Member (and Appeal Panel) differs from that of a court. In Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; (2013) 303 ALR 64 (“Wingfoot”), the High Court stated at [54]-[56]:

15. [30]

    While Wingfoot refers to a medical panel under the Accident Compensation Act 1985 (Vic), the standard for written reasons set out at [54]-[56] above apply equally to the Tribunal Member and Appeal Panel under the CAT Act in this case.

The plaintiff’s application for leave to appeal

1. [31]

   Counsel for the plaintiff submitted that this appeal raises matters of public importance. It is the plaintiff’s position that the Appeal Panel ordered a work order outlining the work that the defendant must perform, and that that order is unworkable. The issues raised in this appeal are therefore of public importance for plaintiffs and builders.

2. [32]

   The appeal is raised on many grounds. They can be broadly identified as involving three topics: the first is the remedy, the second is misleading or deceptive conduct and the third is repudiation. Most of the grounds of appeal do not raise questions of law but rather seek to re-litigate factual findings. In Swain v Waverley Municipal Council [2005] HCA 4; (2005) 220 CLR 517 at [2], Gleeson CJ reiterated that in the common law system of civil justice, the trial process determines the issues between the parties. The system does not regard the trial as merely the first round in a contest destined to work its way through the judicial hierarchy until the litigants have exhausted either their resources or their possibilities of further appeal. This is one such case.

3. [33]

   Both parties relied upon expert reports. The plaintiff relied upon the report of Mr Coombes and the defendants relied upon the report of Mr Gray.

4. [34]

   I will deal with the three topics of the plaintiff’s grounds of appeal in turn.

5. [35]

   On the ground of misleading or deceptive conduct, counsel for the plaintiff referred to Solar Tube Australia Pty Ltd v Solar Bridge International Pty Ltd [2017] FCCA 657, where the legal principles in relation to ss 18 and 29 of the Australian Consumer Law are set out. I shall only reproduce the three principles which are relevant to the plaintiff’s argument. They are firstly, to protect the public from deception; secondly, to identify the class of consumers to whom the conduct is directed; and thirdly, in relation to advertising, to attribute significance to the “dominant message” of the advertisement when assessing whether it is misleading or deceptive.

6. [36]

   It is the plaintiff’s position that the website representations induced her to enter the contract and that the tiling representations induced her to allow Mr Morphett and his labourer, Joshua Wilde, to personally carry out the tiling in lieu of their usual tiler, Mark Groves. She did not stray from this position during cross examination.

7. [37]

   The plaintiff argued that as the evidence unfolded at first instance, it became clear that:

8. [38]

   It was the plaintiff’s case that given the evidence, the website and tiling representations were misleading and deceptive on any objective view.

9. [39]

   At first instance, the plaintiff set out the relevant authorities on misleading and deceptive conduct. While the Tribunal Member agreed with the authorities cited, she did not apply them to the circumstances of the case.

10. [40]

    The Tribunal Member’s findings were:

11. [41]

    The plaintiff appealed these findings, primarily on the grounds that the Tribunal Member failed to examine the representations made from the perspective of the ordinary or reasonable members of a class, being in this case, the plaintiff.

12. [42]

    The Appeal Panel agreed that the test was as stated by the plaintiff in her point of appeal. It stated at [57] of its decision:

13. [43]

    The plaintiff submitted that it was unclear how the second proposition could reasonably follow the first. Notwithstanding its statement at [57], the Appeal Panel referred to the builder's own belief about the standard of work it was capable of achieving, and again referred to findings made by the Tribunal about Mr Morphett's representations about his experience. The Appeal Panel made no reference whatsoever to the class of people to whom the representations were made, and how those persons might interpret them.

14. [44]

    The plaintiff argued that in light of its statements, the Appeal Panel also failed to apply the correct test.

15. [45]

    It is the plaintiff's position that the website representations induced her to enter the contract with the builder, as the representations specifically included words and phrases that promised to deliver a particular standard of work, namely that the finish would be “premium” or “quality”.

16. [46]

    Specifically, the reference to Mr Groves’ qualifications and training in the UK, and the statement that he was the best tiler the builder had worked with, were representations clearly made to set that tiler apart as being better than Australian tilers.

17. [47]

    The plaintiff argued that the representations about Mr Morphett having 25 years of experience in the building industry were misleading or apt to mislead, given that 13 of those years were as an unlicensed person and that a further nine years were for cleaning and minor maintenance only.

18. [48]

    It was the plaintiff’s position that a reasonable member of the class of persons to whom those representations were made would, in conjunction with the terms “premium” and “quality”, have expected Mr Morphett to have worked for at least 25 years as a licensed tradesperson.

19. [49]

    The builder’s own expert gave evidence that the works were not premium quality, but were merely average or above average. The plaintiff suggested that this evidence was unsurprising, given that Mr Morphett had no qualifications or training in tiling and had never held a tiling licence. Similarly, Mr Wilde, the young labourer, was totally unlicensed for any trade.

20. [50]

    With respect to a number of the defects which the plaintiff alleged, the Tribunal Member referred to complaints as concerning aesthetic rather than technical defects. These included:

21. [51]

    In essence, while a number of the defects alleged were not found to be technical defects, their finished appearance was not of a quality or premium standard. Again, the builder's own expert said that to achieve that sort of finish would require additional time and costs. On the basis of this evidence, it was open to the Tribunal and indeed to the Appeal Panel to find that the representations as to quality or premium work were misleading.

22. [52]

    The plaintiff argued that the rectification method proposed by Mr Coombes would not only provide an adequate fix for the shower enclosures, but would give an opportunity for the rectifying builder to provide the level of finish to the bathrooms that the plaintiff expected when she engaged the defendant in the works.

23. [53]

    The plaintiff claimed the cost of rectification in contract and/or, alternately, pursuant to s 236 Australian Consumer Law, arising out the misleading and deceptive conduct of the builder, as well as Mr Morphett on a joint and severable basis.

24. [54]

    The Appeal Panel at [53]-[56] recorded the ground of challenge brought by Ms Petropoulos in relation to her misleading or deceptive conduct claim. She contended that the Tribunal had applied an incorrect legal test to determine whether statements made on the defendant’s website were misleading or deceptive.

25. [55]

    The Appeal Panel observed at [57], [61] that the test for misleading and deceptive conduct is an objective question of fact. That principle of law is well-established: see Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [102] per Gummow, Hayne, Heydon and Keifel JJ. The Appeal Panel was not satisfied that Ms Petropoulos had established any error of law in respect of the test applied by the Tribunal in determining whether the website statements were misleading or deceptive, or likely to mislead or deceive ([61]).

26. [56]

    There was no factual finding that the alleged oral or “additional tiling” representations were ever made.

27. [57]

    The defendant submitted that any appeal must proceed based on the facts as found, whatever might have been the evidence of Ms Petropoulos. As to the website statements, there was no finding that Ms Petropoulos was induced to enter the contract by misleading or deceptive conduct. As to the tiling representations, the factual findings were inconsistent with Ms Petropoulos’ submission that she was induced to allow something to occur.

28. [58]

    The defendant argued that it was unnecessary to address the plaintiff’s submissions that certain facts should have been found, such that, given the evidence, the defendants’ representations were misleading and deceptive on any objective view. Even assuming that all of the alleged representations had been found, which they were not, all of the plaintiff’s submissions were directed to questions of fact.

29. [59]

    The defendants referred to the judgment of Glass JA in Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139. In that case, his Honour said that there is no error of law in a factual finding that is perverse or contrary to the overwhelming weight of the evidence, or against the weight of the evidence, or which is a finding that no reasonable person could have made. Further, it is pointless to submit that the reasoning by which the Tribunal Member arrived at a finding of fact was demonstrably unsound, as this does not amount to error of law. Once the factual findings have been made by the Tribunal Member, or on appeal by the Appeal Panel, that is the end of the matter so far as facts are concerned: see Borcherdt v Scott [2014] NSWCA 339 at [34] per Tobias AJA.

30. [60]

    The defendants submitted that although Ms Petropoulos attempted to set out some factual findings of the Tribunal Member, she mistook the finding. The finding was actually that there was little evidence that Ms Petropoulos entered into the contract on the basis that she understood Mr Groves to be the tiler. Her best evidence was found to suggest that she may have been induced by the fact that CPD Holdings used only one tiler, who was experienced.

31. [61]

    The first appeal by Ms Petropoulos was on the ground that an incorrect legal test had been applied when finding whether conduct was misleading or deceptive. It appears that she has now pressed the same ground of appeal.

32. [62]

    As to the plaintiff’s submission that the Appeal Panel’s proposition at [57] is illogical, the defendant argued that there is no difficulty in seeing how the Appeal Panel's second proposition follows the first. The Appeal Panel explained at [59] how Ms Petropoulos had misunderstood the Tribunal's reasoning with regard to the words “premium bathroom renovation”. The Appeal Panel noted that the correct perspective for assessing whether conduct was misleading or deceptive was that of an ordinary reasonable consumer. It said it was not satisfied that Ms Petropoulos had established that a wrong test was applied.

33. [63]

    The plaintiff failed to identify anything approaching a contention that the Appeal Panel erred in law. The defendant noted that the wording of the plaintiff’s submissions betrayed a fundamental misunderstanding of the nature of any appeal to this Court from the Appeal Panel. It simply does not matter what was “open” to the Tribunal or the Appeal Panel to find. Submissions of that nature do not give rise to a valid ground of appeal.

34. [64]

    These statements of what Ms Petropoulos “says” and what she “claims” do not seem to be directed to any ground of appeal. Further, factual findings have been made about the opinion of Mr Coombes.

35. [65]

    Nothing submitted by Ms Petropoulos in relation to her misleading or deceptive conduct claims properly identifies any contended error of law, let alone a ground that has any, or any substantial, prospects of success on appeal. For that reason alone, the defendant submitted, the Court should refuse leave to appeal on this ground.

36. [66]

    In the primary proceedings, the Tribunal Member stated at [73]:

37. [67]

    The Tribunal Member continued at [89]:

38. [68]

    In its judgment, the Appeal Panel stated at [57], [61]:

39. [69]

    The majority of the plaintiff’s submissions on this ground are directed towards challenging findings of fact, upon which there is no right to an appeal. Furthermore, her allegation that the Tribunal and Appeal Panel applied the wrong test for misleading or deceptive conduct is misconceived. The Tribunal Member and the Appeal Panel stated correctly that the test for misleading and deceptive conduct is an objective question of fact, to be determined from the perspective of an ordinary reasonable consumer, not the perspective of the plaintiff. The plaintiff has failed to demonstrate that the decision of the Appeal Panel is arguably wrong. The plaintiff has failed to demonstrate that any of these grounds of appeal are arguably raised.

40. [70]

    The plaintiff submitted that the finding of the Appeal Panel that she had repudiated the contract was against the weight of evidence. The defendant noted that it was the Tribunal Member, not the Appeal Panel, which made the finding that the plaintiff had repudiated the contract. The Appeal Panel found that it was not persuaded that the finding of the Tribunal Member was against the weight of evidence. The defendant argued that this ground of appeal is therefore not addressed to the Appeal Panel, which made no discernible error of law.

41. [71]

    When the plaintiff sent a notice to the defendant in 2015 asking it to rectify the defects in accordance with the scope outlined by Mr Coombes, the builder responded by stating that the plaintiff’s notice was invalid, given the builder had issued a suspension notice on 26 August 2014.

42. [72]

    On 26 August 2014, the defendant sent two emails to the plaintiff. The first was an offer to resolve the matter by financial resolution and the other an email saying that works will be suspended. It is worth noting that this was at a time when the builder had been back twice to rectify the defects.

43. [73]

    Pursuant to cl 26 of the contract for works, the defendant could give a notice to suspend works if the owner met any of the criteria set out in that clause. In the email sent to the plaintiff, it is unclear which of the factors in cl 26 the defendant relied upon in issuing his suspension notice.

44. [74]

    The plaintiff further noted that the suspension email failed to refer to cl 26, and that an email did not constitute proper service under cl 28. In any event, the defendant failed to follow up on this notice by way of a termination notice.

45. [75]

    When a rectification order was issued to the defendant in October 2014, the builder failed to comply. There is no evidence of any further notice under the contract requesting access to complete the works in accordance with the rectification notice. It is therefore unclear how, under the circumstances, the builder could maintain that the suspension notice dated 26 August 2014 could remain in force.

46. [76]

    It is the plaintiff’s position that her notice on 31 August 2015 was valid as was her termination notice in February 2016.

47. [77]

    The plaintiff argued that the Appeal Panel’s finding that the homeowner repudiated the contract was against the weight of evidence.

48. [78]

    Further, that finding was made without taking into account relevant considerations, such as:

49. [79]

    The plaintiff’s bathroom remains unfinished almost five years after the builder commenced work. While there was no liquidated damages clause in the contract, she claims consequential damages for having two bathrooms that are incomplete and which have no finished shower recess. She claims $100 per week for that delay cost.

50. [80]

    In the alternative, she claims delay costs pursuant to s 236 of the Australian Consumer Law.

51. [81]

    The defendant argued that the plaintiff was wrong in stating that the Appeal Panel did not find that the plaintiff had repudiated the contract. That was the Tribunal Member’s finding. The Appeal Panel at [76] found it was not persuaded that the Tribunal Member’s findings were against the weight of the evidence.

52. [82]

    The Appeal Panel made that finding because it recognized that whether a contract has been repudiated is a question of fact. It followed that the Appeal Panel could only give leave to appeal against the Tribunal Member’s finding of repudiation if it was satisfied that the plaintiff may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or was against the weight of the evidence. The Appeal Panel stated at [76] that it was not so satisfied. It refused leave for the plaintiff to appeal on grounds other than a question of law.

53. [83]

    It is quite plain that in this regard, there is a fundamental disconnect between the Appeal Panel’s decision and the plaintiff’s proposed ground of appeal. The proposed ground is not addressed to the decision of the Appeal Panel. No error of law can be discerned in what the Appeal Panel decided on this question.

54. [84]

    Even if the Appeal Panel had made a finding for itself that Ms Petropoulos had repudiated the contract, its finding would have been one of fact which could not be challenged on appeal to this Court.

55. [85]

    For these reasons, the defendant argued that it is unnecessary to address the plaintiff’s submissions in relation to repudiation, except to note that some of these matters were not raised before the Appeal Panel.

56. [86]

    The plaintiff argued that the Appeal Panel’s finding that the homeowner repudiated the contract was against the weight of evidence. The defendant noted that the Appeal Panel did not make any asserted finding of this kind, and in any event, the plaintiff was not entitled to appeal to this Court on the ground that a factual finding was against the weight of the evidence.

57. [87]

    The plaintiff further provided a list of relevant considerations which the Appeal Panel failed to take into account. The defendant argued that this submission was also misdirected. At [75], the Appeal Panel accurately characterised Ms Petropoulos's “repudiation” ground of appeal as asserting that the evidence supported a finding that she was fully justified in terminating the contract, because CPD Holdings had repudiated the contract by failing to rectify and complete the works. In that context, the Appeal Panel addressed the relevant considerations in [76]. Those were whether the ground raised a question of law and, if not, whether the Appeal Panel was satisfied that the decision was against the weight of the evidence such that Ms Petropoulos may have suffered a substantial miscarriage of justice.

58. [88]

    As to the plaintiff’s submissions in relation to consequential damages, the defendant argued that they raise an issue of claimed “delay” unrelated to the submissions on repudiation. The defendants presumed they were directed to [4g-i] in the summons, which also seemed to raise a separate ground from the remainder of [4] of the summons. Moreover, the defendant argued that the grounds were not directed to the Appeal Panel’s actual decision.

59. [89]

    The Appeal Panel refused leave to appeal on a question of fact relating to the claim of delay, giving reasons at [70] of its decision. It noted that the plaintiff raised a “no evidence” ground for the first time in oral submissions on appeal, but concluded there was evidence to support the Tribunal's finding at [71]-[72]. The Appeal Panel at [73] also dismissed grounds relating to the Tribunal’s findings about mitigation, because they were made in the alternative and because the primary finding that the delay in contract completion was caused by Ms Petropoulos was not being appealed.

60. [90]

    Contrary to [4g] of the summons, the Appeal Panel did not find that no damages for delay were due to the matters stated there. The defendant argued that for these reasons, no error of law can be discerned in what the Appeal Panel decided on the question of delay.

61. [91]

    The Appeal Panel stated at [3], [4], [70]-[76]:

62. [92]

    In Batterham v Maekig [2010] NSWCA 86, Young JA (with McColl JA agreeing) referred to the decision of Walsh JA in Satellite Estate Party Ltd v Jacquet [1968] 2 NSWLR 340, and concluded at [86] that “[t]he question of repudiation is a question of fact”. There is no right to appeal on a question of fact. This ground of appeal is therefore misguided and must fail. Even if I am wrong, it cannot be said that the opinion of the Appeal Panel is arguably wrong.

63. [93]

    So far as the remedy is concerned, the plaintiff had submitted to the Appeal Panel that she should be awarded damages for costs of completely reconstructing the ensuite and bathroom with 900 mm x 900 mm shower recess areas. The defendants submitted that the plaintiff should not receive damages because the rectification work proposed by the plaintiff was clearly unreasonable, and a work order should be made to make the shower recesses bigger, in accordance with the evidence given by its expert.

64. [94]

    The works have remained defective and incomplete. The plaintiff stated that by 2016, she had lost total confidence in the defendant to remedy or complete the work. She ultimately came to the view that the defendant was not able to complete the works to the quality advertised, and that it had evinced an intention not to be bound by the contract. The plaintiff sent a notice of termination to the defendant on 9 February 2016.

65. [95]

    The defendant claimed the termination notice was invalid, treated the notice as repudiation, and accepted the same.

66. [96]

    The Appeal Panel ordered the parties to provide further written submissions on the appropriate remedies, if any, in relation to the found breach of statutory warranty by the defendant. That occurred and, in its second decision, the Appeal Panel decided the question of remedy on the papers. It ordered the defendant to perform work to make the showers 900 mm x 900 mm in size and ordered the plaintiff to provide access to enable that to occur. The plaintiff had argued that there should be a compensation order made, including for claimed “consequential loss”, but the Appeal Panel declined to make such orders: see Petropoulos (No 2) [31], [39]-[41].

67. [97]

    In the course of its second decision, the Appeal Panel in Petropoulos (No 2) at [33] observed that the sole defect, other than the very minor damage to the bath, was that the ensuite and shower recess areas were 850 mm x 850 mm rather than 900 mm x 900 mm.

68. [98]

    The powers of the Tribunal are set out in s 48O(1) of the Home Building Act. It reads:

69. [99]

    Section 48MA refers to the rectification of defective work. It reads:

70. [100]

    The Appeal Panel concluded (Petropoulos (No 2)) at [31] and [38]:

71. [101]

    Section 48MA of the Home Building Act states that rectification of defective works is the preferred outcome in proceedings. The Appeal Panel accepted on the available evidence that the defendants were capable of completing the works in compliance with the contractual warranties. In my view, the plaintiff has failed to demonstrate that under the circumstances, the decision of the Appeal Panel is more than arguably wrong. I am also not satisfied that these grounds of appeal in the plaintiff’s application for leave to appeal involves a matter of principle or a question of public importance, especially in circumstances where the costs of lengthy appeals have swamped the sum involved in the dispute: see Zenden v Sewell per Campbell JA at [22]. For these reasons, in the exercise of my discretion, I refuse leave to appeal.

The defendant’s application for leave to cross appeal

1. [102]

   The cross appeal contains seven grounds of appeal. They are firstly, the proper construction of the building contract in relation to the shower screens; secondly, the waiver of a contractual term; thirdly, no breach of statutory warranty; fourthly and fifthly, waiver of entitlement to claim a remedy; sixthly, remedy; and finally, non-payment relevant to the work order. I shall deal with each topic in turn, considering grounds four and five together.

2. [103]

   The defendants submitted that they should be granted leave to cross appeal on the following grounds. They are:

3. [104]

   Counsel for the first defendant referred to various findings of the Appeal Panel concerning conversations between the parties about the size of the shower screens. The ground of appeal is that the Appeal Panel erred in its construction of the contract in that it erroneously concluded that the works specified thereunder required the installation of 900 x 900 mm frameless shower screens in the bathrooms (Petropoulos (No 1), [30]-[31]), and that in doing so, it failed to construe the language of the contract as a whole and failed to give proper weight to surrounding circumstances known to the parties.

4. [105]

   The first defendant submitted that the High Court case of Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 (“Codelfa”) indicates the relevance of surrounding circumstances when construing contracts. In Codelfa at 353-354, Mason J held that it was permissible to have regard to “discussions between the parties which proceeded entry into the contract” as evidence of the parties’ common understanding or assumption about performance.

5. [106]

   In its decision, the Appeal Panel also referred to a number of well-known authorities on the subject of statutory construction, including the Court of Appeal decision of Cherry v Steele-Park [2017] NSWCA 295; 351 ALR 521 (“Cherry”). The Appeal Panel noted Leeming JA’s observation in Cherry at [72] that a court must construe a contract by having regard to both the contract as a whole and the background circumstances known to both parties, although “very often, nothing in the context will come close to displacing the ordinary grammatical meaning of the legal text”.

6. [107]

   In Cherry, Leeming JA made reference to several other cases which illustrate the legitimate use of surrounding circumstances when construing a contract. The first defendant provided detailed submissions of the relevance of those cases in these proceedings. In one, Boreland v Docker [2007] NSWCA 94 at [61], the Court of Appeal held that conversations between parties prior to a letter of offer could be used to inform its meaning and effect. In that case, Beazley JA said, quoting the decision Mason J in Codelfa, that the content of that conversation informed “the objective framework of facts” surrounding the contract.

7. [108]

   The first defendant also made reference to the decision of Lahoud v Lahoud [2009] NSWSC 623, in which Ward J made use of a pre-contractual conversation in order to construe Terms of Settlement and a Deed of Settlement.

8. [109]

   Finally, the first defendant referred to Angas Securities Ltd v Small Business Consortium Lloyds Consortium No. 9056 [2016] NSWCA 182 (“Angas”). In Angas, Sackville AJA noted at [112] that, pursuant to the decision in Codelfa, discussions between contracting parties which demonstrated a common understanding as to how work under the contract was to be performed could be considered when construing the contract.

9. [110]

   The first defendant submitted that the relevant surrounding circumstances to the contract in this case include a conversation that was found at [86] of the Primary Member’s decision to have occurred between Mr Morphett and Ms Petropoulos. Ms Petropoulos told Mr Morphett that she wished for the shower screens to be as large as possible. Mr Morphett replied, “The rooms are rather small, so it will depend on the fittings that you select and what I find when we do the demolition. I suggest that I allow for custom made 900 x 900 mm screens and if you decide to go ahead with my quote, we can figure out the exact size during the job.” It was also found at [87] that the bathroom vanities had not been selected at the time of the quotation to which Mr Morphett referred.

10. [111]

    The quotation given by the first defendant provided for works including “Installation of plumbing fittings listed in roughly the same locations”. The “FITTINGS INCLUDED” in the quote listed “Custom 900 x 900 x 200 mm frameless shower screens”, consistent with the discussion between the parties. The quotation was not itself a contract, although it was subsequently incorporated into the contract. The first defendant submitted that the written quotation reflected the verbally quoted price, on the basis of the earlier conversation in which Mr Morphett suggested that he “allow for custom made 900 x 900 mm screens” and then determine the exact sizing during the job. The first defendant argued that the word “custom” further suggested that the screens might have needed to be non-standard.

11. [112]

    The first defendant submitted that the Appeal Panel failed to give adequate consideration to several clauses within the contract which reflect the conversation between Mr Morphett and Ms Petropoulos, including the following:

12. [113]

    Clause 9 of the contract contained express warranties consistent with those provided for in s 18B of the Home Building Act, including a provision that no other provision of the contract could reduce or restrict the express warranties. In addition, s 18B of the Home Building Act had the effect of implying warranties into the contract, but from 1 March 2015 did so according to the form of s 18B in force from that date, which was applicable to contracts made before that date: see Sch 4, cls 121, 125.

13. [114]

    In light of the conversation between the parties, as well as these excerpted clauses in the Terms and Conditions of Trade of the contract, the first defendant submitted that the contract does not contain an unqualified promise by CPD Holdings to install 900 x 900 mm frameless shower screens in the bathrooms.

14. [115]

    Specifically, the first defendant attributed significance to the “QUOTED WORKS” provision of the contract. This provision agreed that no physical investigations of the site had been carried out, and that as such, the quotation forming part of the contract had been prepared on an “as seen” basis. The first defendant submitted that reasonable persons in the position of the parties would have understood this provision to mean that the quotation was not to be understood as an unqualified promise that the quoted works would be performed precisely as quoted. The first defendant submitted that the word “assumption” under the “QUOTED WORKS” provision referred to the assumption that 900 x 900 mm frameless shower screens would be able to be approximately accommodated in the bathrooms with the other fittings selected or to be selected for those rooms.

15. [116]

    The first defendant further submitted that the Tribunal’s findings at [29]-[30] reveal an objective framework of facts:

    1. (1)

       that the known and communicated desire of Ms Petropoulos was for the shower screens to be as large as possible;

    2. (2)

       that CPD Holdings had communicated to Ms Petropoulos that it did not know how large it could make the shower screens until the bathroom fittings had been selected and the existing bathrooms demolished; and

    3. (3)

       that CPD Holdings communicated to Ms Petropoulos that its quotation would allow for 900 x 900 mm screens, with the exact sizing to be determined when the works were underway.

16. [117]

    The first defendant submitted that the common understanding of the parties was that the size of the shower screens would not be finally specified in the quotation. The object of the discussion at the time of the quoting of the works was to accommodate, as far as possible, Ms Petropoulos’ desires with regard to the showers and, as in Codelfa, to enable CPD Holdings to “inform itself of what was involved in the work and to cost it so as to arrive at a price for inclusion” in its quotation: see Codelfa at 354. The common contemplation of the parties was that the exact size of the shower doors would be determined during the works.

17. [118]

    The first defendant further submitted that the Appeal Panel failed to adequately take into account the context provided by the “DECISIONS AND INFORMATION FROM CLIENT” provision of the contract. This provision referred to (but was not limited to) a possible need for decisions as to the placement of items during the performance of the works. It recognised that a bathroom reasonably fit for use as a bathroom would require consideration of the placement of items so as to afford reasonable access to each other amenities of the bathrooms. It would also extend to decisions about the sizing of items during the performance of the works.

18. [119]

    Finally, the first defendant submitted that the express and implied warranties in the contract required the work and materials to be reasonably fit for the specified purpose or result, which was the use of the bathrooms and fittings for their intended purpose. That obligation could not be restricted by other terms of the contract. The provision of a bathroom reasonably fit for use as a bathroom would include reasonable access to each of the amenities of the bathrooms, including fixtures such as toilets. In that context, sizing and location of other items would need to be considered in the context of the physical limitation of the room sizes.

19. [120]

    The first defendant submitted that the Appeal Panel did not consider any of these matters in its construction of the contract. It also failed to address CPD Holdings’ relevant submissions, which itself was an error of law: see Segal v Waverley Council (2005) 64 NSWLR 177 at [43], [65], [75]-[77] per Tobias JA.

20. [121]

    For these reasons, the Appeal Panel erred in rejecting the Tribunal’s construction of the contract in favour of a construction to the effect that the contract contained an unqualified promise by CPD Holdings to install 900 x 900 mm frameless shower screens in the bathrooms.

21. [122]

    The first defendant argued that on the construction favoured by the Tribunal Member at [88], at the time the contract was entered into, its performance might have resulted in Ms Petropoulos receiving shower screens of larger than 900 x 900 mm, if it was decided during the works that larger screens could be approximately accommodated in the bathrooms. The exact sizing had been left to be decided once the works were underway, because of Ms Petropoulos’ communicated desire for the shower screens to be as large as possible in circumstances where that size could not be determined at the time of quoting for the works. It was a mistake to reason as if the contemplated decision during the performance of the works could only be to make the showers 900 x 900 mm or smaller.

22. [123]

    The plaintiff submitted that pursuant to Sch 1 cl 2 of the Home Building Act, residential building work means:

23. [124]

    Pursuant to Sch 1 cl 3 of the Home Building Act, a dwelling is defined in the following way:

24. [125]

    The contract between the parties in this matter was in relation to the renovation of a bathroom and ensuite in a residential house, and was therefore a contract for “residential building work” as defined in the Home Building Act. As such, the requirements, rights and liabilities of the homeowner and the builder were strictly governed by that statute, which prescribes penalty points to builders that fail to comply with the statutory requirements.

25. [126]

    The plaintiff argued that in light of the provisions of the Home Building Act, the defendant’s grounds of appeal in its cross-claim were flawed. The cases to which the defendant referred in its submissions did not concern home building contracts, which are strictly governed by law.

26. [127]

    The plaintiff submitted that s 7 of the Home Building Act prescribes the form of a residential building contract where the contract amount exceeds the prescribed amount.

27. [128]

    At the time that the contract in this matter was signed, s 7 relevantly provided:

28. [129]

    The relevant regulations to this case are the Home Building Regulations 2014. Schedule 1 of those regulations sets out a checklist for owners entering building contracts before 1 March 2015.

29. [130]

    The contract between the parties is a “NSW Fair Trading Home Building Contract for work over $5,000.” Clause 13 of the contract stated that a variation could be requested by the homeowner or the builder. Clause 13 then set out the steps required to vary the contract, including the final step that any notice in respect of a variation “must be signed and dated by both parties to constitute acceptance.”

30. [131]

    The Sch 1 checklist for building contracts of this kind under the Home Building Act was reproduced on p 3 of the contract for the works. The plaintiff, as homeowner, ticked “yes” to question nine of the checklist, which asked her, “Is the procedure for variations understood?”

31. [132]

    The plaintiff submitted that when the builder first came out to view and measure the bathrooms in early June 2014, he provided the homeowner with an initial quote (Aff Thea Petropoulos 15 Feb 2019, p 52). The quote included fittings and noted, “custom frameless shower screens of 900 x 900 x 200 mm in both bathrooms”. The parties agreed on a prime cost sum of $2,000 for the bathroom vanities, as at the time, the plaintiff had yet to decide whether to increase their size.

32. [133]

    The builder attended the homeowner’s property for the second time for final measurement on 29 June 2014 and produced a revised quotation sum (Aff Thea Petropoulos 15 Feb 2019, p 53). It noted that the homeowner had chosen to “keep both vanities at 600 mm”. The builder subsequently prepared the contract. As required under s 7(2) of the Home Building Act, the contract was to contain a sufficient description of the works along with plans and specifications.

33. [134]

    The document containing the specifications was attached to the contract, and stated, “Please find this quotation and scope of works. This document is annexed within the contract. Works not listed within this document do not form part of the scope of works” (Aff Thea Petropoulos 15 Feb 2018, p 84). The fittings which were included in that scope of works were “custom 900 x 900 x 200 mm frameless shower screens”.

34. [135]

    The plaintiff argued that between the first and final measurement, the builder moved from a “custom” shower screen to one where all dimensions of the shower screen were specified. Pursuant to the statutory warranties and the terms of the contract, the builder was prima facie bound to provide shower screens to the dimensions specified in the contract. The plaintiff argued that the builder failed to provide the specified screens and then argued that it is not obligated to comply with this particular statutory warranty.

35. [136]

    The plaintiff argued that the defendant’s cross-claim as a whole was an attempt to side-step its obligations under the statutory warranties. One way it sought to do so was by relying on a conversation during the works. The plaintiff agreed that during the works, the builder initiated a conversation with her about access space within the bathroom. However, the plaintiff argued that it was only a conversation. There was no request, from either the builder or the homeowner, to vary the specified dimensions of the shower screens, let alone an agreement that a variation should take effect.

36. [137]

    In its own pleadings at first instance, the defendant voluntarily admitted that there was no variation (Aff Thea Petropoulos 15 Feb 2019, p 22 at [7]). The plaintiff argued that the builder is bound by this admission pursuant to UCPR r 17.7(1), which states:

37. [138]

    Notwithstanding that admission in its pleadings, the builder tried to change its position during the hearing by asserting that a variation to the shower screens took place by verbal agreement. In its trial chronology, the builder asserted the date of the alleged verbal agreement to be 2 July 2014. However, it was the evidence of the homeowner that she never spoke with Mr Morphett on that day, nor was he even present in her home. The plaintiff’s evidence is supported by an email from Mr Morphett to her on that day, in which he says “Hi Thea, I have called you today but you must have been busy” (CB p 214).

38. [139]

    Regardless, the plaintiff submitted that pursuant to the contract, no written variation occurred.

39. [140]

    In construing the building contract, the Primary Member held at [84]-[92]:

40. [141]

    At [90], the Tribunal Member made a finding that several conversations between the plaintiff and defendant gave rise to a common understanding about the construction of their contract. He held that the contract contemplated some flexibility in relation to the 900 x 900 mm shower screen specifications as written, and that the parties then verbally agreed to alter the dimensions to 850 x 850 mm.

41. [142]

    In its decision at [27]-[31], the Appeal Panel addressed the Tribunal Member’s decision as follows:

42. [143]

    At [30] above, Appeal Panel considered that no conversation between the parties, during or after the formation of the contract, had the effect of altering the legal meaning of the written provision for “900 x 900 x 200mm shower screens”. The Appeal Panel characterised the Tribunal as only having arrived at its decision because it “considered it unjust” to enforce the contract as written.

43. [144]

    However, it is unclear how the Appeal Panel arrived at this characterisation. In the passages referred to earlier, the Tribunal stated that it came to its decision after construing the language of the contract in light of the discussions between the parties, both at the time of contracting and after the commencement of the works. Although the Tribunal did not frame its decision in the language of variation, it found that despite the express “900 x 900 x 200 mm” specification in the contract, the parties verbally agreed to vary the dimensions. I now turn to consider whether a verbal variation of this kind is effective at law.

44. [145]

    I note briefly that questions of fact are not the subject of this appeal. The plaintiff’s submissions that she could not have agreed to vary the shower screen dimensions because she was not home on the day of the purported conversation are of no relevance.

45. [146]

    Whether a verbal variation effectively varies the rights and obligations of the parties depends upon the circumstances of the case. In its submissions, the defendant referred to Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 (“Wright”). As in this case, the defendant builder in Wright entered into a residential home building contract with several individuals including the plaintiff, Mr Wright. During the works, the parties verbally agreed to change the plans and specifications from those proposed, but never signed a written variation. The plaintiff sued for damages for the cost of rectifying building work for the unwritten variations. As in this case, he also claimed beach of statutory warranties implied into the contract by s 18B(1)(a) of the Home Building Act. I will consider these arguments in more detail when I consider the third ground of appeal.

46. [147]

    In his decision in Wright at [38], Basten JA (with Giles JA and Handley AJA agreeing) stated:

47. [148]

    As in Wright, the contract in these proceedings required variations to be in writing. Two passages in the contract outline the procedure for variation. One occurs in the quotation given to the plaintiff, which formed part of the contract (CB, Tab 5, p 87):

48. [149]

    The contract also contained the standard provisions for a Home Building Contract for Work Over $5,000. Clause 13 of the contract stated (CB, Tab 5, p 66):

49. [150]

    The Appeal Panel considered the fact that the parties failed to draw up, sign and date their agreement to vary the contract in accordance with cl 13 as a factor in its decision at [27].

50. [151]

    Clause 14 of the contract in Wright stated that a variation “should be detailed in writing and signed by the owner or the owner’s agent” (my emphasis). In his decision, Basten JA stated that the language of cl 14 suggested that although the builder “should” have reduced the agreed variation to a written document signed by the owner, he was not required to do so. It was a “reasonable” construction of the contract that cl 14 did not provide an exclusive regime for variations, especially as the surrounding provisions assumed that variations involved an increase in price or duration of the works not contemplated under the original agreement. Basten JA stated that it was not clear that a variation which did not affect the cost or scope of the works would need to conform to the written formalities.

51. [152]

    In these proceedings, the clause outlining the procedure required to vary the contract was drafted differently. The phrasing of the variations clause in the quotation for works states, “Variations to the contract in terms of matters such as cost or specification will be advised to the client in writing” (my emphasis). Clause 13 states, “Before commencing work on a variation, the contractor must provide to the owner a notice in writing containing a description of the work and the price ... The notice must then be signed and dated by both parties to constitute acceptance” (my emphasis). This obligation is express, although I note that like cl 14 in Wright, the clauses in this case contemplate that variations will increase costs or labour, suggesting that the requirement that agreements be written and signed is to protect the owner from an unforseen bill or delay.

52. [153]

    As with cl 14 in Wright, it is not clear whether the effect of cl 13 in this case is that a builder may verbally agree to vary the works, and then rely on the clause to avoid those obligations. It is also not clear whether its effect is that an owner, such as the plaintiff, may verbally agree to vary the works (with no evidence of additional cost or delay), and then after their construction seek to rely on the written contract to claim damages for breach. It is for these reasons, presumably, that the Appeal Panel suggested that the Tribunal “considered it unjust” to enforce the contract as written.

53. [154]

    Be that as it may, cl 13 of the contract outlines a clear procedure for variation. The builder “must” provide the owner with a written document describing the varied works and the price, and both parties “must” sign and date it “to constitute acceptance”. In light of this provision, it is my view that the defendants have failed to demonstrate something more than that the Appeal Panel was arguably wrong.

54. [155]

    Even if I am wrong, I would not exercise my discretion to remit this matter to the Tribunal on the basis that the legal costs already expended by both parties far outweigh the amount in dispute.

55. [156]

    The first defendant submitted that the Appeal Panel should have found that it was not open to Ms Petropoulos to claim a breach of a contractual term requiring the installation of 900 x 900 mm shower screens. This is because if the Appeal Panel was correct in that the contract contained an unqualified promise that the screens would be that size, then their size was a contractual stipulation for Ms Petropoulos’ benefit which she was capable of waiving before the supply of those screens: see Perri v Coolangatta Investments (1982) 149 CLR 537 per Gibbs CJ at 543.

56. [157]

    At first instance, the defendant submitted to the Tribunal that there was clear waiver by Ms Petropoulos of any 900mm x 900mm size stipulation in the contract. The Tribunal made several factual findings in relation to the submission, including that there had been a discussion concerning the space between the showers and vanities in which Mr Morphett held up a piece of timber to demonstrate the space between the vanities if the shower screens had 900mm x 900mm dimensions. Mr Morphett had marked on the floor the position of the toilets, showers and vanities to demonstrate their spacing, and Ms Petropoulos had said she might not fit through that space. The Tribunal at [89] had preferred the evidence of Mr Morphett that the purpose of this exercise was to determine the size of showers and that Ms Petropoulos found that she could not walk in a forward direction through the space in the en suite bathroom, and that it would be very tight walking in a forward direction through the space in the main bathroom. The Tribunal at [89]-[90] was not satisfied that Ms Petropoulos would have been comfortable with a narrow passage between the vanities and the corner of the shower screens through to the toilets, with the consequence of not being able to walk into that space without turning sideways. As a result, the Tribunal found at [90] that during the contract works, Ms Petropoulos had agreed to the installation of 850mm x 850mm showers in the bathrooms.

57. [158]

    The Tribunal did not address whether these events amounted to a waiver of a contractual stipulation that the showers be 900mm x 900mm in size. However, the Tribunal had already found that the contract did not contain an unqualified stipulation on those terms.

58. [159]

    The defendants raised the matter of waiver before the Appeal Panel to support the Tribunal’s conclusion that there had been no breach of statutory warranty. The Appeal Panel nevertheless failed to address that contention before concluding that CPD Holdings had breached the warranty. The first defendant submitted that this decision amounted to an error of law. The first defendant submitted that on the factual findings of the Tribunal, the Appeal Panel should have concluded that Ms Petropoulos had waived an entitlement to claim that CPD Holdings was obliged to deliver showers with dimensions of 900mm x 900mm.

59. [160]

    In Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Marketing Pty Ltd (2013) 250 CLR 303 at [30], French CJ, Keifel, Bell, Gageler and Keane JJ said:

60. [161]

    At [31], their Honours endorsed the explanation of waiver from Craine v Colonial Mutual Fire Insurance Company Ltd (1920) 28 CLR 305 (“Craine”) at 326, which was a case concerning waiver of a condition under a contract of insurance:

61. [162]

    Waiver was also discussed by Gummow, Hayne and Keifel JJ in Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 (“Gardiner”) at [88]-[89] in the context of abandonment or renunciation of a contractual right. Their Honours also said at [52]:

62. [163]

    The first defendant submitted that if there was in fact a contractual promise by it to install 900mm x 900mm shower screens, then Ms Petropoulos did not insist upon that term, which was for her sole benefit. It can also be described as a modification of the terms of a contract without the formalities, or consideration, necessary for an effective contractual variation. The first defendant further submitted that her behaviour could also be interpreted as a modification of the terms without the formalities, or consideration, necessary for an effective contractual variation.

63. [164]

    In the circumstances, the first defendant submitted that the Appeal Panel should have found that it was not open to Ms Petropoulos to claim a breach of a contractual term requiring the installation of 900 x 900 mm shower screens.

64. [165]

    The plaintiff submitted that a builder is statute-bound to build to the contract specifications unless and until there is an agreed written variation in accordance with cl 13 of the contract. The mandated checklist at p 3 of the contract specifically asks whether the homeowner is aware of the procedure for variations, to which she responded in the affirmative.

65. [166]

    The plaintiff submitted that having a conversation does not amount to an agreed variation. In any event, statutory warranties override notions of common law waiver. The builder must build in accordance with specification. It did not.

66. [167]

    The plaintiff further noted that it was not until March 2015 that the homeowner realised for the first time that the set out for the screens was smaller than that called for within the contract. As soon as she realised the discrepancy, the plaintiff emailed the builder (Aff Thea Petropoulos 15 Feb 2019, p 84). Her complaint on this point predated her application to the Tribunal and is not a recent invention.

67. [168]

    The plaintiff argued that because waiver was not pleaded before the Tribunal, it cannot be argued now as a ground of appeal. Counsel for the defendant noted that the Tribunal is not a court of strict pleading, and that the defendant’s points concerning waiver “were always in the mix and fully explored at length in the evidence, both oral and written” (T 41.1-4). That evidence included the conversation in which the plaintiff agreed to the construction of 850 x 850 mm screens, effectively waiving her entitlement to claim damages for breach of the provision for 900 x 900 mm screens.

68. [169]

    Counsel for the defendant referred to Gardiner, where the High Court stated at [52] that waiver “can apply in circumstances where there is not a formal variation because the formalities of the contract require something to be in writing, for example, or there is no consideration given” (T 42.48-50). In Gardener at [50]-[52], Gummow, Hayne and Keifel JJ discussed the doctrine of waiver in the following terms:

69. [170]

    As their Honours cautioned at [50], the doctrine of waiver is not to be seen as a cloak which “covers a multitude of sins”, or as a “substitute for thought”. Nevertheless, as the defendant submitted, their Honours continued at [52] to acknowledge that waiver can describe a modification to a contract without the formalities required for variation. However, the two cases to which the judgment refers by way of example, Bacon v Purcell (1916) 22 CLR 307 and Embrey v Earp (1890) 6 WN (NSW) 130, did not involve contracts with a variations clause worded similarly to cl 13 in this case, or warranties under the Home Building Act.

70. [171]

    In light of the express requirement for written variation outlined in cl 13, it is my view that the defendants have failed to demonstrate something more than that the Appeal Panel was arguably wrong in failing to find that the plaintiff waived her entitlement to claim for breach.

71. [172]

    For the reasons given in relation to grounds 1 and 2, the first defendant submitted that the Appeal Panel erred in concluding that CPD Holdings had breached the statutory warranty in s 18B(1)(a) of the Home Building Act because it did not build the bathrooms with 900 x 900 mm shower screens.

72. [173]

    The plaintiff submitted that the Home Building Act contains a number of warranties which are, by statute, incorporated into every contract for residential building works. Pursuant to s 18(1)(b) of the Home Building Act, the builder is statute bound to build in accordance with the plans and specifications in the contract. These statutory warranties also appear at cl 9 of the contract for the works.

73. [174]

    The plaintiff argued that any aspect of the plans or specifications could have been changed at any time after the contract was entered into, but only subject to an agreed variation in accordance with cl 13 of the contract.

74. [175]

    The plaintiff argued that in light of the circumstances, the Appeal Panel was correct in finding that the builder breached statutory warranties. The homeowner has set out what she says should be the remedy in her case. In short, and in accordance with the principles in Bellgrove v Eldgridge (1954) 90 CLR 613, she argued that she is entitled to have the work conform with the contract specifications, provided the rectification work is both necessary under the contract, and reasonable.

75. [176]

    As to whether the works are necessary under the contract, the plaintiff argued as 900 x 900 screens are clearly stipulated in the contract, they must be installed pursuant to the statutory warranties. As to whether rectifying the shower size is reasonable, the plaintiff referred to Tabcorp Holdings Ptd Ltd v Bowen Investments Pty Ltd [2009] HCA 8 (“Tabcorp”). In Tabcorp, the High Court discussed reasonableness in reference to Bellgrove v Eldridge as follows:

76. [177]

    The plaintiff argued that in this case, it is not unreasonable that the homeowner be allowed to have the showers constructed in accordance with the contract, particularly as not to do so would reduce the internal space of each of the showers by 11%.

77. [178]

    Section 18B of the Home Building Act relevantly states:

78. [179]

    Section 7 of the Home Building Act relevantly states:

79. [180]

    As of 30 June 2014, the time of formation of the contract in these proceedings, Sch 2 of the Home Building Regulation 2004 relevantly stated:

80. [181]

    Finally, s 10 of the Home Building Act sets out the consequences to a person who fails to comply with the requirements outlined above as follows:

81. [182]

    In Wright, the Court of Appeal extensively considered the effect of the Home Building Act on the rights and obligations of the builder and owner where the parties failed to reduce a variation to writing as required under the contract.

82. [183]

    In Wright at [4]-[8], Giles JA stated:

83. [184]

    In Wright at [43]-[44], [48]-[49], Basten JA considered the issue in more detail:

84. [185]

    By this reasoning, counsel for the defendant argued that the Home Building Act prevents a builder from suing upon a contract that is not in writing, but does not prevent a builder from defending him or herself by reference to something that had been verbally agreed (T 43.44-47).

85. [186]

    When I considered the defendant’s first ground of appeal, I acknowledged that it is unclear whether cl 13 in these proceedings has the same effect on the rights and obligations of the parties as the differently-worded variations clause in Wright. As noted above in Wright at [49], it is difficult to accept a construction of the Home Building Act such that the defendant would be liable for damages for breach of warranty if it complied with a verbal agreement to vary the plans and specifications, but also for damages for breach of contract if it did not. As the Court of Appeal in Wright made clear, that is not the effect of the statutory warranties in the Home Building Act. However, the contract in Wright contained a written variations clause which the Court did not consider to outline an exclusive regime for variations. Clause 13 in these proceedings is clear. It states that the builder “must” provide a written variation which “must” be signed “to constitute acceptance”. In light of this provision, it is not clear that the comments reproduced above in Wright apply equally in the circumstances of this case. As such, it is my view that the defendants have failed to demonstrate that the Appeal Panel was more than arguably wrong in finding that the defendant breached the statutory warranties in the Home Building Act in relation to the size of the shower screen.

86. [187]

    Once the Appeal Panel had found that CPD Holdings breached the statutory warranty in s 18B(1)(a) of the Home Building Act, the parties were ordered to provide further written submissions on the appropriate remedy, if any, flowing from that finding. CPD Holdings relied on the factual findings of the Tribunal to submit that what occurred during the performance of the works was Ms Petropoulos acting in a manner inconsistent with any right to later claim a remedy in reliance upon a 900 x 900 mm shower specification.

87. [188]

    The defendant submitted that this was similar to the position that the law will not allow a person to recover damages for what she or he has caused: see SMK Cabinets v Hili Modern Electronics Pty Ltd [1984] CR 391 (“SMK Cabinets”) at 395. So, for example, in the context of a claim under a liquidated damages clause in a building contract, the principal may not rely on the clause in the face of delay caused by its own acts or omissions: see SMK Cabinets at 395. The Appeal Panel failed to address that aspect of CPD Holdings’ submissions.

88. [189]

    The Appeal Panel held that the doctrine of waiver could not apply because Ms Petropoulos did not have a right to a remedy for breach of statutory warranty under s 48O of the Home Building Act. It did so in the context of saying that CPD Holdings had identified the right said to be waived as the right to damages. CPD Holdings had in fact variously identified the right as both the right to the remedy and the right to claim the remedy.

89. [190]

    The defendant submitted that deciding this contention on this ground involved a denial in procedural fairness. The Appeal Panel did not inform the parties of the point upon which it proposed to dispose of CPD Holdings’ contention. It had not been raised by Ms Petropoulos and CPD Holdings had no opportunity to address it. A court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue: see Autodesk Inc v Dayson (No 2) (1993) 176 CLR 300 at 308, per Brennan J. In International Finance Trust Company Ltd v New South Wales Crime Commission (2009) 240 CLR 319, Heydon J said at [146] that a court may not decide a case on a point not raised by one of the parties or by the court for the consideration of the parties. His Honour cited both Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 (at [132]-[133]) and Friend v Brooker (2009) 239 CLR 129 (at [114]-[118]) in support of this proposition.

90. [191]

    Although the Appeal Panel is not a court, it is nevertheless bound to afford procedural fairness to the parties. There will be a denial of a fair trial if a party is deprived of an opportunity to deal with a material issue that is resolved adversely to that party: see Amaca Pty Ltd v Dougan [2011] NSWCA 169 at [62], per Sackville AJA with Giles and McColl JJA agreeing. It is a general principle that, although the basis on which the parties conduct a trial does not bind the judge, if the judge contemplates determining the case on a different basis he or she must inform the parties of this prospect so that they have the opportunity to address any new or changed issues that may arise. A failure to inform the parties will ordinarily result in a denial of procedural fairness: see Seltsam Pty Ltd v Ghaleb [2005] NSWCA 208 at [78]-[79] per Ipp JA with Mason P agreeing.

91. [192]

    The defendant further submitted that the Appeal Panel’s reasons disclose a substantive error for the following reasons. Firstly, the Appeal Panel treated waiver as a doctrine applying only in relation to rights or privileges. The defendant argued that the law doesn’t support such a restrictive understanding of the doctrine. For example, the statement in Craine, endorsed by the High Court in Expense Reduction Analysts, referred to the adoption of inconsistent “positions”. Similarly, Gummow, Hayne and Keifel JJ did not confine their discussion of waiver in Agricultural and Rural Finance as concerned only with “rights”. The defendant argued that there is no principled basis on which the Appeal Panel concluded that waiver is confined to rights.

92. [193]

    Secondly, the defendant submitted that there was a “right” in issue in these proceedings. It was a right to claim a remedy.

93. [194]

    Thirdly, the defendant submitted that the Appeal Panel erred in reasoning to the effect that, because the grant of power under s 48O of the Home Building Act affords a remedial discretion to the Tribunal, it follows that a party to a residential building contract cannot waive remedial rights which he, she or it would otherwise have in connection with that contract. The nature of the powers given to the Tribunal in the exercise of its jurisdiction is a matter quite separate from the rights and entitlements of parties to a contract.

94. [195]

    Section 18B of the Home Building Act provides that warranties by the holder of a contractor license, or a person required to hold a contractor license before entering into a contract, are implied in every contract to do residential building work. The Appeal Panel found that CPD Holdings breached one of those implied warranties. That is not a finding of contravention of statute; it is a finding of a breach of contract.

95. [196]

    The defendant submitted that a party to a contract has an entitlement or right to sue for a breach of contract. The cause of action is complete upon breach. The person who has such a cause of action has the right to claim a remedy by action against the wrongdoer. The relevant right is identifiable before action has ever been taken and is independent of character of any judicial or other powers as may be exercised if action is taken. In this case, it was waived prospectively, before the cause of action had come into existence.

96. [197]

    If the person claims to have suffered loss and damage caused by the breach of contract, then the claimed remedy may be substantial damages. The common law principles governing assessment of damages for breach of contract apply to claims founded upon breach of a warranty implied by s 18B of the Home Building Act. So much is demonstrated by the fact that, for example, authorities such as Robinson v Harman (1848) 1 Exch 850 and Bellgrove v Eldridge are applied in the context of claims for breach of an implied warranty.

97. [198]

    If the person obtains a judgment, the cause of action, including the claim to a remedy, merges in the judgment. This also demonstrates that the claim to a remedy and the remedy itself are discrete concepts.

98. [199]

    The bringing of proceedings upon a breach of the implied warranty was regulated by s 18E of the Home Building Act, which deals with the time in which such proceedings must be commenced.

99. [200]

    Section 48K(1) of the Home Building Act invested the Tribunal with jurisdiction to hear and determine any “building claim” brought before it in accordance with Part 3A of the Home Building Act, in which the amount claimed did not exceed $500,000. A building claim within the meaning of the Home Building Act relevantly includes a claim for the payment of a specified sum of money that arises from a supply of building services under s 48A(1). It is a “claim” that is the subject matter of the Tribunal’s jurisdiction. The grant of jurisdiction was qualified by a number of succeeding subsections of s 48K, which included that the Tribunal did not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim was lodged was after the end of the period within which the proceedings for a breach of the statutory warranty must be commenced as provided by s 18E: see s 48K(7).

100. [201]

     In the exercise of its jurisdiction under s 48K, the Tribunal was authorised to exercise the powers conferred by s 48O. Under that provision, the Tribunal is empowered to make one or more of several kinds of orders as it considers appropriate. These include both work orders and orders that a party pay money to another party or to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person. These powers are exercisable in relation to the whole range of common law and statutory claims answering the description of a building claim within the Tribunal’s jurisdiction.

101. [202]

     There is no doubt that s 48O of the Home Building Act provides the Tribunal with remedial discretion in determining a building claim, however, that does not mean that the claimant is not invoking a right by making a building claim in the Tribunal. The Appeal Panel’s error may be illustrated in the following way: as mentioned, the Tribunal does not have jurisdiction in a building claim where the amounts claimed exceed $500,000. Such claims will not therefore be determined by an exercise of any power or discretion under s 48O of the Home Building Act. If the Appeal Panel’s reasoning were correct, the person with the claim exceeding $500,000 may have a right which can be waived, but a person with a building claim of less than $500,000 cannot. This cannot be, and is not, correct.

102. [203]

     The Appeal Panel erred in concluding that CPD Holdings’ waiver contention could not succeed because of s 48O of the Home Building Act.

103. [204]

     Finally, the defendant submitted that there had been a waiver by Ms Petropoulos. On the Tribunal’s factual findings, during the performance of the work, Ms Petropoulos informally agreed to or approved of the supply and installation of showers of 850 x 850 mm, a size which was smaller than provided for in the specification. CPD Holdings did what Ms Petropoulos agreed it should do, which was to perform the work on that basis. It obtained and paid for custom screens of 850 x 850 mm and constructed the bathrooms for showers of that dimension. Ms Petropoulos then made a claim in the Tribunal complaining about that work.

104. [205]

     The defendant argued that if there was a contractual promise by CPD Holdings to install 900 x 900 mm shower screens in the bathrooms, then what occurred after the contract was made is best described as Ms Petropoulos not insisting upon a term of the contract which was to her sole benefit. What occurred during the performance of the works was that Ms Petropoulos acted in a manner inconsistent with any right to later claim against CPD Holdings in reliance upon the 900 x 900 mm shower specification.

105. [206]

     The defendant argued that to allow Ms Petropoulos a remedy on facts as found in this case would work a stark injustice, for the same reasons the law does not allow a person to recover damages for what he or she herself has caused: see SMK Cabinets. The Appeal Panel should have found that Ms Petropoulos had waived any right to claim a remedy for breach of the statutory warranty implied into the contract and founded upon the specification of 900 x 900 mm shower screens.

106. [207]

     In Petropoulos (No 2), the Appeal Panel stated at [5]-[7]:

107. [208]

     At [7], the Appeal Panel stated that because the doctrine of waiver only applies to rights and privileges, and s 48O of the Home Building Act does not grant a right to a remedy for breach of a statutory warranty, the doctrine of waiver does not apply in this case. The Appeal Panel’s logic is flawed. Although s 48O empowers the Tribunal with the discretion to make various orders, it does not dictate whether parties to a contract have waived their rights and entitlements such that they are not entitled to a remedy for breach.

108. [209]

     Be that as it may, it is my view that the Court should not intervene to disturb the Appeal Panel’s decision with regards to this ground of appeal. For the reasons I gave in relation to the defendant’s second ground, I came to the view that the defendants had failed to demonstrate something more than that the that the Appeal Panel was arguably wrong in failing to find that the plaintiff waived her right to claim for breach. The same can be said of her right to claim a remedy.

109. [210]

     The defendant submitted that this ground identifies a further and alternative reason why Ms Petropoulos should not have received any remedy for reconfiguration of the bathrooms with 900 x 900 mm showers. This ground assumes that CPD Holdings is found to have breached the contract by not installing showers with these dimensions. The question in a case such as the present is whether the reconfiguration of the bathrooms with 900 x 900 mm showers was a reasonable course to adopt in the circumstances: see Bellgrove v Eldridge.

110. [211]

     The defendant argued that it was not reasonable for the following reasons. Firstly, on the Tribunal’s factual findings, the consequence of having 900 x 900 mm shower screens in the bathrooms would be an uncomfortably narrow passage through to the toilets, thereby detracting from the bathrooms’ fitness for purpose. There would be a risk that the works would not satisfy the warranty as to their fitness for purpose. On the factual findings of the Tribunal, the homeowner would be required to turn sideways to access the toilet. The defendant argued that such a configuration would clearly not be reasonable.

111. [212]

     The defendant made the same submission to the Appeal Panel, but it was not accepted, seemingly because Ms Petropoulos had not submitted that an increase in the size of the shower recess would make the bathrooms unfit for purpose. The defendant submitted that that reasoning is legally erroneous. Whether or not Ms Petropoulos had made any such submission is irrelevant. It is clear from the statement of principle in Bellgrove v Eldridge that the test of reasonableness is an objective one. The Tribunal made a finding of fact about the consequence of having 900 x 900 mm shower screens. The question for the Appeal Panel was whether that fact, in combination of others, made it objectively unreasonable to make an order which would bring about that consequence.

112. [213]

     Secondly, the conclusions of the Tribunal indicated that it accepted that the existing shower areas were 850 x 850 mm. The Tribunal preferred the evidence of CPD Holdings, which was that during the performance of the works, Ms Petropoulos agreed to make the showers the same or roughly the same as before. It was then found that this amounted to agreement during the contract that CPD Holdings would install 850 x 850 mm showers in the bathrooms. Further, the expert called by CPD Holdings, Mr Gray, also concluded that the existing shower areas were 850 x 850 mm. The Tribunal accepted his evidence both generally and in relation to the showers.

113. [214]

     Hence, the existing shower areas were the same 850 x 850 mm size as CPD Holdings was installing with the informal agreement or approval of Ms Petropoulos. There was nothing in the evidence to suggest that this is an impractically small shower area. Mr Gray, whose evidence was accepted, gave evidence that 850 x 850 mm is a normal and comfortable size for a shower enclosure.

114. [215]

     Materially the same submission was made to the Appeal Panel. The Appeal Panel treated the submission as a statement of CPD Holdings’ opinion about the adequacy of the size of the existing shower area and dismissed that opinion as irrelevant. That treatment of that submission was legally erroneous. As is apparent from the restatement of the submission above, it was founded upon expert opinion evidence given by the expert whose opinion was accepted both generally and in relation to the showers. In effect, the Appeal Panel failed to address the submission that was put to it.

115. [216]

     Nor is this the question of the practicability of showers of size 850 x 850 mm irrelevant to the question of whether the proposed rectification is a reasonable course to adopt. The Appeal Panel erred in law in dismissing this as a consideration, as may be demonstrated by authority. In Ruxley Electronics & Construction Ltd v Forsyth [1996] AC 344 (“Ruxley”), under the contract the swimming pool was to have a maximum depth of seven feet, six inches. After the work was completed, the maximum depth was found to be six feet, nine inches. There was no adverse effect on the safety, utility or aesthetic quality of the pool. That is, the pool as constructed was “perfectly serviceable”. This was a relevant consideration as to whether rectification to achieve the specified depth would be reasonable.

116. [217]

     The judgment in the leading case of Bellgrove v Eldridge also demonstrates why the Appeal Panel erred in treating the practicality of showers of size 850 x 850 mm as irrelevant. The well-known example given by the Court at 618 was of the construction of a home with “first quality” bricks when the contract had provided for second-hand bricks. On the question of whether it would be reasonable to demolish the home and rebuild it with second-hand bricks, it was highly relevant that it had in fact been constructed with first quality bricks. It is, with respect, impossible to see how the assessment of reasonableness can be made without regard to the qualities and characteristics of what has in fact been constructed.

117. [218]

     For these reasons, the defendant submitted that installing 900 x 900 mm showers would objectively result in an overall loss of amenity and detract from the bathrooms’ fitness for purpose, thereby diminishing, or risking a diminution of, the value of the property. Materially the same submission was made to the Appeal Panel, which it failed to address. That may have been a consequence of its erroneous rejection of the submission upon which it was found, discussed above.

118. [219]

     Thirdly, the defendant argued that although it is true that the High Court in Tabcorp Holdings at [17] stated that the test of unreasonableness is only to be satisfied in fairly exceptional circumstances, the circumstances of this case answer that description.

119. [220]

     Moreover, a remedy based on reconfiguration of the bathrooms would have CPD Holdings either undo, or compensate Ms Petropoulos for undoing, work which, on the factual findings, Ms Petropoulos informally agreed to or approved of CPD Holdings doing following a specific discussion about the matter. The Appeal Panel referred to this matter and said that there was a factual dispute about what had occurred. There had been, but the dispute had been resolved in CPD Holdings’ favour by the Tribunal’s factual findings referred to above. The Appeal Panel erred in law by treating this as if it remained in dispute. In circumstances where there was no challenge to those factual findings, the Appeal Panel was obliged to determine the appeal by reference to the facts as found by the Tribunal.

120. [221]

     The Appeal Panel also stated that the fact of any oral (or informal) agreement would be irrelevant to the question of whether it is reasonable for a party to seek to have work undone. The Appeal Panel therefore erred in law in proceeding as if the matter could be excluded from consideration. As submitted, the qualities and characteristics of what has in fact been constructed are not irrelevant to the question and neither, as a matter of principle, is the objective reason why it has been so constructed.

121. [222]

     It was also submitted to the Appeal Panel that, in making its determination on the question of remedy, the Appeal Panel was required to be satisfied that the orders would be fair and equitable to all parties to the claim: see the Fair Trading Act 1987 (NSW) at s 79U. It was submitted that, for the reasons stated, it would be neither fair nor equitable for a remedy to be fixed by reference to undoing the work which Ms Petropoulos informally agreed or approved to be done with regard to showers of 850 x 850 mm, and then installing showers of 900 x 900 mm.

122. [223]

     The Appeal Panel erred in law in excluding the fact that Ms Petropoulos’ informal agreement or approval from its consideration of what order would be fair and equitable as between Ms Petropoulos and CPD Holdings.

123. [224]

     To use the language referred to by the High Court in Tabcorp Holdings at [17], this was a case which fairly answers the description of a party “merely using a technical breach to secure an uncovenanted profit”. That is a situation in which the High Court considered that the test of unreasonableness would apply.

124. [225]

     For the reasons submitted above, the Appeal Panel should have found that it would not be a reasonable course to adopt in the circumstances for bathrooms to be reconfigured with 900 x 900 mm showers. It would have followed from that finding that any remedy was not to be determined by reference to such reconfiguration. If there was to be a remedy, the proper result on the evidence would have been an award of nominal damages to reflect the technical breach of contract and the fact that, on the findings of the Tribunal, having 900 x 900 mm showers would almost certainly result in a loss of amenity and, perhaps, value. The current conventional amount for nominal damages is $100: see State of New South Wales v Stevens [2012] NSWCA 415 at [37]. It should be noted that recovery of, in effect, nominal damages was the result in Ruxley.

125. [226]

     The defendant argued that if it had constructed the bathrooms with the 900 x 900 mm shower screens, it would have rendered the bathrooms “not fit for purpose”. The plaintiff argued that even if this were the case, which it denies, a homeowner can still insist on strict compliance with the terms of a contract. If the builder had concerns about complying with the contractual terms, it needed only issue a notice under s 18F of the Home Building Act to shield itself from any complaint. No notice under s 18F was ever given to the plaintiff.

126. [227]

     Additionally, the plaintiff noted that when she pointed out that the shower enclosures would be too small, the defendant said:

127. [228]

     The defendant made no mention of screens this dimension rendering the bathrooms unfit for purpose.

128. [229]

     As reproduced earlier, 48MA of the Home Building Act states that rectification is the preferred outcome in proceedings where the builder’s work is found to be defective. The defendant submitted that despite this preference, rectification is unreasonable for several reasons.

129. [230]

     The first is that the order will require the builder to construct a shower which renders the surrounding space unfit for purpose. In Petropoulos (No 2) at [34], Appeal Panel addressed the defendant’s submissions as to fitness for purpose as follows:

130. [231]

     This statement does not properly address the defendant’s submission. Whether the increase in size of the showers would render the bathrooms unfit for purpose, such that the remedy is unreasonable, is an objective determination not dictated by the submissions of the plaintiff. However, the fact that the increased shower size might affect the functionality of the surrounding bathroom is also not determinative of the reasonableness of that course, especially where s 48MA states that rectification is to be preferred.

131. [232]

     The defendant further argued that in making its determination, the Appeal Panel failed to properly consider the expert evidence of Mr Gray that an 850 x 850 mm shower was “a normal and comfortable size for a shower enclosure”. Once again, although Mr Gray’s evidence is not “irrelevant” as the Appeal Panel stated at [36], neither is it determinative of the reasonableness of an order for rectification of the works.

132. [233]

     In Bellgrove v Eldridge at 606, Dixon CJ, Webb and Taylor JJ addressed the circumstances in which damages for rectification of defective works are an appropriate remedy as follows:

133. [234]

     In Tabcorp Holdings at [17], the Court of Appeal held that the test for reasonableness outlined in Bellgrove v Eldridge:

134. [235]

     In relation to the above passage, the defendant submitted that when assessing the “reasonableness” of an order for rectification, the Appeal Panel failed to consider the plaintiff’s conduct. The defendant argued that by agreeing to the smaller shower screens and then suing for breach of a statutory warranty, the plaintiff sought to exploit a technical breach to secure an uncovenanted profit. However, in this case, the plaintiff has not been awarded damages for the cost of rectification, but rather a work order securing its completion (see Ruxley, where the Court at AC 354–5 was not satisfied that the plaintiff would actually reconstruct the works if awarded their cost). Moreover, the Appeal Panel had found that the plaintiff was entitled to insist upon compliance with the statutory warranty that the defendant build to the contract’s written specifications.

135. [236]

     In these circumstances and in light of s 48MA of the Home Building Act, it is my view that the Appeal Panel’s decision that a rectification order is reasonable is not more than arguably wrong.

136. [237]

     It was common ground that the works were substantially complete by 25 June 2014. It was also common ground that the remaining work was the installation of shower screens in both bathrooms. Although it seems Ms Petropoulos may have sought to resile from these facts in final submissions, the Tribunal made a factual finding that CPD Holdings had purchased the shower screens and that all that remained for the completion of the works was their installation. Those findings were not challenged on appeal.

137. [238]

     The Tribunal at first instance found that Ms Petropoulos did not allow CPD Holdings reasonable access to complete the works and thereby repudiated the contract. These findings were not disturbed by the Appeal Panel. It was in consequence of these findings that Ms Petropoulos was ordered to pay CPD Holdings $952.20. CPD Holdings had claimed loss of bargain damages of $4,761.00, being the unpaid balance of the contract price of $4,980.00 less a small credit of $219.00. The Tribunal reasoned that CPD Holdings should only have its profit on the amount claimed, which was calculated at 20% of that amount.

138. [239]

     It was not a case in which the work order made by the Appeal Panel would, when performed, bring about a contractual “completion” discharging CPD Holdings from further contractual performance. Rather, CPD Holdings had been discharged when it accepted Ms Petropoulos’ repudiation and termination of the contract. However, the order would have the practical effect of bringing about the completion of the work that had been specified in the contract and for which CPD Holdings had not been fully paid.

139. [240]

     In those circumstances, where the Appeal Panel was making a work order in favour of Ms Petropoulos, then the order should have been conditioned upon Ms Petropoulos paying for the works she had already received under the contract and paying for any further works she had received because of the Appeal Panel’s orders. If there had been a compensation order that would have been appropriately brought to account as part of the damages calculation and the position should be no different merely because the Appeal Panel exercised its discretion to make a work order instead of a compensation order.

140. [241]

     The defendant argued that this was a failure by the Appeal Panel to take into account a material consideration in making an order under s 48O of the Home Building Act: see House v The King (1936) 55 CLR 499 at 504-505.

141. [242]

     In Petropoulos (No 1), the Appeal Panel ordered the parties to provide further written submissions on the appropriate remedies, if any, in relation to CPD Holdings’ breach of the statutory warranty in s 18B(1)(a) of the Home Building Act in relation to the shower screen.

142. [243]

     The defendants filed their further submissions on appeal on 18 June 2018 (CB5, Tab 22). The bulk of those submissions reiterated the defendants’ position that Ms Petropoulos was not entitled to a remedy of any kind [3], for the same reasons outlined in these proceedings.

143. [244]

     At [28]-[33] of its submissions on appeal, the defendants submitted:

144. [245]

     Nowhere in their further submissions on appeal do the defendants state that a work order, if ordered, should be conditioned upon Ms Petropoulos paying for the works received under the contract or for the rectification works. The defendants merely submitted that if rectification were the appropriate remedy, then it should be ordered in accordance with s 48MA of the Home Building Act. That is, in effect, the nature of the work order which the Appeal Panel has made.

145. [246]

     In these circumstances, where the defendants failed to submit that an order for rectification be conditioned on the plaintiff paying for the works, it is my view that the Appeal Panel’s decision in relation to this ground of review is not more than arguably wrong.

146. [247]

     Overall, it is my view that the Court should not intervene in the exercise of its discretion for several reasons. In addition to my view that the Appeal Panel is not more than arguably wrong, I am not satisfied that this ground of appeal involves a matter of principle or a question of public importance. Moreover, as above in relation to the plaintiff’s grounds of appeal, I consider that the interests of finality in litigation have been swallowed in this case, where the costs of lengthy appeals have long since swamped the sum involved in the dispute. For these reasons and in the exercise of my discretion, I refuse leave to appeal in relation to the cross claim.

147. [248]

     If I am wrong, I would not remit this matter to NCAT on the basis that the costs already expended by both parties far outweigh the amount in dispute.

Costs awarded in the Tribunal

1. [249]

   The final issue is whether to grant leave to appeal concerning the 13 March 2019 decision of the Appeal Panel in relation to costs (Petropoulos v CPD Holdings Pty Ltd [2019] NSWCATAP 53). The Appeal Panel made an order that any application for costs was to be reconsidered and re-determined by the Tribunal as originally constituted, if that Member is available, either with or without further evidence. The Appeal Panel dismissed both the homeowner’s application for costs of the costs appeal, and the builder’s application for the costs of the homeowner’s withdrawn stay application. While the parties in these proceedings made lengthy submissions on the Appeal Panel’s costs order, I have refused leave on all grounds in both the plaintiff’s appeal and the defendants’ cross appeal. The costs order of the Appeal Panel in its 13 March 2019 decision is therefore not one which this Court would exercise its discretion to disturb.

Costs of these proceedings

1. [250]

   The costs of the applications for leave to appeal in these proceedings are discretionary. As neither party has been successful, the appropriate order for costs is that each party is to pay his/their own costs.