Clark v Universal Property Group Pty Ltd

NCAT Consumer and Commercial|2021-09-01

Summary

The applicant seeks damages for rectification of his home, He alleges that the respondent/builder is in breach of the statutory warranty contained in s 18B(1) of the Home Building Act 1989 (NSW) (HB Act), namely the warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract. The applicant is the successor in in title to the original owner (being the respondent who was the developer) and thus relies extension of the statutory warranties provided for in s 18D(1) of the HB Act.
The applicant seeks the sum of $75,896.81 being the costs of rectification.
For the following reasons, I have decided to order the Respondent to pay the applicant the sum of $7,064.96 on or before 12 January 2022.

Background and common facts

The respondent was the builder and developer of strata scheme no 98687 (Scheme) situated at XXX Quakers Hill, NSW 2763 (Property).
On 8 July 2019, the applicant purchased Lot 2 in the Scheme (Lot).
The building works were undertaken in accordance with a contract
On 29 July 2019, the strata plan 98687 for the scheme was registered (Strata Plan).
The Lot is situated in the Scheme.

The Applicant's claims

The claims of the applicant are: 1. all the items set out in the joint Scots Schedule dated 22 June 2021; 2. $1,461.48 relating to an unpaid rates and water notices; 3. reimbursement of his expert report;

Procedural

At the hearing the applicant appeared in person, and the respondent was represented by Mr Chatterjee of counsel.
Due to the COVID protocols of the Tribunal the parties appeared by telephone.
Prior to the hearing both parties had filed large amounts of material in accordance with directions of the Tribunal.
The applicant's materials included what amounted to a statement and submissions and many photographs, and the report of Mr Damien Moloney of Capital Building Consultants dated 3 March 2021 (Capital Report). Mr Moloney was required for cross-examination.
The respondent relied on a report of Mr Mark Irvine of Tyrrells Property Inspections Pty Ltd dated 19 May 2021 (Tyrrells Report).

Issues

There were four issues for determination. 1. first, which of the work undertaken by the respondent can be the subject of the claim brought by the applicant? 2. secondly, has the claim that may be prosecuted by the applicant been brought in time? 3. thirdly, if so, should the Tribunal apply s 48MA of the HB Act in determining this dispute? 4. fourthly, if not, what sum of money should be awarded to the applicants?

Which of the work undertaken by the respondent can be the subject of a building claim brought by the applicant?

The respondent submits, correctly, that under s 48K(1) of the HB Act the Tribunal has jurisdiction to hear and determine any "building claim" brought before it in accordance with Pt 3A of the HBA subject to the temporal limits contained in ss 48K(2) to (8).
On 12 July 2019 an occupation certificate was issued in relation to the Property.
There was no contract between the parties. Rather, the work was carried out by the holder of a contractor licence as that expression is used in s 18C of the HBA.
Section 48A of the HBA provides: "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. … (2) Without limiting the definition of "building claim", a building claim includes the following-- … (b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C.
The respondent submits that the only contract between the parties is a contract for the sale of land (pp 345 onwards, Applicant's Bundle), which is not a contract that arises from a supply of building goods or services or that is collateral to such a contract. It further submits that this does not mean that the Applicant does not or could not have a claim against the Respondent over which the Tribunal has jurisdiction. It accepts that s 18C(1) of the HBA, which is in Pt 2C of the HBA, provides: 'A person who is the immediate successor in title to … a holder of a contractor licence … who has done residential building work on land is entitled to the benefit of the statutory warranties as if the … holder … had done the work under a contract with that successor in title to do the work.' (emphasis added)
It is not disputed that the Respondent is and was the holder of a contractor licence and had done residential building work on the land now owned by the Owners Corporation and the Applicant.
The respondent submits, again correctly, that the Applicant is not the Owners Corporation, and what constitutes common property and what constitutes lot property is identified in: 1. the Strata Plan (pp 313-315 of the Applicant's bundle) ;and 2. the by-laws at: 1. cl 22.1 which identifies common property and 2. cl 22.2 which identifies lot property.
The respondent submits that: 1. an Owners Corporation, as legal owner of common property, has standing to sue in relation to matters concerning the common property: Owners Strata Plan 43551 v Walters Construction Group Ltd [2004] NSWCA 429); 2. each successor in title has the benefit of the statutory warranties provided under s 18C but only insofar as they pertain to work (albeit done under an entire contract) in relation to that successor's now separately owned property: Owners Strata Plan 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612 at [91] and [92]; 3. these decisions reflect a practical issue; there is no obligation on the recipient of damages to use the money to rectify the defects in respect of which the claim is made and no guarantee that those defects will be properly rectified. payment of damages to a lot owner does not relieve an Owners Corporation from its statutory obligation to repair and maintain common property. The Owners Corporation may find itself in a position where it seeks to recover damages from another party in relation to the same defects. The provisions in the HBA preventing enforcement of the statutory warranties where the warranty has already been enforced at s 18D relate to successive owners, but would not appear to be applicable where the owners are not successive.
I accept all these submissions, which are clearly correct. Accordingly, I have not determined any issues which involve common property. Those claims can only be brought by the owners corporation (that is the Owners - SP 98687).
The respondent submits that the applicant's claim in respect of unpaid rates notices is not a building claim. That may well be correct, but it is not necessary to decide that issue: see [54] and [55] below.
I note that the parties had agreed on rectification and (in some cases also quantification of the cost of rectification) for defects to common property. Hopefully, the owners corporation can reach an agreement with the respondent on these matters.

Has the claim that may be prosecuted by the applicant been brought in time?

For contracts entered into and work done after 1 February and the proceedings commenced after 15 January 2015, the limitation period is 6 years for a major defect and 2 years in any other case: HB Act, ss 18E, 48K(7) and cl 121(1) of Sch 4. The Final Occupation Certificate is dated 12 July 2019, and the proceedings were commenced on 3 November 2020.
Accordingly, all the claims are within the limitation period.

Should the Tribunal apply s 48MA of the HB Act in determining this dispute?

Section 48MA of the HB Act provides that the Tribunal is to have regard to the principle that rectification of defective work by the responsible party is the preferred outcome.
The effect and meaning of the section has been considered in many cases. Some of these authorities are examined in Kumar v Sabharwal [2017] NSWCATAP 200 at [27] to [31] which includes Galdona v Peacock [2017] NSWCATAP 64. In Galdona the Appeal Panel found that the Tribunal erred at law in not having regard to s 48MA. Nevertheless, Appeal Panel decided, having regard to the findings of fact made by the Tribunal and the other material available, to confirm the Tribunal's decision: s 81(b) of the Civil and Administrative Tribunal Act 2010 (NSW). The Appeal Panel observed at [65] that:

s 48MA only required the Tribunal Member to have regard to the principle that that rectification of the defective work by the Appellants was the preferred outcome; and
s 48MA did not make the preferred outcome the mandatory outcome.

A similar conclusion was reached in Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23, where the Appeal Panel set out the relevant principles relating to s 48MA, which I relevantly paraphrase as follows.
First, s 48MA is directed towards the remedy or "outcome" to be provided by the court or tribunal where a claimant establishes the responsible party has carried out defective residential building work or specialist work. In this sense, it is not properly described as a "presumption". Rather, it is a remedy to be "preferred" to other forms of order which the court or tribunal might make.
Secondly, while s 48MA provides that the court or tribunal "is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome", the section does not mandate that a work order must be made in all cases.
Thirdly, s 48MA does not confine the form of orders that may be made under s 48O, including an order that defective work be rectified by the responsible party engaging another person to carry out that work on behalf of the responsible party.
The applicant provided lengthy submissions why he did not seek rectification but, rather, sought a money order. These reasons included but were not limited to:

not complying with timeframes given by NSW Fair Trading for rectification
the respondent giving access to house to "random delivery drivers" without his permission
damaging his personal property and not replacing
unsuccessfully making attempts to repair the faults
not responding to a schedule of work he requested
not paying his rates as discussed
leaving a dangerous staircase in situ
leaving the house in a dangerous condition.

As a result, the applicant says that he has "lost all trust" in the respondent.
I consider that there is substance in the applicant's position, and that this is a case where a money order is warranted.

What sum of money should be awarded to the applicants?

Before setting out the amounts I have decided to allow I note the following.
The respondent relied on a report of Mark Irvine of Tyrrells Property Inspections Pty Ltd (Tyrells) dated 19 May 2021 (Tyrrells Report). It is 286 pages in length and meticulously prepared and detailed. It is in the appropriate form of an expert's report and was of great assistance to the Tribunal. Mr Irvine was not required for cross-examination. I note that Tyrells had also prepared a technical report on 10 February 2021 commenting on Items 1 to 52 of the claim following which the respondent agreed to rectify some 34 items.
Curiously, the only expert evidence filed for the applicant was evidence in reply to the Tyrrells Report, that being the report of Damien Moloney of Capital Building Consultants dated 3 March 2021 (Capital Report). Mr Moloney was required for cross-examination.
Both experts attended a conclave and prepared a joint Scot Schedule dated 22 June 2021.
The experts agreed on the quantum in relation to items 4, 5 - 7, 31 - 32, 35 and 38.
As noted above, all claims in relation to common property are dismissed.
I make the following brief comments in relation to the other items for which I make no allowance.

Item 1

Item 1 is the claim that the air conditioning unit is underpowered. The only expert evidence relied on by the applicant is that statement in the Capital Report that: Air conditioner can only be unit used in separate zones. The air conditioner supplied does not have enough power to run all zones at any given time. The air conditioner supplied is therefore underpowered for the size of the dwelling and will need to be replaced.
In my view that is insufficient evidence and reasoning for the application to prove this component of his claim on the balance of probabilities. I remain of that view even when I consider the applicant's evidence on the matter.
In any event, the Tyrells Report states that the air conditioner installed was "as per Contract List of inclusions".

Items 48 - 50

Items 48 - 50 relate to damage to a lounge. Here Mr Moloney states that: Applicant stated that lounge did have paint on it and from my inspection this was evidence. It is the same colour paint as the wall colour.
In his written submissions the applicant states: In relations to my damaged furniture, this was all due to an unprofessional painter they hired to re paint my house due to poor workmanship previously when I moved in, please note this was the third time a painter had to come The painter has clearly damaged a lot of my furniture when he was trying to repair the poor work from previous painter. I have attached the pictures in the pdf (section 2 pages 1-9) On (section 2 pages 1,5,6 and 7) the painter had covered my sofa but had also put a sharp ornament on top of the sofa, he has ripped the side of the sofa with a tare and also permanent white paint marks left on there, I have attempted to clean myself as they have taken no responsibility for the damage which has not come off and permanently stained. un fortunately l do not have the receipt for this sofa, Bathla asked me for a breakdown of cost for all furniture that was damaged even though they are not taking responsibility for the sofa, l spent weeks on trying to find the sofa but as it was 2 years old, they no longer make the sofa and was purchased at $1,890 on sale, the only ones near to mine on the market now are going for $2,200 as mine was on sale at the time, I requested Bathla via email to feel free to search them self's and as I had no receipt I was willing for them to replace one near to the quality I had, unfortunately their response on page 13 highlighted was its old and they only damaged it a little and will not pay for it …
I am not satisfied on this evidence that this claim is established. There is no corroborative evidence of the costs of the sofa or its date of purchase, and the extent of the paint is not clear from the photographs.

Other claims to Lot property

As to the other claims for lot property, the experts were somewhat apart, but to varying degrees. For instance, in relation to Item 9, the balustrade, the applicant's expert allowed $1,860, and the respondent's expert allowed $560. The principal point of difference was whether one carpenter was required (respondent) or two (applicant) and for how long - a total of 4 hours (respondent) or 16 (applicant.
As with all matters, the onus is on the applicant to prove these matters on the balance of probabilities. As noted above, Mr Maloney was required for cross-examination, but with every respect to him, I was not particularly assisted by his evidence.
However, in an effort to do justice to both parties, I have decided to simply "split the difference", the sums involved being relatively modest.
Accordingly, I order the following amounts to be paid Item No Description Lot or common property Tribunal orders 1 Air conditioning unit Lot property No 2 Air conditioning unit (agreed no defect) No 3 Stairwell paintwork Lot property $82.50 4 Ceiling paintwork Lot property By consent, $130 4a Waterproofing membrane to alfresco roof cover Common property No 5-7 Painting Lot Property By consent, $200 5a-6a Downpipes and penetrations Common property No 7a Seal windows Common property No 8 Doors patched Lot Property By consent, $920 8a Benchtop Lot property No 9 Stair balustrade top landing Lot property $1,210 9a Staircase Lot property No 10a Balcony paint Common property No 10-12 Crack to driveway Common property No 13-14 Crack to external wall render adjacent to garage door Common property No 15-16 Floorboard colour discrepancy Common property No 17 Front entry door stain Common property No 18-21 Rear yard grassed areas Common property No 22 Bulkhead above lower stair landing Common property No 23 Linings lounge north wall Common property No 24-25 Bathroom sealant Lot property $142.50 26-28 Bathroom tile, bath spout, tap cover Common Property and Lot property $720 29 Water staining bedroom 4 ceiling. Common property No 30 Damp insulation batts wire ceiling Common property No 31-32 Ensuite light switch/kitchen pendant lights Lot property By consent, $85 33 Gaps in roof cavity Common property No 34 Powder room doors Lot property $365 35 Pop-up waste Lot property By consent, $165 36 Chipped tile Lot property $142.5 37 Blemishes to plasterboard adjacent stair cupboard doorway Lot property $845 38 Internal stair paint Lot property By consent, $257 39 (agreed no defect) No 40 (agreed no defect) No 41-42 Builder's clean - residue on front balcony, balustrades, paint overburden Common property No 44, 46 43 Fly screens Common property No 47 Soffit trim Common property No 48-50 Stained lounge Lot property No 51-52 Rain tank pump and tap Common property No 53 Gate fence Common property No c Roofing and gutter Common property No Total 5,264.50 Builders Margin, 22% 1,158.19 6,422.69 GST, 10% 642.27 TOTAL 7,064.96

Other claims

The only other claim not included in the Scots Schedule related to an unpaid rates notice. Here the applicant says: UN PAID RATES NOTICE. My rates notices were never paid by BATHLA, I received my first bill on the 30/01/2020. This resulted in myself making fair-trading claim against Bathla reference 10085585 pages 19-23 and a response back from fair-trading with bathlas responses pages 24-25 which states they are not liable and differs from my settlement schedule. I am claiming the following for these reasons In my settlement schedule page 1 BATHLA was supposed to pay a total of $1,311.48 for my rates which was meant to be paid directly to the council and water rates of $150.00 which was never paid and have asked for a receipt which was also never provided by Bathla Refer to page 34 Bathla response but provided a totally fake invoice number to me page 34 and never paid this to the council please see pages 44a and 44b which shows no payment of $912 was ever made on my black town council rates statement. Please refer to my payments to the council pages 11-18
Putting aside the issue of whether I have power to hear and determine this particular claim, assuming I have jurisdiction to do so, having reviewed the materials relied on by the applicant I am not satisfied on the balance of probabilities that the applicant has established this claim.
Finally, the applicant seeks reimbursement of the costs of obtaining an expert report. These are the costs of proceedings, and can be deal with in any costs order.

Costs

If either party seeks costs: 1. they must file with the Registry and give to the other party submissions within 14 days of these reasons; 2. the other party may respond within a further 14 days; 3. the parties may reply within a further 7 days;
Each submission must be limited to three pages.
The Tribunal proposes to decide any application for costs "on the papers". If either party opposes this course, they should that issue in their submissions.
I encourage the parties to reach an agreement on costs.

Orders

The Tribunal orders: 1. The Respondent to pay the applicant the sum of $7,064.96 on or before 12 January 2022.

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: 14 March 2022

Civil and Administrative Tribunal Act 2010(NSW)

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Judgment (16 paragraphs)

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Cases Cited (5)