Robinson v Construction & Design Australia Pty Ltd

1. [1]

   PAYNE JA: I agree with Griffiths AJA.

2. [2]

   MCHUGH JA: I agree with Griffiths AJA.

3. [3]

   GRIFFITHS AJA: This appeal is from orders and a judgment of Stevenson J in Construction & Design Australia Pty Ltd v Robinson (No 2) [2024] NSWSC 376 (primary judgment or PJ), as well as consequential orders made on 2 May 2024 regarding costs (see Construction & Design Australia Pty Ltd v Robinson (No 3) [2024] NSWSC 504). It concerns a dispute between, on the one hand, Ms Nerida Robinson and Mr Mark Bowmer (Owners) and, on the other hand, Construction & Design Australia Pty Ltd (Builder). The directors of the Builder are two brothers, Messrs Daniel and Gerard Turnbull (without disrespect, I shall refer to them by their given names). The Owners purchased a vacant block in Kiama in September 2017. In July 2018 the Builder was approached to construct a residential dwelling and other amenities on the block. On 19 February 2019 the parties entered into an HIA NSW Residential Building Contract for Works on a Cost-Plus Basis (Contract). The Contract was terminated on 6 February 2020, after works had commenced but prior to completion of the build (PJ[1]-[12]).

4. [4]

   By statement of claim the Builder sought damages in the total amount of $432,576.96, comprised of outstanding progress payments payable pursuant to the Contract, loss of profit and interest. By cross-claim the Owners alleged that the Builder had engaged in misleading or deceptive conduct contrary to the Australian Consumer Law (ACL), and sought damages on a no transaction basis. The primary judge held that the Builder was entitled to recover the bulk of the sum due under the Contract and that the Owners had failed to make good their cross-claim.

5. [5]

   The primary controversy below on the cross-claim was whether the Owners could establish that the Builder made various representations to the Owners regarding price and that these representations induced the Owners to enter into the Contract.

6. [6]

   The Owners raise the following two grounds of appeal (both of which relate to their unsuccessful cross-claim) in their amended notice of appeal filed 24 July 2024:

   1. (1)

      Ground 1: Stevenson J erred by using emails sent by Daniel on 18 September 2019 (which attached a lengthy letter) and 20 September 2019 (Emails) “as evidence of the truth of matters alleged in them”. This error is said to be contrary to the parties’ agreement in MFI-4 that the Emails (along with several other specified documents) were to “be treated as evidence of the contents of the documents but not the truth of the matters alleged in the documents”.

   2. (2)

      Ground 2: Stevenson J erred in finding that the Owners suffered no loss by reason of the misleading or deceptive conduct claim. This was for two reasons:

7. [7]

   The Owners contend that if Ground 1 is made out, a new trial should be ordered.

8. [8]

   The Builder has filed a notice of contention, by which it seeks an adverse credit finding against Ms Robinson.

The primary judgment summarised

1. [9]

   The cross-claim below alleged that the Builder had made three representations to the Owners that amounted to misleading or deceptive conduct under s 18 of the ACL. The representations were pleaded as follows:

   1. (1)

      The $550,000 Representation: The Builder and Daniel represented that the cost of building would be about, and not significantly more than, $550,000. This representation was alleged to have been made at a meeting with the Owners on or around 30 August 2018.

   2. (2)

      The Spreadsheet Representations: The Builder and Gerard represented that itemised construction costs would not exceed the estimates set out in a spreadsheet prepared for the Owners. These representations were alleged to have been made in writing by an email dated 24 January 2019 to the Owners from Gerard.

   3. (3)

      The $750,000 Representations: The Builder represented to the Owners that the cost to build the dwelling would either fall within the Owners’ budget of $750,000 or would not be substantially more than that budget. This representation was alleged to have been made by any one or more of the following events: (a) by making the $550,000 Representation and Spreadsheet Representations; (b) by failing to disclose that the cost would exceed the Owners’ budget (which was referred to as “Silence Conduct”); (c) by inserting the figure of $750,000 next to “Total Estimate Funds” in the Contract on 15 February 2019; (d) by providing a certificate of insurance on 20 February 2019 which nominated a contract amount of $750,000; and (e) by an email dated 1 February 2019, which included an attachment (“long service levy documentation”) stipulating that the estimated value of works was $750,000.

2. [10]

   His Honour summarised the relevant principles at PJ[247] (citing Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60) as follows:

3. [11]

   The Owners’ misleading or deceptive conduct case hinged on establishing that the alleged representations were in fact made, and that the representations induced their entry into the Contract. A dominant issue below was reconciling the various witness accounts of the events in the period prior to entry into the Contract (from July 2018 to 19 February 2019) and specifically meetings held on 24 July, 3 August, 30 August and 16 November 2018. The primary judge acknowledged that there was a “sharp divergence of recollection” between the parties and that their positions were irreconcilable (PJ[21]). Factual findings had to be made in circumstances where various oral conversations took place and no contemporaneous notes were in evidence.

4. [12]

   The primary judge generally preferred the evidence given by Daniel and Gerard to that of Ms Robinson and Mr Bowmer. His Honour acknowledged his caution in assessing the demeanour of the various witnesses during cross-examination. He said that he preferred the evidence given by Daniel and Gerard by reference to “objectively determined matters”, such as correspondence and the logic of events (PJ[24]). The primary judge ultimately found that none of the pleaded representations was made, with the exception that the long service levy documentation included a statement by the Builder that the “estimated value of work for the project was $750,000” (PJ[159]). His Honour concluded, however, that this did not induce the Owners to enter the Contract (PJ[163], [281]).

5. [13]

   I will elaborate on these matters later, including the use of the Emails by his Honour and whether that use was contrary to MFI-4.

6. [14]

   While the primary judge noted that it was strictly unnecessary to consider what loss flowed from the alleged misleading or deceptive conduct, he proceeded to do so at PJ[289]-[317]. These reasons are relevant to ground 2.

7. [15]

   In their cross-claim below, the Owners primarily ran a “no transaction” case, supplemented by an “alternative transaction” case. Thus, if the Builder had not made the representations alleged, the Owners claimed that they would:

   1. (1)

      not have entered into the Contract;

   2. (2)

      have entered into a fixed price contract with the Builder;

   3. (3)

      have entered into a fixed price contract with a different builder; or

   4. (4)

      have sold the property and purchased elsewhere.

8. [16]

   The primary judge found that there was no evidence that the Owners could have entered into a fixed price contract with the Builder or any other builder (PJ[294]). Further, no evidence was adduced showing that they could have purchased an existing house in Kiama (PJ[300]-[302]). The “alternative transaction” case was not made out.

9. [17]

   As to the “no transaction” case, the Owners submitted that, but for the alleged representations, they would not have entered the Contract and, as is the requirement for an award of damages under s 236 of the ACL, the relevant “prejudice or disadvantage suffered” (see Mills v Walsh [2022] NSWCA 255 at [109]-[110]) was “that they paid the Builder $550,000 and are liable to pay the Builder a further sum … the total disadvantage is thus in the order of $795,000” (PJ[309]).

10. [18]

    The parties were in dispute as to the proper measure of the countervailing benefit that the Owners received under the Contract. The Builder contended that the benefit was the value of the building works performed which the primary judge accepted was just under $800,000 (PJ[311]). Conversely, the Owners contended that the benefit was the extent to which the value of the property increased by reason of the works. When valuing the land with the unfinished building works as compared to the land without improvements, the benefit was said to be $160,000 (PJ[312]). If the Owners’ argument was accepted, the damages figure would be $635,000.

11. [19]

    Applying Mills v Walsh, the primary judge accepted the Builder’s argument and concluded that there was no loss. At PJ[315]-[316] his Honour reasoned as follows (emphasis in original):

The parties’ submissions summarised

1. [20]

   The Owners contend that his Honour erroneously used the Emails when making factual findings, and this led to the rejection of the Owners’ misleading or deceptive conduct case. This is said to be in error in circumstances where the parties had agreed in MFI-4 that the Emails (and other specified documents) were to “be treated as evidence of the contents of the documents but not the truth of the matters alleged in the documents”.

2. [21]

   The Owners claim that this produced unfairness as the trial would have been conducted differently if MFI-4 had not been accepted (for example, their counsel below did not challenge Daniel on the content of the Emails).

3. [22]

   The Owners’ complaint that the primary judge acted inconsistently with MFI-4 is directed to his Honour’s rejection of the pleaded $550,000 Representation and the $750,000 Representations. The complaint is not directed to the rejection of their Spreadsheet Representations case, presumably because his Honour’s reasons for rejecting that case at PJ[254]-[277] do not rely on any of the documents in MFI-4.

4. [23]

   The Builder submits that MFI-4 was not framed as a traditional hearsay exclusion. Instead the agreed evidentiary position permitted the primary judge to consider the “contents” of each specified document, including the Emails. The primary judge was entitled to draw inferences from the Emails by looking at their content in the context of the evidence at large. The primary judge used the contents of the Emails to corroborate and/or confirm evidence otherwise before the Court.

5. [24]

   The Builder alternatively submits that, if the primary judge did use the Emails in error, such error was not material. This was because, when making factual findings, the primary judge also relied on other evidence, considered the logic of events, and made a “multitude of careful and considered findings with limited, or on most occasions, no use of the Emails”.

6. [25]

   In their reply, the Owners contend that the use of the Emails for the purpose of corroboration and confirmation involves using them as evidence of the truth of the matters alleged therein, which is contrary to MFI-4.

7. [26]

   The Owners contend that, when assessing the ACL damages claim, his Honour erred by failing to consider damages under s 237 of the ACL and the effect of an order rendering the Contract void pursuant to s 243 (which remedies were pleaded). They claim that this is a significant error in light of intermediate appellate authority which holds that, for the purposes of s 237, entry into legal relations from which a person otherwise would have abstained amounts to loss or damage (Demagogue Pty Limited v Ramensky (1992) 39 FCR 31 at 32, 44 and 47; and Harvard Nominees Pty Limited v Tiller (2020) 282 FCR 530; [2020] FCAFC 229 at [40] and [76]-[77]).

8. [27]

   The Owners further contend that the passage relied on by the primary judge (at PJ[315]) in Mills v Walsh (being that at [140], citing ADC v White [2001] NSWCA 9 at [67]) was misconstrued. The Owners contend that the passage does not support the proposition that there are no circumstances in which benefit to a proprietor under a building contract can be assessed by reference to the enhancement of the capital value of the land. The Owners further submit that this case should be distinguished on the basis that “[the Owners] have run out of money” and the only benefit of the incomplete works to the Owners is the proceeds of the sale of the land.

9. [28]

   The Builder submits that, whilst the pleadings sought damages pursuant to s 237 and an order under s 243, this relief was not pursued at the final hearing and the Owners ought to be bound by the way the case was run below. The Builder points to several occasions when the Owners had an opportunity to agitate for such relief. The Builder further contends that, had this relief been sought below, “in both circumstances the appellants have received the benefit of building materials and services and, in doing justice between the parties, the Owners need to account for that benefit by paying the Builder the fair and reasonable value of those works” and that there is no reason why the benefit should be measured in a different way to the approach taken by the primary judge.

10. [29]

    As to the issue of the correct application of Mills v Walsh, the Builder submits that this Court has applied the principle in the same manner as the primary judge, even in circumstances where the aggrieved party could not afford to complete a project (citing Schrader v Broach [2024] NSWCA 14).

11. [30]

    The Builder contends that it was open to the primary judge to make an adverse credit finding against Ms Robinson, which his Honour did not do. With reference to the “natural limitations” of the appellate process, the Owners submit in response that no such adverse finding should be made on appeal.

(a) Ground 1

1. [31]

   In Doney v The Queen (1990) 171 CLR 207; [1990] HCA 51 at [7], the High Court described the essence of corroborative evidence as being that it “confirms”, “supports” or “strengthens” other evidence in the sense that it “renders [that] other evidence more probable”. In a criminal law context, corroborative evidence can be required either as a rule of law or practice. In all cases where there is a requirement of corroboration, the corroborative evidence must itself take the form of a separate item of admissible evidence (see JD Heydon, Cross on Evidence (14th Aust ed, 2024, LexisNexis) at [15.165]).

2. [32]

   The central issue is whether, in using the Emails to corroborate or confirm other evidence concerning whether or not the alleged representations were in fact made, the primary judge acted inconsistently with the parties’ agreement in MFI-4 that such documents were to be treated as evidence of the contents of those emails, but not as evidence of the truth of the matters set out therein.

3. [33]

   MFI-4 is a handwritten document apparently drafted by the Builder’s counsel below. It was provided to the Court on the fourth day of the hearing and after the witnesses had been cross-examined. Counsel for the Builder then told the Court that, although the Court had been taken to some parts of the documents the subject of MFI-4, “other than where there are [submissions] from the parties about the contents, they wouldn’t otherwise be taken as truth of their contents”.

4. [34]

   It should also be noted, as part of the context in which MFI-4 was produced, that on the morning of the first day of the trial the primary judge provided the parties with a document headed “preliminary rulings on objections”. It responded to some of the objections to the other party’s evidence. With respect to the Builder’s objections to the Owners’ evidence, his Honour’s preliminary rulings were as follows:

5. [35]

   As to the Owners’ objections to the Builder’s evidence, his Honour gave preliminary rulings, including as to various objections to Daniel’s affidavits dated 16 March 2022 and 23 November 2023.

6. [36]

   It is important to note that the terms of MFI-4 are expressed differently to his Honour’s preliminary rulings. A distinction is drawn in MFI-4 between evidence of “the contents of the documents” and “the truth of the matters alleged in the documents”. This is to be contrasted with the more orthodox distinction drawn in paragraph (b) of the preliminary rulings on the affidavit evidence (see at [35] above), between allowing “evidence that documents in that form were created” and not as “evidence of the truth” of their contents.

7. [37]

   Another point to note at the outset is that Daniel made clear during his cross-examination that the Emails were among the documents which he had used to refresh his memory when he prepared his affidavits.

8. [38]

   For the purpose of determining ground 1, and despite their length, it is desirable to set out the relevant parts of the Emails, together with the 16 September 2019 email to which they relate. (Mr Bowmer’s email dated 16 September 2019 was also included in MFI- 4).

9. [39]

   The 16 September 2019 email sent by Mr Bowmer to Daniel and Gerard was as follows (without alteration):

10. [40]

    On 18 September 2019, Gerard sent an email in response to the Owners, which read:

11. [41]

    The lengthy letter attached to that email (which I will treat as part of that email) was signed by Daniel and Gerard. Of particular relevance are the following passages, extracted by the primary judge at PJ[237] (without alteration):

12. [42]

    In the morning on 20 September 2019, Ms Robinson responded by email to the 18 September 2019 letter. Later that same day, Daniel responded by email by inserting comments into Ms Robinson’s email in red mark-up. That response is extracted below, with Daniel’s mark-ups in bold:

13. [43]

    For the following reasons, ground 1 should be rejected. I do not consider that the primary judge used the Emails in a way which was inconsistent with the agreed position recorded in MFI-4.

14. [44]

    His Honour described his general approach to fact finding at PJ[22]-[26]. Noting the contrasting evidence of the witnesses as to whether the alleged representations were made, his Honour correctly acknowledged at PJ[24] that contemporaneous documents are generally the most reliable source of evidence as to what has occurred. He added that reference should also be made to the logic of events as revealed by objectively determined matters, including the parties’ contemporaneous communications.

15. [45]

    The transcript confirms that the primary judge was well aware of the parties’ agreement in MFI-4. The terms of MFI-4 permitted consideration to be given to the “content” of each Email. I accept the Builder’s contention that this permitted the primary judge to rely, as he did, on:

16. [46]

    I shall now explain why the primary judge did not act inconsistently with MFI-4 in making findings regarding the four meetings which underpinned the Owners’ misleading or deceptive conduct case.

17. [47]

    The primary judge stated at PJ[52] that, although there was no dispute as to what was said at this meeting and nothing said there formed part of any of the pleaded representations, his Honour concluded at PJ[64] that it was “likely” that there were discussions as to whether “a house could be built for $750,000”, but it was “unlikely” that either Daniel or Gerard said that any particular house could be built on the property for $750,000 (at PJ[68]).

18. [48]

    None of these findings relies explicitly on the Emails.

19. [49]

    The primary judge’s key findings as to what was said at this meeting may be summarised as follows:

20. [50]

    The primary judge’s acceptance of Daniel’s evidence as to what was said at the 3 August 2018 meeting was relevant to his Honour’s rejection of the Owners’ “Silence Conduct” claim, which formed part of the basis of the $750,000 Representations (PJ[249]).

21. [51]

    The primary judge plainly had regard to the content of the Emails in making many of these findings, but I do not consider that the Emails were used as evidence as to the truth of the matters they contain. Rather, his Honour used the content of the Emails to corroborate or confirm the truth of other evidence before the Court regarding what was said at the 3 August meeting.

22. [52]

    Consideration was also given to an email sent by Ms Robinson on the same day as the meeting occurred, which his Honour described at PJ[90]-[91] as “likely to cast light on what was said” at the meeting.

23. [53]

    The primary judge made the following inferences and findings with respect to this email (none of which is challenged on the appeal):

24. [54]

    I accept the Builder’s submission that these findings of fact by the primary judge did not involve him accepting the truth of the contents of the 18 September 2019 email in a way which was contrary to MFI-4. It is notable that the primary judge was careful in his choice of language when describing that email as being a “reliable guide” and in providing “confirmation” of what both Gerard and Daniel had said in their affidavits (see PJ[89] and [241]). For this reason, I also reject the contention that his Honour erred in rejecting the Owners’ “Silence Conduct” claim.

25. [55]

    As noted above, the Owners alleged that it was at this meeting that Daniel said that the cost of the building would be around $550,000, which formed the basis for the $550,000 Representation. The primary judge was required to resolve the competing versions as to what was said at this meeting and, in particular, whether the figure of $550,000 given by Daniel related to the cost of the building as a whole or only to a part thereof, being the living area after the floor level had been built. His Honour’s approach was to:

26. [56]

    These steps in the analysis led to the primary judge’s finding at PJ[117] that Daniel’s reference to $550,000 was directed only to the main living area once the floor level was achieved. It is notable that, up to this point of the reasons for judgment, this finding did not rely at all on the Emails.

27. [57]

    Having made that finding at PJ[117], the primary judge then referred to other matters which were relevant to the probability as to what the figure of $550,000 was directed to. The first of those matters, which is unrelated to the Emails, was that on no occasion prior to 16 September 2019 did the Owners refer in any of their multiple emails to Daniel or Gerard having said anything about the proposed home costing $550,000.

28. [58]

    Secondly, that figure was mentioned by them for the first time in Mr Bowmer’s email dated 16 September 2019. His Honour noted at PJ[120] that, when that email was sent to the Builder, the relationship between the parties was beginning to deteriorate. It was in the context of Mr Bowmer’s claim in his 16 September 2019 email that he and his wife were told that “the house was simple to construct and could be built for around $550,000” that his Honour then said at PJ[121] that “in his lengthy and careful reply to [Mr Bowmer’s] 16 September 2019 email” Daniel had said that he had taken the communication “totally out of context” and gave an account regarding that figure which the primary judge viewed as consistent with Daniel’s evidence. Plainly, his Honour was referring to the 18 September 2019 email. The content of that email was used by the primary judge to corroborate or confirm the truth of Daniel’s affidavit and oral evidence (see at PJ[122]). In my view, that is not inconsistent with MFI-4.

29. [59]

    It is also notable that the primary judge proceeded to give additional reasons for preferring Daniel’s account that the figure of $550,000 related to the cost of the main living area once the floor level had been achieved. This included the fact that, in an email Ms Robinson sent to Daniel on 30 August 2018 (the day of the meeting), she made no reference to the alleged $550,000 Representation (PJ[125]); the terms of an email Mr Bowmer sent on 5 October 2018 (PJ[128]); the failure of Ms Robinson to make any mention of the alleged $550,000 representation in an email she sent dated 13 November 2018 (PJ[124]); nor did she make any mention of the alleged $550,000 Representation in her email dated 14 November 2018 (PJ[137]); and inconsistencies between Ms Robinson’s evidence during cross-examination and the terms of her email dated 14 November 2008 (PJ[139]-[140]).

30. [60]

    The contrasting evidence given by Daniel and Ms Robinson as to what was said at this meeting is summarised at PJ[142]-[143]. Daniel gave evidence that, at that meeting, Ms Robinson had made a comment to the effect that “when the time comes for us to go to the bank we will” (PJ[142]). Ms Robinson denied that this conversation had taken place.

31. [61]

    This conversation was relevant to the primary judge’s finding that the Owners did not rely on the long service levy document when choosing to enter into the Contract. The long service levy documentation formed part of the $750,000 Representations.

32. [62]

    The primary judge found that Daniel’s recollection of what was said at the meeting was consistent with:

33. [63]

    The primary judge did not use the Emails as evidence of the truth of the matters contained therein; rather, their contents were used to corroborate or confirm the truth of matters raised elsewhere in the written or oral evidence, particularly that of Daniel, and why his evidence on relevant matters, including his recollection of the events that occurred at the 16 November 2018 meeting, was preferred to that of the Owners. This use is not inconsistent with the limitations imposed by MFI-4. This is reflected in his Honour’s careful choice of language, including his reference at PJ[239] to part of the 20 September 2019 email being “a pointer” to the probability that Daniel’s evidence as to his recollection of what was said at the 16 November 2018 meeting was correct (see also at [54] above). For completeness, I also reject the contention that his Honour erred in finding that the Owners did not rely on the long service levy document.

34. [64]

    It is unnecessary to determine the alternative response raised by the Builder to ground 1.

35. [65]

    For all these reasons, ground 1 is rejected.

(b) Ground 2

1. [66]

   Ground 2 raises some difficult issues relating to the assessment of damages under the ACL and the primary judge’s reliance on Mills v Walsh.

2. [67]

   The rejection of ground 1 means that ground 2 does not strictly arise. Having regard to the complexity of the issues it raises I consider that those issues should await a case in which their resolution is essential.

(c) Notice of contention

1. [68]

   Having regard to the fact that the notice of appeal will be dismissed, it is unnecessary to address the notice of contention.

Conclusion

1. [69]

   For all these reasons, I propose that the amended notice of appeal filed 24 July 2024 be dismissed, with costs.