Diao v Rawson Homes Pty Ltd

Notice of Appeal and Appellant's submissions

1. The appellant lodged a Notice of Appeal (with attachments) dated 26 February 2021. At Part 6A of the Notice of Appeal the appellant stated that he was not asking for leave to appeal. However, in Part 6B the appellant stated that he was asking for leave to appeal on all three bases specified in cl 12 of Schedule 4 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act). Irrespective of the ambiguous position taken by the appellant in his Notice of Appeal, we accept that leave to appeal is sought. For the reasons we discuss below, we are satisfied that leave to appeal is not required.
2. The appellant lodged submissions and further documents (described as a "main bundle") in support of the appeal on 8 April 2021. Several documents in the main bundle do not appear to have been in evidence before the Tribunal (in what was described by the respondent as a "court book" that was before us in evidence).
3. The appellant challenged the Tribunal's reliance on the date that the respondent's certifier issued the OC for calculating when the three year time limit commenced under s 48K(3) of the HBA. The appellant contended that the OC was issued prior to and not after the date of PC of the works. The appellant contended that PC was not until 21 April 2017. Therefore, he submitted that the date from which time should run was 21 April 2017 and not 1 March 2017.
4. Accordingly, the appellant submitted that his application was made within time and the Tribunal's decision was wrong in relying on the date of the OC for calculating time when it should have calculated time from the actual date of PC of 21 April 2017.

Respondent's submissions

1. The respondent's Notice of Reply was dated 25 March 2021 and was included in a joint bundle of documents lodged by the respondent on 6 April 2021.
2. The respondent lodged a chronology and its submissions on 20 April 2021.
3. The respondent opposed leave to appeal being granted on the basis that the appellant had not established any substantial miscarriage of justice, having regard to the criteria required for leave to appeal from a decision of the Tribunal made in its Consumer and Commercial Division. As we have stated above, we are of the view that leave to appeal is not required.
4. In summary, the respondent submitted that: 1. The Tribunal was correct in finding that the application was filed out of time having regard to s 48K(3) of the HBA and the date that the OC was issued and because the defects were not "major defects"; 2. Clause 21 of the contract between the parties provided the mechanism by which PC is to be determined, noting that the appellant did not challenge the respondent's Notice of PC dated 28 November 2016; 3. Section 3B(3) of the HBA provides for a series of statutory presumptions which determine a disputed or otherwise uncertain date for PC (unless an earlier date can be positively established) by reference to the earliest date on which either of the following occurred: 1. hand-over of possession; 2. the last attendance on site by the builder to carry out work that does not affect PC; 3. the date an OC was issued; and 4. if an owner-builder, a date 18 months after the issue of the owner-builder permit being issued (and which was obviously not relevant in this case).
5. The respondent submitted that regardless of whether time is to run from the date that PC was certified or from the date that the OC was issued, the appellant's application was filed out of time.

Request for further submissions

1. In our opinion, both parties proceeded before the Tribunal and on this appeal on a misconception as to the proper basis on which the appellant's application was before the Tribunal. In turn, we formed the preliminary view that this may have caused the Tribunal to apply the wrong provisions of the HBA in its consideration of whether the application was brought within time.
2. We were mindful that the appellant was self-represented before the Tribunal and on the appeal. In Cominos v Di Rico [2016] NSWCATAP 5, the Appeal Panel stated at [13]: It may be difficult for self-represented appellants to clearly express their grounds of appeal. In such circumstances and having regard to the guiding principle, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal. The Appeal Panel has taken such an approach in a number of cases, for instance, Khan v Kang [2014] NSWCATAP 48 and Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69. However, this must be balanced against the obligation to act fairly and impartially (Bauskis v Liew [2013] NSWCA 297 at [68] citing Hamod v State of New South Wales [2011] NSWCA 367 at [309]-[316]). Relevantly, s 38(2) [of the NCAT Act] provides that that Tribunal "may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice.
3. Therefore, after the hearing of the appeal and while our decision was reserved, we raised the following for the parties' consideration: ... [W]e have considered the Tribunal's decision concerning s 48K(3) of the Home Building Act (HBA) and the counting of time from the date the Occupation Certificate (OC) was issued. We note in this regard that according to the Tribunal's reasons for decision, the appellant's cause of action was breach of contract rather than breach of statutory warranty. We further note that s 48K(3) specifies the time period in which a contractual claim made by a person to whom building goods and services were provided must be brought. It presently seems to us that in taking time to run from the date the OC was issued, the Tribunal may have applied the provisions of s 3B(3) of the HBA without expressly referring to that section. This has raised an issue which the parties have not addressed in their written submissions or at the appeal hearing. Given in particular that the appellant is self-represented in the proceedings, we have concluded that the parties should be requested to make further written submissions.
4. We requested the parties to address us on three specific questions: (a) Whether the three year time limit specified in s 48K(3) runs from when the work is deemed to be complete in accordance with s 3B of the HBA or from some other date? (b) If the date from which time runs for a claim under s 48K(3) is calculated in accordance with the provisions of s 3B, why this is so? (c) If the date from which time runs for a claim under s 48K(3) is not calculated in accordance with s 3B, from what date does time run in this case and why does time run from that date?
5. We did not receive any submission from the appellant. We received a further submission from the respondent dated 3 August 2021. In its submission, the respondent answered the questions as follows: (a) Yes, the 3 year limit for the NCAT's jurisdiction under s 48K(3) is the date deemed as the date of completion of residential work under s 3B(3). (b) The Respondent submits that that [sic] s 3B(3) would presume the date of completion to be 28 November 2016 being the date the notice of practical completion was issued (Notice Date), or failing that, 1 March 2017 being the date of the FOC (Certificate Date). The date from which time runs under s 48K(3) is from 28 November 2016, or at the latest by 1 March 2017. (c) The Respondent submits the date from which the three year time limit runs under s 48K(3) is determined by reference to s 3B(3). The Respondent submits this would mean three years lapsed by 28 November 2019, and by no later than 1 March 2020.

Statutory basis of the appeal

1. Internal appeals from a decision of the Tribunal may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, the Appeal Panel set out a non-exclusive list of questions of law at [13]:

• whether there has been a failure to provide proper reasons;
• whether the Tribunal identified the wrong issue or asked the wrong question;
• whether a wrong principle of law had been applied;
• whether there was a failure to afford procedural fairness;
• whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations;
• whether the Tribunal took into account an irrelevant consideration;
• whether there was no evidence to support a finding of fact; and
• whether the decision is so unreasonable that no reasonable decision-maker would make it.

1. A question of law also arises where it involves consideration of whether a court or tribunal has identified or applied the relevant and correct legal test and whether the facts of a case "fall within a statute properly construed": Federal Commission of Taxation v Trail Brothers Steel & Plastics Pty Ltd (2010) 186 FCR 410 at [13].
2. As we have set out above, the Tribunal found that the appellant's claims were time-barred, having regard to s 48K(3) of the HBA and the date on which the OC was issued by the certifier, namely 1 March 2017. By taking time to run from the date the OC was issued, it appears to us that the Tribunal may have been seeking to apply the provisions of s 3B(3) of the HBA without expressly referring to that section. In any event, the Tribunal adopted the date of the issuing of the OC as the last date on which building goods and services were supplied by the respondent. In doing so, the Tribunal failed to disclose the evidence relevant to that particular finding or its reasoning for having regard to that date for the purposes of determining when time runs under s 48K(3) of the HBA.

HBA provisions

1. Section 48K of the HBA relevantly provides in relation to breach of statutory warranty claims and contract claims brought by the party to whom building goods and services were supplied: 48K Jurisdiction of Tribunal in relation to building claims (1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations). (2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section. (3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made). …. (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). ….
2. Section 18E of the HBA 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), (d) if the work is not completed, the warranty period starts on-- (i) the date the contract is terminated, or (ii) if the contract is not terminated--the date on which work under the contract ceased, or (iii) if the contract is not terminated and work under the contract was not commenced--the date of the contract, (e) if the breach of warranty becomes apparent within the last 6 months of the warranty period, proceedings may be commenced within a further 6 months after the end of the warranty period, (f) a breach of warranty "becomes apparent" when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach. …..
3. Section 3B of the HBA 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. (2) If the contract does not provide for when work is complete (or there is no contract), the completion of residential building work occurs on "practical completion" of the work, which is when the work is completed except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose. (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, (our emphasis) (d) (in the case of owner-builder work) the date that is 18 months after the issue of the owner-builder permit for the work. (4) If residential building work comprises the construction of 2 or more buildings each of which is reasonably capable of being used and occupied separately, practical completion of the individual buildings can occur at different times (so that practical completion of any one building does not require practical completion of all the buildings). (5) This section applies for the purposes of determining when completion of residential building work occurs for the purposes of any provision of this Act, the regulations or a contract of insurance under Part 6.
4. From the legislative provisions above, the following conclusions can be drawn: 1. Section 48K(7) applies where the cause of action under the HBA is for a breach of statutory warranty. In such cases, s 18E(1) specifies the length of the statutory warranty period (six years for major defects and two years for other defects) and specifies from when the statutory warranty period runs (where the work is completed, "on completion of the work to which it relates"). Section 3B is concerned with determining the date of completion from which time is to be calculated. 2. Section 48K(3) applies where the cause of action under the HBA is not for breach of statutory warranty, but for some other cause of action such as breach of contract, in cases where building goods and services have been provided to or for the claimant. In such cases, for the Tribunal to have jurisdiction, the application must be lodged within three years of the last supply of building goods and services. Sections 18E and 3B do not apply to claims brought under s 48K(3).
5. As we have stated above, the Tribunal did not expressly refer to s 3B(3) of the HBA but in applying s 48K(3) of the HBA, it found that the date on which the last supply of building goods and services was when the certifier issued the OC on 1 March 2017. The Tribunal found that the application was therefore brought out of time, being lodged on 8 March 2020, which is more than three years after 1 March 2017. While on that calculation the application was out of time by only a few days, there is no power or discretion provided to the Tribunal under either the HBA or the NCAT Act to extend time under s 48K: S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190 at [53].
6. The Tribunal may have considered s 3B(3) of the HBA when taking time to run from the issuing of the OC, although this is not clear. As noted above, the Tribunal stated that it took the date on which the supply was last made as the date on which the OC was issued. However, the Tribunal did not explain why it selected the issuing of the OC as the relevant date to calculate time under s 48K(3).

Consideration

1. As noted above, the incorrect application of a legal principle is a question of law. Failure to provide adequate reasons for decision is also a question of law: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69A at [13]. Leave to appeal is not required in respect of questions of law.
2. We have first considered the basis on which the parties ran the appeal; that is, whether s3B applies to the case, whether the date the OC was issued is the correct date from which to calculate time or whether time should be calculated from some other date by reference to s 3B.
3. We do not accept the reasoning underlying the appellant's submission that the date of the OC should not be used for the purpose of calculating time because PC was in fact reached after the OC was issued. Implicit in that submission is a contention that the OC should not have been issued. However, there was no direct challenge made by the appellant to the validity of the OC and which is within the jurisdiction of the Tribunal to determine: Dyldam Developments Pty Ltd v The Owners - Strata Plan 85305 [2020] NSWCA 327 per White JA (with whom Emmett AJA and Simpson AJA agreed) at [47], [57] and [74].
4. The appellant contended that the proper date for PC was 21 April 2017 based on the email from Mr Garland to him dated 25 May 2017 and therefore argued that the three year time limit would run from that date. We do not accept that PC occurred at a date later than that on which PC was certified by the respondent. If we were to accept the appellant's contention, it would require us to ignore the express terms of the contract or s 3B(3) of the HBA in so far as that provision prescribes an alternative approach for determining the date of PC. This would also require us to effectively re-write the contract between the parties.
5. We also do not accept the respondent's submission that s 3B(3) of the HBA is relevant in calculating the three year time limit under s 48K(3). We note the respondent's further submission that there is no valid breach of contract and even if one is established, then there is no "necessary or appropriate" rectification required: citing Bellgrove v Eldridge (1954) 90 CLR 613. We also note the respondent's submission that the premises were capable of being resided in by the appellant by the date that the OC was issued. However, these are not matters relevant to the issues on the appeal. Further, on the material provided to us on the appeal, they are not matters which we can determine. Having regard to the fact that the appellant's claim was expressed to be for breach of contract, we conclude, but for different reasons, that in this case the issuing of the OC is not the date relevant to calculating time under s 48K(3) of the HBA.
6. It appears from the evidence provided with the appeal documents which are referred to below, that the building works were not completed until about 21 April 2017 and possibly until even closer to the date on which "handover" occurred on 19 May 2017. Based on a chronology that the respondent lodged in the appeal, the respondent accepted that the date of "handover" was 19 May 2017. Whether those works did not prevent PC being issued under the contract on 17 November 2017 is not of concern for our purposes. The legal meaning of the date of PC by reference to the contract or s 3B(3) of the HBA, or the date of issuing the OC for that matter, is not the relevant to test prescribed by s 48K(3). The test under s 48K(3) is a question of fact as to the date when the goods and services were last supplied. It is from that date that the three year time limit is to be calculated. Section 48K(3) could have but does not refer to PC or s 3B(3) for the purpose of determining the last date on which supply occurred under a building contract.
7. The central issue for us on this appeal is whether the Tribunal erred in finding that the appellant's application to bring a claim for breach of contract was brought out of time and therefore the Tribunal did not have jurisdiction to hear it. For the Tribunal's decision to be correct, the relevant time limit for making the application had to be determined by reference to the date on which building goods and services were last supplied.
8. According to the application, the appellant's claim was for rectification of defective or the completion of incomplete work totaling approximately $29,065, concerning: 1. a missing structural beam (for which a variation and credit was given), 2. out-of-plumb brickwork, 3. outstanding face brickwork to the first floor, 4. removing paint from the garage floor, 5. removing an air-conditioning duct and a bow in a brick wall.
9. There are some contemporaneous photographs of these items and emails referring to some of these claims in the evidence. There are also complaints in relation to various items of work particularised in letters from the appellant to the respondent dated 7 March 2017 and also to the Department of Fair Trading dated 19 July 2017. A series of photographs and the correspondence of 7 March 2017 and 19 July 2017 was in the Tribunal "court book".
10. The evidence shows that the respondent had agreed in an email dated 23 March 2017 that it was liable (or had simply agreed) to pay the appellant liquidated damages (LDs) and that it had "gone over the contract period" after the OC was issued. That email was also in the "court book".
11. In his main bundle of documents for the appeal, the appellant provided several documents that do not appear to have been in the "court book" before the Tribunal. We cannot be certain about that because the Tribunal does not identify what evidence was relied upon by the parties and it is not clear from the Tribunal's reasons that the appellant contended that PC was sometime after the OC was issued or that if he did, he advanced that submission by reference to those documents. Therefore, for the purpose of determining the issues on the appeal, we have allowed the additional documents into evidence.
12. In our opinion the documents are of considerable relevance to our determination of the issues on this appeal. In particular, the documents allow us to consider whether there is any utility in the appeal. This is because, even if the Tribunal erred in not providing reasons for taking the date of issue of the OC as the last date of supply, if there was in fact no supply of building goods and services after that date, the appeal would lack utility.
13. As noted above, the evidence indicates that the respondent undertook work after PC was certified and after the OC was issued. Further, the evidence establishes that physical "handover" of the premises occurred at a date much later than that certified as PC and well after the OC was issued. It is not clear from the evidence before us that the only work undertaken after the date on which the OC was issues could be characterised as the rectification of defects, as opposed to the completion of works required under the contract.
14. We note in relation to this that the evidence adduced by the appellant before us included a series of emails received from various employees of the respondent during the period after the OC was issued, including from its Head of Construction (Mr Garland), the Construction Manager (Mr Harris) and the Contract Administrator (Mr Owusu).
15. In summary, those emails contained the following statements made on behalf of the respondent: 1. email on 23 March 2017 from Mr Owusu: …we have gone over the contract period. Once construction has completed… you will be credited the liquidated damages… 1. email on 27 March 2017 from Mr Harris: The delay was due to heavy rain. We can't render and paint in the rain. 1. email on 11 April 2017 from Mr Garland: When all work is completed we will adjust the liquidated damages… 1. email on 1 May 2012 from Mr Garland: Regarding the outstanding items ... Handover looks like it will be the week of the 14/5/17 on being wanting [sic] on the new front door the over [sic] items will be complete. 1. email on 12 May 2017 from Mr Garland: We expect to be able to complete handover on 19/05/2017. 1. two emails on 25 May 2017 from Mr Garland: 1. ... practical completion was reached on the 21/04/2017; and 2. We have completed the items listed and ready for handover. Please finalise your account and you can move into your home.
16. The respondent stated that the outstanding adjusted final contract sum (which included credits for liquidated damages) was not paid by the appellant until June 2017.
17. From the material before us, it appears that time ran from a date that is later than the issuing of the OC, on the basis that the respondent undertook work after that date. We need not be exact about that date for the purposes of this appeal given that the evidence before us is not comprehensive about what work was being undertaken during this time. However, from the material before us it appears that the appellant's application was brought within time insofar as it was brought under s 48K(3) of the HBA. This means that the appeal does not lack utility.

Conclusion

1. We conclude that to the extent that the Tribunal sought to apply s 3B of the HBA in determining that the application was not within time, this was a misinterpretation of the relevant legislative provisions and constitutes an error of law.
2. Further, no reasons were provided for the Tribunal's conclusion that the application was time barred. The Tribunal's reasons for decision in relation to this issue do not possess the minimum characteristics set out in s 62(3) of the NCAT Act, as described by Bell P (Ward JA agreeing) in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231 at [71]: … [T]here are certain minimum characteristics that a Tribunal's reasons must possess. These are really supplied, in relation to the Tribunal, by s 62(3) of the CAT Act which, as noted at [52] above, requires there to be set out in reasons (when requested by a party): (a) the findings on material questions of fact, referring to the evidence or other material on which those findings were based, (b) the Tribunal's understanding of the applicable law, and (c) the reasoning processes that lead the Tribunal to the conclusions it made.
3. The Tribunal made a finding on a material question of fact - that is, that the date of the OC was the last day of supply - without referring to the evidence or other material on which that finding was made. Further, the reasons for decision do not disclose the reasoning process that led to the Tribunal to that conclusion. We are satisfied that the failure to provide reasons constitutes an error of law.

Disposition of the appeal

1. Having regard to our reasons above, we have decided to allow the appeal and to remit the appellant's application for determination by a differently constituted Tribunal.
2. In reaching this conclusion, we make no findings as to the merits of the respondent's substantive application. It may be that even if the application is within time, the appellant cannot establish that the respondent breached the contract. It may also be that the appellant suffered no loss arising from any breach. To the extent that the appellant's claim for breach of contract relates to defective work and is covered by clause 39 of the contract (headed "Statutory Warranties"), the appellant may be in a position that is no better by relying on s 48K(3) than he would have been if his cause of action had been for breach of statutory warranties under s 48K(7) of the HBA.
3. These matters were not canvassed during the appeal hearing and cannot be determined on the basis of the written material before us, without hearing further from the parties. Further, while the material before us indicates that the last supply of building goods and services was within three years of the date on which the proceedings were commenced and that the application was within time, we have made no finding as to the date from which time ran for the purposes of an application under s 48K(3) of the HBA. These are all matters to be considered in the remitted proceedings.

Costs

1. The amount claimed by the appellant in the Tribunal proceedings is less than $30,000. Therefore, s 60 of the NCAT Act applies and the presumption in s 60(1) is that "each party to proceedings in the Tribunal is to pay the party's own costs".
2. While we did not hear from the parties in relation to costs of the appeal, the Tribunal did not make any order as to costs of the proceedings before it and on the material provided, we do not consider that special circumstances warrant making an order for costs. We have therefore made an order that each party is to pay its own costs of the appeal, subject to any application for a different costs order to be made in accordance with our orders below.

Orders

1. We make the following orders: 1. Appeal allowed. 2. The proceedings are remitted to a differently constituted Tribunal for a hearing and determination of the appellant's application in accordance with the evidence previously adduced to the Tribunal and such further evidence as the Tribunal may allow including the evidence before us on this appeal. 3. Each party pay their own costs of the appeal. 4. Order 3 above ceases to have effect if either party contends for a different costs order, in which case the following orders apply. 5. Any application for costs is to be provided to the Appeal Panel and the other party, supported by submissions, within 14 days of the date of publication of these orders. 6. Any submissions in response to the costs application are to be provided to the Appeal Panel and to the other party within 28 days of the date of publication of these orders. 7. Any submissions in reply are to be provided to the Appeal Panel and the other party within 35 days of the date of publication of these orders. 8. Costs submissions are not to exceed five pages in length and must address whether the party agrees to costs being determined without a hearing and on the basis of the written submissions provided.

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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: 13 September 2021