These proceedings, commenced on 12 April 2021, involve a renewal application by owners against a builder. It is convenient to here note that there is a related application (HB 21/16006) that was heard at the same time as these proceedings and is the subject of separate orders and reasons.
The issues raised by the renewal application may be summarised as whether there has been compliance with orders made by the Tribunal on 22 September 2020 and, if not, what orders should now be made.
Having considered the evidence and submissions, the Tribunal determined that both parties had failed to comply with those orders and that (1) the owners should be required to comply with order 8 which, as the result of a subsequent variation of the contract, now requires the payment of $12,190 by them to the builder, (2) there were matters covered by the work order which had not been satisfactorily rectified, (3) a money order should be made in relation to those matters in the amount of $5,190, and (4) the respondent should be ordered to provide certificates in relation to electrical and plumbing work.
Accordingly, the net outcome of the proceedings is that the builder is entitled to be paid $7,000 by the owners.
[2]
History of the earlier proceedings
The proceedings upon which the renewal application is based were commenced by the builder. It was noted by the presiding member that, as the parties agreed the contract was still on foot, the owners were "not entitled to sue for monetary damages for incomplete and defective work" but that a work order could be made along with a money order for the balance owing under the contract.
Faced with the owners relying on a report titled "Jim's Building Inspections" (JBI) dated 11 March 2020 and builder relying on the Office of Fair Trading Rectification Order (RO) dated 29 June 2020, the Tribunal preferred the latter because (1) the officer who prepared the RO had been provided with a copy of the JBI report prior to making the RO, (2) that officer was a neutral third party, exercising a statutory function, (3) the JBI report was prepared at the request of the owners, was unsigned, did not list any relevant qualifications, and did not contain anything to suggest its author was aware of the responsibility of an expert provided evidence to the Tribunal.
As a result, the orders made by the Tribunal on 22 September 2020 were as set out below:
1. The Tribunal finds that the contract price was $258,000 plus GST making a total of $283,800.
2. The Tribunal finds as agreed by the parties that the Homeowners have paid the Builder a total of $202,000 leaving therefore a balance of $81,400 owing under the contract.
3. The Tribunal finds on the agreed evidence of the parties that the contract is still on foot and that neither party has sought to end the contract.
4. The Builder is to issue all progress claim[s] certified as required under the contract to the homeowners by 29 September 2020.
5. The Homeowners are to pay the Builder $67,210 by 6 October 2020.
6. The Builder is to rectify all items listed 1-13 under the heading Defective Work in the Office of Fair Trading Report Order dated 29 June 2020; construct a storeroom as provided in the contract and carry out window cleaning. Such work is to be completed by no later than 27 November 2020.
7. The Builder by no later than 10 December 2020 is to issue all certificates including any electrical certificates required under law or the subject contract to show completion and compliance with those laws and contract.
8. The Homeowners are to pay the Builder the balance of the contract price being $14,190 by 17 December 2020.
The RO, which was the first of three aspects covered by order 6, read as follows:
1. Roof flashings have not been cut into the wall. Requires rectification.
Reference:
BCA Part 2.2.2 Weatherproofing
2. Laundry Tub not sealed to wall. Requires rectification.
Reference:
Home Building Act 1989 - Section 18B(1)(a)
3. Stair treads and risers are differing in size. Requires rectification.
Reference:
BCA 2016 Vol. 2 - Clause 3.9.1.2
4. Several internal doors are out of adjustment and require rectification.
Reference:
Home Building Act 1989 - Section 18B(1)(a)
5. Aluminium doors are out of adjustment and require rectification.
Reference:
Home Building Act 1989 - Section 18B(1)(a)
6. Render to rear patio lower walls is drummy and coming away in places. Requires rectification.
Reference:
Home Building Act 1989 - Section 18B(1)(a)
7. An outside tap fixed to the brick wall has come loose. Requires rectification.
Reference:
Home Building Act 1989 - Section 18B(1)(a)
8. Control joints to brickwork [have] not been sealed. Requires rectification.
Reference:
AS 3700-2011 Masonry Structures Clause 4.8.5
9. Mitres and joints to several of the architraves and skirtings have large gaps and require rectification.
Reference:
Home Building Act 1989 - Section 18B(1)(a)
10. External doors have no weather seals fixed to the bottom of the doors. Requires rectification.
Reference:
BCA Part 2.2.2 Weatherproofing
11. Several doors are not sealed to the top and bottom of the doors. Requires rectification.
Reference:
Guide to Standards and Tolerances Clause 9.6
12. Flyscreen to [louvre] window not fitting correctly. Requires rectification.
Reference:
Home Building Act 1989 - Section 18B(1)(a)
13. External Power sockets not sealed to top and sides. Requires rectification.
Reference:
AS 3000 clause 1.7.1
In their renewal application, the owners sought a renewal of orders 4, 6 and 7. As to the orders they sought, the application sought (1) an order for the payment of $141,121, (2) an order that the owners did not have to pay $14,190, and (3) costs.
As to order 4, paragraph 4 of the Amended Points of Claim dated 30 July 2021 alleged that (1) 11 Progress Payment Certificates had been provided by the builder, (2) they did not particularise the stages of work said to have been completed, and (3) clause 12 in the contract specified eight stages of work and stipulated the percentages of the contract sim the builder was entitled to claim when those stages were completed.
As to order 6, paragraph 6 of the Amended Points of Claim suggested the following items had not been rectified by the builder:
1. Roof flashing not cut into the wall (1);
2. Stair treads and risers are differing in size (3);
3. Several internal doors are out of adjustment (4);
4. Aluminium doors are out of adjustment (5);
5. Control joints to brickwork have not been sealed (8);
6. Mitres and joints to several of the architraves and skirting have large gaps (9);
7. External doors have no weather seals fixed to the bottom of the doors (10); and
8. Several doors are not sealed to the top and bottom (11).
As to order 7, paragraph 7 of the Amended Points of Claim suggested the builder had not "issued all certificates including any electrical certificates required under law or the subject contract to show completion and compliance with those laws and contract." Although this paragraph included particulars of certificates which had been provided, it did not list the certificates alleged not to have been provided. It is noted that the list of provided certificates included that, on 12 December 2019, the builder had provided electrical and plumbing certificates "on behalf of the electrician Qiong Wang and plumber Peter Geagea" (emphasis original).
[3]
History of the renewal proceedings
After the initial directions hearing of the renewal application on 4 May 2021, the owners sought and obtained leave to file amended Points of Claim (which was done on 30 July 2021) and, following a second directions hearing on 26 August 2021, a notice was issued on 30 September 2021 to advise the parties of the hearing dates.
[4]
Hearing
At the hearing, a Joint Tender Bundle, comprising pages numbered 1-466, became Exhibit A. Documents only relevant to the related proceedings were added, during the hearing, as pages 466-481. The owners' opening submissions and chronology were marked for identification as MFI 1 and MFI 2 respectively.
On the first day of the hearing, the builder's Mr Wei was cross-examined as was the owners' expert, Mr Xue, and one of the owners, Ms Ding. The second hearing day began with cross-examination of two experts, Mr Nguyen for the owners and Mr Ghobrial for the builder, dealing with an aspect of the related proceedings. That was followed by oral closing submissions from the owners' solicitor, Mr Birch, and Ms Wei who is the daughter of the builder's principal. Although it was necessary to add some time on a third hearing day, that was only in respect of the related proceedings.
It should be noted that (1) the owners had legal representation while the builder did not, (2) the owners had evidence from an expert in relation to the alleged building defects while the builder did not, and (3) the first language of the builder's principal (Mr Wei) was not English which is why his daughter (Ms Wei) was permitted to represent the builder.
[5]
Jurisdiction
As these are renewal proceedings, it is clear the Tribunal has jurisdiction under the HBA and it is noted that the application was lodged within 12 months of the work order being made, as required by clause 8(2) of Schedule 4 in the Civil and Administrative Tribunal Act 2013 (CATA), quoted in the next paragraph.
[6]
Relevant law
The provision in the CATA which allows proceedings to be renewed is Clause 8 of Schedule 4 which provides:
1. If the Tribunal makes an order in the exercise of a Division function in proceedings, the Tribunal may, when the order is made or later give leave to the person in whose favour the order is made to renew the proceedings if the order made is not complied within the period specified by the Tribunal.
2. If an order has not been complied with within the period specified by the Tribunal the person in whose favour the order was made may renew the proceedings to which the order relates by lodging a notice with the Tribunal, within 12 months after the end of the period, stating that the order has not been complied with.
3. The provisions of this Act apply to a notice lodged in accordance with subclause (2) as if the notice were a new application made in accordance with this Act.
4. When proceedings have been renewed in accordance with this clause, the Tribunal:
1. May make any other appropriate order under this Act or enabling legislation as it could have made when the matter was originally determined, or
2. May refuse to make such an order.
1. This clause does not apply if:
1. The operation of an order has been suspended, or
2. The order is or has been the subject of an appeal.
The words quoted above have been considered in earlier decisions which establish principles that can be applied to this case. However, it should first be observed that, to be entitled to commence renewal proceedings, the owners do not have to be the applicants in the earlier proceedings, only that they have had an order made in their favour.
In Bondarek v NSW Land and Housing Corporation [2018] NSWCATAP 299 (Bondarek) at [44-45], it was noted that a renewal hearing does not involve a re-hearing of the initial application but instead requires a consideration of what to do next when there has been non-compliance with the earlier order.
The owners outline submissions referred to what was said in Blessed Sydney Constructions Pty Ltd v Vasudevan [2018] NSWCATAP 98 at [26] which was quoted in Minifie v Maxwell [2020] NSWCATAP 30 (Minifie) which was an appeal from a decision made in renewal proceedings which related to a dividing fence.
The principles set out in Minifie, at [37-41], were summarised as follows in The Owners Strata Plan No 79642 v Five D Pty Ltd [2020] NSWCATAP 110 at [44] as follows:
1. Renewal proceedings are a simple and practical method of enforcing and promoting compliance with Tribunal orders.
2. Jurisdiction arises if a party in "whose favour" an order has been made brings proceedings within 1 year of the date compliance with the order was due; and proves that order has not been fully complied with.
3. If the order has not been fully complied with (or not complied with at all), the Tribunal must focus upon what, if any, appropriate orders should be made to do justice between the parties, with reference to the original order made and all subsequent circumstances.
4. A renewal hearing is not a re-hearing of the original dispute, or a re- consideration of the merits of the original dispute; but to consider what to do next given the non-compliance with the original order.
5. In appropriate circumstances, in a renewal application the Tribunal may consider causes of action and remedies which were not available in the original proceedings.
Simply stated, renewal proceedings are a way the Tribunal can deal with non- compliance with an earlier order by putting a party in the same position as if there had been compliance with that order.
Of course, when considering the issues raised by renewal proceedings in relation to allegations of defective building work, the statutory warranties set out in s 18B(1) of the HBA are relevant. However, in these proceedings, only the first paragraph in s 18B(1) is relevant. That paragraph provides:
1. 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,
It is also necessary to note that s 48MA of the HBA provides:
A court or tribunal determining a build 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.
If a money order is to be made, the assessment of the amount payable must be determined by reference to the fundamental principle that the party affected by the breach should be put in the same position as if the breach had not occurred: Haines v Bendall [1991] HCA 15 (Haines). However, where there has been defective work, the rectification method must be both necessary and reasonable and the rectification cost must be reasonable: Bellgrove v Eldridge [1954] HCA 36 (Bellgrove).
[7]
Evidence of Ms Ding
In relation to the subject matter of the renewal application, the statement of Ms Ding (A35 at [39] expressed reliance on the report of Mr Xue, and referred to orders 4, 5, 6, and 7 but, tellingly, not order 8. She attached a copy of a certificate issued by the builder "on behalf" of the electrician and the plumber and suggested (A35 at [40]): "Neither contractor has provided their own certificate to me." It is noted that those words do not specifically suggest the builder had not provided such certificates to the owners.
Ms Ding's statement also replied to the affidavit of Mr Wei, set out reasons why the owners sought a money order rather than a work order, and indicated that the orders sought in respect of the renewal application were for the builder to (1) pay $7,811 or such other amount as the Tribunal may determine, (2) provide the remaining certificates required to obtain an occupation certificate, and (3) pay the owners' costs of the renewal proceedings.
The oral evidence of Ms Ding, when she was asked questions by Ms Wei, on behalf of the builder, was primarily directed to issues in the related proceedings and did not materially add to the evidence in this renewal application.
[8]
Evidence of Mr Xue
The written and oral evidence of Mr Xue in relation to the issues raised by the renewal application is summarised below in the item-by-item consideration of the eight matters said to still require rectification.
[9]
Evidence of Mr Wei
In his affidavit, Mr Wei suggested the owners took a pedantic approach to the builder's work, Mr Ding having previously worked with him. He said Mr Ding threatened to end the contract and not pay any further amount after Mr Ding claimed a hole cut in a door for a doorknob was too big. Mr Wei also noted that the 29 June 2020 RO also required the owners to make the progress payments required by the contract. He maintained that, in an email dated 11 August 2020, the author of that RO advised him it was no longer of any effect because of the commencement of Tribunal proceedings which result in the subject work order. However, that overlooks the fact that the order now under consideration is not just the RO but the order of the Tribunal which required compliance with that RO.
As to order 4 made on 22 September 2020, Mr Wei said he had sent progress claim certificates on 17 October 2020. As to order 6, he claimed be had completed the work required by the RO to a satisfactory standard. As to order 7, Mr Wei asserted that by 11 December 2020 he had provided all the required certificates except for the stormwater certificate.
The responses of Mr Wei to each of the eight items in the RO raised by the owners in these proceedings are considered below. He indicated that the builder was willing to carry out any further work which the Tribunal considered necessary and noted that the owners had failed to comply with order 8 by not paying an amount of $12,190.
In his oral evidence, Mr Wei was questioned in relation to the eight items considered below. He specifically suggested he had a certificate from the electrician during cross-examination but was not asked to produce that certificate.
[10]
Submissions
The oral submissions of the parties in respect of the renewal application have been considered and, so far as is necessary, are referred to below.
[11]
Consideration
In reaching a decision in relation to this application, the Tribunal has considered the entirety of the documents admitted as evidence and the submissions. These reasons focus on the material central to the issues but, to the extent that any evidence or a submission is not referred to, it should not be assumed that evidence or submissions has been ignored.
That approach is consistent with what was said by Allsop P in Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [2]:
[A] judge may, in dealing with large bodies of evidence, be forced to economise in expressions and approach in order to be coherent in resolving the overall controversy. The need for coherent and tolerably workable reasons sometimes requires a truncation of reference and expression. Judgement writing should not become a process that is oppressive and produces unnecessary prolixity. Not every piece of evidence must be referred to. That said, central controversies put up for resolution by the parties must be dealt with. The competing evidence directed or relevant to such controversies must be analysed or resolved …
Order 4 was not pursued, as reflected by the closing submissions only seeking orders for the payment of $8,592.10 ($7,811 plus GST), provision of the remaining certificates needed to enable the owners to obtain an occupation certificate, and costs.
Although order 6 included the words "construct a storeroom as provided in the contract", the affidavit of Ms Ding, at [12], [14] and [36], indicates that there was an agreed variation for the storage room to be deleted from the scope of works with a $2,000 reduction in the amount payable by the owners. That variation, dated 02 November 2020, was reduced to writing, and signed by both parties with the result that it complied with clause 13 of the contract, prior to its termination by the owners by letter dated 07 June 2021.
It follows that the amount of $14,190 which order 8, made on 22 September 2020, required the owners to pay to the builder by 17 December 2020, should be reduced to $12,190. It is not in dispute that the owners have not paid that amount, as revealed by the statement of Ms Ding at [14]. As noted earlier, while that statement stated, at [39], that the owners had complied with order 5 and that the builder had not complied with orders 4, 6, and 7, it omitted the owners' failure to comply with order 8.
Order 6 also included the words "carry out window cleaning" but that aspect was not raised either in the Amended Points of Claim, during the oral evidence or during submissions. As a result, in relation to order 6, it is only necessary to consider eight of the thirteen items specified in the RO alleged to have not been rectified by the builder. Those items are considered below, taking the item number from the RO and the description from the Amended Points of Claim.
[12]
Item 1 - Roof flashing not cut into wall
While Mr Wei's affidavit suggested the flashing was cut into the wall, Mr Xue's report states that the flashing has not been cut into the brickwork and that apron flashing was not profile to the roof sheeting and he provided three photos in relation to this item. The presence of a piece of duct tape which should have been removed is of no moment. As to this evidentiary contest, the view of the independent expert is preferred by the Tribunal.
[13]
Item 3 - Stair treads and risers are differing in size
Again, Mr Wei disagrees with Mr Xue's opinion that there is a remaining defect which requires rectification, namely that the bottom tread is 15mm out of alignment. The Tribunal accepts the opinion of Mr Xue which was supported by two photos.
[14]
Item 4 - Several internal doors are out of adjustment
The rectification order, in relation to this item, said: "Several internal doors are out of adjustment and require rectification". It did not specify either the number of doors or which doors. Mr Xue's report referred to no less than seven doors and to matters which went beyond the doors being out of adjustment.
Mr Wei accepted that the laundry door was out of alignment, that there were missing screws from the front entry door, that there was bowing in the downstairs entry door which needed rectification.
Mr Xue's report referred to damage at the bottom of the ensuite bathroom door and door to bedroom 2 but those two matters do not fall within the ambit of a rectification order which only referred to doors being out of adjustment. That leaves the doors to the master bedroom and bedroom 3.
The description of Mr Xue in relation to the master bedroom door suggests its hinges were poorly installed and the door to bedroom 3, as shown in photo 13, was not patched when a hinge was relocated. Not being satisfied that those are matters falling within the responsibility of the owners, as suggested by Mr Wei, the Tribunal considers those two doors require rectification which is covered by the RO.
[15]
Item 5 - Aluminium doors are out of adjustment
It was indicated in the owners' closing submissions that this item is not pressed.
[16]
Item 8 - Control joints to brickwork have not been sealed
On this item, Mr Xue's report said: "Poorly applied clear silicon used to seal control joint, that does not match the mortar colour." Mr Wei's response to this item was that the control joints have been sealed but there was no requirement for the colour of the silicon to match. That response does not address the suggestion the silicon was poorly applied, and the Tribunal is of the view that both good building practice and the exercise of due care and skill required the silicon to be properly applied and for it to be of a matching colour.
[17]
Item 9 - Mitres and joints to several of the architraves and skirting have large gaps
The opinion expressed by Mr Xue was: "Rectification is poorly finished with sanding to bog not completed and texture of paint does not match. Cracking appearing to architrave and joints". Mr Wei's response was that there are no gaps, and that cracking is due to normal wear and tear.
In Mr Xue's report, the photos numbered 18 to 22 are accompanied by descriptions which refer to cracking and workmanship but not gaps. It is convenient to here note that, as observed earlier, the officer who prepared the RO had been provided with a copy of the JBI report prior to making the RO. As a result, either the cracking was not present, or it was but was not included in the RO. Neither of those situations warrants cracking now being included in either a work order or money order.
While a comparison of those photos numbered 18 to 22, and those upon which the rectification order was based, suggests Mr Wei is correct when he suggested, in his affidavit, that Mr Xue's photos are of different locations, it is not necessary to decide that aspect as it is sufficient to note that the RO referred to "gaps" and Mr Xue's report referred to matters of cracking and workmanship. However, there are photos which provide support for poorly finished rectification work.
As a result, by reference to the two sentences quoted above in the first paragraph relating to this item, the Tribunal accepts that what appears in the first sentence warrants a work order or money order but not the second sentence.
[18]
Item 10 - External doors have no weather seals fixed to the bottom of the doors
In relation to this item, Mr Xue's report provided a single sentence which read: "This defect has been rectified, however the rectification is causing the door to bow, refer to photo 7." Mr Wei noted that this aspect was covered by the earlier item which has been described as "Several internal doors are out of adjustment". Likewise, Mr Xue did not suggest an additional cost of rectification for this item as it was covered by Item 4. As a result, this item does not require further consideration as it has already been addressed.
[19]
Item 11 - Several doors are not sealed to the top and bottom
In relation to this item, Mr Xue's report said no more than "Bottom of doors are not sealed". Mr Wei suggested this was a paint job and that he did not argue the item at the previous Tribunal hearing as his primary focus was on the money he was owed. Be that as it may, it is not appropriate for the Tribunal to now revisit the basis upon which the work order was made by the Tribunal on 22 September 2020: the role of the Tribunal is to consider whether there has been any failure to comply with that order and, if so, what order should now be made. Accordingly, this is an area of non-compliance which the Tribunal needs to consider when determining this renewal application.
The next matter which requires consideration is whether to make a work order or a money order. While there is no rule against a second work order being made (3D Design & Build Pty Ltd v Lynch [2016] NSWCATAP 229 at [37]) and while there are instances where a second work order has been made (eg Maiolo v Chiarelli [2016] NSWCATAP 81), it is far more common for a money order to be made where there has been non-compliance with a work order.
In this instance, a significant item requiring attention is the flashing and that is an area which Mr Wei does not accept there is any defect. Simply stated, there is a practical difficulty in the Tribunal ordering a building to fix something which the builder suggests has been fixed. That, plus the fact that there was an earlier work order are the two reasons why the Tribunal is persuaded there should be a money order made in respect of the renewal application.
The only evidence of the estimated cost of rectification was that of Mr Xue. Little attention was paid during the hearing to that amount and closing submissions for the owners did no more than urge the Tribunal to award the total amount suggested by Mr Xue, namely $7,811, plus GST which is $8,592.10.
Set out in Appendix 1 is the table whereby Mr Xue derived that figure of $7,811, omitting his sub-total column as the figures in that column are each shown in the total column.
The legal principles in relation to unchallenged evidence were summarised in Hamod v State of New South Wales and Anor [2011] NSWCA 375 at [336-340]. While the prima facie position is that the unchallenged evidence of an expert witness should be accepted, it was noted that, even if such evidence is unchallenged, it may not be accepted if it is "based on an incorrect or incomplete history or upon unproven assumptions".
That qualification accords from what was made clear in Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305: that an expert's opinion should clearly indicate the facts upon which it was based and the process of reasoning which led to the opinion expressed.
It is also relevant to note what was said in Pacorp Holdings Pty Ltd v Waller [2017] NSWCATAP 167 at [58], namely that "provided that some evidence of loss or damage has been produced, difficulty of assessment is not a bar to the assessment of damages, and where precise evidence is not available, the court or tribunal must do the best it can."
In relation to Item 1, Mr Xue used a rate obtained from Rawlinsons and applied that rate to the 10 lineal metres of flashing to obtain an amount of $1,076. That amount is allowed.
Likewise, the amount suggested for Item 3 appears to be reasonable and $86 is allowed for that item.
As to Item 4, the amount of $1,215 suggested by Mr Xue is problematic because his description includes the words "if door is in a condition that cannot be rectified, replace with a new door" despite no such suggestion in the body of his report. Also, although his costing is said to be based on Rawlinsons, the amount is obtained by multiplying an amount of $243 by 5 and there is nothing to indicate either to what the amount of $243 relates or why he multiplied that amount by 5. The use of the number 5 does not accord with the number of doors to which he referred in his report, which was seven.
The Tribunal found that four doors required attention: the laundry door was out of alignment, there were screws missing from the front entry door, and the doors of the master bedroom and bedroom 3 required work on the hinges. It is difficult to see how that work would require more than a day's labour. Indeed, allowing that amount should be sufficient to include the cost of any materials. There is no evidentiary basis for including any allowance for the cost of a replacement door and it was not put to Mr Wei in cross-examination that any new doors were required. For these reasons, an amount of $490 is allowed for this item as that was the amount suggested by Mr Xue for eight hours' work in relation to other items.
Item 5, for which Mr Xue suggested a cost of rectification of $490, was not pressed.
Moving to Item 8, the amount of $490 was based on eight hours of labour at a rate obtained from Rawlinsons. The Tribunal is satisfied that is a sufficient allowance for this item.
For Item 9 Mr Xue suggested two days' work which resulted in an amount of $980. However, that amount was based on two aspects, poorly finished rectification work and cracking, and the Tribunal has determined that the builder is only liable for the former aspect. Accordingly, the Tribunal allows $490 for this item.
Item 10, in the schedule in which Mr Xue set out his estimated cost of repair, said no more than "refer to item 5". However, item 5 was not pressed. Item 10 related to the front entry door which was said to have bowed due to the builder's rectification work. This door was considered under Item 4, Mr Wei's evidence that this door can be rectified was not challenged and there was no evidence that this door needed to be replaced. The Tribunal is satisfied that no additional amount is warranted for this item as the amount allowed for Item 4 is considered sufficient to address this item.
Item 11 was not included in Mr Xue cost estimate. This is where what was said in Pacorp becomes relevant. As indicated earlier, it is not appropriate for the Tribunal to go behind the RO, the builder has not done the work, and the owners have not provided evidence of the reasonable cost of doing that work. As it is difficult to see how this work could require more than a day, the Tribunal allows $490 for this item but on the basis that such an amount includes materials.
The additional components suggested by Mr Xue present as being excessive: $1,500 to cover and protect surfaces during rectification work, $490 for a days' work to make good any affected surfaces, and a further $466 for a days' work to clean the site. It was said that the amount of $1,500 was based on experience and was quantified as 50m2 at $30 per m2. However, there is insufficient factual evidence and reasoning for Mr Xue's opinions in relation to these three amounts.
Having regard to what the Tribunal has found to be the rectification work which is necessary and reasonable (in accordance with Bellgrove) to put the owners in the position they would have been in had the building work been free of defects (in accordance with Haines), the Tribunal allows one day (ie $490) for both protection of surfaces prior to commencing the relevant work and cleaning the site after that work.
Adding $1,076 for Item 1, $86 for Item 3, and $490 for each of Items 4, 5, 8, 9 and 11 plus a further $490 as indicated in the previous paragraph gives $4,102. When the 15% margin for which Mr Xue contended is added, that amount increases to $4,717.30 and the addition of 10% for GST results in a final figure of $5,189.03 which the Tribunal rounds to $5,190.
Order 7 was said to be unfulfilled based on the lack of certificates for electrical work, plumbing work and the stormwater system, as alleged by Ms Ding in her statement (A36 at [51]). As the stormwater system is the focus of the related proceedings and has not been provided due to a dispute in relation to that work, the Tribunal only considers the certificates for the electrical and plumbing work in these renewal proceedings.
Mr Wei provided the owners with a certificate dated 12 December 2019 from the builder purporting to provide certification in respect of the electrical and plumbing work (A133) but did not provide the Tribunal with a copy of any certificate from either the electrician or the plumber.
As was noted earlier, the evidence of Ms Ding on this point (A35 at [40]) was that "Neither contractor has provided their own certificate to me." Those words do not specifically suggest the builder had not provided such certificates to the owners.
It was not until during closing submissions that Ms Dei suggested that certificates from the electrician and plumber had been obtained by the builder and provided to the owners and that copies of those documents could be provided to the Tribunal. The response of Mr Birch, on behalf of the owners, was to take the strict approach that there were no such documents in evidence.
This issue does not require resolution as an order can be made for the provision of certificates from the electrician and the plumber to the owners and they can be either provided or provided again by the builder to put this matter to rest.
In short, the real issue in relation to order 7 appears to be that the owners cannot obtain an occupation certificate until they are provided with a stormwater certificate which is the primary topic of contention in the related proceedings.
[20]
Summary
A consideration of order 6 has resulted in the owners being entitled to be paid $5,190 by the builder. However, order 8 entitles the builder to be paid $12,190 by the owners. The net amount, resulting from the builder's non-compliance with order 6 and the owners' non-compliance with order 8 is that the builder is entitled to be paid $7,000 by the owners. There will also be an order made in respect of order 7 but the Tribunal is satisfied that will be of little moment.
The irony is that the previous application, which was commenced by the builder, resulted in orders which included a work order against the builder and the renewal application, which was commenced by the owners, resulted in a money order being made against the owners.
[21]
Costs
By reason of s 35 of the CATA, s 60 yields to rule 38 of the Civil and Administrative Tribunal Rules 2014 with the result that, in proceedings in the Consumer and Commercial Division of the Tribunal where the amount claimed or if dispute exceeds $30,000, it is not necessary to show special circumstances.
The question of whether rule 38(2)(b) applies was considered in The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite) which established that it is necessary for either: (1) the amount claimed to exceed $30,000; or (2) the amount in dispute to exceed $30,000; or (3) there to be credible evidence which, if accepted, would establish an entitlement to an order for more than $30,000. On the other hand, rule 38(2)(b) does NOT apply where either: (1) the proceedings do not involve a request for payment, or relief from payment, of $30,000 or less; or (2) the relief sought does not depend on a finding that an amount of money is owed.
When rule 38(2)(b) applies, there is a general discretion to award costs and it is well established, by decisions such as News v Cotes [2019] NSWCATAP 186, Bonita v Shen [2016] NSWCATAP 159 and Thompson v Chapman [2016] NSWCATAP 6, that: (1) the starting point is that the usual order for costs should be in favour of the successful party, (2) the award is not to punish the unsuccessful party but to compensate the successful party for the costs incurred in the proceedings, and (3) departure from the usual order is permissible if the circumstances favour that course of action.
Simply stated, when rule 38 applies it is not necessary to establish special circumstances and the usual order is that costs follow the event unless there is disentitling behaviour by the successful party: Latoudis v Casey [1990] HCA 59; Oshlak v Richmond River Council [1998] HCA 11.
While the phrase "costs follow the event" is normally considered by reference to the outcome of the case, that phrase is not confined to the determination of the proceedings as a whole and may be applied to causes of action or even issues: Cretazzo v Lombardi (1975) 13 SASR 4 at 12.
When rule 38(2)(b) does not apply then s 60 applies and s 60(1) provides that "Each party to proceedings in the Tribunal is to pay the party's own costs" but s 60(2) relaxes that default position by providing that "The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs". A non-exhaustive list of considerations is set out in s 60(3).
Although it common for parties to focus upon whether any of those individual considerations apply, the Tribunal is required to make a global assessment of whether there are special circumstances, having regard to the matters set out in s 60(3).
It is well-established that the adjective "special" requires circumstances that are out of the ordinary but do not need to be extraordinary or exceptional: Megerditchian v Kumond Homes Pty Ltd [2014] NSWCATAP 120, adopting what was said in Cripps v G & M Mawson [2006] NSWCA 84 at [60].
Since s 60(2) commences with the words "The Tribunal may award costs …", it is clear the Tribunal has a discretion which must be exercised. It is necessary to consider not only whether there are special circumstances but also whether those circumstances warrant an award of costs.
In this instance, as the application claimed $141,121, it could be said that the amount claimed exceeded $30,000 and rule 38 applies. Overlooking the issue relating to order 7, which occupied little time and only appears to be a formality, an application of the principle that costs should follow the event could be said to favour the view that the owners should pay the builder's costs as the net outcome is in the builder's favour. Alternatively, as the focus of the renewal application was the alleged failure of the builder to rectify defective work, it could also be said that the principle that costs follow the event favours an order that the builder pays the costs of the owner. If that approach is taken, it would be necessary to consider whether there was disentitling conduct on the part of the owners in that they were complaining that the builder failed to comply with order 6 when they failed to comply with order 8.
However, the Tribunal prefers to consider the reality that, based on the Scott Schedule, the owners only ever sought a money order for $7,811 plus GST in respect of the items covered by the renewal application. As a result, s 60 applies and the question become whether there are special circumstances and, if so, whether those circumstances warrant an order for costs.
It is noted that no order for costs was made in the previous proceedings, and it is tolerably clear that was because of the mixed success: the builder obtaining a money order and the owners obtaining a work order. The Tribunal is not satisfied there are special circumstances in relation to this application, and, even if it could be said there are special circumstances, the Tribunal is not satisfied that such circumstances warrant an order for costs.
In forming that view, the Tribunal does not consider either party is entitled to an order for costs when the owners, who complained that the builder had not complied with order 6, had themselves failed to comply with order 8. Indeed, the Tribunal notes that the RO, which was dated 29 June 2020, required the orders to comply with two conditions before the builder was required to comply with the RO and the second condition was that the owners "Make the progress payment as per the contract". However, the owners' failure to pay the builder was why he commenced the previous proceedings and, as at 22 September 2020, it was still necessary for the Tribunal to make orders for the payment of a total of $81,400 by the owners to the builder: $67,210 by 6 October 2020 and $14,190 by 17 December 2020.
Each party has had some success in these proceedings, the owners ar entitled to be paid to $5,190 and the builder $12,190. The Tribunal considers that each party should pay their own costs of these proceedings. However, in view of the costs order considered to be appropriate in the related proceedings, there will be no order as to costs in respect of this application.
[22]
Orders
For the reasons set out above, the orders that will be made are as follows:
1. The applicants are to pay the respondent $7,000 immediately.
2. On or before 31 December 2021 the respondent is to provide the applicants with certificates in relation to the electrical work and plumbing work the subject of the contract dated 08 December 2018.
3. No order as to costs by reason of the order for costs made in the related proceedings.
[23]
Appendix 1
Description Quantity Unit Rate Total
[24]
1 Gain access to the defect areas in accordance with WorkCover requirements 1 item note 0
2 Cover and protect adjacent surfaces during the rectification work - Experience 50 m2 30.00 1,500
3 Item 1 - remove existing over flashing and apron flashing. Install appropriate apron flashing and over flashing. Rawlinsons 2020 pg 203 $82.50 + removal of $25 10 lm 107.60 1,076
4 Item 3 - render patch bottom stair tread. 2 m2 42.80 86
5 Item 4 - remove and realign affected door, if door is in condition that cannot be rectified, replace door with new door. Sand and paint when complete. Rawlinsons 2020 pg 189 5 ea 243.00 1,215
6 Item 5 - remove screws and install new screws to match aluminium frame colour, adjust fly screen door and remove electrical wiring. Rawlinsons 2020 pg 272 8 hr 61.25 490
7 Item 8 - cut out silicon and reapply colour matching seal to control joints. Rawlinsons pg 272 8 hr 61.25 490
8 Item 9 - sand smooth patched architrave and skirtings, repaint architrave and skirting to the nearest corner or architectural break with paint of similar colour. Rawlinsons pg 272 16 hr 61.25 980
9 Item 10 - refer to Item 5. 1 item note 0
10 Make good any surfaces affected as part of the work. Rawlinsons pg 272 8 hr 61.25 490
11 Clean site and leave in tidy condition upon completion of the work. Rawlinsons pg 272 8 hr 58.25 466
SUB-TOTAL 6,793
Preliminaries and margin 0.15 1,019
TOTAL 7,811
[25]
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: 10 February 2022