[2019] NSWCA 61
Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2020) 275 FCR 385
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[2019] NSWCA 61
Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2020) 275 FCR 385
Judgment (35 paragraphs)
[1]
Introduction
The builder formulated the following questions as constituting questions of law in relation to grounds of appeal 3 to 6 of the notice of appeal:
1. grounds of appeal 3 and 4: whether the Tribunal by reason of s18E(1) of the HB Act or otherwise, has jurisdiction to hear a building claim in respect of asserted breaches of the implied warranties set out in s 18B of the HB Act that constitute 'non-major defects' that:
1. did not form part of the original application lodged by the owner; and/or
2. otherwise have been asserted by the owner to form part of the justiciable controversies before the Tribunal after the time period stipulated in s 18E of the HB Act for those claims to be brought has expired;
1. ground of appeal 5: whether the Tribunal's conclusion at the Tribunal Decision at [106] with respect to a defect with respect to the ceiling height was made without evidence;
2. ground of appeal 6: whether the Tribunal in making a money order denied the builder procedural fairness and otherwise erred in principle.
As to ground of appeal 5, the builder in argument modified its position. It acknowledged there was some evidence on the issue and accepted that the architectural plans were part of the contract. The issue of whether there was a defect with respect to the ceiling height involved consideration of the proper construction of the contract.
As to ground of appeal 6, the builder in argument also modified its position. It submitted that:
1. there were the following three errors made by the Tribunal in exercising the discretion under s 48O(1) of the HB Act to make a money order in light of s 48MA of the HB Act:
1. it was procedurally unfair for the Tribunal to find against the unchallenged evidence of the builder that it was willing to rectify any defects, and there is a presumption in favour of a work order that needs to be rebutted;
2. the Tribunal placed too much weight on the owner's poor health;
3. the Tribunal placed too much weight on the builder's response to the asserted defects by the owner;
1. in the alternative, leave to appeal should be granted.
[2]
Consideration
The interpretation of a statute or contract is directed to the ascertainment of the document's actual and true meaning. When the document is properly construed, there is only one correct meaning. It is for this reason that the proper construction of a statute or contract is a question of law: Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2020) 275 FCR 385; [2020] FCAFC 50 (Bianco Walling) at [66] (Flick, White and Perry JJ).
Errors in the exercise of a discretion are capable of being agitated on appeal restricted to a question of law alone. If it is alleged that the Tribunal had acted on a "wrong principle", then the question of law would be whether that principle was wrong or correct and, if wrong, whether the Tribunal acted on that principle and whether that materially affected the outcome: Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 (Bimson) at [48]-[53] (Beech-Jones J). This passage was recently applied by the Appeal Panel in relation to the exercise of the discretion under s 48O of the HB Act: Noori Homes Pty v Patel [2023] NSWCATAP 149 (Noori Homes) at [45]-[47].
Recently the Appeal Panel has decided that a conclusion of mixed fact and law cannot be challenged on an appeal on a question of law under s 80(2)(b) of the NCAT Act except in the circumstances where it can be determined that the conclusion proceeded from a misdirection of law: Jain v Dr N Kalokerinos Pty Ltd [2023] NSWCATAP 141 at [91]. This is to be distinguished from the wrong application of the correct principles to the facts that would be an error of mixed fact and law and an appeal would not lie on a question of law: Bimson at [42]-[45] (Beech-Jones J).
[3]
Conclusion
We are satisfied that the reformulated grounds of appeal 3 to 6 raise questions of law and accordingly the builder has an appeal as of right under s 80(2)(b) of the NCAT Act in respect of these grounds of appeal:
1. as to grounds of appeal 3 and 4, this is a question of law within the principles of Bianco Walling at [66] as it involves the interpretation of s 18E of the HB Act;
2. as to ground of appeal 5, this is a question of law within the principles of Bianco Walling at [66] as it involves the interpretation of the contract;
3. as to ground of appeal 6, to the extent that the builder contends that to justify a departure from the preferred remedy the Tribunal must identify by reference to objective evidence that the owner's loss of confidence is reasonable given the builder's conduct, this is a question of law within the principles of Bimson at [48]-[53] as it involves the question of whether the Tribunal acted on a "wrong principle" in the exercise of the statutory discretion under s 48O(1) of the HB Act. Similarly, allegations of procedural unfairness may be raised as a question of law.
As to the balance of ground of appeal 6, having regard to the principles in Bimson at [38]-[53] we are not satisfied that this ground of appeal raises a question of law. It follows that the builder does not have a right of appeal in respect of this grounds of appeal, to this extent.
[4]
The nature of an appeal under s 80(2)(b) of the NCAT Act
In Bimson at [40]-[41], Beech-Jones J made the following observations when considering an appeal under a statute which conferred a right of appeal "on a ground that involves a question of law alone." The observations are pertinent given that a question of law in s 80(2)(b) of the NCAT Act excludes a mixed question of law and fact:
"[40] This leads to the second proposition, namely that, ultimately it is incumbent on the parties contending that a question of law was decided erroneously, to identify the question and to do so in abstract terms. Thus in Williams v R [1986] HCA 88; 161 CLR 278 at 287 ("Williams"), Gibbs CJ stated:
"... there is 'a question of law alone' if the question of law can be stated and considered separately from the facts which it may be connected in a given case." (see also 314 per Wilson and Dawson JJ.)
[41] If that task is undertaken, then the consequential questions that will arise are whether the lower court or tribunal either answered that question or proceeded on an assumption concerning that answer, whether its answer or assumption was correct or incorrect, and whether that answer or assumption was material to the outcome, in the sense that it could have affected the outcome (see Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321 per Mason CJ; Mark Aronson and Matthew Groves Judicial Review of Administrative Action (Thomson Reuters, 5th ed, 2013, at [4.270]))."
The Appeal Panel has determined that, except when it conducts a new hearing under s 80(3), an appeal under s 80(1) of the NCAT Act involves a rehearing on the materials before the Tribunal to determine whether the order that is the subject of the appeal is the result of some legal, factual or discretionary error and, in some cases, has power to receive additional evidence. Although the appeal is described as being "by way of rehearing", it does not call for a fresh hearing (sometimes described as a hearing de novo) and the Appeal Panel does not hear the witnesses again": Yuen v Thom [2016] NSWCATAP 243 at [14]-[22].
We consider that the approach in Bimson at [40]-[41] should be applied in determining whether the Tribunal made an error on a question of law under s 80(2)(b) of the NCAT Act. If we are satisfied that the Tribunal made one or more material errors on a question of law, then it will be necessary to determine whether to undertake a rehearing on the material before the Appeal Panel or remit the proceedings for further consideration by the Tribunal.
The approach in Collins at [76], [77] and [84] should be followed in determining whether leave to appeal should be granted in respect of ground of appeal 6. If leave to appeal should be granted, then it will be necessary to determine whether to undertake a rehearing on the material before the Appeal Panel or remit the proceedings for further consideration by the Tribunal.
[5]
The substantive issues for determination in the appeal
The following issues arise for determination in this appeal or may arise for determination depending on the outcome of anterior issues:
1. issue 1: whether the Tribunal had jurisdiction to hear the proceedings with respect to defects that were not major defects and not specified in the home building application when it was lodged;
2. issue 2: whether the Tribunal erred in determining the ceiling height specified in the contract;
3. issue 3: whether the Tribunal acted on a wrong principle in exercising its discretion under s 48O(1) of the HB Act or did so in a manner that was procedurally unfair;
4. issue 4: whether the builder should be granted leave to appeal against the decision to make the money order; and
5. issue 5: the costs of the appeal.
It is convenient to deal with issues 3 and 4 together as they both concern the exercise by the Tribunal of the discretion to make the money order.
As issues 1, 3 and 4 involve consideration of provisions of the HB Act, it is convenient to set out the relevant provisions before considering these issues in this appeal in turn.
[6]
The relevant provisions of the HB Act
Part 1 (ss 1-3D) contains provisions dealing with preliminary matters. Section 3B deals with the date of completion of residential building work, and relevantly provides:
3B Date of completion of residential building work
…
(1) The completion of residential building work occurs on the date that the work is complete within the meaning of the contract under which the work was done.
…
(3) It is to be presumed (unless an earlier date for practical completion can be established) that practical completion of residential building work occurred on the earliest of whichever of the following dates can be established for the work -
(a) the date on which the contractor handed over possession of the work to the owner,
(b) the date on which the contractor last attended the site to carry out work (other than work to remedy any defect that does not affect practical completion),
(c) the date of issue of an occupation certificate under the Environmental Planning and Assessment Act 1979 that authorises commencement of the use or occupation of the work,
…
Part 2C (ss 18A-18G) contains provisions dealing with statutory warranties. Section 18B deals with warranties as to residential building work, and relevantly provides:
18B Warranties as to residential building work
(1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work -
(a) a 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,
(b) a warranty that all materials supplied by the holder or person will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new,
(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,
(d) a warranty that the work will be done with due diligence and within the time stipulated in the contract, or if no time is stipulated, within a reasonable time,
(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,
(f) a warranty that the work and any materials used in doing the work will be reasonably fit for the specified purpose or result, if the person for whom the work is done expressly makes known to the holder of the contractor licence or person required to hold a contractor licence, or another person with express or apparent authority to enter into or vary contractual arrangements on behalf of the holder or person, the particular purpose for which the work is required or the result that the owner desires the work to achieve, so as to show that the owner relies on the holder's or person's skill and judgment.
…
Section 18E deals with proceedings for breach of warranty, and relevantly provides:
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),
…
(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
…
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.
Part 3A contains provisions for resolving building disputes and building claims. Division 1 (s 48A) contains definitions, and relevantly provides:
48A Definitions
(1) In this Part -
building claim means a claim for -
(a) the payment of a specified sum of money, or
…
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 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
…
goods, services and supply have the same meanings as in Part 6A of the Fair Trading Act 1987.
Part 3A Division 4 (ss 48K-48MA) contains the provision dealing with the jurisdiction of the Tribunal in relation to building claims. Section 48K relevantly provides:
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).
…
(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).
…
Section 48MA deals with the preferred outcome in proceedings, and provides:
48MA Rectification of defective work is preferred outcome in proceedings
A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
Part 3A Division 5 (ss 48N-48U) contains provisions dealing with the powers of the Tribunal in relation to building claims. Section 48O deals with the orders which the Tribunal may make, and relevantly provides:
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,
…
(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
…
[7]
Issue 1: whether the Tribunal had jurisdiction to hear the proceedings with respect to defects that were not major defects and not specified in the home building application when it was lodged
[8]
Introduction
Before considering this issue, it is appropriate to summarise the submissions of the parties.
[9]
The builder's submissions
In the builder's submissions, it focussed on the issue of whether there was a single cause of action for breach of the contract. It submitted that, having regard to Parkview CA at [104], there was not, and the defects in the points of claim and the owner's expert report that were not specified in the home building application when it was lodged were out of time.
[10]
The owner's submissions
The owner submitted that the home building application was filed within time for each category of defects (that is both major and other defects) and the single cause of action for breach of the statutory warranties is supported by particulars of breach across both categories.
[11]
Parkview SC
The background, issue for consideration and decision in Parkview SC are conveniently summarised in the headnote of Parkview CA:
"Parkview Constructions Pty Ltd was the builder and The Quay Haymarket Pty Ltd was the developer of a large building comprising some 286 residential apartments and associated parking and storage spaces on the outskirts of the Sydney CBD. The building plan was registered on 1 September 2014, which had the effect of common property vesting in The Owners - Strata Plan No 90018. A final occupation certificate was issued on 15 December 2014, engaging s 3C(2) of the Home Building Act 1989 (NSW), which deemed the completion of the residential building work to have commenced on that date for the purposes of that statute.
Proceedings were commenced by the Owners Corporation on 26 August 2016 in the Technology and Construction List. The Technology and Construction List Statement alleged defects in the common property that were caused by breach of "one or more" of the six statutory warranties specified in s 18B of the Home Building Act. The statement asserted that the Owners Corporation, as the immediate successor in title to the Developer in relation to the common property, was entitled to the benefit of those warranties pursuant to s 18D. The Owners Corporation further asserted that the Developer was taken to have done the residential building work by dint of s 18C(2), and that by s 18C(1), it was entitled to the benefit of the statutory warranties. The alleged defects were said to "include, but are not limited to, the defects identified in Annexure A", and the Owners Corporation reserved the "right to provide further particulars of defects". Annexure A identified 85 defects, including some minor defects (such as "Water leak above bathtub") and some major defects.
The Owners Corporation sought leave to amend its Technology and Construction List Statement in 2021. Those amendments included the inclusion of three further claimed defects, such as the external façade of the building not meeting the requirements of the Building Code of Australia. The primary judge regarded these amendments as raising a point of principle, that being whether a party in the position of the Owners Corporation seeking to bring proceedings in respect of a breach of a s 18B statutory warranty invokes a different cause of action for each defect in work said to be a breach of the statutory warranties. The primary judge held that there was a single cause of action to enforce the promises made in each of the six statutory warranties, and accordingly granted the Owners Corporation leave to amend its statement to include the three new alleged defects."
[12]
Parkview CA
In Parkview CA, the New South Wales Court of Appeal considered an application for leave to appeal by both the Developer and the Builder. The Court (Leeming JA, with Ward P at [1] and Simpson AJA at [108] agreeing) granted leave to appeal but dismissed the appeal for the reasons summarised in the headnote. The headnote is not part of the judgment but is in our view an accurate summary:
"1. The Owners Corporation's claims are best regarded as claims for breach of contract. While it was never in fact a party to any contract, it has, by reason of the Home Building Act, the ability to sue for breaches of the actual contract between the Builder and the Developer into which the statutory warranties in s 18B are taken to have been incorporated by reason of s 18D(1). The Owners Corporation is also entitled to sue the Developer on statutory warranties in respect of work deemed to have been done by the Developer pursuant to s 18C: [24]-[32], [86].
Baron Corporation Pty Ltd v Owners of Strata Plan 69567 [2013] NSWCA 238, considered.
2. In a conventional case for breach of contract, there is a single cause of action, complete when a defective structure is provided, irrespective of the number of ways in which those defects manifested themselves. Although the Home Building Act makes important inroads into the position at general law, those changes do not alter the fact that the nature of the Owners Corporation's claim is that the building which is the subject of the contract has not been provided in accordance with the terms of the contract: [90]-[91].
Conquer v Boot [1928] 2 KB 336, considered and applied.
3. Where a successor in title sues a builder or developer on the statutory warranties in s 18B of the Home Building Act, the proceeding is for breach of the single contract (which may be actual or deemed) against that party. An amendment which does nothing more than introduce further departures from the building as promised will not give rise to a new cause of action because the cause of action is for breach of the same contract. The Owners Corporation's amendments did not therefore introduce a new cause of action, and so could be permitted without resort to s 65(2)(c) of the Civil Procedure Act 2005 (NSW). [88]-[89], [103]-[106]
Onerati v Phillips Constructions Pty Ltd (in liq) (1989) 16 NSWLR 730; Honeywood as Executrix of the Estate of the late Neville Honeywood v Munnings (2006) 67 NSWLR 466; [2006] NSWCA 215, considered.
4. Statutory modifications following Onerati and Honeywood v Munnings preserved the singleness of the cause of action in some circumstances for the purposes of res judicata. The statutory modifications do not produce the result that there is a different cause of action for each defect said to have been caused by a breach of a statutory warranty for the purposes of s 65 of the Civil Procedure Act: [80]-[84], [93]-[102].
The Owners - Strata Plan 70030 v Decon Australia [2016] NSWSC 19, considered."
In the judgment, Leeming JA at [92] and [104] made the following observations:
"[92] Sixthly, the introduction of a differential time period during which proceedings on the statutory warranties may be brought unquestionably alters the nature of how a claim is pleaded. In particular, whether or not a defect is a "major defect" will, at least in some cases, be a material fact. There is some force in the proposition that this has a consequential effect upon the characterisation of the cause of action. Take for simplicity a claim where there was one major defect and one defect which was not major. It strains the conventional notions of a cause of action to regard a plaintiff as only having a single cause of action in those circumstances, because the availability of different limitation defences to different aspects of the same claim is hard to reconcile with there being a single cause of action."
"[104] However, I would reserve for further consideration the issue which would arise if the difference in the nature of the defects was acute. In the present case, nothing turns on whether the new defects are or are not "major defects". That will not always be the case. Suppose a plaintiff had brought proceedings within 2 years of completion of the work, but only for defects which were "major defects", and then much later sought to amend to include defects which were not major defects, in respect of which the defendant would have had a limitation defence. That case squarely raises the point developed in this Court with force especially by the Builder, that it does not make sense to speak of a single cause of action where part of the damage is subject to a two year limitation period and part is the subject of six year limitation period. I do not wish in these reasons to express a view on the proposition that, for the purposes of s 65 of the Civil Procedure Act, the differentiated limitation period regime has the consequence that a plaintiff may have one single cause of action for breach of contract leading to major defects, and another for breach of contract leading to minor defects. But that is not the present case."
[13]
Conclusion
The home building application in specifying "Painting defects" unquestionably included a defect that was not a "major defect" within s 18(4) of the HB Act. The position as to whether "Ingress of water through walls and windows both on the ground and first floor" was a "major defect" within s 18(4) of the HB Act is unclear because while this description can be characterised as being "waterproofing" within paragraph (c) of the definition of "major element" in s 18(4) of the HB Act, there was no information to enable a decision as to whether the defect caused, or was likely to cause, any of the consequences in paragraph (c) of the definition of "major defect".
There also can be no question that many of the defects particularised in Annexure A to the points of claim were not a "major defect" within s 18(4) of the HB Act.
Unlike the hypothetical circumstances referred to by Leeming JA at [104] in Parkview CA, the difference in the nature of the defects in these proceedings was not acute. This means that, consistent with the reasons in Parkview CA, in the circumstances of the proceedings there was a single cause of action for breach of contract, and so it is unnecessary to consider the various authorities to which we were referred by the builder.
It follows that the Tribunal did not make any error in deciding that it had jurisdiction to hear the proceedings with respect to defects that were not major defects that were not specified in the home building application.
For these reasons, we reject grounds of appeal 3 and 4.
[14]
Issue 2: whether the Tribunal erred in determining the ceiling height specified in the contract
[15]
Introduction
Before considering this issue, it is appropriate to summarise the submissions of the parties.
[16]
The builder's submissions
In the builder's submissions, it referred to the NSW Guide to Standards & Tolerances and submitted that the use of the word "ordinarily" in the Tribunal Decision at [106] imports some kind of unspecified judicial notice in the evidence and is inconsistent with the actual evidence proffered by the builder's expert. It also submitted that the construction of the applicable architectural plans as found by the Tribunal was incorrect on the basis that when the plans were prepared the floor finishings to be applied, at least, were unknown, meaning the plans could not have been intended to provide for a "finished" dimension.
[17]
The owner's submissions
The owner submitted that the construction of the contract by the Tribunal was supported by the evidence.
[18]
Consideration
The submissions of the parties were not directed to the proper construction of the contract. The NSW Guide to Standards & Tolerances was not relevant to this question of construction because it was not incorporated into the contract. The word "ordinarily" was used by the Tribunal to refer to the ordinary meaning of the words "ceiling" and "floor' rather than indicating that it took judicial notice of some unspecified information.
The Tribunal found that it was unnecessary to determine whether the owner's or the builder contention as to the words comprising the abbreviations "FFCL" and "FFFL" was correct because their meaning was the same. In each case the abbreviations referred to the finished levels of the ceiling and floor respectively. That construction was open to it on the evidence and in our view correct. There is no principled basis upon which some allowance could not be made in the drawings to allow a minimum height that accounts for variation in floor treatments within a commonly understood range. We are not satisfied that the Tribunal made any error in the construction of these abbreviations. It follows that the Tribunal was not in error in finding that there was a breach of statutory warranty by the builder in failing to comply with the architectural plans with respect to the ceiling heights.
For these reasons, we reject ground of appeal 5.
[19]
Issues 3 and 4: whether the Tribunal acted on a wrong principle in exercising its discretion under s 48O(1) of the HB Act or did so in a manner that was procedurally unfair; and whether the builder should be granted leave to appeal against the decision to make the money order
[20]
Introduction
Before dealing with these issues, it is necessary to set out the applicable legal principles and summarise the evidence and submissions of the parties.
[21]
Section 48MA of the HB Act
It is well established that the requirement under s 48MA of the HB Act for the Tribunal to have regard to the "principle" that a work order is the "preferred outcome" creates a mandatory relevant consideration in exercising its discretion whether to make a money order under s 48O(1)(a) of the HB Act rather than a work order s 48O(1)(c)(i) of the HB Act: Galdona v Peacock [2017] NSWCATAP 64 at [50], [65]; Leung v Alexakis [2018] NSWCATAP 11 (Leung) at [139]; John McDonald Building Services Pty Ltd v Gusa [2022] NSWCATAP 60 at [69]; Moody v M K Building Services Group Pty Ltd [2022] NSWCATAP 212 at [48]-[49]. Further, an owner who seeks a money order under s 48O(1)(a) of the HB Act does not have any evidentiary onus: Noori Homes at [53].
In Leung at [140] the Appeal Panel made the following observation as to the nature of the obligation imposed on the Tribunal by s 48MA of the HB Act:
"[140] Being expressed as a "preferred outcome", it operates in the manner of a presumption. That is, unless the facts of the particular case make it inappropriate to order rectification of the defective work by the responsible party, an order should be made in terms that give effect to the principle."
In Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 (Kurmond Homes) at [42]-[46] the Appeal Panel gave the following explanation as to the nature of the obligation imposed on the Tribunal by s 48MA of the HB Act, cited with approval in Brennan Constructions Pty Ltd v Davison [2018] NSWCATAP 210 (Brennan) at [16]-[21]:
"[42] First, the principle, by its terms, only applies "in determining a building claim involving an allegation of defective residential building work or specialist work". It is not expressed to apply where, for example, the building claim only involves an allegation of incomplete residential building work or specialist work. That is not to suggest s 48O does not otherwise permit a work order in respect of work found to be incomplete.
[43] Second, 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.
[44] Third, while s 48MA provides 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. Further, the section 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.
[45] Fourth, the term "preferred" is not defined. The HB Act and Regulations do not specify circumstances in which the preferred outcome is not to be adopted. However, guidance as to the meaning of "preferred" and the circumstances that would justify an order for a different outcome is found in the second reading speech where the Minister for Fair Trading makes clear that the purpose of the amendment was to:
(1) prevent a homeowner from unreasonably refusing a builder access to a building site to rectify defective work;
(2) permit a builder to return to carry out necessary rectification work if they are willing; and
(3) support the timely and cost-effective resolution of disputes.
[46] That is, in deciding what order should be made, a court or tribunal may consider whether there is a reasonable basis for any objection raised by the homeowner to the builder being permitted to rectify the defective work, the terms of any order, whether the builder is willing to return and whether such an order would support a timely and cost effective resolution of the dispute."
In Nationwide Builders Pty Ltd v Le Roy [2019] NSWCATAP 220 (Nationwide Builders) the Appeal Panel found that the Tribunal had not made an error of law by failing to consider or apply s 48MA of the HB Act. The Appeal Panel at [20]-[21] dealt with some specific challenges to the decision under appeal under this ground of appeal:
"[20] The Appellant also made some specific challenges to the Decision under this ground of appeal. First, the Appellant challenged the statement at [21] of the Decision that there is: "no evidence that the Respondent has expressed its preparedness to undertake identified defective work in the report by Mr Capaldi dated 12 November 2018". It was submitted that the Senior Member erred in making this statement because, firstly, "the builder was licensed and able to perform the work at the time of the determination".
[21] In our view, there was no error on the part of the Senior Member because even if the Appellant was "able" to perform the work, it was correct to say that the Appellant had not given any evidence of its "preparedness" to undertake the work as identified by the Senior Member and this was a relevant consideration."
With one qualification, we respectfully concur with the findings of those Appeal Panels. The reference to in Leung at [140] to s 48MA of the HB Act operating in the manner of a presumption is apt to mislead. There is no presumption in favour of a work order which must be rebutted for any other order to be made. While the Tribunal is likely to make a work order in the absence of objection by the owner or other relevant countervailing factors, the Tribunal is not precluded in the exercise of its discretion from making another form of order under s 48O of the HB Act provided it has regard to the preferred outcome of a work order.
[22]
An appeal in relation to the miscarriage of the exercise of a statutory discretion
In House v The King (1936) 55 CLR 499 (House) at 504-505; [1936] HCA 40 Dixon, Evatt and McTiernan JJ stated:
"The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution, for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
It is fundamental that deference is to be given by an appellate court to the discretionary decisions of judges at first instance, insofar as it is insufficient for the appellant merely to persuade the appellate court that it would have decided the matter differently: Australian Health & Nutrition Association Ltd v Hive Marketing Group Pty Ltd (2019) 99 NSWLR 419; [2019] NSWCA 61 (AHNA) at [13], [18]-[19] (Bathurst CJ and Leeming JA).
[23]
The evidence of the owner
The owner in his affidavit sworn on 9 February 2021 at [43], [53]-[55] gave the following evidence:
"[43] On 10 February 2020, I noticed that there was water ingress at the Property. I noticed that there was leaking through the cornice above the windows in the downstairs toilet and downstairs media room. Water had pooled on the floor in the media room, soaking the carpet and underlay. Furthermore, there was dampness to the carpet in the upstairs library and in the master wardrobe which required a wet-vac to be purchased to remove the water. I took photographs of the water ingress and had thermal imaging photographs taken. At Page 297 is a copy of the email I sent to the Builder dated 10 February 2020 with photographs I took on the same date."
"[53] I have instructed my solicitors that I do not wish to have the Builder attend the Property to rectify the defects.
[54] Due to the many defects at the Property, I do not trust the Builder's competency. The constant building issues showed me that the Builder has systemic issues. This has caused me great stress. Towards the end of the building works our meetings were becoming less professional. In addition, the Builder had consistent communication and build quality issues, and failed to meet the Australian Standards, breached environmental regulations and dangerous practices. I have no confidence in the Builder.
[55] I am a veteran of the Australian Army. I was medically discharged due to a number of diagnosis including sleep apnoea and major depressive disorder. I experience persistent symptoms causing considerable distress and manifest distress. I am concerned that if the Builder was to return to the Property to rectify the defects, the situation could be confrontational to me and could relapse. I believe that this could be easily avoided by being able to employ my own chosen contractors who could attend the Property at times I allow. At Page 477 is a copy of my Combined Impairment Report."
There was no cross-examination of the owner on this evidence.
[24]
The evidence of the builder
Daniel Lettieri (Mr Lettieri), the director of the builder, in his affidavit sworn on 11 May 2021 at [32], [34]-[35], [44] gave the following evidence:
"[32] In response to paragraph 43 of David's Affidavit the email sent on that date mentioned was sent to saIes(crvsteIehomes.com.au which at the time was experiencing spam filter issues. All previous correspondence David has sent went directly to either his site supervisor bencrvsteIehomes.com.au, business owner Daniekcrvstelehomes.com.au or office manager christv@crvstelehomes.com.au. At no point during the time mentioned by David did he try and contact Daniel, Christy or Ben despite having their phone numbers and email addresses. We cannot understand why he opted to email our sales team who he had never dealt with, for such a critical issue. At all times during and after the build Crystele Homes were very lenient and patient with David despite him being an extremely difficult client and have always had open lines of communication with him through the parties mentioned above.
…
[34] If we had been made aware of the issue via the usual channels, we would have been able to attend immediately. Consequently, we did not see this email until weeks later. Daniel then tried to call David in the proceeding weeks to arrange to inspect the ingress. David was notified via text message on 17 March 2020 that Daniel had been trying to call him and confirmed he did note Daniel tried to call him on 2 March 2020 but that it was "too late" and he had "handed it off to legal".
[35] David has not made any genuine attempt to allow Crystele to inspect the alleged ingress or rectify it and consequently we cannot be responsible for any associated damage or costs.
…
[44] We are happy for David to provide an alternative individual to be present whilst completing any rectification works if he does not want to be present for mental health reasons. We can provide our new construction manager's credentials to verify his skills and ability to complete the rectification works (we note we have already offered this and been refused). This should give David peace of mind that the work will be done and it will not cause him further anguish."
There was no cross-examination of Mr Lettieri on this evidence.
[25]
The builder's submissions
The builder submitted:
"4.3 The Owner has not sufficiently discharged the statutory preference for a work order. It is not sufficient to assert he has a condition of a kind that might aggravate him.
4.4 The overwhelming evidence is to the effect that the Builder addressed the concerns he had throughout the build.
4.5 The Owner was cross examined with respect to a defect maintenance list. The Owner's counsel conceded at T 2h.43 that 'it would be unreasonable to suggest that there hasn't been compliance by the builder with his defect rectification obligations.'
4.6 The Senior Member in paragraph [116] of his reasons explains his decision not to adopt the preferred remedy.
4.7 The Senior Member's first point at [116] is that evidence established a loss of confidence and trust by the Owner in the Builder. The Senior Member explains this conclusion: 'given what the owner said were systemic defects and poor communications in respect of the claimed defects'. Yet the Senior Member has not identified what evidence he is here referring to, other than what the 'owner said'.
4.8 The Owner cannot displace the preferred remedy merely by stating that they consider the defects systemic and the Builder's communication poor.
4.9 To justify a departure from the preferred remedy the Tribunal must identify by reference to objective evidence that the Owner's loss of confidence is reasonable given the Builder's conduct. It has been held on many occasions that an owner's preference that the builder not return is not sufficient; the loss of confidence must be objectively reasonable.
4.10 It was not put to the Builder that it had acted in such a way so as to justify a conclusion that the Owner had reasonably lost confidence in its ability to rectify the defects.
4.11 As such, the Builder did not have the opportunity to respond to this allegation.
4.12 The Senior Member's conclusion in this regard was unfair, and it was not based on an assessment of the objective evidence.
4.13 The Senior Member's second point in [116] refers to the Owner's health. The Senior Member conceded that this issue cannot determine the form of relief, yet goes on to take into account that making a work order will 'involve significant time to implement' and that this is relevant given the owner's poor health. It is submitted, respectfully, that this was in error.
4.14 The issue cannot be whether the Builder fulfill a money order faster than it could complete the work. The purpose of the money order - as the Senior Member correctly noted - is that an owner can pay a third party to complete the work. There was no evidence that the Builder would take longer, or significantly longer, to do the work than any third party the Owner engaged.
4.15 The Senior Member's third point is that 'The [Owner's] loss of confidence was reinforced by the builder's resistance (in my view unsuccessfully) to what the owner maintained were defects'.
4.16 This reasoning involves, with respect, an obvious error. Where a work order is the preferred order at the end of a contested hearing in which the existence of defects is likely to be disputed, it cannot be correct to rely on the Builder's resistance to the defects as a basis for concluding the Owner has reasonably lost confidence. If this were correct, the preferred remedy would be undermined in any case in which a builder does not concede the defects alleged.
4.17 The Senior Member's final point is that 'a work order would in all likelihood in the present circumstances lead to [further litigation]'. This is premised on a conclusion that the parties are so antagonistic that litigation will inevitably continue. There was, with respect, no evidence to support this view.
4.18 The flexibility set out in s 480 has not been made out, where the Builder suggested others could do the work.
4.19 No question was put to the Builder that concerned his ability to complete the works or any other matter that would impugn the Builder's personal relationship with the Owner.
4.20 As to the conduct of the Owner, the Tribunal would also have regard to the peculiar manner in which he brought the asserted problems to the attention of the Builder. That is, through the sales enquiry email as distinct from making contact with persons he was in touch with during the build, and the fact that he gave no evidence as to any relational problems at that time."
[26]
The owner's submissions
The owner submitted that the builder had not identified any reason to impugn the Tribunal's exercise of discretion.
[27]
Whether the Tribunal failed to afford procedural unfairness
The allegation that the decision to make a money order was made in a way that was procedurally unfair is not made good. The evidence referred to above, at [87]-[90], makes it clear that the parties had joined issue on the question of whether a work order or money order should be made. There was no obligation on the Tribunal, particularly where both parties were represented by counsel, to put to the parties the various issues it might consider in resolving that question or to engage in a process of examining the witnesses itself in order to allow them to comment on issues it might later consider relevant to its determination.
[28]
Whether the Tribunal acted upon a wrong principle
We are not satisfied that the Tribunal acted upon a wrong principle. We do not accept that to justify a departure from the preferred remedy the Tribunal must identify by reference to objective evidence that the owner's loss of confidence is reasonable given the builder's conduct. While, as specified in Kurmond Homes at [46], the Tribunal may consider whether there is a reasonable basis for any objection raised by the homeowner to the builder being permitted to rectify the defective work, there is no principle that requires the Tribunal to undertake any such assessment in the exercise of the discretion to grant relief under s 48O of the HB Act.
There is no presumption in favour of a work order pursuant to s 48MA of the HB Act that the owner is required to rebut before a money order can be made under s 48O(1)(a) of the HB Act. The submission of the builder is contrary to Kurmond Homes at [43] and Brennan at [17].
[29]
Whether the Tribunal failed to weigh competing factors and evidence appropriately, and failed to give appropriate weight to various facts
The Tribunal's assessment of the competing factors and evidence and the weight it gave to various facts does not constitute an error in the exercise of its discretion in determining to make a money order rather than a work order, within the criteria in House at 504-505.
Further, we are not satisfied that the decision of the Tribunal to make a money order was against the weight of evidence within cl 12(1)(b) of Sch 4 of the NCAT Act as explained in Collins at [77]. In light of the evidence of the owner set out above, we do not accept that the evidence in its totality preponderated so strongly against the conclusion of the Tribunal that it can be said that it was not one that a reasonable Tribunal member could reach.
[30]
Conclusion
We have approached these issues having regard to the fundamental principle of deference being given by an appellate court to the discretionary decisions of judges at first instance as explained in AHNA at [13], [18]-[19] as applied to the Tribunal.
We are not satisfied that the Tribunal made an error of law in the exercise of its discretion to make the money order under s 48O(1)(a) of the HB Act by reason of acting on the wrong principle or in a procedurally unfair manner.
Since none of the criteria in cl 12(1) of Sch 4 of the NCAT Act has been satisfied, we are not satisfied that the builder may have suffered a substantial miscarriage of justice. It follows that leave to appeal against the money order should be refused.
Even if we had been satisfied that the builder may have suffered a substantial miscarriage of justice, then having regard to the matters in Collins at [84(2)], we would not have exercised the discretion under cl 12(1) of Sch 4 of the NCAT Act to grant leave to appeal against the decision to make the money order.
For these reasons, we reject ground of appeal 6.
[31]
Introduction
Each of the owner and the owners corporation submitted that they would wish to make submissions on the costs of the appeal.
[32]
Consideration
Rule 38A deals with costs in internal appeals of this nature, and relevantly provides:
38A Costs in internal appeals
…
(2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
For the purpose of r 38A of the NCAT Rules the amount claimed or in dispute is the amount in dispute on appeal, not the amount in dispute in the proceedings at first instance: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57].
We are satisfied that r 38A(2) of the NCAT Rules is applicable to this appeal because the amount in dispute in the appeal is more than $30,000. It follows that the position of each party paying their own costs specified in s 60(1) of the NCAT Act does not apply to the proceedings.
The builder has been unsuccessful in the appeal. There is no reason so far as we can see for costs not to follow the event and for the builder to pay the owner's costs of the appeal. However, if some different order is sought by a party, then application may be made to vary this costs order.
[33]
The disposition of the appeal
Leave to appeal should be refused.
As we have found that the builder has not established any grounds of appeal 3 to 6, by showing that the Tribunal materially erred on a question of law, it follows that the appeal should be dismissed pursuant to s 81(1)(a) of the NCAT Act.
In view of these findings, the builder should pay the owner's costs of the appeal as agreed or assessed under the applicable costs legislation pursuant to r 38A of the NCAT Rules.
However, having regard to the position of the parties, we have decided to make procedural orders in respect of the costs of the appeal.
[34]
Orders
We make the following orders:
1. leave to appeal is refused;
2. the appeal is otherwise dismissed;
3. the appellant is to pay the respondent's costs of the appeal as agreed or assessed under the applicable costs legislation;
4. if any party wishes to make an application to vary order (3) above, the applicant (the costs applicant) must file and serve a costs application, including submissions limited to three pages and any evidence in support, on or before 14 days from the date of this decision;
5. the respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in reply on or before 28 days from the date of this decision;
6. the costs applicant is to file any submissions limited to two pages in reply on or before 35 days from the date of this decision;
7. the parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs application, and if they do not consent, submissions of no more than one page as to why an oral hearing should be conducted rather than the application being determined on the papers. If a hearing is not dispensed with, the parties will be advised of a date for the hearing of the application.
[35]
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: 29 August 2023
ody v M K Building Services Group Pty Ltd [2022] NSWCATAP 212
Nationwide Builders Pty Ltd v Le Roy [2019] NSWCATAP 220
Noori Homes Pty v Patel [2023] NSWCATAP 149
Parkview Constructions Pty Ltd v The Owners - Strata Plan No 90018 [2023] NSWCA 66
Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223
The Owners - Strata Plan No 90018 v Parkview Constructions Pty Ltd [2022] NSWSC 1123
Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40
Yuen v Thom [2016] NSWCATAP 243
Texts Cited: NSW Guide to Standards & Tolerances
Category: Principal judgment
Parties: Crystele Designer Homes Pty Ltd (Appellant)
David Alexander Boyne Wood (Respondent)
Representation: Counsel:
A Ahmad (Appellant)
G Carolan (Respondent)
The proceedings between the parties in the Tribunal
On 14 October 2021, the owner as the applicant commenced proceedings HB 20/44548 against the builder as the respondent by filing a home building application which contained the following details under the heading "4 ORDER DETAILS:
1. under the subheading "A: "WHAT ORDERS DO YOU WANT?" the claim for a work order or a money order for work or services:
"Ingress of water through walls and windows both on the ground and first floor.
Painting defects.
Other defects to be identified."
1. under the subheading "B: "WHAT ARE YOUR REASOINS FOR REQUESTING THE ORDERS?":
"Ingress of water through walls and windows both on the ground and first floor.
Painting defects.
Expert report to be provided upon the service of evidence.
Other defects to be identified."
On 13 November 2020, the owner filed his points of claim in which he relevantly claimed for 22 defects identified in Annexure A as "Preliminary defect list [address of property] Preliminary only. Requires further inspection" together with a refund of $18,200 for a payment by mistake.
On 14 December 2020, the builder filed its points of defence in which it relevantly denied the 22 defects alleged by the owner.
On 12 November 2021, the builder filed its amended points of defence in which it relevantly denied the 22 defects alleged by the owner and asserted that the entire claim of the owner was statute-barred under s 18E of the HB Act.
On 16 and 17 November 2021 and 25 May 2022, the Tribunal heard the proceedings. The owner relied upon a building report dated 15 March 2021 based on inspections on 9 and 18 December 2020, and 10 March 2021, which dealt with the alleged defects under 13 items which extended beyond the 22 defects identified in his points of claim (the owner's expert report). The builder relied on an expert building report dated 7 May 2021 with an inspection on 23 April 2021 (the builder's expert report). The parties also relied on a joint conclave report dated 28 October 2021 of their respective experts (the joint expert report). On 25 May 2022, the Tribunal rejected the costing report of the builder's expert dated 24 May 2022 (the builder's costing report). At the conclusion of the hearing, the Tribunal made procedural orders for written submissions by the parties and reserved its decision.
On 10 October 2022, the Tribunal relevantly refused the builder's informal request in its solicitors' letter dated 26 September 2022 to defer determination of the proceedings.
On 14 October 2022, the builder filed an interlocutory application to stay the determination of the proceedings until the New South Wales Court of Appeal decided the outcome of a summons for leave to appeal against the interlocutory ruling in The Owners - Strata Plan No 90018 v Parkview Constructions Pty Ltd [2022] NSWSC 1123 (Parkview SC).
The Tribunal Decision
In the Tribunal Decision, the Tribunal relevantly:
1. summarised the outcome of proceedings (at [1]-[2]);
2. set out the factual background, details of the proceedings, the common ground of the parties that the building works were residential building work within the HB Act, and noted the owner's claims were under the Tribunal's jurisdictional limit, the expert evidence of the parties, the respective claims of the owner and the builder for a money order and a work order for any defects, and the rejection of the builder's costing report (at [3]-[26]);
3. dealt with the effect of Parkview SC on limitation issues (at [27]-[43]) as follows:
1. held that the further defects in the owner's expert report were beyond the period in s 18E when read with s 48K(7) of the HB Act for the type of defect alleged, unless the amendments took effect retroactively to the time of filing (at [27]);
2. set out the decisions in Parkview SC and David Cameron Jones t/as Oz Style Homes v Panchal [2018] NSWCATAP 238 (Jones v Panchal), and held that s 65(3) of the Civil Procedure Act 2005 (NSW) which provides for retroactive effect if the amendments arose out of the same factual circumstances does not apply to the Tribunal (at [28]);
3. set out the decision made on 12 December 2022 (at [29]);
4. summarised the builder's further submissions (at [30]);
5. noted that Parkview SC was upheld by the New South Wales Court of Appeal in Parkview Constructions Pty Ltd v The Owners - Strata Plan No 90018 [2023] NSWCA 66 (Parkview CA) (at [31]);
6. held that the builder's objections all fail (at [32]);
7. set out the reasons for rejecting the builder's objections (at [33]-[40]):
"[33] The consequence is that the matters identified in the points of claim, as supplemented in the owner's expert's report, all are particulars of a cause of action, properly characterised as for breach of a single contract containing all the relevant statutory warranties. The building claim (as defined in HBA s 48A) constituted by that cause of action was filed within time, for any type of defect as defined in s 18E with s 48K(7), on 14 October 2018, being within two years from practical completion as defined in s 3B which in this case was clearly in November 2018 whichever alternative in s 3B applied. The particulars identify the defects said to constitute the breaches of statutory warranties within the cause of action: cp Owners SP 78465 v MD Constructions PL [2016] NSWSC 162 at [23]-[25].
[34] The absence of a formal amendment application is not to the point if as a matter of evidence, and especially in a Tribunal where pleading rules do not apply, the particulars identifying the alleged defects within the cause of action have been ventilated with opportunity to answer and without other claims of prejudice. That is the case here it seems (from the extensive conclave report and the absence of complaint on such grounds).
[35] Likewise, the "rule in Weldon v Neal" does not apply because there is not a new defendant or a new cause of action. Further, the Parkview decision does not depend upon the applicability of CPA s 65(3) which refers to a new cause of action; compare the power to amend particulars in s 64.
[36] The upshot of Parkview is that, outside the limited effect of HBA ss 18D(2) and 18E(2), the relevant building claim as defined in HBA s 48A is in respect of a cause of action to which further particulars can be added if they otherwise meet the test for amendment of particulars. This applies, not only in respect of a direct contracting party seeking to enforce statutory warranties in s 18B, but also when the litigating party is reliant upon the co-extensive statutory entitlements in ss 18C and 18D to the contractual entitlement: Baron Corporation PL v Owners SP 69579 [2013] NSWCA 238 at [49].
[37] The general law principle underpinning the analysis in Parkview was enunciated in Conquer v Boot [1928] 2 KB 336, a decision which was approved and followed in Onerati v Phillips Constructions PL (1989) 16 NSWLR 730 esp at 746 in a general law context independent of s 18E. The general law was confirmed to apply to HBA Pt 2C as it then stood in Honeywood v Munnings (2006) 67 NSWLR 466 esp at 470, [2006] NSWCA 215. According to the explanatory note to the Home Building (Statutory Warranties) Bill 2006 (NSW), the amendments to HBA s 18E (together with amendments to s 18D) were made to overcome that decision in the specific application within ss 18E(2) and 18D(2). That application is to a "deficiency" of a different kind from that which had been enforced, being a "deficiency" of which the person seeking to enforce did not now and ought not reasonably be expected to have known at the earlier enforcement.
[38] There appears to be no reason that the same principle should not apply whoever is seeking to enforce statutory warranties (either directly as a contracting party or under the extensions in HBA ss 18C and 18D). Indeed, the result could be anomalous otherwise. Such a conclusion is at least implicit in Honeywood v Munnings.
[39] Provided that the tests of procedural fairness, absence of prejudice and the other requirements for amendment are met, there appears to be no policy reason against allowing a cause of action constituting a building claim to be more comprehensively particularised with identification of defects.
[40] The relevant part of the Appeal Panel's decision in Jones v Panchal addresses a different issue, namely, whether the inclusion of some time-barred defects that are particulars of a cause of action that constitutes a building claim or claims for various forms of relief within an application renders the entire cause of action, including major defects, out of time. The conclusion against that outcome appears with respect to be correct. A contrary characterisation would severely undermine the intent of HBA s 18E with s 48K(7) in respect of major defects which constitute particulars within the cause of action. The fact that one cause of action may give rise to claims for different forms of relief (each of which is a defined "building claim") does not undermine their origin in a cause of action on a single contract for breach of warranty or warranties for defective work."
1. held that the builder's challenge to the owner's reliance upon the entire suite of alleged defects particularised in the owner's expert's report fails (at [41]);
2. noted that it was unnecessary to resolve certain factual disputes (at [42]-[43]);
1. set out the principles governing loss arising from defective and incomplete work (at [44]-[49]);
2. considered and set out conclusions on the alleged defects and claim for alternative accommodation during the remedial works (at [50]-[113]) including item 12 as follows (at [103]-[108]):
"Item 12 ceiling heights
[103] The issue was essentially whether the approved plans included height of joists and linings on top and bottom of the floor joists between first floor and ground floor when the approved plans referred to height dimensions top and bottom of each level. Neither party relied upon any reference to approved overall external height of the dwelling and any roof space. Interpretation of the plans was ultimately a matter for the Tribunal to which the evidence of building experts could not substantially contribute. Architectural and draftsperson evidence was not called.
[104] The owner said that "FFCL" and "FFFL" on the plans must be final finished floor and ceiling levels. The builder said that those terms must mean first floor ceiling level and first floor level.
[105] Section 2.5 of the Guide was quoted in the builder's submissions but appears to refer to wall dimensions on drawings, not ceilings where height is significant.
[106] Even if the abbreviation meant what the builder contended, the reference to "ceiling" and "floor" ordinarily encompasses the finished level for those items, not a frame which excludes linings and elements of structure.
[107] Further, if there was ambiguity it was up to the builder, under HBA s 18F, to obtain written instructions. There was no such evidence to which I was pointed in submissions. Rather, the evidence was of a discussion between the owner and the builder in December 2017 to confirm the relative heights of the floors, the ceilings and the gap between ground floor and first floor.
[108] Non-compliance with plans is a defect in breach of statutory warranty. I accept the owner's expert's costing of $42,617.30 as uncontradicted."
1. considered whether a work order or a money order should be made (at [114]-[117]):
"[114] Under HBA s 48MA, a work order is the preferred, not the mandatory, outcome for defective work: Galdona v Peacock [2017] NSWCATAP 64 at [65]. Personal animosity is not sufficient to displace the primacy of a work order for defective work, as the test is objective and the flexibility of s 48O permits an order that the builder fulfil a work order by engaging another party to carry out the work order on behalf of the builder. However, relational breakdown is an element in objective assessment, as can be the builder's conduct in unrelated projects and as will be doubts about the builder's capacity (including being licensed) or skills to undertake the required remediation, the builder's attitude to the standard of work done and willingness to return and the likelihood of further dispute not meaning that a work order would be a timely or cost-effective resolution: Brooks v Gannon Constructions PL [2017] NSWCATCD 12 (appeal not affecting s 48MA decision); Galdona at [64]; BNT Constructions PL v Allen [2017] NSWCATAP 186 at [33]-[36]; Kumar v Sabharwal [2017] NSWCATAP 200 at [29]-[30]; Clements v Murphy [2018] NSWCATAP 152 at [30], citing with approval Kurmond Homes PL v Marsden [2018] NSWCATAP 23 at [31]-[32], [46]; Brennan Constructions PL v Davison [2018] NSWCATAP 210 at [15]-[21].
[115] The ultimate litmus test for whether a work order should be made, and formulating its content, is whether it is appropriate, having regard to the fact that HBA s 48O(3) imports the requirement in s 79U(1) of the Fair Trading Act 1987 (NSW) that the orders will be fair and equitable to all the parties to the claim: Petropoulos v CPD Holdings PL t/as The Bathroom Exchange (No 2) [2018] NSWCATAP 233 at [28], [30], citing with approval Kurmond Homes PL v Marsden [2018] NSWCATAP 23 at [25].
[116] In my view the evidence establishes an objective breakdown of relationship between the parties from the loss of confidence and trust of the owner in the builder given what the owner said were systemic defects and poor communications in respect of the claimed defects. This is exacerbated in the present case by the owner's unfortunate personal health circumstances; while those cannot determine the form of relief, they do form part of the objective characterisation of the relationship and the likely outcome of making a work order which will involve significant time to implement. The loss of confidence was reinforced by the builder's resistance (in my view unsuccessfully) to what the owner maintained were defects. A work order would in all likelihood in the present circumstances lead to a renewal application for a money order following disputes about its satisfactory fulfilment.
[117] Accordingly, there will be a money order in favour of the owner against the builder as previously set out."
1. considered the owner's refund claim (at [118]-[121]);
2. set out the statutory provisions and principles to be applied in determining the costs of the proceedings (at [122]-[134]);
3. set out the money order and the costs procedural orders (at [135]).
The hearing of the appeal
On 14 August 2023, we heard the appeal.
We referred to the necessity to identify a question of law in a notice of appeal as explained in recent authority: Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13] (Meagher, Payne and White JJA); Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 (Thomas and Naaz CA) at [26] (Leeming JA, with Meagher JA at [1] and Griffiths AJA at [75] agreeing).
The builder in response formulated questions which it submitted were questions of law in relation to grounds of appeal 3 and 4 of the notice of appeal, essentially those identified in the prior application for referral of questions of law to the Supreme Court. The builder also sought leave to appeal, for the first time, in respect of grounds which did not identify a question of law. The owner did not concede that these reformulated questions raised a question of law but did acknowledge that they may warrant a grant of leave. No prejudice was alleged to have been caused by the late application for leave to appeal. We indicated we would deal with this issue in our decision.
The parties relied on a joint tender bundle comprising the written evidence, the transcript of the oral evidence and submissions before the Tribunal.
The builder relied on its undated Appeal Submissions filed on 18 July 2023 (the builder's submissions).
The owner relied on Respondent's Submissions dated 2 August 2023 and filed on 4 August 2023 (the owner's submissions).
Each of the builder and the owner made oral submissions reinforcing their written submissions.
The scope and nature of internal appeals
Part 6 Division 2 (ss 80-81) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) contains provisions dealing with internal appeals. Section 80 deals with the making of internal appeals, and provides:
80 Making of internal appeals
(1) An appeal against an internally appealable decision may be made to an Appeal Panel by a party to the proceedings in which the decision is made.
Note. Internal appeals are required to be heard by the Tribunal constituted as an Appeal Panel. See section 27(1).
(2) Any internal appeal may be made -
(a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and
(b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.
(3) The Appeal Panel may -
(a) decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and
(b) permit such fresh evidence, or evidence in addition to or in substitution for the evidence received by the Tribunal at first instance, to be given in the new hearing as it considers appropriate in the circumstances.
Section 81 deals with the determination of internal appeals, and provides:
81 Determination of internal appeals
(1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following -
(a) the appeal to be allowed or dismissed,
(b) the decision under appeal to be confirmed, affirmed or varied,
(c) the decision under appeal to be quashed or set aside,
(d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it,
(e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel.
(2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited by cl 12(1) of Sch 4 of the NCAT Act:
12 Limitations on internal appeals against Division decisions
(1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because -
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence, or
(c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
Note. Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds.
On 12 December 2022, the Tribunal relevantly dismissed the builder's application to stay the determination of the proceedings.
On 22 May 2023, the Tribunal made the money order and procedural directions with respect to the costs of the proceedings (the costs procedural orders), and published reasons for its decision (the Tribunal Decision).
In Collins v Urban [2014] NSWCATAP 17 (Collins), the Appeal Panel at [76] stated that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 of the NCAT Act 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." (emphasis in original)
In Collins, the Appeal Panel at [77], without seeking to be exhaustive, stated the authorities establish that:
1. if there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" within cl 12(1)(a) of Sch 4 of the NCAT Act;
2. the decision under appeal can be said to be "against the weight of evidence" within cl 12(1)(b) of Sch 4 of the NCAT Act where the evidence in its totality preponderates so strongly against the conclusion found by the Tribunal at first instance that it can be said that the conclusion was not one that a reasonable Tribunal member could reach.
Even if an appellant from a decision of the Consumer and Commercial Division 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.
In Collins, the Appeal Panel at [84] summarised the general principles which govern the granting of leave to appeal:
"[84] The general principles derived from these cases can be summarised as follows:
(1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
(2) 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,
BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and the authorities cited there, SAB v SEM [2013] NSWSC 253 at [8] and [9] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45];
(3) In relation to an application for leave to appeal relating to a question of practice and procedure, the application is to be approached with the restraint applied by an appellate court when reviewing such decisions, especially if the application is made during the course of a hearing: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [21] and the authorities cited there."