Baserite Constructions Pty Ltd v Tanios

Solicitors: White Knight Lawyers (Respondent) File Number(s): 2021/00255285 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: [2021] NSWCATCD 85 Date of Decision: 10 August 2021 Before: D Charles, Senior Member File Number(s): HB 20/33320; HB 20/40203

REASONS FOR DECISION

1. In this decision, the appellant is referred to as 'the builder' and the respondent is referred to as 'the owner'.
2. This is an appeal from a decision of the Tribunal dated 10 August 2021.
3. The Tribunal awarded the owner damages of $180,144 for the cost of rectifying defective residential building work and dismissed the builder's cross application seeking $109,308.85 on a quantum meruit basis.
4. The dispute has a long and complex procedural history, which it is necessary to expound upon in detail.
5. In April 2013 the builder entered into a written contract with the predecessor in title of the owner to construct a new two-story residential dwelling. According to the builder, it completed works on or about 18 November 2013 and some further works were performed after it left the site.
6. In June 2015, the owner purchased the property.
7. An occupation certificate was issued on 2 November 2015. The owner moved into the property on or about 1 December 2015.
8. On 19 December 2018 the owner commenced proceedings in the Tribunal against the builder for allegedly defective work in breach of the statutory warranties in s 18B of the Home Building Act 1989 (NSW) ('the HB Act').
9. The owner obtained an expert report from a building consultant, Mr Winton, dated 30 December 2018, which identified 7 items of defects.
10. In the report of 30 December 2018, Mr Winton relevantly identified the defective work as follows: 1) Flashings and weep holes are not evident at ground floor damp course level, 1st floor damp course level and windows with elevated moisture readings internally including areas of mould growth on the ground floor southern side and 1st floor main bedroom west wall continuing along the southern wall in the adjoining room. 2) Vertical articulation has not been provided in the masonry structure resulting in sheer cracking to both the external rendered and internal rendered surfaces allowing water ingress. Cracking to bedroom tiles is evident. The external masonry boundary fences do not have articulation and display water ingress and cracked drummy render. 3) The alfresco ceiling is water damaged along with the pool pump room ceiling, the colour bond (sic) metal roof above is fitted at 8 degrees and 1.5 degrees fall which is causing surcharge into the structure. 4) The gas wall mounted heaters to the alfresco area are mounted too close to the ceiling damaging the plasterboard. 5) Approximately 60% of the driveway tiles accessing the underground car park are drummy, efflorescence is leaching from the tile bed with water freely flowing at the lower levels across the face of the tiles creating a slip hazard. 6) The tiling at the intersection of the front entry path and front patio is not articulated resulting in cracking throughout the tiles. 7) The internal ground floor tiles are not articulated.
11. Mr Winton set out in detail his opinion in respect of the defects and the scope of work necessary to rectify the defects. It is unnecessary to set out the entirety of his opinion. Item 1 was the item that involved the most substantial cost to rectify. In regard to that Item, Mr Winton identified that the works had failed to comply with a number of provisions of the Building Code of Australia and Australian Standards, causing water ingress; excessive moisture; and mould issues. The cost of rectification of this defect Item was $112,400.
12. According to Mr Winton, the total cost of rectifying all of the defective works was $214,718.06.
13. On 5 February 2019 the owner, Mr Winton, and the director of the builder Mr Ayoub held a site meeting to discuss resolving the dispute. The parties agreed that the builder would rectify 4 items identified in Mr Winton's report to settle the Tribunal proceedings.
14. Mr Winton prepared minutes of the meeting and agreement, which were signed by the owner, Mr Ayoub, and Mr Winton. The document has subsequently been referred to by the owner as the "Work Agreement". That agreement contained a scope of works. It is unnecessary to set out verbatim the agreement and scope of works. The agreement was, in substance, for the builder to rectify the following defects: 1. Remove bricks to expose the dampcourse and provide weep holes to brickwork at ground floor and first floor levels ("Issue 1"). 2. Repair cracking to rendered masonry externally and internally. Areas of external corners where vertical cracking is from floor to ceiling height will be cut to create a 10 mm articulation joint with articulation ties fitted every 5th course Repaint walls to match existing painting ("Issue 2"). 3. Engage sub-contractor to inspect roof of alfresco area and pool sump room and "confirm remediation to take place this coming Friday…" ("Issue 3"). 4. Remove and re-lay tiles on driveway, with owner to provide new tiles at his expense ("Issue 5").
15. On 8 February 2019 the owner's proceedings were listed for a directions hearing at the Tribunal. The owner and Mr Ayoub attended the directions hearing. The directions hearing was conducted by Thode SM.
16. The owner's appeal bundle of documents contained a transcript of the directions hearing. The owner told the Tribunal that there had been a site meeting earlier in the week and the parties had reached an agreement. The minutes of the meeting prepared by Mr Winton were handed to the Senior Member.
17. The Senior Member asked when the work was completed and an occupation certificate was issued. Mr Ayoub stated that "practical completion was met (sic) in April of '13 (sic)" and that after further works were performed by another entity, the owner moved into the property in about November 2013. The Senior Member stated: Senior Member: Okay. All right. The reason why I'm asking is that the time limits for these sort of works are six years for major defects and two years…It's six years for major defences (sic) and two years in any other case. So I had a look at your Scott Schedule and they seem to be all water ingress and what I would, just on briefly glancing at them, classify major defects. So there's probably no problem with, um, time limitation…
18. The Senior Member then explained to the parties that the Tribunal had the power to make a work order to resolve the dispute. The following was then said: Senior Member: The best way forward is if you actually let the Tribunal enter a work order, which means-and the builder agrees on or before blah (sic) day to go back and do the report in accordance with the expert report of Mr… Mr Ayoub: Yep. Senior Member: …come back here for a money order. Mr Ayoub: Of course. Senior Member: So have you actually agreed to do the work in the report? Mr Ayoub: Not the full report, no.
19. Mr Ayoub stated that the builder did not agree to all of the items in Mr Winton's expert report because there were "things in there that was-that wasn't my work". Mr Ayoub then explained the rectification items agreed to. The following exchange then occurred: Senior Member: But what you've got to understand is that if you-perfectly good; I can do that today. Mr Tanios: Sure. Senior Member: I can make the order. Mr Tanios: Yep. Senior Member: You are limited to the order that we make today. That settles your case. Mr Tanios: Sure. Senior Member: So I write out what it is you want them to do. Mr Tanios: Yep. Senior Member; What you cannot do is come back in after it's done and say "Oh, look, actually, I wanted-also wanted him to do that that and that". Mr Tanios: Sure. Senior Member: You are limited to what you agree today. Mr Tanios: That's fine. Senior Member: So do you want me to take a look at it?
20. The parties then handed up to Thode SM the written agreement including the scope of works that Mr Winton had drafted arising from the site meeting earlier that week. The Senior Member looked at the agreement, and raised issues with the parties, including when the work would be completed. The Senior Member made alterations to the written document to reflect when the builder would complete the works. The Senior Member asked that each party sign the agreement, and each party did so.
21. After expressing the consent work order that the Tribunal was satisfied reflected the agreement of both parties, the Senior Member stated the following: Senior Member: Okay. Now, and then I'm going to write the applicant is granted leave to renew the proceedings in accordance with clause 8 schedule 4 of the Civil and Administrative Tribunal Act. Now, that's lawyer speak for this (sic) renewal provision is (sic) enshrined in schedule 4 of the NCAT Act. Mr Tanios: Okay. Senior Member: Because this idea of a renewal simply means for you if the work is not done or it's defective, you ring up the Tribunal and you say, "Well, I want the matter renewed". Mr Tanios: Sure. Senior Member: And that doesn't cost you anything, and then it'll be a direction hearing like this one to see what you want renewed. Mr Tanios: Yeah, no problem.
22. The Senior Member then made sure each party had a signed copy of the agreement and stated that consent orders would be made and be able to be collected from the Tribunal Registry. The Senior Member enquired whether either the owner or Mr Ayoub had any questions, and both said they did not.
23. Consent orders were made by the Tribunal as follows: By consent, the Tribunal orders that (the builder) is to carry out the following work on or before 17 May 2019 in a proper and workmanlike manner: Details of Work Order: 1. The (builder) shall perform the work as set out in the agreed scope of work as set out by Ken Winton Senior Building Consultant dated 5 February 2019 signed and dated by both parties and placed with the papers. 2. The (owner) is granted leave to renew the proceedings in accordance with clause 8 schedule 4 of the CAT (sic) Act within 12 months of today.
24. The builder did not attend the owner's property or perform the work the subject of the consent order by 17 May 2019.
25. On or about 20 May 2019, the owner sent to the home warranty insurer a "loss notification form" that contained a copy of the consent orders and asserted the builder had failed to comply with the orders. As the builder had failed to comply with a Tribunal order, the builder's ability to obtain home warranty insurance for new contracts was restricted.
26. On 22 May 2019 the owner filed renewal proceedings under Sch. 4 Cl. 8 of the Civil and Administrative Tribunal Act 2013 (NSW) ('the NCAT Act').
27. After the renewal proceedings commenced, the builder and its sub-contractors attended the property and performed some works. The parties dispute the extent of the works performed. Such work occurred in the period between July 2019 and September 2019.
28. A directions hearing in the renewal proceedings occurred at the Tribunal on 1 July 2019. The Tribunal noted the parties were "working towards completing the work order by the hearing date" and if the owner was satisfied the work had been completed, he would withdraw the proceedings. The Tribunal made directions regarding the filing and serving of documentary evidence.
29. In mid-September 2019 there was a discussion between Mr Ayoub and the owner about the owner signing a letter to the effect that the works pursuant to the consent orders of the Tribunal dated 8 February 2019 were complete. According to Mr Ayoub some painting work had not been performed, but the owner agreed to sign a letter that works had been completed on the basis that the builder pay for a painting sub-contractor. The owner disputed that the rectification works were substantially complete.
30. On or about 16 September 2019 the owner signed a letter directed "to whom it may concern" that work required to be carried out at the property by the builder pursuant to the NCAT consent orders had been completed. The owner subsequently asserted the reason he signed that letter was because he believed the builder would not complete the rectification works otherwise; and his focus was upon getting the rectification works completed.
31. According to the owner, the painting sub-contractor told him on or about 27 September 2019 that there were "issues" with the "patchwork" performed by the builder.
32. The hearing of the renewal proceedings occurred at the Tribunal on 29 October 2019 before Goldstein SM. There was no appearance by the builder. The hearing proceeded ex parte. The Tribunal awarded the owner damages of $175,750.25 for the cost of rectifying defective work. The reasons of the Tribunal relevantly stated as follows: The (owner) has proved a Scott Schedule filed on 12 August 2019 which the (owner) has stated under oath was prepared by his expert Mr Winton and that he has sent a copy to the respondent. That Scott Schedule sets out the work that the (owner) states has not been completed properly or at all by the (builder). The Scott Schedule is exhibit B. The (owner) also produced 3 photographs which were marked as exhibit A which show the unsatisfactory rectification work carried out by the (builder). The Scott Schedule assesses the cost of carrying out the necessary rectification work which is described and priced in detail. The pricing includes an allowance for preliminaries frequently contained in expert reports for building work tendered in Tribunal proceedings. GST has also been allowed for. The total of $175,750.25 has not been contradicted by the (builder)In that regard I note that the Tribunal directions made on 1 July 2019 required it to provide all evidence on which it intended to rely by 23 September 2019. The (builder) has therefore had ample opportunity to file its own evidence and also to contradict the contents of the (owner's) Scott Schedule filed on 12 August 2019. I find that the (builder) has not complied with the Tribunal work order dated 8 February 2019 […] to the extent referred to in the Scott Schedule which is exhibit B. I will therefore make an order in the (owner's) favour in the sum of $175750.25 being the reasonable and necessary cost to undertake the rectification of the defective work referred to in the Scott Schedule.
33. The builder did not file a set aside application under Regulation 9 (1) (b) of the Civil and Administrative Tribunal Regulation 2014 (NSW), but rather filed an appeal under s 80 of the NCAT Act from the decision of Goldstein SM.
34. That appeal was determined in Baserite Constructions Pty Ltd v Tanios [2020] NSWCATAP 77 ('Baserite No 1'). In those appeal proceedings, Ms McMahon of Counsel appeared for the builder; and she has continued to represent the builder in the remitted proceedings and the current appeal.
35. In Baserite No1, the builder's appeal grounds are summarised as follows (para [22] of the decision): 1. The Tribunal lacked jurisdiction to make the consent work order dated 8 February 2019 as the subject of the work order was non-major defects, which were out of time pursuant to the limitation period in s 18E of the HB Act. Accordingly, the Tribunal had no power to make an award of damages for failure to perform such work under Sch. 4 Cl. 8 of the NCAT Act. 2. The builder had no knowledge of the hearing date, having not received a Notice of Hearing from the Tribunal and was not accorded procedural fairness by a decision in its absence. 3. The owner "acted in bad faith" (sic) because, in ex parte proceedings the owner did not provide to the Tribunal a copy of the letter dated September 2019 stating that work pursuant to the Tribunal consent orders had been completed; and in not "advising" the Tribunal that the proceedings were commenced "out of time" (sic). The builder submitted the owner had "misled" the Tribunal. 4. The decision was not fair and equitable (i.e. leave to appeal should be granted under Sch 4. Cl. 12 of the NCAT Act for an error of this type that did not involve an error on a question of law for which leave to appeal is not required) because the builder "had carried out all rectification works" as evidenced by the letter of the owner.
36. The Appeal Panel noted that the builder had sought leave to adduce evidence that it would have adduced at the hearing on 29 October 2019 if it had known of the hearing date, but such evidence did not include any expert report.

The Appeal Panel Decision in Baserite No 1

1. In Baserite No 1, two salient issues are separately identified. The first is "Alleged absence of jurisdiction" (paras [45]-[56]). The second is "Non-provision to the Tribunal of the satisfaction letter" (paras [63]-[68]).
2. The ratio decidendi of the decision is contained at paras [65]-[68]. The Appeal Panel found that the Tribunal erred on a question of law by failing to accord procedural fairness The Appeal Panel stated at [64]-[65]: Accordingly, there is insufficient (sic) in our view to establish, by the non-provision in itself of the satisfaction letter to the primary member (sic) bad faith or an intention to mislead the Tribunal. However, in our view there was procedural unfairness to the builder by the non-provision of the satisfaction letter. The satisfaction letter was not an ingredient required by the owner to establish the owner's claim, and any illegal purpose if established (such as participation by both parties in fraud of the regulator) was thereby collateral to his contractual claim so far as the owner was concerned. However, unlike other evidence that the builder could have put forward if (on its case) it had known about the hearing this letter had an independent objective impact on the determination of the owner's claim. It either removed the basis for that claim or required an explanation by the owner or a characterisation of its legal impact which the primary member (sic) could assess. In our view, this ground succeeds in establishing procedural unfairness.
3. However, the Appeal Panel also made a number of obiter dicta comments about the substance of the dispute, and whether the Tribunal had jurisdiction under the HB Act to make the consent orders it made on 8 February 2019.
4. At para [45] the Appeal Panel stated: There was no need for the primary member (sic), or for us, to consider the jurisdiction of the primary work order.
5. Despite this, the Appeal Panel then made the following comments at paras [46]-[55]: 1. Even if the Tribunal lacked jurisdiction to make the consent work order and to grant leave to the owner to renew the proceedings under Sch. 4 Cl. 8 of the NCAT Act, "…the important fact is that the scope of works to be addressed by the builder resolved a dispute between the parties on an agreed basis and itself formed a contract for building work as set out in the scope of works, irrespective of whether or not it was also the subject of a consent order and irrespective of the context…" (para [46]). 2. The owner's claim "…for alleged non-performance of the agreed scope of remedial work on the contract formed on 8 February 2019…" was within time under s 18E of the HB Act and "The money order reflected the expert evidence of the amount to compensate for the non-performance of the works agreed on 8 February 2019 to be carried out by the builder". (para [47]). 3. The Senior Member did not refer to Sch.4 Cl. 8 of the NCAT Act in the decision, and awarded damages on the basis of the cost to perform what had not been performed pursuant to the "breach of the relevant agreement" dated 8 February 2019. That was the substance of the owner's application, and the builder had not submitted that it was denied the opportunity to seek a work order rather than an award of damages (para [48]). 4. The builder in oral submissions in the appeal asserted the agreement of the parties should be set aside under the contractual doctrine of mistake. That argument was not fully articulated; it appeared inconsistent with the builder's other arguments; and it did not appear to the Appeal Panel that the doctrine of mistake applied (para [49]. 5. If the Appeal Panel was wrong in its "foregoing substantive characterisation of the primary proceedings" the builder should be able to argue that the Tribunal had no jurisdiction to make the consent orders of 8 February 2019 as that was a necessary jurisdictional fact to make the orders (para [50]). 6. The parties could not consent to the "jurisdictional fact" that the defects were major defects under s 18E of the HB Act, and cannot "effectively confer jurisdiction on the Tribunal by in effect agreeing that the alleged defect was major" (para [51]). 7. None of the alleged defects the subject of the consent orders of 8 February 2019 were in respect of a "major element of a building" or a "major defect" as defined in s 18E (4) of the HB Act. This is irrespective of whether the defective weep holes or roof slope come within the definition of "waterproofing" which was "doubted" for the roof slope but "could be the case" for the waterproofing (sic) (para [53]). 8. The lack of weep holes; defective rendering; defective roof slope; and drummy driveway tiles with efflorescence "does not cause and is not likely to cause any of: the inability to inhabit or use the building for its intended purpose, the destruction of the building or a threat of collapse of the building". The evidence regarding water ingress producing the conducive environment for mould was "too generalised" to satisfy the test in Stevenson v Ashton [2019] NSWSC 1689 (para [54]). 9. Even if the absence of weep holes in brickwork constituted a "major defect" under s 18E of the HB Act, "it would not confer jurisdiction in respect of the other alleged defects" (para [55]).
6. The Appeal Panel also held that the failure of the owner to tender the "satisfaction letter" at the hearing was a basis to grant leave to appeal in any event under Sch. 4 Cl. 12 of the NCAT Act (paras [71]-[73]).
7. The Appeal Panel determined that the whole of the proceedings be remitted back to the Tribunal, and stated as follows (at paras [78]-[79]): The errors of law and fact that we have identified necessitate the reconsideration of the matter on the substantive merits. It is not appropriate that the Appeal Panel itself engage in the primary fact-finding in relation to those components of the case. The Panel is not satisfied that we have before us the complete material to deal with the effect of the satisfaction letter and the Panel is an inappropriate forum to determine serious issues of probability (sic) and credit that may involve allegations that would attract privilege against self-incrimination and the exceptions to that privilege that are available, even if the rules of evidence do not otherwise apply in the Tribunal. Once the case is opened up in that way, there is no reason to prevent the builder from seeking to rely upon whatever other lay evidence and expert evidence, that it wishes. The owner should be afforded the opportunity to respond. We therefore conclude that the appeal should be allowed, and the entire case remitted to be reconsidered by a member of the Tribunal with the parties having the opportunity, before that further primary hearing, to lodge any further evidence in chief and reply that they may wish to rely upon. The proceedings should be listed for directions in the Consumer and Commercial Division to enable the parties to address the scope and timing of any further evidence.
8. The Appeal Panel also determined the issue of costs in the appeal.

The Remitted Proceedings and the Decision the Subject of This Appeal

1. On 24 July 2020 the builder sent to the owner a tax invoice in the amount of $96,714.97 for the work it had purportedly performed at the residential premises, including the work said to arise from the consent orders of 8 February 2019.
2. After the owner's proceedings were remitted back to the Tribunal for determination, the builder filed its own Tribunal proceedings seeking payment of monies on a quantum meruit basis (Matter HB 20/33320) with Points of Claim on 2 October 2020. The builder's proceedings sought payment of $96,714.97 for the reasonable value of the work performed by the builder since the Tribunal had made the consent work orders on 8 February 2019. The builder pleaded that the work had been performed under a "mistake of fact or law" due to the Tribunal not having the power to make the consent orders in the first place as the rectification work involved non-major defects.
3. Accordingly, the position of the builder expressed in its Points of Claim was that the Tribunal had no jurisdiction to make the consent work orders (and no jurisdiction to make any orders in favour of the owner), but did have jurisdiction to award monies to the builder on a quantum meruit basis.
4. Both parties filed and served Points of Claim and Points of Defence in the owner's remitted proceedings and the builder's cross application. The owner filed and served additional lay evidence from the owner, and additional expert evidence from its building consultant expert witness Mr Winton.
5. The builder filed and served lay evidence from Mr Ayoub, and an expert report of Mr Dietrich, building consultant.
6. Both experts conferred in conclave, and a Joint Expert Report in the form of a Joint Scott Schedule was completed dated 17 November 2020.
7. The parties also filed a Joint Statement of Agreed Facts and Issues in Contention.
8. The hearing in the Tribunal before Charles SM occurred over a 2 day period. In addition to the lay evidence of the owner and Mr Ayoub; the expert evidence of Mr Winton and Mr Dietrich; there was also lay evidence from the painting contractor, Mr Ryan, called by the owner. The decision was reserved, with a timetable for the filing and serving of written submissions. Both parties filed and served extensive written submissions.
9. A written decision was published on 10 August 2021. The decision is 39 pages in length.
10. The first 54 paragraphs of the decision set out the background to the matter, including the circumstances of the consent orders dated 8 February 2019 and the Appeal Panel proceedings in 2020.
11. Paragraphs [55]-[63] deal with the lay evidence. The Tribunal found that the owner and Mr Ryan gave evidence in an honest, creditable and forthright manner. The Tribunal found that Mr Ayoub was inconsistent and unreliable in a number of respects and gave specific examples. Such instances involved the evidence of Mr Ayoub as to whether the builder expected to be paid for the work that the builder had agreed to perform when the consent orders of 8 February 2019 were made; discrepancies contained in various invoices the builder had sent the owner; Mr Ayoub's claim that he had not obtained legal advice and did not understand the consent orders of 8 February 2019; and Mr Ayoub's evidence about when the builder had commenced work after the consent orders of 8 February 2019.
12. At paragraph [63], the Tribunal found that the builder had not commenced any work required under the consent orders of 8 February 2019 until "at least July 2019". The Tribunal also found that to the extent there were inconsistencies in the evidence of the owner and Mr Ayoub, the Tribunal preferred the evidence of the owner.
13. Paragraphs [64]-[74] of the decision, the Tribunal dealt with the claim by the builder that the work that was performed in respect of Item 1 of the consent order of 8 February 2019 constituted a variation of the Work Agreement. The relevant paragraphs of the decision does not discuss any logical inconsistency between the builder arguing on the one hand that there was no binding contract or agreement between the parties, but on the other hand that the parties had mutually varied the Work Agreement
14. The purported "variation" of the terms of Item 1 was that, on the builder's version of events, when the render was exposed by the builder to reveal the flashings and the weepholes the owner had approached an employee of the builder and requested the weepholes be covered up, which the builder did. The owner's version of events was that Mr Ayoub told the owner it was unnecessary to uncover the weepholes and appropriate to substitute a membrane.
15. The Tribunal accepted the evidence of the owner on this issue. The Tribunal also found that, even if the Tribunal had accepted Mr Ayoub's version of events, there was "no legal basis for a variation in respect of Item 1" for the following reasons: 1. There was no written variation issued by either party. 2. There was no "fresh consideration" by either party.
16. Further, the Tribunal found that it did not accept the evidence of Mr Dietrich that the existence of a membrane justified the absence of weepholes. The Tribunal found that under Part 4.7.2 of Australian Standard AS 3700-2011 weepholes were required wherever flashings were incorporated, and Mr Winton's evidence was that compliant flashings had not been installed allowing water to accumulate. The Tribunal also found that the waterproofing membrane had not been finished in any event.
17. On the issue of whether the parties had agreed to vary the Work Agreement, the Tribunal concluded that: 1. Even if it was to accept that there was an enforceable oral agreement to substitute waterproofing membrane for weepholes (which it did not), there was no evidentiary basis to support the builders assertion that the work was not defective; and the "preconditions" of the builder's expert to justify the absence of the weepholes. 2. There was no agreement or variation of Item 1 of the consent orders of 8 February 2019 effective at law. 3. Insofar as it was asserted any oral variation purported to vary the consent order, it would have no effect in any event unless the Tribunal had ordered a variation of the terms of the order.
18. Paragraphs [75]-[117] of the decision deal with the "owner's primary claim for breach of contract". That part of the decision is divided into 4 sub-headings. The first is the "Tribunal's jurisdiction". The second is the "terms of the Work Agreement". The third is "whether the builder breached the Work Agreement". The fourth is "quantum of the owner's loss".
19. On the issue of the Tribunal's jurisdiction, the Tribunal "respectfully adopted" what was set out in paras [45]-[56] of the Appeal Panel decision in Baserite No 1, in respect of the Work Agreement constituting a new contract and noted that the builder had not appealed that part of the Appeal Panel decision. The Tribunal also stated that it had ruled at the hearing the owner did not need to file fresh proceedings (rather than the original renewal application) for the Tribunal to have jurisdiction and had given oral reasons during the hearing on that issue.
20. Importantly, the Tribunal did not simply "adopt" the comments of the Appeal Panel in Baserite No 1 about the Work Agreement that formed the basis of the consent orders of 8 February 2019 forming a new contract between the parties. The Tribunal noted (at [80]) that the builder had "raised a series of issues about whether the Work Agreement was valid and binding and/or liable to set aside". The Tribunal made the following findings:
21. The Work Agreement was not liable to be set aside on grounds of unilateral mistake. The builder was not mistaken as to the terms of the Work Agreement that formed the basis of the consent orders, and there was no evidentiary foundation to support a finding that the owner had acted unconscionably by being aware of the purported mistake of the builder and taking steps to prevent the builder from becoming aware of the mistake, citing the principles in Royal Diamonds Pty Ltd v Buttle [2016] NSWCATAP 230 at [26]-[31].
22. The Tribunal found that any failure of the builder to take out new home warranty insurance was "a failure in statutory compliance of the builder" and notwithstanding any uninsured work, the builder could still be liable for damages for breach of contract (para [84).
23. The Tribunal stated that irrespective of the subjective beliefs of the owner and Mr Ayoub, whether a contract had been entered into and its terms were matters to be determined objectively, having regard to communications between the parties in their context and the parties dealings over time leading up to the making of the contract (para [85]).
24. The Tribunal at para [86] found the "parties agreed to be bound by the Work Agreement" because of the following factual matters: 1. The parties being in a commercial relationship (i.e. at 'arm's length'). 2. The owner had brought a "building claim" under s 48A of the HB Act against the builder in the original proceedings; had served an expert report (the first report of Mr Winton) with a Scott Schedule setting out the alleged defects and scopes of work to rectify the defects. 3. The minutes of the site meeting kept by Mr Winton stated that the "following items were agreed to be remediated by Mr Ayoub (sic)". 4. The parties had signed the minutes of the site meeting kept by Mr Winton evidencing a mutual agreement. 5. Both parties had consented to the making of the consent orders of the Tribunal on 8 February 2019 which had the effect of finalising the original proceedings, subject to the owner's right of renewal. 6. The terms of the consent orders of the Tribunal reflected the terms of the Work Agreement.
25. In respect of the terms of the agreement the Tribunal set out applicable legal principles for interpretation of contractual terms (para [87]-[95]). The Tribunal found: 1. The express terms of the Work Agreement are as set out in the signed minutes of the site meeting complied by Mr Winton. The minutes refer to the first report by Mr Winton. Mr Ayoub stated in cross examination that he had read Mr Winton's report prior to attending the site meeting on 5 February 2019. The first report by Mr Winton forms part of the surrounding circumstances known to the parties at the time they entered into the agreement and may be used to construe the terms of the agreement. 2. The builder agreed to remediate the defects identified in Items 1, 2, 3 and 5 in the first report by Mr Winton. In respect of Item 3, the term of the agreement was that the builder was obliged to have its roofer/carpenter attend the owner's property; inspect the roofs and confirm remediation to take place before 8 February 2019 (the site meeting minutes containing a typographical error). 3. It was an express term of the agreement that the builder remediate (sic) the alfresco area and pool pump room Colorbond metal roofs. 4. While the minutes of the site meeting prepared by Mr Winton and signed by the parties did not expressly identify the date by which the works were to be completed, the minutes should be read in conjunction with the consent orders of the Tribunal dated 8 February 2019. It was an implied term of the Work Agreement necessary to give business efficacy to the Work Agreement that the date of completion of the works in Items 1, 2, 3, and 5 was 17 May 2019. 5. The Work Agreement contained an implied term that the remediation work was to be performed at the builder's cost in exchange for the owner's forbearance to sue the builder in the original Tribunal proceedings. Such a term was necessary to give effect to the commercial purpose of the Work Agreement and did not contradict any express term of the Work Agreement as recorded in the signed minutes of the site meeting. The 'Winton minutes' supported the existence of such an implied term because Item 5 stated the owner would provide tiles at his own expense. There would be no need to identify this aspect of the agreement if the owner had agreed to pay for the cost of all of the remediation work. The existence of the implied term is also consistent with the builder's conduct in transferring the amount of $11,000 to the owner to cover the cost of repainting.
26. Paragraphs [96]-[108] of the Tribunal decision deal with whether the builder had breached the Work Agreement. The Tribunal found the builder had breached the Work Agreement as follows: 1. Item 1 (weepholes) had not been performed, and the membrane installed by the builder had not been completed. In any event, installation of the membrane was not a term of the Work Agreement. The absence of effective waterproofing had led to "the problem of water penetration" continuing, as evidenced by internal elevated moisture readings leading to blistering paint at the internal ground floor stairs, even after the waterproofing membrane had been partly applied. 2. Even if the Tribunal had accepted there was a variation of Item 1 of the Work Agreement, the expert evidence satisfied the Tribunal that "the supposed substituted waterproofing of applying the membrane has failed" so that "the builder breached the terms of the purported variation, or the consideration underlying the purported variation has failed". 3. The builder had breached the terms of the Work Agreement by failing to complete works before 17 May 2019 or failing to complete the works within a reasonable time. 4. Item 2 (cracked rendering) had, on the expert evidence of both Mr Winton and Mr Dietrich, not been performed in accordance with the agreed scope of works under the Work Agreement. 5. No work had been performed in respect of Item 3 (metal roofs) and Mr Dietrich's opinion that the roofs had not been installed in a defective manner (which was not shared by Mr Winton) was immaterial to the fact the builder had not performed the works it had agreed to perform pursuant to the Work Agreement. 6. In respect of Item 5 (driveway tiles), work had been performed but it had not complied with the scope of works under the Work Agreement. The Tribunal accepted the evidence of Mr Winton on this issue, and did not accept the evidence of Mr Dietrich, because his focus was on whether the driveway tiling was defective, not on whether the scope of works under the Work Agreement had been achieved.
27. Paragraphs [109]-[117] of the Tribunal decision deal with the "quantum of the owner's loss". The Tribunal considered whether a work order should be made for the builder to rectify the items of work that had not been performed in accordance with the Work Agreement that formed the basis of the consent orders of the Tribunal dated 8 February 2019. The Tribunal declined to make a work order, and also discussed the provisions of s 48MA of the HB Act.
28. The Tribunal ordered the builder pay the owner damages, and stated at para [112]: I find that the appropriate measure of the Owner's loss and damage for breaches of the Work Agreement is the value of the work that should have been performed under the Work Agreement.
29. The Tribunal stated that the evidence of Mr Winton (as updated since the proceedings were considered by Goldstein SM) of $180,144 was the cost of making the building compliant with the terms of the Work Agreement, including preliminaries, builder's margin and GST.
30. Of that amount, the major component was Item 1, which was assessed by Mr Winton as $142,186. The Tribunal explained in detail in para [114] why it accepted the evidence of Mr Winton on the cost of performing the said work. The Tribunal also explained why it did not accept the evidence of Mr Dietrich in respect of Item 2; and that other than Item 2 Mr Dietrich had not provided an opinion on the cost of performing the scope of works in Items 1, 3, and 5 of the "Winton minutes" that constituted the terms of the Work Agreement.
31. At paragraphs [118]-[121] the Tribunal considered the owner's "alternative" claim that the builder had not complied with the consent orders of the Tribunal dated 8 February 2019, and that the award of damages could be made by reason of the renewal provisions under Sch. 4 Cl. 8 of the NCAT Act.
32. The Tribunal noted that the Appeal Panel in Baserite No 1 had not made a finding that the defects the subject of the consent orders were not "major defects" under s 18E (4) of the HB Act, but its "observations" had "cast doubts" on whether the consent orders related to "major defects".
33. The Tribunal stated at para [121]: Whether (or not) the Consent Orders of 8 February 2019 were valid and within the Tribunal's jurisdiction, is a question I will leave open. I make no findings as regards to the parties' competing submissions based on the expert evidence i.e. as to whether (or not) there were "major defects" in respect of each of Items 1, 2 3 and 5 respectively, of the Winton Minutes. It is not necessary, and there is no utility in me doing so, because the Owner has already made a case for damages in the amount of $180,144 based upon his primary claim for breach of contract. The Owner's alternative case based on non-compliance with the Work Order of 8 February 2019 was always a fall-back position for the Owner in the event that he did not establish a factual and legal basis for his primary claim.
34. At paragraphs [122]-[127] the Tribunal considered the builder's claim in Matter HB 20/40203 based on principles of quantum meruit. The Tribunal found that there was no legal basis for such a claim, as the builder had agreed to perform the work at its own cost. The Tribunal also commented at para [126] that there was no evidence to support the builder's submission that the builder had given evidence that it could obtain retrospective home warranty insurance for the works it had performed.
35. At paragraphs [128]-[131] the Tribunal considered the issue of costs and made procedural direction for the provision of costs submissions.

GROUNDS OF APPEAL

1. The builder filed its appeal (and an application for stay) on 6 September 2021. The appeal was filed within the applicable limitation period under Regulation 25 of the Civil and Administrative Tribunal Rules 2014 (NSW).
2. The grounds of appeal are identified as follows:

5B-Grounds of Appeal 1. The Tribunal erred in failing to consider and determine whether the Tribunal had jurisdiction to make the consent orders dated 8 February 2019. 2. The Tribunal erred in failing to set aside the consent orders. 3. The Tribunal erred by finding that renewal proceedings were original proceedings for breach of contract as opposed to proceedings commenced for a breach of the previous orders. 4. The Tribunal erred by conflating the work order with a new contract. 5. The Tribunal erred in finding that the work order was a new building contract for the purposes of the Home Building Act 1989 (NSW). 6. The Tribunal erred in reaching an adverse finding in relation to Mr Ayoub's credibility by taking into account irrelevant considerations and/or failing to take relevant considerations into account. 7. The Tribunal erred in finding there was no legal basis for a variation in respect of Item 1, or that any such oral agreement or variation is effective (sic) at law. 8. The Tribunal erred in finding that any variation to Item 1 could only have been made by order of the Tribunal. 9. The Tribunal erred in finding the builder was not entitled to a claim in quantum meruit for work carried out under the consent order. 10. The Tribunal erred in failing to determine the quantum meruit claim for works which were additional to the consent work order.

6B-Decision not fair and equitable 1. The builder asserted the decision was not "fair and equitable" under Sch. 4. Cl. 12 of the NCAT Act (an error of a type that leave to appeal must be granted).

1. The appeal grounds identified by the builder did not clearly articulate what was an error on a question of law. The also contain significant overlap and repetition. This issue was raised by us with Counsel for the builder during the hearing, and the builder was invited to identify whether any appeal grounds were withdrawn or consolidated in accordance with the duty of parties and representatives under s 36 (3) of the NCAT to provide assistance to the Appeal Panel to achieve the just, quick, cheap and efficient resolution of the real issues in the appeal. The builder did not withdraw or consolidate any appeal grounds.
2. Both parties filed and served extensive written submission on the appeal. The builder's appeal submissions in chief were filed on 12 November 2021. The owner's appeal submissions in chief were filed on 3 December 2021. The builder's appeal submissions in reply were filed on 7 March 2022.
3. For the purpose of the appeal, we regard the builder's grounds of appeal as falling into the following categories: 1. The finding that the Work Agreement that Mr Ayoub and the owner entered into at the site meeting and formed the basis of the consent orders of the Tribunal dated 8 February 2019 was a new contract. 2. Whether the Tribunal had any power to make findings that the Work Agreement was a new contract, in circumstances where the parties entered into consent orders at the Tribunal on 8 February 2019. 3. Whether the Tribunal made any error in its interpretation of the terms of the Work Agreement. 4. Whether the Consent Orders dated 8 February 2019 were beyond the jurisdiction of the Tribunal. 5. Whether the Tribunal had the power to consider the owner's proceedings filed as renewal proceedings under Sch. 4 Cl. 8 of the NCAT Act as fresh proceedings. 6. Whether there was any error in dismissing the builder's quantum meruit claim. 7. Whether there was an error in the Tribunal finding that, if the Work Agreement was a new contract, the parties had not varied Item 1. 8. Whether, if there was no error on a question of law established, whether leave to appeal should be granted under Sch. 4 Cl. 12 of the NCAT Act, applying the principles in Collins v Urban [2014] NSWCATAP 17 ('Collins v Urban') .

SCOPE AND NATURE OF APPEALS

1. Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) ("the NCAT Act").
2. Internal appeals involve consideration of whether there has been any error on a question of law; or any other error sufficient to grant leave to appeal under Cl. 12 of Sch. 4 of the NCAT Act.
3. An appeal is not simply an opportunity for a dissatisfied or aggrieved party to re-argue the case they put at first instance: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10].
4. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 ('Prendergast') the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons. 2. Whether the Tribunal identified the wrong issue or asked the wrong question. 3. Whether a wrong principle of law had been applied. 4. Whether there was a failure to afford procedural fairness. 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations. 6. Whether the Tribunal took into account an irrelevant consideration. 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
5. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are constrained by Cl. 12 (1) of Sch. 4 of the NCAT Act. In such cases, the Appeal Panel must first be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. The decision of the Tribunal under appeal was not fair and equitable; or 2. The decision of the Tribunal under appeal was against the weight of evidence; or 3. Significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
6. In Collins v Urban, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of Cl. 12 (1) of Sch. 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
7. Even if an appellant from a decision of the Consumer and Commercial Division requiring leave to appeal has satisfied the requirements of Cl. 12 (1) of Sch. 4 of the NCAT Act, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80 (2) (b) of the NCAT Act.
8. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
9. Even if the appellant establishes that it may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains discretion whether to grant leave under s 80 (2) of the NCAT Act. The appellant must demonstrate something more than the Tribunal was arguably wrong (Pholi v Wearne [2014] NSWCATAP 78 at [32]).

Did the Work Agreement that the Owner and the Builder Entered Into At the Site Meeting On 5 February 2019 Form the Basis of a New Contract in Respect of Which the Tribunal Had Jurisdiction?

1. The findings of the Tribunal clearly distinguish between the agreement the parties entered into at the site meeting on 5 February 2019 (the Work Agreement), and the consent orders subsequently made on 8 February 2019 to resolve the owner's Tribunal proceedings.
2. The builder submits that the Tribunal "conflated" both issues and that there was no contract. We do not accept that submission. The Tribunal carefully and clearly articulated that the parties entered a new contract for the builder to perform some work (which, in substance, involved rectification of some defects) and that the contract was entered into prior to the entry of the consent orders on 8 February 2019.
3. The builder submits (para [46] of its submissions in chief) that the Tribunal "failed to consider and determine whether Senior Member Thode was correct in saying that the Tribunal had jurisdiction at first instance".
4. That submission is rejected because it mischaracterizes what the Tribunal found. The Tribunal found that the parties entered into a new contract pursuant to the signed Work Agreement that was entered into on 5 February 2019. The parties then attended the Tribunal and entered into consent orders that finalised the owner's proceedings against the builder in Matter HB 18/53832 on 8 February 2019.

Jurisdiction of the Tribunal in Home Building Proceedings.

1. The jurisdiction of the Tribunal generally in home building disputes arises from the provisions of ss 48A and 48K of the HB Act.
2. Section 48K of the HB Act states as follows: 48K Jurisdiction of Tribunal in relation to building claims (1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations). (2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section. (3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made). (4) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that are required under a contract to be supplied to or for the claimant on or by a specified date or within a specified period but which have not been so supplied if the date on which the claim was lodged is more than 3 years after the date on or by which the supply was required under the contract to be made or, if required to be made in instalments, the last date on which the supply was required to be made. (5) The fact that a building claim arises out of a contract that also involves the sale of land does not prevent the Tribunal from hearing that building claim. (6) The Tribunal does not have jurisdiction in respect of a building claim arising out of a building cover contract required to be entered into under this Act if the date on which the claim was lodged is more than 10 years after the date on which the residential building work the subject of the claim was completed. (7) The Tribunal does 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 is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E). (8) The Tribunal does not have jurisdiction in respect of a building claim relating to - (a) a contract for the supply of goods or services to which none of subsections (3), (4), (6) and (7) applies, or (b) a collateral contract, if the date on which the claim was lodged is more than 3 years after the date on which the contract was entered into. This section has effect despite clause 5 (Relationship between Tribunal and courts and other bodies in connection with Division functions) of Schedule 4 to the Civil and Administrative Tribunal Act 2013.
3. Section 48A of the HB Act defines "building claim" and "building goods and services" as follows: 48A Definitions (1) In this Part - building claim means a claim for - (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services but does not include a claim that the regulations declare not to be a building claim. building dispute means a dispute that has been notified as referred to in section 48C. building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services - (a) supplied by the person who contracts to do, or otherwise does, that work, or (b) supplied in any circumstances prescribed by the regulations to the person who contracts to do that work. goods, services and supply have the same meanings as in Part 6A of the Fair Trading Act 1987. (2) Without limiting the definition of building claim, a building claim includes the following - (a) an appeal against a decision of an insurer under a building cover contract required to be entered into under this Act, (b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C. (3), (4) (Repealed)
4. The builder submits that the Tribunal never had jurisdiction to hear and determine Matter HB 18/53832; and therefore had no jurisdiction to (a) consider a claim in contract by the owner in respect of the Work Agreement for the builder to return to the property and rectify certain defects; and (b) make consent orders of the Tribunal on 8 February 2019.
5. However, the Tribunal dealt with the issue of jurisdiction on the basis that the parties had entered into a new contract on 5 February 2019. The orders of the Tribunal on 8 February 2019 finalised the proceedings in Matter HB 18/53832, but the contract between the parties was separate and distinct from the consent orders.
6. In other words, had the owner withdrawn the proceedings on 8 February 2019 and an order had been made that the proceedings were dismissed because they had been withdrawn under s 55 (1) (a) of the NCAT Act; or if the Tribunal had otherwise dismissed the proceedings and simply noted the agreement between the parties, the Tribunal had jurisdiction to determine the owner's proceedings in the manner it did on 10 August 2021.
7. It was open to the Tribunal to make the findings it did that the parties entered into a new contract on or about 5 February 2019 described as the Work Agreement. The Tribunal set out in detail (a) that there had been offer and acceptance; (b) that there had been consideration; (c) the terms of the contract; and (d) that the builder had breached the contract.
8. There was no error in the finding of the Tribunal that the work pursuant to the Work Agreement was incomplete. Proceedings were commenced by the owner within 2 years of the relevant date under s 18E (1) (d) of the HB Act. Accordingly, the proceedings for breach of statutory warranties under s 18B of the HB Act were clearly within time. There is no error established in the findings that the statutory warranties in s 18B of the HB Act were breached (Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 at [46]).
9. Further, in respect of there being an "agreement" between the parties for the builder to return and rectify work, Section 48O of the HB Act states as follows: 48O Powers of Tribunal (1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate - (a) an order that one party to the proceedings 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, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings, (c) an order that a party to the proceedings - (i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or (ii) do or perform, or refrain from doing or performing, any specified act, matter or thing. (2) The Tribunal can make an order even if it is not the order that the applicant asked for. (3) Sections 79R and 79T-79V of the Fair Trading Act 1987 apply, with any necessary modifications, to and in respect of the determination of a building claim.
10. Section 48O (1) (c) (i) of the HB Act empowers the Tribunal to order that the parties perform obligations under "an agreement". The legislature did not, in respect of the remedial provision under s 48O (1) (c) (i) of the HB Act use the words "a contract" but used the words "an agreement". Provided the claim is a "building claim" for "building goods and services" and falls within any of the applicable limitation provisions of s 48K of the HB Act, the Tribunal has jurisdiction.
11. The builder submits that the Tribunal had no jurisdiction to make the consent work orders on 8 February 2019. We do not accept that submission, for reasons that we will elaborate upon when we discuss the powers of the Tribunal to make consent orders in HB disputes, and the renewal provisions in Sch. 4 Cl. 8 of the NCAT Act.
12. However, as no error has been established in respect of the legal or factual findings of the Tribunal that the "Work Agreement" entered into on 5 February 2019 constituted a fresh contract in the particular circumstances of this dispute, the Tribunal clearly had jurisdiction to hear and determine the dispute regarding the builder breaching that contract.
13. The builder asserts that the finding of the Tribunal that the parties had entered into a new contract was contrary to the provisions of ss 7 and 92 of the HB Act, which stipulate certain matters pertaining to the form of contracts for residential building work (s 7 of the HB Act); and the requirement that residential building work over the contractual value stipulated in the Home Building Regulation 2014 (NSW) (being $20,000) must be covered by home warranty insurance taken out by the builder. If the builder is in breach of such provisions, the builder may be subject to a penalty (ss 7A and 92 (2) of the HB Act).
14. However, as the Tribunal correctly pointed out in its decision, the fact that the builder did not comply with the obligations imposed on the builder under the HB Act does not remove jurisdiction of the Tribunal under ss 48A and 48K of the HB Act. There is no error in the conclusion of the Tribunal at [84] of the decision (which dealt with the issue of s 92 of the HB Act), and the same principles are applicable to the builder's failure to comply with s 7 of the HB Act.
15. The builder submits that even if the parties entered into a new contract, the rights of the parties merged into the consent orders made by the Tribunal on 8 February 2019 and the owner cannot sue on the new contract. The only authority referred to in the builder's written submissions on the issue of merger was Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589.
16. A concise enunciation of the principles of merger are set out in Wolfe v Permanent Custodians Limited [2012] VSC 275 as follows at [88]-[90] as follows (citations omitted): The doctrine of merger is a form of res judicata, that being that where the cause of action is litigated at judgment and upheld, it merges in the judgment and loses its separate existence. For that reason, in addition to cause of action estoppel, the cause of action ceases to exist and cannot support a second action. Clarke JA in Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd and others,[41] put this another way: The first is that the doctrine of merger in the judgment only applies in a case in which the plaintiff establishes his cause of action and it is that cause of action which merges in the judgment. Where the plaintiff fails to establish its cause of action (that is, there is a verdict for the defendant) there is nothing to merge in the judgment and the doctrine of res judicata operates as a true estoppel. In Maganja v Arthur,[42] Yeldham J quoted Halsbury's Laws of England[43] where it said: When judgment has been given in an action the cause of action in respect of which it was given is merged in the judgment and its place is taken by the rights created by the judgment, so that a second action may not be brought on that cause of action. Merger is not affected by an order which is not a judgment, nor by a judgment which is interlocutory and not final, or which is void. There will be no merger unless the cause of action is the same in both actions, and the plaintiff had an opportunity of recovering the first action ... what he seeks to recover in the second ... .
17. The builder's submission on the issue of merger contains a fundamental inconsistency. On the one hand, the builder asserts that the Tribunal had no jurisdiction to make the consent orders of 8 February 2019 because the works identified did not relate to "major defects" under s 18E (4) of the HB Act. If this submission is correct, then the doctrine of merger does not arise because Tribunal's orders of 8 February 2019 are without jurisdiction and there is no pre-existing cause of action to "merge" into those consent orders.
18. If the Tribunal did have jurisdiction to make the consent orders of 8 February 2019, then the Tribunal also had jurisdiction to make the orders it eventually made (on the same factual findings) pursuant to a renewal of the proceedings under Sch 4. Cl. 8 of the NCAT Act, and the principles set out by the Appeal Panel in Blessed Sydney Constructions Pty Ltd v Vasudevan [2018] NSWCATAP 98.
19. Further, the doctrine of merger does not arise in any event. Any cause of action of the owner for breach of contract of the Work Agreement entered into by the parties on 5 February 2019 is an entirely different cause of action to the original causes of action raised by the owner in Matter HB 18/53832 and arose if and when the builder breached the Work Agreement entered into between the parties on or about 5 February 2019. That was not an existing cause of action that formed part of Matter HB 18/53832 or should reasonably have formed part of Matter HB 18/53832 either on the basis of the principle of merger or the principle of res judicata.
20. The builder submits that that, in a renewal application (which was then remitted back to the Tribunal by the Appeal Panel for redetermination in Baserite No 1). the Tribunal had no power to treat the remitted proceedings as an application dealing with breach of the "Work Agreement" and the issue of new contract had only been raised by the owner in the proceedings after remittal.
21. However, it is within the discretion of the Tribunal to consider the substance of the application rather than the technical form of whether it has been filed as a renewal application under Sch. 4 Cl. 8 of the NCAT Act; or a fresh application (Devel Pty Ltd v Lewis; Lewis v Devel Pty Ltd [2021] NSWCATAP 395 at [82]), considering the principles applicable under ss 36 (1) and 38 (4) of the NCAT Act. That is, however, subject to the obligation to ensure that the process adopted is procedurally fair: Cynthia Jian Er Huang t/as Auchland and Co v Younes [2019] NSWCATAP 153 at [14].
22. The remittal order by the Appeal Panel in Baserite No 1 placed no fetter on what the Tribunal was to consider. The owner's Points of Claim dated 2 October 2020 make clear that it was arguing its case on the basis the Work Agreement was a new contract. .The Joint Statement of Agreed Facts and Issues in Contention dated 7 December 2020 also make clear that the owner was alleging the agreement reached at the site meeting on 5 February 2019 formed a new contract (see para [15]). The builder was also arguing in the alternative that there was an agreement (albeit an unenforceable one by the builder by reason of s 10 of the HB Act, and where there was a dispute about the terms of the agreement) reached between the parties to support its claim in quantum meruit for works performed in Matter HB 20/40203).
23. It is clear that both parties were aware prior to the hearing before Charles SM that the owner was asserting a new contract had been formed on 5 February 2019 and both parties argued their respective positions at the hearing. The fact that this was raised by the Appeal Panel in Baserite No 1, and then adopted by the owner, is irrelevant, noting that the owner was not legally represented in the proceedings until after the decision of Goldstein SM on 29 October 2019. No procedural unfairness to the builder has been established.
24. In respect of the findings of the Tribunal on whether a new contract had been entered into; whether consideration had been provided; the terms of the contract; whether it had been breached; and the damages caused by the breach, no legal error has been established. The Tribunal referred to well established legal authorities regarding formation of a contract and interpretation of the terms of a contract, including Toll (FGCT) Pty Ltd v Alpahpharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165; Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 and Codelfa Constructions Pty Ltd State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337. The builder's submissions do not establish that the Tribunal applied incorrect legal principles regarding the formation and construction of a contract or misapplied those legal principles.
25. On the issue of consideration for the new contract, the Tribunal found the consideration passed from the owner to the builder was forbearance to sue or a compromise of his potential legal rights (i.e. the owner would not press its claim for damages to rectify all defective works identified in the first Winton report if the builder agreed to rectify some of the defects).
26. Such a finding was open to the Tribunal on the evidence. As Mason J stated in Wigan v Edwards (1973) 1 ALR 497 at 512: The first question which arises is whether there was valuable consideration for the appellant's promise of 22 April 1969. The general rule is that a promise to perform an existing duty is no consideration, at least when the promise is made by a party to a pre-existing contract, when it is made to the promisee under that contract, and it is to do no more than the promisor is bound to do under that contract. The rule expresses the concept that the new promise, indistinguishable from the old, is an illusory consideration. And it gives no comfort to a party who by merely threatening a breach of contract seeks to secure an additional contractual benefit from the other party on the footing that the first party's new promise of performance will provide sufficient consideration for that benefit. An important qualification to the general principle is that a promise do precisely what the promisor is already bound to do is a sufficient consideration, when it is given by way of a bona fide compromise of a disputed claim, the promisor having asserted that he is not bound to perform the obligation under the pre-existing contract or that he has a cause of action under that contract. The qualification recognizes that for the Court itself to examine and determine the correctness of the promisor's claim would be a pointless exercise when the new bargain indicates that the promisee regarded the fresh promise as a benefit, presumably viewing the promise of performance as more advantageous than the remedies available to him for breach of contract. But the law, by insisting that the claim in dispute is one which was honestly or bona fide made, prevents the qualification from assisting the party who would seek to gain an unfair advantage by threatening unscrupulously to withhold performance under a contract.
27. The legal principles regarding whether forbearance to sue constitutes valuable consideration were also discussed by the Appeal Panel in Jandson Pty Ltd v James [2021] NSWCATAP 274 ('Jandson') at [78]-[88].
28. It is clear on the evidence that the Work Agreement was a bona fide compromise of a disputed claim. There were Tribunal proceedings on foot. The owner had served on the builder prior to the site meeting on 5 February 2019 the first report of Mr Winton dated 30 December 2018. That report set out a number of defects and a scope of works to rectify the defects.
29. In the context of the defects; method of rectification; and cost of rectification set out in Mr Winton's report dated 30 December 2018, it is abundantly clear that the owner entering into the Work Agreement on 5 February 2019 was a genuine and bona fide compromise of the amount of damages (or, in the alternative, work order) that the owner may have obtained in the Tribunal proceedings. There is no error in the Tribunal's finding that there was consideration for the new contract. The forbearance to sue was not merely temporary, because if the builder had complied with the Work Agreement there would have been no basis for the owner to take any legal action against the builder in the future.
30. The builder did not raise any argument or ground of appeal that the Tribunal erred in making an award of damages because the "Work Agreement" contract between the parties was still on foot (Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2005] NSWCA 248 at [68]; Vasudevan at [58]). Accordingly, it is unnecessary to explore that issue.
31. The builder did not identify and clearly articulate any ground of appeal that there was an error on a question of law in respect of the calculation of damages for the cost of doing work to put the owner in the position that the owner should have been had the Work Agreement been performed: Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613. In any event, we discern no error in the manner in which the Tribunal assessed damages; nor its findings regarding s 48MA of the HB Act.
32. The builder submits that the Tribunal finding the parties entered into a new contract on or about 5 February 2019 was a "legal fiction" to avoid the absence of jurisdiction for the Tribunal to make the consent orders of 8 February 2019. We will return to that issue later in this decision. However, the legal principles applied by the Tribunal were not "a fiction". The builder has failed to establish any error on a question of law in respect of the findings of the Tribunal that the Work Agreement constituted a new contract; that there had been a breach of contract; or the damages that flowed from the breach. As discussed previously, the Tribunal had jurisdiction under the HB Act to determine the owner's breach of contract claim.
33. In respect of the above, in Jandson the Appeal Panel considered whether an agreement between a builder and an owner that a builder perform defect rectification work could constitute a new contract, in circumstances where the owner took legal proceedings against the builder for breach of statutory warranty under s 18B of the HB Act more than 7 years after the date of completion of the original contract works (7 years being the then applicable limitation period, and there being no applicable statutory distinction between "major defects" and "non-major defects".
34. That Appeal Panel held that on the facts of the particular matter, the Tribunal had erred in finding that a purported agreement between an owner and a builder based on an exchange of correspondence that the builder would rectify defective work constituted a new contract. However, the Appeal Panel stated at [72]-[75]: We conclude that there was no evidence from which the Tribunal could reasonably find that the correspondence dated 19 July 2017 and 24 August 2017 (the latter enclosing the letter dated 22 August 2017) constituted offer and acceptance of a new contract to undertake residential building work or a variation of the original contract… We do not imply by our conclusion in respect of the above grounds of appeal that an agreement between a builder and an owner that the builder will return to undertake work to rectify defects after the end of the statutory warranty period will never amount to a new contract. If there is an agreement between the parties as to the scope of work to be undertaken, as well as sufficient consideration, a new contract could come into existence either through the application of conventional principles of contract formation or by implication. However, as we have found above, we do not accept that the available evidence in this case established a contract either on the application of conventional legal principles or by implication from the surrounding circumstances. At most, the evidence established that the builder was prepared to return to undertake a scope of work proposed by the builder, not a scope of work agreed with the owner.
35. Jandson supports the proposition that it is open to the Tribunal, on the particular facts of the case, to find that an agreement between an owner and a builder to perform rectification works constitutes a new contract. That does not mean that every agreement between an owner and a builder to rectify defects forms a new contract. However, on the facts of this matter, it was open to the Tribunal to find that a new contact had been formed.

The Jurisdiction of the Tribunal to Make Consent Work Orders For Rectification of Residential Building Defects.

1. Much of the builder's written and oral submissions are based on the argument that the Tribunal never had the power to make the consent orders of 8 February 2019 as the defects that form the substance of the consent orders were not "major defects" under s 18E of the HB Act.
2. As the original building contract was entered into after 1 February 2012 and proceedings were commenced after 15 January 2015, by reason of Cl. 121 (1) of Sch. 4 of the HB Act, the applicable form of s 18E of the HB Act is as follows: 18E Proceedings for breach of warranty (1) Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions - (a) proceedings must be commenced before the end of the warranty period for the breach, (b) the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case, (c) the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work), (d) if the work is not completed, the warranty period starts on - (i) the date the contract is terminated, or (ii) if the contract is not terminated - the date on which work under the contract ceased, or (iii) if the contract is not terminated and work under the contract was not commenced - the date of the contract, (e) if the breach of warranty becomes apparent within the last 6 months of the warranty period, proceedings may be commenced within a further 6 months after the end of the warranty period, (f) a breach of warranty becomes apparent when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach. (1A) If a building bond has been lodged for building work under Part 11 of the Strata Schemes Management Act 2015, the period of 2 years specified for commencing proceedings for a breach of a statutory warranty for that work is extended until the end of 90 days after the end of the period within which a final inspection report on the building work under that Part is required. (1B) Subsection (1A) does not limit any other law that permits the period for commencement of proceedings to be extended. (2) The fact that a person entitled to the benefit of a statutory warranty specified in paragraph (a), (b), (c), (e) or (f) of section 18B has enforced the warranty in relation to a particular deficiency in the work does not prevent the person from enforcing the same warranty for a deficiency of a different kind in the work (the other deficiency) if - (a) the other deficiency was in existence when the work to which the warranty relates was completed, and (b) the person did not know, and could not reasonably be expected to have known, of the existence of the other deficiency when the warranty was previously enforced, and (c) the proceedings to enforce the warranty in relation to the other deficiency are brought within the period referred to in subsection (1). (3) The regulations may prescribe defects in a building that are not (despite any other provision of this section) a major defect. (4) In this section - major defect means - (a) a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause - (i) the inability to inhabit or use the building (or part of the building) for its intended purpose, or (ii) the destruction of the building or any part of the building, or (iii) a threat of collapse of the building or any part of the building, or (b) a defect of a kind that is prescribed by the regulations as a major defect, or (c) the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act. Note - The definition of major defect also applies for the purposes of section 103B (Period of cover). major element of a building means - (a) an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams), or (b) a fire safety system, or (c) waterproofing, or (d) any other element that is prescribed by the regulations as a major element of a building.
3. As discussed previously, work under the original building contract was completed in about November 2013. The owner had standing to bring proceedings against the builder for breach of the statutory warranties under s 18B of the HB Act as a successor in title under s 18D (1) of the HB Act.
4. In Fisher v N. Phillips and M. Phillips t/as Arise Building Services [2022] NSWCATCD 80 the Tribunal summarised the applicable principles as to whether a defect was a "major defect" as follows (at [41]-[43]): The Appeal Panel in Ashton v Stevenson; Stevenson v Ashton [2020] NSWCATAP 233 ('Ashton') considered the applicable principles for whether or not a defect was a "major defect" under Section 18E (1) (b) and (4) of the HB Act. Such principles are summarised as follows: (a) The test under s 18E (4) of the HB Act has two parts. The first is that there must be a defect in "a major element of the building" attributable to one of the specified mattes. The second is that the defect must "cause" or "is likely to cause" (a) the inability to inhabit or use the building (or part of the building) for its intended purpose; or (b) the destruction of the building or any part of the building; or (c) a threat of collapse of the building or any part of the building (Ashton at [63]); (b) Expert evidence may be necessary to establish the fact of the defect and the likely effect on the ability to inhabit the building or cause the destruction of the building. However, the homeowner may also give lay evidence on such issues, including matters such as observations about the absence of relevant elements of the work; the location of water staining; the fact of water ingress during a rain or flooding event; photographs of such matters; or other observations about which a non-expert could give evidence and which could rationally affect the determination of what is likely in the future (Ashton at [68]). (c) Whether a particular defect is likely to cause the relevant consequences in the future is evaluated in the context of (a) how long the defect has existed; and (b) whether the defect has resulted in any damage that might indicate the likelihood the premises will become uninhabitable or destroyed in the future by reason of the defect (Ashton at [69]). (d) The design life of the structure and materials used may be relevant considerations (Ashton at [70]). (e) Determination of the matters in s 18E (4) (a) (i)-(ii) are questions of fact (Ashton at [130]-[131]). Evidence is required from which it can be concluded the defects will likely cause the specified outcome (Ashton at [134]). (f) Defects in the drainage system (and the roof structure) designed to keep rainwater from entering the dwelling is a major element under s 18E (4) (c) of the HB Act; and evidence may establish defects are likely to cause the premises to become uninhabitable in the future due to flooding, even if such a rain event has not yet occurred (Ashton at [169]-[170]). Further, the Appeal Panel stated in Ashton at [135]: Whilst it is inappropriate to try and catalogue all evidence that might be relevant to resolving the issue of whether the defects are likely to cause the building to become uninhabitable or to be destroyed in whole or in part, it can be readily accepted that the fact of water ingress arising from one or more of the defects would be relevant even though such an outcome had not presently manifested itself. The nature, location and extent of the defects would also be relevant in assessing the likelihood of the prescribed outcome. Lastly, expert evidence assessing the likelihood of the particular defects causing the prescribed outcome would be relevant, it being noted that the evidence must be of a type which is "comprehensible and reach conclusions that are rationally based" in order to "furnish the trier of fact with criteria enabling the evaluation of the validity of the expert's conclusion" .
5. In Stevenson v Ashton [2019] NSWSC 1689, the Supreme Court (Harrison AsJ) (on appeal from Ashton) stated at [74]-[76] that the legal test for whether the defect in s 18E (4) of the HB Act is a "major defect" does not require proof that the defect is "presently manifested and dire" or "imminent".
6. The Tribunal has the power under its enabling legislation (in this matter, the HB Act) in the exercise of its judicial power, and additionally under s 59 of the NCAT Act, to make consent orders (Aboriginal Housing Office v Harrison [2021] NSWCATAP 97 ('Harrison') at [86]-[112]).
7. The powers of the Tribunal under s 59 of the NCAT Act to make consent orders in the context of HB Act proceedings was considered in S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190 at [34]-[35]; [49]-[54] and [67] as follows: The mischief or object to which s 59(1)(b) is directed is to ensure that the enforcement mechanisms available in relation to Tribunal orders are reserved for cases where the Tribunal is satisfied that it would have had power to make the order. The difference between a private agreement between the parties and a court order was explained in Beck v Weinstock [2012] NSWCA 289 at [61]: A characteristic of judgments and orders of a court that belong in the mandatory part of the court order is that they take effect through the authority of the court. A court order produces legal consequences through the very fact that it is made by the court. . . . It happens when the court gives a judgment that A pay $X to B, where the judgment itself is a source of the liability to pay the $X. A court order that commands that some act be done is itself a source of an obligation to perform that act. Special enforcement procedures appropriate to judgments and orders can be invoked to achieve the effect that the judgment or order is obeyed. By contrast, an agreement inter parties that the court has noted creates obligations that are merely contractual ones, not obligations based in any way on the authority of the court. The enforcement mechanisms available concerning it are the same as would have been available if the agreement had been made, but not noted by the court. It would not be in the interests of justice for the Tribunal to make enforceable orders if it would not otherwise have the power to make those orders. … When categorising 'powers' courts have distinguished between "jurisdictional facts", "pre-conditions" to the exercise of powers and procedural matters which do not constitute a pre-condition to the exercise of powers. That classification is useful when determining the meaning of 'powers' in s 59(1)(b). If the matter under consideration is a jurisdictional fact or a pre-condition to the exercise of the Tribunal's powers, the Tribunal will be bound to take it into account when deciding whether to make consent orders. Otherwise, it will not. Jurisdictional facts are facts which must exist in order for the decision to be valid. Those facts must have an "objective" existence and must be "essential" to the validity of the decision: Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46; Mark Aronson & Matthew Groves, Judicial Review of Administrative Action, (5th ed 2013, Lawbook Co) at 235. Neither party submitted that either the out of time provisions in s 48K or the requirement for investigation of a claim by the Commissioner of Fair Trading constitutes a jurisdictional fact. In Vero Insurance Ltd v Buckle [2008] NSWSC 73 the Supreme Court held at [65], in relation to s 48K(3) of the Home Building Act, that the application in that case had been lodged out of time and that the former Consumer, Trader and Tenancy Tribunal, the predecessor to the Consumer and Commercial Division of the NCAT, did not have jurisdiction to entertain it. The Court explained its conclusion at [64]: What is envisaged by the provisions of s 48K(3) cannot be categorised as a limitation defence. It is not of the nature of a defence that operates to bar a remedy. The language of the provision operates as a jurisdictional matter where jurisdiction is attracted by reason of the claim arising from a supply of building goods or services. The claim must be lodged within the three year period after the date on which the supply was made. If the claim is not brought within that period, there is no jurisdiction to entertain it. In this case, the supply of building goods or services had taken place by 5 December 2000. As the application was not brought until 12 May 2006, it has been instituted well out of time and the Tribunal has no jurisdiction to entertain it. The effect of this decision is that s 48K(3), (4), (6) and (7) are pre-conditions to the exercise of the Tribunal's jurisdiction: Parisienne Basket Shoes Pty Ltd v Whyte (1938) 59 CLR 369 at 391-392; Berowra Holdings Pty Limited v Gordon (2006) 225 CLR 364 at 374-376; [2006] HCA 32. Each of those sub-sections relates to the "power of the Tribunal to make a decision". The power in s 41 of the NCAT Act to extend time is limited to legislation "in respect of which the Tribunal has jurisdiction". The Tribunal has jurisdiction under the Home Building Act but because the Tribunal does not have jurisdiction to entertain a home building claim which has been lodged out of time, s 41 should not be interpreted so as to give the Tribunal that jurisdiction. The conferral of jurisdiction needs to be express. It follows that the Tribunal does not have power to extend the time for making an application because to do so would purport to give the Tribunal jurisdiction it does not otherwise have. The signing of terms of agreed settlement does not absolve the Tribunal of the requirement to consider whether it has the power to make the consent orders. The combined effect of s 59(1)(b) of the NCAT Act and s 48K of the Home Building Act is that where there is a dispute as to time limits, before making consent orders the Tribunal must consider whether it is "satisfied" that the application has been made within the time limits prescribed in s 48K. We are of the opinion that the Tribunal has erred by failing to take into account the matters in s 59(1)(b) or by making a decision which lacks an "evident" justification. The justification for making the consent orders was not evident in circumstances where the Tribunal had heard but not determined a contested hearing as to its jurisdiction. … Section 59(1)(b) of the NCAT Act gives the Tribunal discretionary power to make consent orders if it is satisfied that it would have the power to make a decision in the terms of the agreed settlement or in terms that are consistent with the terms of the agreed settlement. Where there has been a dispute as to the Tribunal's powers, the Tribunal is bound to consider whether it is satisfied that it has power to make the order and to make that decision reasonably in the sense referred to in Minister for Immigration and Citizenship v Li [2013] HCA 18. If it is not so satisfied it may dismiss the application: NCAT Act s 59(2). In particular, if there is a dispute as to whether a matter has been lodged within the time limits set out in s 48K of the Home Building Act, the Tribunal must direct its mind to that matter before making consent orders and must not make an order that it unreasonable...
8. The NSW Court of Appeal in Chase Oyster Bar Pty Ltd v Hamo Industries Pty Ltd [2010] NSWCA 190; (2010) 78 NSWLR 393; (2010) 272 ALR 750 set out the principles of determining whether a matter is a "jurisdictional fact" as follows: As Gleeson CJ and McHugh J observed in Abebe v The Commonwealth of Australia (1999) 197 CLR 510 at 523-524[24], "jurisdiction is the authority to decide". A "jurisdictional fact" is, in general terms, "a criterion the satisfaction of which enlivens the exercise of the statutory power or discretion in question" (Gedeon v Commissioner of the New South Wales Crime Commission (2008) 236 CLR 120 at 139[43]). Spigelman CJ pointed out in Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55 at 63-64[37] that "[t]he parliament can make any fact a jurisdictional fact, in the relevant sense: that it must exist in fact (objectivity) and that the legislature intends that the absence or presence of the fact will invalidate action under the statute (essentiality)". As his Honour said at 64[38], those two features "are two inter-related elements in the determination of whether a factual reference in a statutory formulation is a jurisdictional fact in the relevant sense". The interrelationship arose because essentiality may often suggest objectivity. Whether something is a jurisdictional fact is ascertained by a process of construction, undertaken in the usual way. The court will have regard to the full statutory context and to the object that the legislation seeks to achieve. One asks, in essence, whether the legislature intended that the presence or absence of the factual condition should invalidate an attempted exercise of power: Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391[93] (McHugh, Gummow, Kirby and Hayne JJ).
9. We do not accept that the Tribunal had no jurisdiction to make the consent orders on 8 February 2019.
10. We do not agree that a "jurisdictional fact" or the meeting of a jurisdictional pre-condition for the Tribunal to have jurisdiction under s 48K (7) of the HB Act can only be established if there are factual findings made by the Tribunal after a contested hearing if the issue of whether an alleged defect is a "major defect" under s 18E of the HB Act arises.
11. If that were the case, the Tribunal would never be able to make consent work orders under s 48O of the HB Act other than in respect of Tribunal proceedings that were commenced within 2 years of completion of the building works under the contract (s 18E (1) (c) of the HB Act); or if works were not complete, within 2 years of one of the matters set out in s 18E (1) (d) of the HB Act.
12. This is because, if the same argument is adopted, the Tribunal would have to make a finding on one of the issues in s 18E (1) (c) or (d) of the HB Act for it to have jurisdiction to make consent work orders.
13. In respect of factual findings dealing with the issue of "major defect" under s 18E (4) of the HB Act, the Court held in Stevenson v Ashton [2019] NSWSC 1689 at [74] that to determine this issue at a contested hearing usually involves consideration of expert evidence.
14. Often, there will be no straightforward answer as to whether a defect is a "major defect". That does not mean, however, that parties can never agree to work orders to rectify defects by consent, and that they cannot characterise by way of their agreement the nature of the defect and the work necessary to rectify it.
15. Further, the issue of the nature and characterisation of a defect and what rectification work is necessary to rectify that defect and a reasonable course to adopt are different issues.
16. The mere fact that the parties agree to rectify a defect in a manner that does not involve extensive work does not, of itself, mean that the defect was not a "major defect" within s 18E (4) of the HB Act.
17. We accept that the Tribunal cannot make orders it has no jurisdiction to make and that the parties cannot consent to the Tribunal having jurisdiction it does not have. That issue was discussed by the Appeal Panel in BKB Construction Pty Ltd v Sawan [2022] NSWCATAP 103 at [53]-[55] and [66] in respect of a builder's claim against an owner for unpaid contract monies that was clearly and obviously outside the limitation period in s 48K (8) of the HB Act, although not in the context of consent orders.
18. In our view, provided there was some material to satisfy the Tribunal (including what was alleged in the owner's application; and any expert evidence filed and served by the parties) that it is arguable that (a) the claim is a "building claim" for "building goods and services" under s 48A of the HB Act; (b) if it is a claim for breach of statutory warranties under s 18B of the HB Act, it has been brought within 6 years of the matters set out in s 18E (1) (c)-(e) of the HB Act; and (c) if the proceedings may fall outside the 2 year limitation period, the defects are "major defects" under s 18E (4) of the HB Act, then the Tribunal may be properly satisfied that it has sufficient evidence of jurisdictional facts to make consent work orders. An analogous position is adopted in respect to allowing appeals by consent, where the existence of error is a jurisdictional pre-condition: see, for example Bellman v Peters [2020] VSCA 143 at [2].
19. The manner in which the parties set out or characterise the work to rectify defects is not an element of any relevant jurisdictional fact. It is sufficient for the purpose of s 48K (7) of the HB Act for the Tribunal to consider whether it is arguable that the defects are "major defects", without needing to formally determine that issue. If it is clearly unarguable that the defects are "major defects" then consent orders to rectify are beyond jurisdiction.
20. However, if there is some material before the Tribunal to indicate it would be open to conclude that the defects are "major defects", the issue is not in dispute, and it is otherwise appropriate to make the consent orders (for example, the orders are sufficiently clear to resolve the dispute and there is nothing to indicate any duress, mistake or unconscionability) then it is within the jurisdiction of the Tribunal to make the orders under s 48O of the HB Act.
21. When making consent orders, the Tribunal must also take into account that parties can concede issues in the context of agreeing to orders to resolve a legal dispute provided that they are not agreeing to confer jurisdiction that a Court or Tribunal clearly does not have (Coleman v Power [2004] HCA 39; (2004) 220 CLR 1 at [79])
22. It is unnecessary to discuss the principles applicable to consent orders that are within jurisdiction being set aside for mistake, duress, or unconscionability (see Harrison at [31-[35]). The only issue raised by the builder was "mistake" but that was in the context of the Work Agreement. In any event, irrespective of the principle of mistake being considered in respect of the Work Agreement or the consent orders, no error of law is established in respect of the Tribunal's consideration of this principle.
23. It is unnecessary for us to express any views about any items other than 1,2,3 and 5 of the first Winton report, as they are the defects that were reflected in the consent orders.
24. Additionally, for reasons previously expressed, irrespective of whether the Tribunal had the power to make consent orders on 8 February 2019, the parties had entered into the Work Agreement on 5 February 2019.
25. There was sufficient identification and consideration of the jurisdictional facts for the Tribunal to make the consent orders of 8 February 2019, for the following reasons: 1. The Tribunal clearly turned its mind to the issue of whether there was evidence to establish that it was arguable the defects were "major defects" within s 18E (4) of the HB Act. 2. The evidence contained in the report of Mr Winton dated 30 December 2018 was sufficient to establish it was arguable that the defects identified were "major defects" within s 18E (4) of the HB Act. In particular, Items 1, 2, and 3 involved failure of waterproofing that, on the basis of the material in the first Winton report caused, or was likely to cause one of the matters set out in s 18E (4) (a) (i)-(iii) of the HB Act. 3. The Tribunal referred to the issue of s 18E (4) of the HB Act and neither Mr Ayoub nor the owner raised any dispute about this issue. 4. The parties had met on site with Mr Winton on 5 February 2019 and agreed to the scope of works to rectify certain defects, with the parties clearly having compromised in the context of the number of defects claimed by the owner and the total cost of rectification expressed in the report of Mr Winton. 5. The Tribunal clearly and carefully went through the proposed consent orders, identified and clarified issues with the parties, and made orders that it was satisfied both parties understood and agreed to.
26. In respect of the comments of the Appeal Panel in Baserite No 1 that the defects were not "major defects", such comments were obiter dicta. In our view they are not necessarily consistent with the evidence contained in the report of Mr Winton in respect of Items 1,2, 3 and 5. The Appeal Panel in Baserite No 1 was not determining the issue under s 81 of the NCAT Act and its comments are non-binding. Further, it did not preclude the lodgement of more evidence on this issue on remittal, and that is what occurred.
27. Further, the comments need to be considered in context. The salient issue is whether the Tribunal had jurisdiction to make the consent orders on 8 February 2019, not what might be found after a full contested hearing, that would include evidence of the type referred to in Ashton. The Appeal Panel in Baserite No 1 clearly stated it was not determining the issue of jurisdiction.
28. We are satisfied the Tribunal had the jurisdiction and power to make the consent orders of 8 February 2019 under s 48O of the HB Act, and they were binding on the parties.

The Quantum Meruit Claim By The Builder

1. No error has been established in respect of the factual findings of the Tribunal that the builder agreed to perform the Work Agreement without payment. The Tribunal was correct in dismissing the quantum meruit claim by the builder.
2. Principles applicable to quantum meruit claims are well established (see, for example, Roude v Helwani [2020] NSWCA 310). They include: 1. If the quantum meruit claim involves an unenforceable variation, the builder must prove the homeowner had actual knowledge of the additional works; that the works were outside the contract; and the builder expected to be paid for the additional work. 2. In respect of all quantum meruit claims, the onus is on the builder to establish the reasonable value of the work that was performed and accepted by the homeowner. This is a question of fact. Relevant evidence will include any invoices/receipts of the builder; time sheets of the builder; rates under the contract for labour and materials; and expert evidence that analyses the work actually performed and the reasonable cost of such work. 3. The amount recoverable in a quantum meruit claim cannot exceed the amount that would have been payable under the contract for that component of the work.
3. In this matter, the Tribunal found that the agreement of the parties was that the builder perform the rectification works contained in the Work Agreement at its own cost. No error is established in respect of that finding. The builder cannot claim the value of the work performed on a quantum meruit basis for the simple reason the builder agreed to perform such work without payment.

The Findings on the Issue of a Contractual Variation

1. Grounds 7 and 8 of the appeal were that the Tribunal had made errors on a question of law; or in the alternative an error of a type invoking Cl. 12 of Sch. 4 of the NCAT Act when rejecting the builder's argument that (if there was a contract to perform rectification work) Item 1 had been orally varied to install a membrane.
2. Other than submissions that the builder disagreed with the findings, the submissions of the builder did not clearly articulate what was the purported error on a question of law.
3. The factual findings made by the Tribunal at paragraphs [98]-[102] were open to it on the evidence before it, and there is nothing to indicate the Tribunal incorrectly applied legal principles pertaining to variation of a contract (see, for example, Lewis and Smyth v Rejko Pty Ltd [2021] NSWCATAP 186 at [62]-[64]).
4. Having found the terms of the contract were not varied, the additional comment regarding there being no amendment of the consent orders of 8 February 2019 is merely obiter dicta, and does not constitute an error on a question of law.

Leave To Appeal

1. The builder submits that the decision was not fair and equitable to the extent that leave to appeal should be granted on an error other than an error on a question of law under Sch. 4 Cl. 12 of the NCAT Act.
2. The Tribunal correctly and fairly applied legal principles to factual findings that were open on the evidence before it. No error invoking the principles establishing a proper basis for leave in Collins v Urban is established.

CONCLUSION

1. The builder has failed on all of its grounds of appeal. By reason of the overlap of the builder's various grounds of appeal, our decision deals with all of the salient issues raised. Leave to appeal is refused and the appeal is dismissed.

THE ISSUE OF COSTS

1. In respect of the costs of the appeal, our preliminary view (subject to any future costs application by either party for further or other costs orders) is that by reason of rr 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) the amount claimed or in dispute in the appeal exceeds $30,000 (Allen v Tricare (Hastings) Pty Ltd [2017] NSWCATAP 25 at [43]-[69]). Accordingly, the "special circumstances" costs provisions of ss 60 (1) and (2) of the NCAT Act do not apply.
2. The owner was the successful party in the appeal. There is nothing to obviously indicate the Appeal Panel should depart from the usual principle that the unsuccessful party pays the costs of the successful party on the ordinary basis (Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; Oshlack v Richmond River Council [1998] HCA 11; (1998) 139 CLR 72).
3. In our view, the appropriate course of action is to make a costs order in favour of the owner in the appeal; but give both parties the opportunity to make an application for further or other costs orders if one or both choose to do so.
4. ORDERS 1. Leave to appeal is refused. 2. Appeal dismissed. 3. Subject to the outcome of any costs application pursuant to order (4) below, the appellant is to pay the respondent's costs of the appeal on the ordinary basis as agreed or assessed. 4. If any party wishes to make an application to vary order 3, the applicant (the costs applicant) must file and serve a costs application in the form of an Application for Miscellaneous Matters, including submissions limited to five pages and any evidence in support, within 14 days of the date of these orders. 5. The respondent to the costs application is to file and serve any submissions, limited to five pages, and any evidence in reply within 14 days thereafter. 6. The Appeal Panel may dispense with a hearing and determine any application for costs on the basis of the written submissions and evidence provided. If the parties oppose this course, they should make submissions on this issue when complying with the directions as to their submissions on the substantive costs application. 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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 November 2022