The question in this appeal is whether the appellant has established errors of law, or if not, should be granted leave to appeal as to other errors. For the reasons we set out below we conclude that the appeal be dismissed.
[2]
Background
The appellant, Access Housing Pty Ltd (the builder) entered into a "costs plus" contract with the respondents, Mr Christopher and Mrs Becky Rayfield (the homeowners) to construct a home on land owned by the homeowners at Lalor Park in New South Wales. The homeowners also entered into a contract with Country Kit Homes Pty Ltd, which supplied them with a "kit" home. The homeowners were dissatisfied with the work done, as set out below. They brought proceedings against the builder seeking relief amounting to approximately $316,000, and were successful in obtaining an order that the builder pay $167,926.14. They also brought proceedings against Country Kit Homes seeking the same ultimate amount. That proceeding was dismissed.
It is relevant to note that Country Kit Homes Pty Ltd and the builder were related corporations, who chose to be represented in the proceedings below by their common director, a Mr Klohn, whereas the homeowners chose to be represented by counsel, who also appeared on this appeal.
The builders appeal, as of right, on questions of law, and seek leave in relation to certain other questions. No notice of contention or cross-appeal has been brought in these proceedings by the homeowners, nor have they appealed from the dismissal of their proceedings against Country Kit Homes.
The Home Building Act 1989 (HB Act) provides by s 18E that proceedings for breach of a statutory warranty such as those set out in s 18B must be commenced within a specified period:- they were so commenced in this case.
The Tribunal obtained jurisdiction to decide the proceedings brought by the homeowners by reason of s 48K of the HB Act.
Having made findings on the evidence (to which we shall return), the Tribunal found certain defects which breached the statutory warranty in s 18B to carry out work in a proper and workman-like manner in accordance with the relevant plans and specifications, and determined that the builder was liable to compensate the homeowners for consequential loss.
The homeowners, who, as noted above, were legally represented, provided an expert report from a Mr Maglis in the form of a Scott Schedule identifying various defects.
The builder, by its director, Mr Kholn, who as noted above, also represented the builder company and its related corporation in the proceedings below, did not produce an expert report. Insofar as Mr Kholn sought to put forward his comments endorsed on the Scott Schedule produced by Mr Maglis as expert evidence to meet the expert evidence of Mr Maglis, the Tribunal rejected that evidence on the basis that it was not independent expert evidence compliant (as Mr Maglis' evidence was), with the NCAT Procedural Direction No 3 'Expert Witnesses' issued by this Tribunal's President.
The Tribunal also rejected evidence tendered by the homeowners by an independent person, a Scott Myers of Elite Additions, on the basis that he too had not complied with the Direction No 3 as his evidence was "at best, advocacy on the part of" the homeowners". That left the Maglis report as the only admitted expert witness report. Based upon that report the Tribunal:
1. Determined that the cost of demolition, as determined by Mr Maglis, was $14,194.83, and concluded "that is a reasonable cost for the demolition of the building works";
2. Found that the measure of damages suffered by the homeowners as a result of the breach of the statutory warranty (so that the dwelling was not reasonably fit for habitation) was the amount that had been paid by the homeowners to the builders under the contract, namely $50,126.31;
3. Found that the breach by the builder and the need for demolition of the works already done meant that the materials supplied by Kit Homes would be wasted and the measure of damages in that respect was the amount paid for the materials which was $103,595; and
4. The total amount of damages was arrived at by the addition of those three amounts, being $167,926.14.
Critical to the finding that the house was not fit for habitation and needed to be demolished were paragraphs 78, 79 and 80 of the reasons below, which stated as follows:
78 The applicants contend that it was Access' [the builder's] responsibility to arrange for inspections of the critical stages during construction so that an occupation certificate could ultimately be issued. Access' [the building manager's] site manager, Mr Darren Fleming, in his evidence…attests to arranging for the mandatory critical stage inspection of the footing. However, despite a letter adduced from the certifier confirming that an inspection took place, the certifier now contends that no such inspection took place. Again, the responsibility for arranging the inspections is clouded by the blending of responsibilities as to who was responsible for which part of the building works. It was the applicants who engaged the certifier, yet they relied on Access to arrange the inspection. Critical to the damages being sought is the answer to the question: "Are the works capable of retrospective inspection and certification issued?"
79 In the Maglis supplementary report, Mr Maglis responds to the question by the Applicant's solicitor Ken: "[What needs to be done to the property for it to be certified] be done now given that it is after the fact?" By stating that quote, it is possible to obtain certification by the PCA in relation to the concealed structural elements, however, this would require consultation with the Structural Design Engineer. The Engineer may undertake invasive assessments and load tests to determine structural adequacy and compliance with engineering specifications of these concealed structural elements.
80 The Tribunal relies on Mr Maglis as a qualified expert witness to inform it of the consequences of failure to provide inspection certificates at critical stages to the certifier. The Tribunal notes that there is no other more recent evidence after the Maglis supplementary report before the Tribunal from an expert engineer, to inform the Tribunal in relation to whether or not invasive tests could be carried out. In the absence of that evidence, the Tribunal can only rely on that evidence that the work without the structurally fit certification is defective and will not be provide [sic] a dwelling that is reasonably fit for habitation. On that basis, the defective certification causes the Tribunal to find that the only remedy is for the demolition of the building and rebuilding it.
There were, in the end, three types of challenge in the Notice of Appeal which are considered now.
[3]
Could the director give expert evidence?
The first ground of appeal is "the Tribunal erred in considering that a director of the appellant could not give expert evidence to the Tribunal".
Reference is made to paragraph 59 of the decision, which states:
Access did not elect to assist the Tribunal or its own case by engaging an expert witness to support their contentions in relation to the claim against it. It relies on its director's opinion in relation to the issues raised by the applicant's expert. The Tribunal notes that Access' director contends that he has many years of experience as a builder, however, he is not an expert for the purposes of giving expert evidence to the Tribunal.
It was then noted that Mr Kholn, the director in question, had written comments on the Scott Schedule provided in the Maglis report. Although it is briefly expressed, it seems clear that the Tribunal is finding that the builder did not comply with the President's guidelines as to expert evidence, that is to say, he had not subscribed to the experts' Code of Conduct. He had not properly set out his expertise and how his expertise was brought to bear in his evidence and the reasons for his comments on the Scott Schedule. It was not a finding that a director could not give expert evidence, so the cited complaint in this ground is not made out and, in any event, it is not established that this raises a question of law as opposed to a challenge on a finding of fact.
[4]
Grounds 5A and 5B
The builder alleged that the Tribunal erred in concluding that "the only remedy is for demolition of the building and rebuilding it, in circumstances where there was no evidence to support that finding…and acting contrary to legal principle, as established in Bellgrove v Eldridge (1954) 90 CLR 613 by failing to determine whether demolition of the building was a necessary and reasonable course to adopt."
As found in paragraph 80, the evidence of Mr Maglis was that the failure to provide inspection certificates in critical stages to the certifier and the inability retrospectively to obtain retrospective certification in the absence of consultation with the Structural Design Engineer (which had not occurred and which was not the subject of evidence in the proceeding) meant that the work was defective and that a dwelling reasonably fit for habitation did not exist and thus, the only remedy was demolition and rebuilding. Evidently, there was some evidence - being that given by Mr Maglis - so the premise for the ground of appeal falls away.
As to Bellgrove v Eldridge, in that case, the High Court said:
5 …the work necessary to remedy defects in a building and so produce conformity with the plans and specifications may, and frequently will, require the removal or demolition of some part of the structure. And it is obvious that the necessary remedial work may call for the removal or demolition of a more or less substantial part of the building. Indeed - and such was held to be the position in the present case - there may well be cases where the only practicable method of producing conformity with plans and specifications is by demolishing the whole of the building and erecting another in its place. In none of these cases is anything more done than that work which is required to achieve conformity and the cost of the work, whether it be necessary to replace only a small part, or a substantial part, or, indeed, the whole of the building is, subject to the qualification which we have already mentioned and to which we shall refer, together with any appropriate consequential damages, the extent of the building owner's loss.
6 The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt…
Although the reasoning below could have been expressed in greater detail, plainly enough, Mr Maglis was entitled to proceed on the assumption that the critical stage inspection for the footings and piers was not carried out, and that in the absence, firstly determining whether rectification is both necessary and reasonable, as was found here, is as the High Court stated, a question of fact, therefore not a matter on which there is an appeal as of right, and secondly, there was at least some evidence, namely from Mr Maglis, to support the conclusion. These grounds of appeal are not made out.
[5]
Reversal of the onus of proof
Ground 5D was that the Tribunal erred in "reversing the onus of proof and thereby denying procedural fairness by requiring the appellant to disprove the possibility of obtaining certification by the PCA if invasive assessments and load tests were carried out to determine the structural adequacy of the building".
There is no formal onus in the Tribunal. There was an issue as to whether there had been a breach of the statutory warranty as to which the Tribunal found that the key evidence which it accepted was that of Mr Maglis, the consequence of which was that demolition was required because the work had not been, and might not be, certified fit for habitation. It was open, in the face of that evidence, for the builders to call evidence in rebuttal but they did not do so or at least in such a way as to convince the Tribunal. That being so, there was neither a reversal of the onus of proof, nor a denial of procedural fairness.
[6]
Denial of procedural fairness
The final challenge was set out as follows in paragraph 6 and 7:
6 The Tribunal denied procedural fairness to the appellant by having regard to the statutory declaration of Matthew Bodley dated 11 August 2015 in circumstances where:
(a) Mr Bodley was not available for cross examination;
(b) The Tribunal indicated to the appellant that it would have the opportunity to cross-examine witnesses relied upon by the respondents, but failed to ensure that the appellant was provided with such an opportunity;
(c) The appellant indicated to the Tribunal that Mr Bodley's evidence went to a critical issue;
(d) The respondent conceded that Mr Bodley's presence was necessary to ensure procedural fairness to the appellant;
(e) The respondent conceded that Mr Bodley's statutory declaration should be given little weight, if any;
(f) Mr Bodley's statutory declaration was contradicted by Mr Bodley's letter dated 13 May 2015 and his email of 30 September 2015;
7 The Tribunal denied procedural fairness to the appellant in allowing the hearing on 11 November 2015 to proceed in circumstances where the Court Book was provided to the appellant only 2 business days prior to the hearing, and contained material which had not been previously provided to the appellant.
Both of these grounds are misconceived.
As to ground 6, the context was as follows:
1. The relevant allegation accepted by the Tribunal (e.g. at [62]-[66] on the basis of evidence, was that significant work was defective, there was a consequential breach of the s 18B statutory warranty by the builder and the homeowners were entitled to damages as a result.
2. Expert evidence was given by Mr Maglis, and accepted by the Tribunal, that in the absence of an occupation certificate the building would not be fit for habitation, would be required to be demolished and damages should be assessed on that basis.
3. There was clearly no occupation certificate in evidence. There was some contest as to whether the 'mandatory critical stage inspections of the footings' had taken place: there was no evidence before the court of the written results of any such inspections. The discussion by the Tribunal at [78] concerned whether there was evidence that inspections had or had not taken place. It was in that context that the Tribunal stated, apparently in relation to Mr Bodley's evidence that despite a letter adduced from the certifier that an inspection took place, the certifier now contends that no such inspection took place.'
Mr Bodley's declaration stated that he had not conducted any such inspection, notwithstanding certain letters from his previous employer that he had. That declaration was tendered, as the Decision below records, by the builder, not by the homeowners. So the complaint by the builder not having the author of a statutory declaration they had tendered available for cross-examination such that there was a denial to them of procedural fairness is quite misplaced. We also note that our reading of paragraph [78] is that having noted the debate about whether the inspections had taken place at all, what the Tribunal was concentrating upon was the absence of a certificate and then whether retrospective certification was capable of taking place, a matter answered by reference to the evidence of Mr Maglis.
The essential irrelevance of Mr Bodley's evidence at [78] is consistent with the remarks made below at [33] that as he was not at the hearing the Tribunal needed to consider the weight of his evidence, inferentially, that is, its small weight. We consider that his evidence had no bearing on the result.
There is no error of law, and there is no factual merit in the ground either so that it would be futile to grant leave to appeal.
As to ground seven, we note from the transcript that there were difficulties with late service on both sides but neither side requested an adjournment. Having reviewed the transcript we are satisfied that there was no denial of procedural fairness. We reject this ground also.
We have considered the submissions on costs. We note that by operation of Rule 38A of the Civil and Administrative Tribunal Rules that there is a broad discretion as to costs, as there was below, and therefore order the Appellant to pay the Respondents' costs as taxed or agreed of this appeal. The costs below are a matter which must be taken up with the member who heard the matter.
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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Decision last updated: 06 January 2017