Duplex Australia Pty Limited v Hathaway

The Grounds of Appeal

1. The builder's Notice of Appeal contained eight grounds. These were: i The Tribunal erred in finding that there was non-compliance with Performance Requirements of National Construction Code, Volume 2, Section F, Part 1. ii The Tribunal erred in finding that defects in roofing cladding are major defects (in) contrary to the definitions provided by the National Construction Code, Volume 2, 2016. iii The Tribunal erred by allowing the Respondent's counsel to amend the points of claim on foot, then declining the legally unrepresented Appellant's request to adjourn and allow the appellant sufficient time to review the amended points of claim and to draft a response (the Appellant has ordered a transcript at the time of this appeal application). iv The Tribunal erred by failing to acknowledge the Appellant's multiple offers to settle, then awarding costs to the Respondents. v The Tribunal erred by denying the Appellant the right to rely upon the evidence provided by the Respondents (the Appellant has ordered a transcript that is not available at time of this appeal application). vi The Tribunal erred by denying the Appellant the right to rely upon the building certification prescribed by the Environmental Planning and Assessment Act 1979 and Regulation 162A of the Environmental Planning and Assessment Regulation. vii The Tribunal erred in failing to acknowledge that the Appellant's expert had acted in accordance with Direction No.15 of the NCAT Procedural Direction No. 3 of 7 February 2014. viii The Tribunal erred in relying upon undefined things as a basis for decision.
2. In their written submissions the homeowners' counsel submitted that these grounds could be grouped together and summarised in the following manner: 1 That the Tribunal allegedly allowed the homeowners to amend their points of claim at the hearing; 2 That the Tribunal allowed the homeowners to rely on evidence outside the timetable; 3 That the Tribunal "[modified] the definitions provided by the applicable Legislation, Regulations and a federally mandated instrument, without being legally entitled to do so", which in substance appears to concern the Tribunal's findings that water ingress through the roof constituted a defect in waterproofing, and therefore was a major defect; 4 A grab bag of complaints as to finding made by the Tribunal, characterised by the appellant as "decisions made against the weight of the evidence" or "inconsistencies and factual errors".
3. During the hearing the parties' submissions dealt with the grounds as summarised, in this order, and we have followed the order in these Reasons.

Nature of an Appeal

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

Questions of law

1. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 (Prendergast), without listing exhaustively possible questions of law, the Appeal Panel identified eight matters which might constitute a question of law. These included a failure to afford procedural fairness.
2. A question of law must be a pure question of law and not depend on findings of fact: Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 at [3-5] (Unique Commercial). The Appeal Panel in Unique Commercial also held at [31] that the formulation of the eight matters in Prendergast that might constitute a question of law was "overly reductive", and at [32], that in order to ensure that questions of law were stated with precision, a more nuanced form of language was appropriate. An allegation about the Tribunal's failure to afford procedural fairness could be better expressed as an allegation that the Tribunal failed to respond to substantial, clearly articulated arguments based on established facts which might constitute a failure to accord natural justice or procedural fairness.

Leave to appeal

1. Clause 12 of Schedule 4 of the NCAT Act provides that, in an appeal from a decision of the Consumer and Commercial Division of the Tribunal, an Appeal Panel may grant leave only if it is satisfied that the appellant may have suffered a substantial miscarriage of justice because: 1 The decision of the Tribunal under appeal was not fair and equitable; 2 The decision of the Tribunal under appeal was against the weight of evidence; or 3 Significant new evidence has arisen, (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
2. The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are well settled. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel conducted a review of the relevant cases ad concluded that [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; (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 no 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.
3. Even if an appellant establishes that they may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave. An appellant must demonstrate something more than that the Tribunal was arguably wrong Pholi v Warne [2014] NSWCATAP 78 at [34].

The builder's notice of appeal

1. The builder sought leave to appeal claiming that that the Decision was not fair and equitable and was made against the weight of the evidence. The Notice of Appeal did not refer to any question of law.
2. In these Reasons we will also consider whether any of the grounds raises a question of law.
3. The parties filed and served written submissions for the appeal. They also made oral submissions and we were provided with a transcript of the Tribunal proceedings. The builder had also sought leave to rely on new evidence for the appeal. This was an email dated 12 August 2024 to Mr Vavrika from the structural engineer for the building project. On 22 August 2024 Principal Member Suthers refused leave.

Background

1. The relevant facts are set out at paragraphs [53 - 73] in the Decision. The first issue was the ownership of the Property. Prior to November 2016, the original owner owned the land. On 16 November 2016 the land was transferred to a company. The original owner was the sole director and shareholder of that company.
2. The land was then subdivided into two lots and, between November 2016 and March 2018, the builder constructed a two story duplex on the site. After the building works had been completed, the land in issue was transferred back to the original owner, who then sold it to the homeowners in April 2020.
3. The second issue is the manner in which the homeowners framed their claim. In their Points of Claim they said that they were the immediate successors in title to the owner of the Property. Section 18C(1) of the HBA provides that a person who is the immediate successor in title to the original owner, is entitled to the benefit of the statutory warranties contained in s 18B(1) of the HBA.
4. The Decision sets out at [67] that: "During the hearing, the Respondent raised this issue on a number of occasions claiming this was factually incorrect and that the Applicants were not the immediate successors -in - title pursuant to s.18C(1) of the HBA." and at paragraph [69] that: "During the hearing, however the Applicants counsel acknowledged that if that was correct, then the Applicants were probably entitled to the benefit of the statutory warranties pursuant to Section 18D(1) of the HBA. "
5. Section 18D(1) provides that a person who is a successor in title to a person who is entitled to the benefit of the statutory remedies, is entitled to the same rights as the person's predecessor.
6. The Decision then continued at [72] that: "The Applicant's Counsel, in oral submissions at the conclusion of the hearing, submitted that all the material facts necessary to rely on either s.18C or s.18D were pleaded in the Points of Claim, namely evidence of building defects and that the Applicants were a subsequent owner and that this was all that was necessary for the Applicants to make oral submissions on s.18D of the HBA." and concluded at [73] that: "The Tribunal accepts the Applicants' submission and acknowledges their right to proceed with their application pursuant to s.18D of the HBA."

The builder's submissions

1. In its written submissions the builder said: "1.3 The Respondents were made aware of the facts relation to the history of the title on 8 December 2023. 1.4 The Respondents did not seek leave to amend their Points of Claim. 1.5 The Respondents sought leave to amend their Points of Claim on foot, during the hearing on 29 January 2024, after having left the critical issue dormant for a period of more than 7 weeks. … 1.6 By resorting to the tactic described in points 1.3 to 1.5 above, the Respondents deliberately framed their case in a way that the Appellant would have conducted the case differently, had the issues been previously raised.
   1.7The Tribunal was aware of the above at the time of the hearing. 1.8 The Appellant prepared the defence based on the original points of claim. The Appellant could not have known in advance that the Respondents' Points of Claim would be amended on foot. 1.9 The Tribunal accepted the Respondents' amendment on foot, irrespective of item 1.6 above. 1.10 A further hearing was required at this point, in order for the Appellant to prepare the defence in a new case. 1.11 The Tribunal did not adjourn the hearing and did not grant he Appellant the time needed to prepare the defence in a new case. 1.12 Ultimately the Tribunal based its decision on the Appellant's defence prepared for a different case. 1.13 By having prepared the defence in a different case, the Appellant incurred unnecessary costs, up to the date of the Hearing. There is no evidence of this having been addressed by the Tribunal. 1.14 By conducting itself in a manner in the points 1.10 - 1.13, the Tribunal denied the Appellant natural described justice.
2. The builder also referred to section [2 -0730] of the Judicial Commission of New South Wales Civil Trials Bench Book. That section provides that an amendment to a pleading will be refused if a party has deliberately framed his case a particular way and the opponent may have conducted his case differently had the new issues been raised.

The homeowners' submissions

1. The homeowners said that they did need not amend their Points of Claim. They pointed to the following exchange between their counsel and the Tribunal: CHATTERJEE: I can put it this way, Senior Member. The Tribunal could find that the sub particular (1) of para 7 of the points of claim is not made out, because the applicants are not (the immediate) successor in title, it makes no difference to my client's claim. They are entitled to the benefit of the warranties. They have put on evidence that they are - and they're got title to the property and it's in the affidavit, they can still make out para 7. I don't need to plead how they have the entitlement, just stating a material fact that they are entitled to (the) statutory warranty. SENIOR MEMBER MCDONALD: Well it's just about standing. I don't think it's about entitlement to the statutory warranty, that seems fairly clear. CHATTERJEE: Yes My clients clearly have standing, they own the property, And evidence has been put on about that ownership from the outset. No dispute being taken by the builder that my clients are not the owners of the property.
2. They also referred to the Decision at [71] where the Tribunal said that the builder "struggled to substantiate the precise privilege or any prejudice that could not be addressed in oral submissions by the homeowners proceeding in this manner," and that it had not identified any prejudice in its written submissions for the appeal.

The builder's submissions in reply and oral submissions

1. The Builder said that it had no legal representation in the Tribunal. This impacted its ability to outline to the Tribunal the prejudice it had sustained and the need for an adjournment.
2. At the hearing Mr Vavrika said that this ground constituted the overwhelming reason why the appeal should be allowed. He also pointed to an instance of actual prejudice sustained by the builder. He said that when Mr Kozlowski, the builder's expert witness, first became aware of the title history for the Property, he sent an email dated 8 December 2023 to the homeowners' expert witness, Mr Le Breton, and copied to the homeowners' solicitors which said: "Further to the issue of "immediate successor in title" under Section 18C of the Home Building Act 1989, I believe "the immediate successor in title" issue is a fundamental issue to be addressed by Chapman Lawyers before I proceed with any formal commentary filed with the Tribunal."
3. Thereafter, Mr Kozlowski did not carry out any further work on his report or meet with Mr Le Breton on site. Nor did he carry out his own assessment of damages or critique Mr Le Breton's scope of works or methodology for remedying the defects.
4. Had he been aware, or had he been advised that the Tribunal might not rule in his favour on this fundamental issue, Mr Vavrika would have instructed Mr Kozlowski to continue to prepare his report and to engage with Mr Le Breton.

Consideration

1. As we have noted Mr Vavrika represented the builder in the Tribunal proceedings and in this appeal. He also drafted the builder's pleadings and the written submissions. He has signed these submissions with the appellation: Ijor Vavrika B.Arch, B.Eng, QSC, Director of the Appellant.
2. He is qualified in matters of building design and construction. He does not have any legal qualifications, though it is apparent that he is generally familiar with the procedure and practice of tribunal hearings. The points of claim in the Tribunal and for the notice of appeal are in the proper form, and his submissions identify relevant legislation and cite appropriate case law. In the Tribunal, when asked by the homeowners' counsel whether he had obtained any assistance in preparing the builder's points of defence and submissions, he answered: No, I did not get any assistance. I explained to you earlier that I have many years of experience in producing documents like this. (transcript at page 21).
3. In Reisner v Blatt [2004] NSWCA 22 at [4] the Court of Appeal observed that: The parties are entitled to appear unrepresented in proceedings in the Court, and sometimes because of lack of funds or other reasons they have no alternative. The Court has a duty to give such persons a fair hearing, and it may be appropriate for the Court to give some assistance to such persons in order to fulfil that duty. However the Court hearing a case between and unrepresented litigant and another party cannot give assistance to the unrepresented litigant in such a way as to conflict with its role as an impartial adjudicator.
4. Sections 18C and 18D of the HBA relevantly provide: 18C Warranties as to work by others (1) A person who is the immediate successor in title to an owner-builder, a holder of a contractor licence, a former holder or a developer who has done residential building work on land is entitled to the benefit of the statutory warranties as if the owner-builder, holder, former holder or developer were required to hold a contractor licence and had done the work under a contract with that successor in title to do the work. …r 18D Extension of statutory warranties (1) A person who is a successor in title to a person entitled to the benefit of a statutory warranty under this Act is entitled to the same rights as the person's predecessor in title in respect of the statutory warranty. …
5. Mr Vavrinka read the homeowners' points of claim as asserting that their claim was made based solely on their standing as "immediate successors" in title under s 18C only. He did not read the points of claim as also providing a basis for a claim that they were "a successor in title to a person entitled to the benefit of a statutory warranty under this Act", which also gave them standing to make the claim under s 18D. The Tribunal did, as we do.
6. It is apparent that both Mr Vavrinka and Mr Koslowski proceeded on the basis that the claim was one made by the homeowners under s 18C, without the standing to do so, and that it did not occur to them that the homeowners also had standing under s 18D. It was only when the matter was raised at trial that the Tribunal was asked to rule on the matter and did so in favour of the homeowners. Before then, the builder had proceeded on the basis that Mr Vavrinka's understanding of the law was correct and in doing so took significant risks in the litigation, including not obtaining a proper expert report.
7. The Tribunal's ruling on the matter was plainly correct. That fact the builder had proceeded on a misunderstanding of the claim, and mounted a technical defence which was not sustained, does not point to any error of lack of fairness in the manner in which the Tribunal considered the builder's defence. Procedural fairness did not oblige the Tribunal to adjourn the hearing so the builder could adjust to its mistake. When the Tribunal inquired, the builder was unable to identify any prejudice requiring an adjournment.
8. It is our view that Tribunal's decision on the question of the homeowners' standing was the correct one. That outcome would have been the same had whether the builder been legally represented or not. The Tribunal is not a court of pleadings. The points of claim clearly indicated to anyone with a knowledge of the HBA that in addition to being immediate successors in title under s 18C, the homeowners were also successors in title to a person entitled to the benefit of a statutory warranty under s 18D.
9. Contrary to the builder's submission, there was no "new case" brought against it under s18D(1) of the HDA. That case had always been one made by the homeowners.
10. We also do not accept that the builder's expert was entitled, in effect, to "down tools" after 8 December 2023 when he identified that the homeowners were not the immediate successors in title to the Property. This was a very risky course for Mr Kozlowski to adopt. Had Mr Vavrika sought legal advice on this issue, it is our view that he would have been advised that the Tribunal would probably find that the homeowners had standing, and that Mr Kozlowski should complete his report and meet with Mr Le Breton.
11. The Tribunal observed at [101] that the only evidence in relation to damages was Mr Le Breton's assessment. The Builder's case may well have benefitted from a proper assessment from Mr Kozlowski, but any prejudice that it sustained as a consequence of Mr Kozlowski's approach to the hearing was entirely self - inflicted, and not attributable to the manner in which the Tribunal conducted the proceedings.
12. The Civil Trial Bench Book also does not assist the builder's case. The Tribunal is not a court of pleadings. Rather the Tribunal's guiding principle under s 36 of the NCAT Act is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings", and, in doing so s 38(4), says that: The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.
13. We therefore reject this ground of appeal. The builder's hope that its technical defence would succeed was unrealistic. The Tribunal's decision in relation to this issue was not unfair and inequitable. We refuse leave to appeal. To the extent that this ground involves a question of law, nor has any error of law been demonstrated.

The builder's submissions

1. The builder's submissions summarised this ground. They stated that: The Tribunal accepted additional evidence by the Respondents, filed without leave and without explanation: 2.1 Affidavit of Jacinta Harrison affirmed on 22 December 2023; 2.2 Amendments to the Respondents' Expert Report, filed on foot; 2.3 In addition to the Respondents and the Tribunal not following the prescribed procedures, the above amounts to prejudice against the Appellant, especially when taking into account that the Appellant had no legal representation.

The homeowners' submissions

1. Ms Harrison is Mr Hathaway's spouse. Her 22 December 2023 affidavit attached a copy of an application to amend the development consent for the building works to be carried out on the Property. This became an issue when the builder asserted that building works had been carried out on the Property after practical completion.
2. The Tribunal's procedural directions did not refer to the filing of reply evidence so it was not correct to say that Ms Harrison's affidavit in reply dated 22 December 2023 was filed in contravention of the Tribunal's timetable. The affidavit was served on the builder well before the hearing. Mr Vavrika was then permitted to file and serve his own affidavit, in response to Ms Harrison's affidavit, on the morning of the hearing.
3. The submission also noted that the only amendments to Mr Le Breton's report were to replace one blurred photograph and to provide a close up of the main bathroom to complement the existing bathroom photographs in his report. The photographs were provided to the builder in the week preceding the hearing.
4. The builder suffered no prejudice as a consequence of these amendments. Mr Vavrika did not seek an adjournment. When he cross-examined Ms Harrison, he did not ask her any questions about her December 2023 affidavit.

Consideration

1. The Tribunal was entitled to admit into evidence Ms Harrison's December 2023 affidavit and the additional photographs for Mr Le Breton's report. The transcript of the Tribunal proceedings reveals nothing which suggests that the builder was denied procedural fairness. As the homeowners' submission noted, Mr Vavrika was permitted to file a further affidavit during the hearing. The builder did not sustain any prejudice as a consequence of these matters.
2. This ground of appeal is not made out and leave to appeal is refused. Nor does any error of law arise.

Background The Tribunal found that Defects #2 and #3 were major defects. "Major defect" is defined in 18E(4) of the HBA: 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 (c) the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act. 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.

1. The Tribunal found, at [85] and [88], that Defects #2 and #3 were defects due to defective design or workmanship in the waterproofing of the Property and thus they were defects in a major element of the building. It further held at [89] that these defects caused or were likely to cause the inability to inhabit part of the building.

The builder's submissions

1. The builder said that the Tribunal should not have found that water ingress from the deficient roof covering, box gutters and flashing, nor the leaks, damp and damage to the ensuite and bathroom constituted major defects. It pointed to the definitions of waterproofing and weatherproofing in the National Construction Code which it described as a "Federally mandated instrument".
2. Under the National Construction Code Waterproofing is limited to wet areas within the building. Weatherproofing under the code, however, includes stopping water ingress through "a roof and external wall (including around windows and doors)."
3. The builder said that the Tribunal wrongly ignored these definitions when making the finding that the two defects were waterproofing defects. It submitted that they are properly regarded as problems with weatherproofing, not waterproofing.
4. Further, it said that the roof sheeting, box gutters and eaves are not load bearing components of the building and that Mr Le Breton's report did not include any evidence of the destruction of the building, or any part of it, or the threat of collapse, or evidence of the building or part of it being uninhabitable to satisfy the requirements of subsections (i), (ii) or (iii) in s18E(1) of the HBA.

The homeowners' submissions

1. The Tribunal was not restricted, when considering whether waterproofing constituted a major element of a building, by the meaning of the word "waterproofing" in the National Construction Code.
2. The builder had put forward no authority for the proposition that waterproofing, where that word is used in the HBA, should be confined to this definition. A restricted meaning is not consistent with the approach taken by the Tribunal in Vella v Mir (No.2) [2019] NSWCATAP 240 (Vella), Ashton v Stevenson; Stevenson v Ashton [2018] NSWCATCD 25 and [2020] NSWCATAP 233 (Ashton), and recently in GMI Construction Pty Limited v Keshavarz [2024] NSWCATAP 68.

The builder's submissions in reply

1. The builder said that to the extent that these authorities did not support its argument, they should not be followed, and that "GMI Construction v Keshavarz is new evidence and the Appellant objects to its inclusion".

Consideration

1. We do not accept that the expression waterproofing as used in s 18E(4) of the HBA, should be confined to the manner in which it is used in the National Construction Code. It defies common sense to say that a major defect as defined could not be caused by water ingress from the roof of a building.
2. In Ashton, at [121] the entire roofing system was said to be part of the waterproofing of the premises and that: "… the term waterproofing when used in the definition of "major element" means the mechanisms by which water coming into contact, by whatever means, with a building, or building element, is excluded from the building or building element."
3. The Tribunal referred with approval at [80] to the following passage in Vella at [24] that: "It was not in dispute in this case that there is water ingress into the dwelling from the balcony. It is clear that this water ingress should not occur. We find that the water ingress is properly characterised as a defect which is a major defect for the purposes of s 18E (of the HBA)." We agree with this formulation.
4. The Appeal Panel in Vella also rejected a submission that the meaning of the word should be consistent with the definition of waterproofing in Schedule 4 of the Home Building Regulation 2014. This schedule limits the works that may be carried out by a contractor to ensure that only qualified and licenced persons carry out residential building work. It held, at [19], that the definition in this Schedule should not be construed as limiting the elements that cause a building to be waterproof.
5. Further, even if we were to come to the view that these decisions were wrongly decided, which we do not, we would follow them in the interests of facilitating consistency and promoting public confidence in tribunal decision making: Australian Postal Corporation v Williams [2016] NSWCATAP 168 at [34].
6. It is also not to the point that there was no evidence in Mr Le Breton's report about the destruction of the building or the threat of its collapse. Mr Le Breton did not need to include this evidence. The homeowners did not rely on those subsections in s 18E(4) of the HBA. They relied only on subsection (i), that the defects were or were likely to cause the inability to inhabit or use the building or part of it, for which there was evidence.
7. The Decision at [29 - 39] summarised the homeowners' evidence on this issue. Their written submissions at [49] also referred to the paragraphs in Mr Le Breton's report where he concluded that, "the defects had caused or were likely to cause in the future the inability to inhabit the property or part of the property for its intended purpose by way of the creation of unhealthy living conditions, loss of amenity and deterioration of building elements." This evidence was not opposed or cross - examined upon, so that the Tribunal would ordinarily accept it, as it did,
8. Similarly, whether the roof sheeting box gutters and eaves are load bearing components was not relevant to the homeowners' argument. To satisfy the definition of major element, the homeowners relied only on the waterproofing failure.
9. The Tribunal's findings in relation to this ground of appeal were correct. The Decision was not unfair and inequitable, nor made against the weight of the evidence. Leave to appeal on this ground is refused.
10. We have also considered whether the question of whether a word or a phrase, when used a statute, is to be given its ordinary meaning or some technical or other meaning, is a question of law. We have formed the view in this instance that no question of law arises. The HBA uses the word waterproofing according to its ordinary meaning, and it was reasonably open to hold that the facts fall within that meaning, and whether they do is a question of fact: Unique Commercial at paragraph [32(6)], citing Collector of Customs v Agfa Gevert [1996] HCA 36, 186 CLR 389. However, if we are mistaken, we do not consider that any error of law has been identified.

Background

1. This ground takes in paragraphs v, vi and vii in the builder's Notice of Appeal. There are two main issues which to some extent overlap. The first is the Tribunal's criticism of the builder's expert, Mr Kozlowski.
2. The Decision at [50] states: "While there is a record of conclave at 779 - 792, it records no agreement between the experts. There are obvious comments that the Tribunal may make at this stage: 1. Mr Kozlowski, a building expert, declined to utilise his expertise to assess the alleged 4 defects in the Le Breton Report and instead engaged in a discussion in correspondence with Mr Le Breton assessing the alleged defects against the 'deem to comply' provisions of the NCC and disregarding 'the readily available performance solutions' (para 15.5 Respondent's written submissions) 2. Mr Kozlowski asked Mr Le Breton a number of questions [para.48(1) - (4) above] that Mr Le Breton could not answer other than on instructions, did not form part of his expertise and were not relevant to his brief. In this way Mr Kozlowski became an advocate of the Respondent's defences, and not an expert providing evidence on the Respondent's behalf. 3. Mr Kozlowski entered a lengthy dissertation about the 'Conduct by the Applicant's side' again going beyond his role as a building expert for the Respondent to make a number of allegations against how the Applicants had presented their case. This is outside the role, competence and expertise of a building expert." and at paragraph [108]: "No alternative assessment of damages, or critique of Le Breton's scope of works, or methodology for remedying the defects was undertaken by Mr Kozlowski, who appeared preoccupied in his report with other matters." The second issue is whether the defective building work was attributable to the builder, or to work carried out by other tradespeople before or after the date of practical completion. This allegation was rejected by the Tribunal. At [93] the Tribunal noted that before completion, any works not carried out directly by the builder, were carried out by its subcontractor, Topaz Constructions Group, and that the builder continued to submit invoices to the homeowners for this work.
3. In relation to any works carried out subsequently, the Decision set out at [98] and [100] that: "98 The Tribunal has two comments on this. First a brand new residence had been built by the Respondent in respect of which practical completion was reached on or about 15 March 2018. It is unlikely that material further building work was undertaken by the developer. This is because the property was a new residence. Secondly, if this occurred and the Respondent had specific knowledge of it, it was incumbent on the Respondent to put that evidence before the Tribunal in support of the denial in their Points of Defence. 100 The Tribunal rejects the Respondent's submission that the Applicants bear the onus in these circumstances where there is a reasonable inference for the Tribunal to draw (which it has) that the duplex residence built at the Property was largely (if not completely) constructed by the Respondent and remained predominantly in the form that it was constructed in March 2018 when the Applicants purchased it in April 2020.

The builder's submissions

1. The builder said that Mr Kozlowski is an architect, a project manager and a licenced builder, and it is within the scope of his professional activities to be aware of the regulatory environment that he operates in. It submitted that when deciding not to engage further with Mr Le Breton, Mr Kozlowski was acting in accordance with the guiding principle in s 36 of the NCAT Act to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
2. In Mr Kozlowski's correspondence with Mr Le Breton, he noted that Mr Le Breton's report had detected only non - compliant water proofing (limited to the deemed to comply method), but no actual leaks. As a consequence, the builder submitted, the Tribunal should not have made findings in relation to the major defects at the Property.
3. As to the Tribunal's findings at [98] and [100], the builder said that the Tribunal has engaged in speculation as to whether he Property was completely constructed by the builder, or that it remained predominately in the form that it was constructed in March 2018, or when the homeowners purchased it in April 2020.The builder argued that there was no evidence before the Tribunal on which those findings were based. The Tribunal should have held that the onus was on the homeowners to provide this evidence, not on the builder.

The homeowners' submissions

1. The homeowners said that the Tribunal's criticisms of Mr Kozlowski were hardly surprising, given his lack of engagement with Mr Le Breton. The builder's challenge to the Tribunal's findings as to the existence of the various defects, was a remarkable position to take, given that Mr Kozlowski did not actually address the homeowners' evidence about the defects, or attend the site to examine them, with the result that the Tribunal had before it unopposed and largely uncontested expert evidence. In those circumstances the Tribunal would ordinarily be bound to accept that expert opinion: Ghosh v Medical Council of New South Wales [2020] NSWCA 122 at [63].
2. As to when the defects occurred, the homeowners said that Mr Kozlowski's evidence that it was "reasonable" to infer that this occurred after completion because there was "a possibility" that further works had been undertaken at this time, was implausible. It referred to the following exchange during counsel's cross - examination of Mr Kozlowski: CHATTERJEE: Your reasonable conclusion is that there was compliant box gutter installed and someone unknown turned up, took it away and installed a non- complying gutter in its place? WITNESS KOZLOWSKI: Well my - my -yes, my conclusion is that - that all the works complied pursuant to the occupation certificate on 12 December 2019, something's happened between in between……… So if there's something omitted and there's an approval, - an occupation certificate issued, then something's been interfered with after the occupation certificate but before the, before Mr Le Breton did his report, there's a window of time there.

The builder's submissions in reply

1. The builder said that given that there was some evidence of building work having been carried out by others after the completion of its building contract, Mr Kozlowski's position was entirely plausible. The builder had every right to rely on the certification process "regulated by the HBA and the Home Building Regulation".

Consideration

1. In our view the Tribunal's criticism of Mr Kozlowski was appropriate. Mr Kozlowski's reliance on the guiding principle in s 36 of the NCAT Act to justify his not engaging further with Mr Le Breton, was misconceived. The Tribunal must give effect to the guiding principle when it exercises any power given to it, and parties to Tribunal proceedings and their representatives are under a duty to co - operate with the Tribunal to give effect to the guiding principle. The section does not regulate the conduct of witnesses appearing in Tribunal proceedings.
2. Mr Kozlowski's primary obligation was to comply with NCAT Procedural Direction 3 - Expert Witnesses (the Procedural Direction), which is based on the code of conduct for expert witnesses contained in the Uniform Civil Procedure Rules 2005 (NSW) - Schedule 7. A revised version of the Procedural Direction was issued by the Tribunal on 11 September 2024, but the relevant version at the time of the Tribunal proceedings was that issued on 28 February 2018. Paragraphs 14 - 16 set out the expert's duties to the Tribunal as follows: 14. An expert witness has an overriding duty to assist the Tribunal impartially on matters relevant to the expert witnesses' area of expertise. 15. An expert witness's paramount duty is to the Tribunal and not to any party to the proceedings (including the person retaining the expert witness). 16.An expert witness is not an advocate for a party.
3. Mr Kozlowski's task, when engaged by the builder, was to prepare a report in response to Mr Le Breton's report on the nature, source, and extent of the water ingress and leaks identified in his report, to quantify the cost of remedying any defects identified, and thereafter to meet with and prepare a joint report with Mr Le Breton. An expert witness is not a legal advisor to those retaining him or her.
4. In Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305 at [79], Heydon JA, as he then was, referred with approval to the comments of Cresswell J in National Justice Compania Naviera SA v Prudential Assurance Co Ltd [1993] 2 Lloyd's Rep 68 at 81- 82 , that expert evidence presented to the Court should be, and be seen to be, the independent product of the expert uninfluenced as to form and content by the exigencies of litigation.
5. Mr Kozlowski did not adopt this approach and instead acted beyond the scope of his retainer, in particular in relation to the legal issue of the homeowners' standing to bring these proceedings. In preparing his report, and when giving evidence, he became an advocate for the builder. We agree with the Tribunal's criticisms of Mr Kozlowski.
6. We also do not accept the builder's submission that the issuing of an Occupation Certificate for the Property leads to the conclusion that there could have been no relevant defects in the Property at the date. Plainly some defects will not be apparent when the certificate is issued and will only manifest themselves at a later time. If the builder's submission were to be accepted, the regime of warranties for residential building work and the six year limitation period to recover damages for major defects, would be redundant.
7. It follows that we also do not accept the submission that it was reasonably open to the Tribunal to conclude that a third party was responsible for the defects after the builder had left the site, and that the onus was on the homeowners to disprove this.
8. The Decision at [95] set out the only evidence before the Tribunal of any additional work after the Occupation Certificate was issued in March 2018. This related to the approval for a different style of skylight for the Property. But there was no evidence about the skylights themselves. The Decision at [97] also noted the builder had made reference in submissions, that "a Hebel partition wall and the fire spraying of the structural beam had been installed by Topaz Group Pty Limited after March 2018", but there was no evidence before the Tribunal in relation to these matters.
9. It was open for the Tribunal to come to the view that the evidence, such as it was, was insufficient to support the builder's case that work carried out after March 2018 was the source of the waterproofing defects.
10. The findings in the Decision relevant to this ground of appeal were not unfair and inequitable, nor made against the weight of the evidence and leave to appeal is refused.

Costs

1. That disposes of all of the issues raised in the builder's Notice of Appeal except for (iv) in relation to costs. The builder said that it had made offers to settle including two Calderbank offers which significantly reduced its exposure to damages and any cost of legal representation of the homeowners. It said that it was unjust and inequitable that the Tribunal did not address these offers and that it should have allowed a separate hearing for costs. The homeowners did not make any submission on this issue.
2. Costs were raised at the conclusion of the Tribunal hearing. The transcript at page 142 is in the following terms: If there is an issue about costs, what I tend to do these days, obviously depending on the outcome, on rule 38, make an order, but say that if there is a reason that that order is not appropriate or there is evidence the parties would want to put in respect of a Calderbank offer or a special costs order, then make submissions on 14 days and I'll amend that costs order, depending on the determination made after I have read the submissions and whatever evidence there might be of Calderbank offers. And that's just a way of not bringing it back unless it needs to come back, and I prefer to do that.
3. The Tribunal did not follow this approach. Instead, it ordered the builder to pay the homeowners' costs before the builder had the opportunity to make a submission on costs.
4. It is highly unlikely that any offer contained in any Calderbank letter from the builder would have exceeded the amount awarded to the homeowners. Nevertheless, the manner in which the Tribunal dealt with this issue does raise an issue of procedural fairness. In our view the builder should have been entitled to make a submission before the final cost order was made.
5. Section 81(2) of the NCAT Act permits the Appeal Panel to vary or set aside, in part, a decision of the Tribunal, and when doing so, to exercise all of the functions of the Tribunal at first instance, and to exercise such functions on grounds other than those relied on at first instance. In these circumstances, rather than remitting this issue to the Tribunal, we propose to deal with the Tribunal costs in the same manner that we will deal with the costs of the appeal. We have set out what we propose to do in the following paragraph.
6. In relation to both the Tribunal costs and the appeal costs, our preliminary view is that as the homeowners have been successful, costs should "follow the event", so that the homeowners are entitled to their costs. We will make provisional cost orders to that effect. However, we will permit the builder to make submissions to the contrary and if it does so, these costs orders will cease to have effect until we determine the issue.
7. In relation to all the other grounds of appeal, leave to appeal is refused and the appeal is otherwise dismissed.

Orders

1. The Appeal Panel's orders and directions are as follows: 1. Leave to appeal is refused and the appeal is dismissed except in relation to the costs order numbered (2) made in Tribunal Proceedings 2023/003960620, which order is set aside and in lieu thereof the following orders made: 1. Subject to order 1(b) below, Duplex Australia Pty Ltd is to pay Jade Hathaway's and Jacinta Harrison's costs of Tribunal Proceedings 2023/003960629 on the ordinary basis as agreed or assessed. 2. Should Duplex Australia Pty Limited seek a different costs order in Tribunal Proceedings 2023/003960620, the directions set out in order 4 below apply. 1. Subject to order 3 below, Duplex Australia Pty Ltd is to pay Jade Hathaway's and Jacinta Harrison's costs of the appeal on the ordinary basis as agreed or assessed. 2. Should either party seek a different costs order in the appeal the directions set out in order 4 below apply. 3. In respect of any such application for costs: 1. The party applying for costs (the costs' applicant) must file and serve its written submissions on those issues only (no more than 3 pages) within 14 days of the date of these orders. 2. The party from whom an order for costs is sought (the costs' respondent) must file and serve any written submissions in reply (no more than 3 pages) within a further 14 days of receipt of the costs' applicant's submissions. 3. The costs' applicant may file and serve a written submission (no more than 3 pages) in response to the costs' respondent's submissions within a further 7 days of receipt of the costs' respondent's submissions. 4. In any such submissions the parties are to address whether the Appeal Panel should dispense with a hearing on the issue of the costs of the appeal and of the costs in Tribunal Proceedings 2023/0039062, so that the issues can be decided on the papers lodged with the Appeal Panel without a hearing.

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 November 2024