Chahrouk v Bardouh

NCAT Appeal Panel|2024-08-26

Summary

This an appeal from a decision of the Consumer and Commercial Division of the Tribunal (Tribunal) of 7 May 2024 (Decision).
In the Decision, the Tribunal ordered the appellant to pay the respondent $70,300.00.
The appellant had filed no evidence prior to the Tribunal hearing.
We note that on 24 June 2024, the appellant sought a stay of the Decision. That application was dismissed on 24 July 2024, the Appeal Panel ordering the appellant to pay the respondent the $70,300.00 immediately.
We further note that on 27 June 2024, the respondent filed an application seeking an order that the appeal be summarily dismissed.
That application too was dismissed on 24 July 2024.
For the following reasons, we have decided refuse leave to appeal. This has the consequence that the appeal is otherwise dismissed.

Appellant's materials before the Appeal Panel

The appellant provided the following materials to the Appeal Panel.

Notice of Appeal

In the Notice of Appeal, the appellant raised 3 grounds of appeal, being: 1. the Decision was not fair and equitable' 2. the Decision was against the weight of the evidence; and 3. significant new evidence was now available that was not reasonably available at the time of the hearing.
However, these grounds must have been amended and those amendments notified to the respondent (but never filed with the Appeal Panel), as the Reply to Appeal refers to 5 different grounds of appeal. These are reproduced below.
At the appeal hearing, we were handed a document which stated the appellant's grounds of appeal to now be: 1. the Tribunal erred in law in granting the respondent, an owner builder, the right pursuant to the Home Building Act 1989 (NSW) (HB Act) to enforce a contract between the owner builder and the tradesperson contractor (Ground 1); 2. the Tribunal erred in law in finding that s 18 of the HB Act applied to an owner builder in circumstances where there was no enforceable contract and the defects identified did not meet the definition of major defects; accordingly, no statutory warranties could be implied (Ground 2); 3. the Tribunal erred in law erred and fact by finding the defects were major defects (Ground 3); 4. the Tribunal erred in law erred in law by failing to consider whether or not the owner builder failed in her duty of care to mitigate any losses and whether or not a statutory defence arose in respect of s 18F of the HB Act (Ground 4); 5. the Tribunal erred in fact by accepting the expert report of Maison Azdari in circumstances where the report failed to properly address the objective standards such as Australian Standards, the Building Code of Australia or the National Construction Code. The expert report also failed to address the inconsistencies in the finished floor levels specified in the respondents' own evidence (Ground 5). 6. the Tribunal erred in its consideration of the quantum of damages (Ground 6).
Ground 6 was not pressed at the appeal hearing due to the lack of evidence to support it, the appellant not having filed the evidence before the Tribunal in the appeal proceedings.

Submissions

The appellant also filed an outline of submissions, which were relied on and amplified in oral submissions by his solicitor at the appeal hearing. We will refer to any relevant submissions in the Consideration section of these reasons.

The expert report of Mr Maison Azdari of Owners Inspections dated 18 October 2022

We will refer to this as the Azdari Report.
The Azdari Report was objected to by the respondent on the basis that it had not been filed and served by the appellant in accordance with directions of the Appeal Panel. The appellant's solicitor submitted that he had understood and thought that the materials before the Tribunal would be before the Appeal Panel.
That is an incorrect assumption. That is why on 3 July 2024 the Appeal Panel directed both parties to file and serve any evidence before the Tribunal at first instance on which it is intended to rely.
Nevertheless, as we say, the Azdari Report was the respondent's expert evidence relied on at the Tribunal hearing. Accordingly, we decided to receive the report, although we allowed the respondent time after the hearing to provide additional submissions to the Appeal Panel if necessary.
As it transpired, the respondent's solicitor indicated, after the oral submissions concluded, that he did not need additional time to respond to the Azdari Report.

Reply to Appeal

These are short and can be reproduced in full: Ground 1 1. There is nothing in the Home Building Act 1989 ("HBA") that prohibits an owner-builder enforcing a contract that does not comply with section 7 of the HBA against a tradesperson. 2. Section 10 of the HBA affects the rights of persons who contract to do any residential building work. An owner-builder does not contract to do any residential building work. 3. There are no regulations prescribed for the purposes of 10(1)(c) of the HBA. Ground 2 1. The implication of the warranties set out in section 18B of the [HB Act] is not abrogated because the contract is not in writing, or the defects are not major defects. Ground 3 1. This is a question of fact, and leave is required. 2. Leave has not been sought and should not be granted. 3. Whether the defects were "major defects" within the meaning of 18E of the HBA is irrelevant to the decision of the Tribunal below. Ground 4 1. Whether or not the respondent failed in any duty to mitigate any losses and whether or not a defence arose under section 18F of the HBA were not issues raised in the Tribunal below. 2. Alternatively, the reasons for decision demonstrate that there was no such failure. Ground 5 1. This is a question of fact, and leave is required. 2. Leave has not been sought and should not be granted.

Nature of an appeal

Section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) sets out the basis upon which appeals from decisions of the Tribunal may be brought. That section states that an appeal may be made as of right on any question of law or with leave of the Appeal Panel on any other grounds (s 80(2)(b)).

A question of law

In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, without listing exhaustively possible questions of law, the Appeal Panel considered the requirements for establishing an error of law giving rise to an appeal as of right.
These include, but are not limited to: 1. whether the Tribunal provided adequate reasons; 2. whether the Tribunal identified the wrong issue or asked the wrong question; 3. whether it applied a wrong principle of law; 4. whether there was a failure to afford procedural fairness; 5. whether the Tribunal failed to take into account a relevant (that is, a mandatory) consideration; 6. whether it took into account an irrelevant consideration; 7. whether there was no evidence to support a finding of fact; and 8. whether the decision was legally unreasonable.

Leave to appeal

Clause 12 of Sch 4 of the NCAT Act provides that, in an appeal from a decision of the Consumer and Commercial Division of the Tribunal, an Appeal Panel may grant leave to appeal only if satisfied that the appellant may have suffered a substantial miscarriage of justice because: 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).
The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel conducted a review of the relevant cases at [65]-[79] and concluded 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; or (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.
Even if an appellant establishes that they may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave under s 80(2) of the Act. An appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32].

The Decision

It is appropriate to briefly summarise the Decision.
The Decision was short, being 4 pages of reasoning. That may be because the appellant filed no evidence (Decision, at [3]). The Tribunal noted at [12] that the appellant "did himself no favours" by not filing any evidence.
The appellant represented himself at the Tribunal hearing. He cross-examined the respondent's expert. The Tribunal stated at [6] that the appellant concentrated on the issue of a "step down in this lab", and did not "query the expert on the numerous other defects outlined" in the report.
While the appellant apparently gave evidence to the Tribunal that the alleged defects were not major defects, he provided no independent expert report.
The Decision then relevantly states that: 5 The applicant relied on a witness statement and an expert report. 6 The expert was cross-examined during hearing. In his cross examination the respondent concentrated on the issue of a step down in this lab and did not query the expert on the numerous other defects outlined in the report. 7 The expert found all defects and s[t]ated in summary: There are many incomplete and or defective items. Not all the items in the contract were delivered. Some items are nonstandard and not standard-compliant. The major defect is slab surface level which is not matching the plans; as a result the slab is to be demolished and reconstructed. 8 Itemised defects included: (1) finished floor levels did not comply with the plans provided or specified planning and building permit requirements (2) slab was not sitting on the board peers (3) the board is not sitting under edge beams (4) the edge of the slab not being straight (5) excess concrete needed to be trimmed (6) exposure of steel reinforcements in this land causing a honeycombing affect (7) Slab level having more deviation that allowed with tolerance limits … 14 I find the defects were major.
In considering the quantum of the respondent's claim, after referring to Chang v Azari [2020] NSWCATAP 154, the Tribunal concluded: 17 I find the consequential losses set out in the Scott Schedule will all be incurred. Such works are reasonable and necessary to produce conformity with the contract by providing a slab complaint with plans and not defective. Further, the applicant's claim for $70,300.00 was supported by a Scott Schedule further supported by various quotes for individual aspects of the work that needed to be done. 18 However, the contract price for installation of the slab was $29,000.00. A new contractor under the schedule seeks $39,600.00 for that aspect of that work. I am satisfied that $10,600.00 ought to be allowed. If the [applicant] had relied on the quote of another licenced contractor it well may be they would have quoted more than $29,000.00. The applicant would have incurred extra costs based on that alternate contract by a licenced provider.

Ground 1

Ground 1 was but faintly pressed by the appellant, whose solicitor told us that Grounds 1 and 5 were the same. A fair reading of the two grounds demonstrates that this is not the case.
The gravamen of this ground of appeal appears to be that the respondent (as owner builder) failed to enter into a contract which conformed with s 7 of the HB Act. Section 7 relevantly provides: 7 Form of contracts (other than small jobs) … (1A) This section applies to a contract only if the contract price exceeds the prescribed amount or (if the contract price is not known) the reasonable market cost of the labour and materials involved exceeds the prescribed amount. The prescribed amount is the amount prescribed by the regulations for the purposes of this section and is inclusive of GST. (1) A contract must be in writing and be dated and signed by or on behalf of each of the parties to it. (2) A contract must contain - (a) the names of the parties, including the name of the holder of the contractor licence shown on the contractor licence, and (b) the number of the contractor licence, and (c) a sufficient description of the work to which the contract relates, and (d) any plans and specifications for the work, and (e) the contract price if known, and (f) any statutory warranties applicable to the work, and (f1) the cost of cover under Part 6 or 6B (if insurance is required under Part 6), and (g) in the case of a contract to do residential building work - a conspicuous statement setting out the cooling-off period that applies to the contract because of section 7BA, and (h) in the case of a contract to do residential building work (other than a construction contract to which the Building and Construction Industry Security of Payment Act 1999 applies) - details of any progress payments payable under the contract, and (i) in the case of a contract to do residential building work - a statement that the contract may be terminated in the circumstances provided by the general law and that this does not prevent the parties agreeing to additional circumstances in which the contract may be terminated, and (j) any other matter prescribed by the regulations for inclusion in the contract. (3) The contract must comply with any requirements of the regulations. (4) If the contract price is known, it must be stated in a prominent position on the first page of the contract. (5) If the contract price is not known or may be varied under the contract, the contract must contain a warning to that effect and an explanation of the effect of the provision allowing variation of the price. The warning and explanation must be placed next to the price if the price is known. (6) A contract must not include in the contract the name of any person other than the holder of a contractor licence as, or so it may reasonably be mistaken to be, the holder's name. (7) This section does not prevent the holder of a contractor licence with a business name registered under the Business Names Registration Act 2011 of the Commonwealth from also referring in such a contract to the business name. (8) This section does not apply to - (a) a contract that is made between parties who each hold a contractor licence and is for work that each party's contractor licence authorises the party to contract to do, or (b) a contract to do specialist work that is not also residential building work.
In addition, the appellant in his written submissions submitted that he provided a quotation identifying her the respondent's husband Mr Akkram Bardouh as the client and the respondent's evidence before the Tribunal indicated that any "contractual relationship" existed between Mr Bardouh and the appellant.
While the appellant's written submissions cross reference the respondent's evidence before the Tribunal, this was not provided to us. Accordingly, we reject that particular submission.
As for the submission that the contract found by the Tribunal did not conform with s 7 of the HB Act, we asked the appellant's solicitor if this point had been taken below. He indicated that it had. The respondent's solicitor disagreed. In the absence of a transcript of the proceedings (or even a sound recording, both of which had been directed by Appeal Panel if what occurred before the Tribunal was to be relied on), we do not accept that submission.
As the Appeal Panel stated in Bartel v Ryan [2018] NSWCATAP 231 at [25], the High Court of Australia said in Coulton v Holcombe [1986] HCA 33 at [9] that it is elementary that a party is bound by the conduct of their case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against them, to raise a new argument which, whether deliberately or by inadvertence, the party failed to put during the hearing when they had an opportunity to do so: see too Palm Homes Pty Ltd v Kav's Constructions Pty Ltd [2015] NSWCATAP 113 at [27].
Assuming in favour of the appellant that this ground raises a question of law, we see no error raised on this question of law.
And, if this ground does not raise a question of law, it is not a ground in respect of which we would grant leave to appeal. We are not satisfied that it involves a issue of principle, a question of public importance, an injustice which is reasonably clear or that the Tribunal has gone about its factfinding process in such an unorthodox manner that it is likely to have produced an unfair result.

Grounds 2 and 3

These may be considered together, as Ground 3 repeats the second limb of Ground 2.
The first limb of Ground 2 is simply a repetition of Ground 1. For the reasons just given, it is rejected.
As for the Tribunal erring in law and fact by finding the defects were major defects, the first matter we observe is that, as the Appeal Panel stated in Stojonoff v Webber [2024] NSWCATAP 71 at [46], it is an established principle that when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or do not is one of fact: Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 288 (Neaves, French and Cooper JJ) citing Hope v Bathurst City Council (1980) 144 CLR 1 at 8; [1980] HCA 16 (Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed). This principle has been applied by the Appeal Panel: see Rogers v Vinoly [2016] NSWCATAP 2 at [11]-[14].
That means that the appellant requires leave to press this point.
The appellant submits that leave should be granted because of the injustice occasioned to him. The respondent opposes a grant of leave because the appellant did not seek leave, and because this point is irrelevant, as the respondent was "in time" to bring a claim for both major defects (as defined in s 18E of the HB Act), such claims having to be before the end of the 6 year warranty period, and for other defects, such claims having to be brought within 2 years before the end of the warranty period.
We consider that there is little substance in the respondent's first argument, as the appellant in did in fact seek leave in its first Notice of Appeal. We will give the appellant the benefit of the doubt and not refuse leave on that basis.
However, we would not grant leave to appeal on the second basis agitated by the respondent. Again, we are not satisfied that it involves an issue of principle, a question of public importance, an injustice which is reasonably clear or that the Tribunal has gone about its factfinding process in such an unorthodox manner that it is likely to have produced an unfair result.

Ground 3

It is not necessary to separately consider Ground 3.

Ground 4

The principal point raised in the ground of appeal is that the Tribunal erred by not considering or having regard to s 18F of the HB Act. It was put to us that, even were it not raised before the Tribunal by the appellant, the Tribunal had a separate independent role and function to consider "statutory defences".
Section 18F relevantly provides: 18F Defences (1) In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from-- (a) instructions given by the person for whom the work was contracted to be done contrary to the advice of the defendant or person who did the work, being advice given in writing before the work was done, or (b) reasonable reliance by the defendant on instructions given by a person who is a relevant professional acting for the person for whom the work was contracted to be done and who is independent of the defendant, being instructions given in writing before the work was done or confirmed in writing after the work was done. …
We accept that s 18F provides for defences in proceedings in breaches of a statutory warranty, but if the point was not raised or made by the defendant (here the respondent), we see no error by the Tribunal.
In any event, as with Ground 1, in the absence of a transcript of the proceedings (or even a sound recording, both of which had been directed by Appeal Panel if what occurred before the Tribunal was to be relied on), we do not accept that this point was taken by the appellant before the Tribunal.
Assuming in favour of the appellant that this ground raises a question of law, we see no error raised on this question of law.

Ground 5

The only ground of any substance is Ground 5. The appellant's simple point is that the findings of the Tribunal that the defects complained of by the respondent were major defects was against the weight of the evidence, the evidence being the Azdari Report.
As we have noted above, the circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that, amongst other matters, the decision of the Tribunal under appeal was against the weight of evidence: NCAT Act, cl12(1)(b).
Accordingly, the appellant needs a grant of leave to succeed on this point.
The appellant made three principal submissions on this Ground.
The first related to the expert not correctly referring to the relevant plans.
The second submission was that the evidence in the Azdari Report was insufficient to establish major defects.
We have highlighted above that the Tribunal found that "the major defect" is the slab surface level "which is not matching the plans". It was suggested by the respondent's solicitor that the expert was using the expression "major defect" in an everyday sense, and not in terms of the definition of s 18E of the HB Act.
We reject that submission. At p 6 of the Azdari Report it is stated that: Significant items to be reported are as follows: (a) Major defects. (b) A general impression regarding the extent of minor defects, for example, significantly deteriorating exterior paint. (c) Any major defect that is an urgent and serious safety hazard, for example, unsafe balustrades or imminent collapse of a structural member.
Clearly paragraph (c) is similar to the language of s 18E of the HB Act which relevantly provides: "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
In any event, we are considering an expert report of an appropriately qualified expert, Mr Azdari being a civil engineer and a registered builder in various States of Australia. It is not unreasonable to assume that when an expert who is a qualified builder invokes the expression "major defect", he means "major defect in accordance with the HB Act", even if that section is not expressly invoked. And that is clearly what the Tribunal understood.
At p 16 of the Azdari Report, Mr Azdari states: EXPERT'S OPINION IN SUMMARY General Advice items are not standard-compliant. The are many incomplete and/or defective items. Not all the items in the contract were delivered. Some demolished and re constructed. The major defect is the slab surface level which is not matching the plans; as a result, the slab is to be demolished and reconstructed. Please refer to the report for the full findings.
Mr Saddat put to us that this reasoning was erroneous because there were in fact three different sets of plans used on this site, being the site plans, survey plans and architectural plans.
However, those plans were not in evidence before us.
Accordingly, we reject the submission that any finding relating to the slab being a major defect was against the weight of the evidence is established.
As noted above, 7 defects were expressly referred to by the Tribunal, all being found to be major defects. As the second, fourth, sixth and seventh defects there listed relate to the slab, we would not allow an appeal in relation to those matters.
However, we do accept that the evidence in the Azdari Report does not support the Tribunal's finding of major defects in relation to the first, third and fifth defects. We accept these findings were against the weight of the evidence.
We note that, in summary: 1. the first defect, was that the finished floor levels did not comply with the plans provided or specified planning and building permit requirements; 2. the third defect was that the board was not sitting under the edge beams; and 3. the fifth defect was that that the excess concrete needed to be trimmed.

A finding of major defects was against the weight of the evidence

Having found that the Tribunal's findings that the first, third and fifth defects were against the weight of the evidence, we now consider whether or not leave to appeal should be granted in relation to these grounds.
As countless decisions of the Appeal Panel have stated, and as we have stated, leave to appeal only granted for appeals which involve an issue of principle, a question of public importance, an injustice which is reasonably clear or that the Tribunal has gone about its fact finding process in such an unorthodox manner that it is likely to have produced an unfair result.
The only basis on which to grant leave would be because there has been an injustice which is reasonably clear.
In our view, there was no such injustice. That is because, in our view, it matters not whether the relevant defect was a major one or some other defect, as claims in respect of each were brought within the time allowed for in the HB Act.
That is because s 18E of the HB Act relevantly provides that: 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,
The works were completed on 13 November 2021 (Decision at [4]). Therefore the warranty period commenced that day. As the respondent's application was filed on 10 April 2023, it was filed in time for both for claims of breaches of a warranty which results in a major defect and for claims for breaches for "any other case", that is, any other (non-major) defects)
We reject any suggestion that the Tribunal's view that the first, third and fifth defects identified were anything other than defects; to put the matter more directly, while not major defects as defined in the HB Act, the expert evidence supports findings that these matters were nevertheless defects other than major defects.
In this respect, we note that the Azdari Report stated in relation to the first defect, (namely that the finished floor levels did not comply with the plans provided or specified planning and building permit requirements) that: The step-down between the garage and the lounge/dining room is specified to be 350mm (Difference between FFL 20.8 and FFL 20.45) on the approved architectural plans; however, the built slab stepdown is 65mm. The garage is 285mm higher than the council-approved plans. The situation here arises from a misalignment in the specified finished floor level (FFL) values between the architectural and engineering drawings. Specifically, the engineering drawings feature a FFL that diverges from the one provided in the architectural plans. This discrepancy suggests a misreading of the FFL during the drawing phase, which has ultimately led to the incorporation of an inaccurate FFL in the engineering diagrams, different from the FFL originally established as a benchmark in the architectural plans. The contractor (concreter) has obtained all dimensions (external, internal, setout, etc.) from the architectural plans but has failed to recognise a critical discrepancy between the engineering and architectural plans in regard to step-down dimensions. The concreter should check the FFL when laying the slab by using a laser level to measure the elevation of the floor relative to the threshold elevation of the building. This ensures that deviations are accounted for, and the slab is built at an even level.
In relation to the third defect (namely that the board was not sitting under the edge beams), the Azdari Report stated that the bored piers were not sitting under the edge beams.
In relation to the fifth defect, (namely that the excess concrete needed to be trimmed), the Azdari Report stated that: The excess concrete [t]o be trimmed. The excessive concrete will affect the stormwater pipe and/or landscaping. Trimming the concrete may (most probably will) damage the marked pipe.
If follows that while the Tribunal erred in finding that these defects were major defects, the defects were defects for which the respondent was liable under the HB Act.

Conclusion

For the above reasons, leave to appeal should be refused, with the consequence that the appeal is otherwise dismissed.

Orders

The Appeal Panel orders: 1. Leave to appeal is refused. 2. The appeal is otherwise dismissed.

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: 23 September 2024

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