Fair Trading Administration Corporation v Meriton Apartments Pty Limited

By short minutes of consent orders made on 3 December 2001 ('the first consent order'), the respondent agreed to: a. Extend indemnity to the cost of rectifying certain defects affecting the applicant's building, being defect items No. 1 to 43.3 and 66 to 68.7 in the report of Bonacci Rickard dated 28 November 2001 ('the Report'), and b. Reconsider its liability in respect of the balance of the insurance claim, being defect items 44 to 65 in the report.

The respondent subsequently issued the following determinations in respect of the insurance claim: a. An offer of indemnity to the sum of $527,645.00 for the rectification of the defect items No. 1 to 43.3 and 66 to 68.7 in the report, and b. An offer of indemnity to the sum of $77,000 for the rectification of defect items 44 to 65 in the report.

The applicant has accepted the offers of indemnity listed in paragraph 4 above.

The issue of costs was reserved for further hearing under paragraph 2 of the first consent orders.

The parties have agreed that the respondent will pay the applicant the following amounts in relation to the costs and disbursements incurred by the applicant: a. $36,736.30 in respect of legal costs and disbursements, b. $8,464.00 in respect of the fees of Mark Brabazon, Barrister-at-law, in relation to the Fair Trading Tribunal proceedings up to the date of the first consent orders, c. $1,650.00 in respect of the fees of Mark Brabazon in respect of the Fair Trading Tribunal proceedings from the date of the first consent orders to the date of these orders, d. $30,263.25 in respect of expert's costs and disbursement, and e. $490.00 in respect of the applicant's witnesses' fees. Total: $77,603.55.

7. The respondent undertakes to assess the following expert costs and disbursements ('the additional expert costs') as part of the insurance claim: a. The costs and disbursements incurred by the applicant by engaging Rickard & Partners (now Bonacci Rickard) from August 1996 to the date of filing the application, being $10,821.00, and b. The costs and disbursements incurred by the applicant by engaging Bonacci Rickard to administer and supervise the rectification works being carried out by BMP Industrial Pty Ltd, being $26,453.65 Total: $32,274.65

The respondent agrees that it has been provided with all invoices and estimates of costs and disbursements required to assess the component of the insurance claim relating to the additional expert costs.

A. The respondent pay the applicant the sum of $77,603.55 by 26 August 2002,

B. The respondent assess the component of the insurance claim relating to the additional expert costs and forward to the applicant's solicitors a formal determination attaching a Department of Fair Trading Authorisation of payment form by 19 August 2002, such authorisation of payment to be executed by the applicant and returned to the respondent prior to payment of additional expert costs,

C. The applicant file a Notice of Discontinuance of these proceedings in the Registry within 7 days of receiving the respondent's payment pursuant to paragraph A above, and

D. Liberty to apply to the Tribunal with 3 days notice if these orders are not complied with." 72 Following the obtaining of the up-to-date quotations on settlement of the appeal proceedings in December 2001, BMP Industrial duly performed the rectification work concerned and payments were made to it by the plaintiff under the insurance scheme from 21 May 2002 to 6 November 2002, plus $30,263 on 23 October 2002 in respect of the expert's costs. The total payment was $634,823 and was subject to inspections by Mr Seton during the rectification work of its satisfactory completion. That amount represented the plaintiff's claim against the defendant.

73 Two expert building consultants gave evidence in the proceedings, Mr Zakos for the defendant and Mr Marosszeky for the plaintiff. I have earlier briefly referred to their involvement and it is necessary only to shortly deal with what they said. Indeed, in the important respect of betterment resulting from the rectification work the experts agreed in a joint report of 14 October 2009 on a figure, accepted by the parties, that a deduction should be made for betterment from any amount awarded to the plaintiff in the sum of $107,584. I accept this as proper.

74 As to the amount claimed for preliminaries for the rectification work, the experts reached agreement that a rate in the range of 12.5 per cent to 17.5 per cent of the tender price would be reasonable. The plaintiff's claim was for an amount of $120,120 for preliminaries, that is, 25 per cent of the tender price as set out in the amended Scott Schedule dated 8 April 2009. This component covers such matters as site accommodation, supervision, materials handling, general site labour, waste removal, insurances and overheads. Generally, as the evidence showed, preliminaries account for about 8 to 12 per cent of the tender price for residential building work, although for rectification it is usually higher in the range of 10 to 15 per cent. In light of the experts' agreement, I will accept a reasonable figure for preliminaries here of 15 per cent instead of the 25 per cent claimed.

75 Mr Zakos was asked to review the Scott Schedule prepared by the plaintiff in respect of a few items only, being items 1,2, 3,8, 14,16 and 22 but as to which the cost was about 80 per cent of the total claim, to comment on reasonableness and the costs incurred in carrying out the defective work. He inspected the site on 29 September 2008, about six years after the rectification work was done and was provided with the affidavits of Mr Votano, Mr Dyer, Mr Seton, Mr Elliott and Mr Kennedy, the Scott Schedule and drawings related to the building. Apart from item 1 which concerned preliminaries, the remaining six items dealt with by Mr Zakos in his first report of 17 December 2008 were accepted by him as defects and as leading to some rectification work but where what was done was said to be excessive-this aspect is really covered by the experts' agreement on betterment and need not be further considered. As to some items, such as item 22 concerning the fire door where "double-dipping" in the claim was alleged, the experts finally agreed that that did not occur.

76 By reference to the Rickard & Partners Report of 30 August 1996, Mr Zakos was asked also to identify the items which were not major structural defects. He expressed the opinion that only defect 1 as to the roof membrane in the tower building, defect 11 in the tower building in Unit 147 and defect 22 in the tower building lift plant room were major structural defects as they directly affected the habitability of the building or its structural integrity; otherwise the defects were properly categorised as general defects.

77 Mr Zakos also expressed the view that items 1 to 43.3 inclusive in the Bonacci Rickard report of 28 November 2001 were contained in the Rickard & Partners report of 30 August of 2006 in one form or another. However, he said items 44 to 68 in the later report (said earlier in these reasons to be called the "new" items) were not included in the earlier report.

78 Mr Zakos dealt also with those defects which he thought were raised for the first time after September 2000. The relevance of that date is clearly that it was more than seven years after the alleged commencement of the building work in September 1993 having in mind the time limitation period in cl 7(1)(b) of Form 4 of the insurance scheme. By reference to the numbering in the Bonacci Rickard report 28 November 2001, Mr Zakos concluded, after he considered the relevant documents, that - + defects 1 to 43 were clearly identified in the Rickard & Partners Report of 30 August 1996; + defects 44 to 49(part of the so-called "new" defects) were notified prior to September 2000, probably in December 1998; + defects 50 to 54 (part of the so-called "new" defects) were said in the Bonacci Rickard Report to have been identified on 10 August 2001 or 27 November 2001; + defects 55 to 65 were identified by Mr Piccoli in his handwritten list of defects prepared on 23 July 1996 after his inspection on 22 July 1996; and + defects 66 to 69 (relating to the fire service doors) were identified in the scope of works put to tender in October 1999. 79 Mr Marosszeky was qualified as an expert by the plaintiff. He was asked to prepare a technical report in response to the report of Mr Zakos and to comment on a number of matters raised by the original Scott Schedule prepared by the plaintiff's solicitors in 2008 and the amended Scott Schedule prepared by him in April 2009. He did so in a report dated 8 April 2009. Mr Marosszeky as requested by FTAC, first inspected the site on 14 May 2001 to classify the perceived defects as major structural or general. He reacquainted himself with the building and to view the rectification work carried out by a site visit on 6 February 2009.

80 As a general proposition, Mr Marosszeky considered that all issues relating to water penetration into the building and fire safety non-compliance were major structural defects.

81 Of significance, having in mind that the present claim was based on "rectification" work as distinct from "incomplete" work (the distinction is made in cl 5(1)(c) as compared to cl 5(1)(d) in Form 4 of the BSC Insurance Scheme), Mr Marosszeky was referred to the amended Scott Schedule and agreed that items 5 ($4,680 cost), 10 ($780) and 11 ($1,456) were incomplete work-the total value is $6,916.

82 Mr Marosszeky in his report expressed the view that items 10 and 17 in the Rickard & Partners report of 30 August 1996, being respectively items 6 (corrosion protection to steel structures on roof terrace level costing $2,600) and 16 (roof waterproof membrane above pool costing $83,044) in the amended Scott Schedule, were not defects under the insurance scheme because there were no leaks through the slabs into habitable spaces. However, as to item 17 (16) both Mr Marosszeky and Mr Zakos agreed in the joint report that the estimate for this rectification work was reasonable but subject to a betterment in the value of $66,544.

83 The date of the commencement of actual residential building work on the site was raised with Mr Marosszeky in cross-examination with the suggestion that for a building such as the one here concerned it would be at least two months before the pouring of concrete footings. He agreed there would have been "quite extensive site preparation and excavation probably in this case demolition of an existing building". However, and although a little unsure, Mr Marosszeky added that "the period would be relatively short, rather than-it would be at the lower end of that range of one to six months rather than the upper end of it...if there were no basements at all on a building site (seemingly the case here, certainly not extensively so) that footings would be cast within a month of starting."

84 What I think emerges from the expert evidence, on any view of it, is that there were in the subject building very many defects requiring rectification. Much of the contest between the experts was the categorisation of the defects as major structural or general and the extent to which rectification work was required. In that latter respect, the agreement to a value for betterment avoids the need to look precisely at each defect. Therefore, I accept the Scott Schedule, as prepared in its final form by Mr Marosszeky and as read in conjunction with the Bonacci Rickard report of 28 November 2001, as stating the relevant defects; this is subject to Mr Marosszeky's evidence about those items considered to be incomplete work rather than rectification.

Notification of defects within six months of awareness

85 A fundamental point against the plaintiff's claim, indeed a complete bar to it, was that the Owners Corporation failed to notify BSC of the defects within six months after first becoming aware of them contrary to cl 7(1)(b) and (c), of Form 4 of BSC Insurance. Counsel for the defendant, Mr DS Weinberger, submitted that the date of awareness was 7 September 1995, as appeared in the complaint form dated 26 September 1996 completed by the Owners Corporation's then strata manager, so that it was in excess of 12 months before notification of the defects was made. Counsel emphasised that that was consistent with the record in the minutes of the proprietors of 4 September 1995 of "water puddling on roof of lower section of the building", particularly having in mind that water penetration was the primary defect with which this case was concerned. The strata manager, Bright & Duggan, was represented on the Body Corporate and on the Council by Mr Wyatt and the complaint form was completed and signed by its employee, Mr Anderson. The plaintiff's case, said Mr Weinberger, invited the finding that the strata manager "plucked a date out of thin air which had no factual basis whatsoever". In the alternative, Mr Weinberger submitted the date of awareness was 5 February 1996, still beyond the six-month limitation period, when at a Council meeting it was resolved to supply the builder's representative on the Council with "a list of building finishing problems".

86 Mr GA Sirtes SC, who appeared with Ms S Callan of counsel, submitted for the plaintiff that the relevant date of awareness of defects was 30 August 1996 being the date when Rickard & Partners presented its report identifying a large number of defects. As the complaint form was completed on 26 September 1996, and lodged with BSC the following day, then, as senior counsel put, the time limitation of six months had been well met. As to the 7 September 1995 date, Mr Sirtes submitted it was not supported by and was inconsistent with the evidence so as to be factually wrong. In that respect, reliance was placed on the evidence of Mr Piccoli that he prepared a list of defects on 23 July 1996 after inspecting the premises the day before at the request of the other Council members and, in the result, the Council at its 16 August 1996 meeting decided to retain Rickard & Partners as "a qualified structural engineer" to "prepare a report of any defect found". Significantly, Mr Sirtes emphasised that the two Council members who gave evidence, Mr Piccoli and Mr Rudgley, were not cross-examined at all about their awareness of the defects identified in the Rickard & Partners report so that that failure enabled an inference to be drawn that the defendant feared to do so: see per Handley JA in Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418 - 419.

87 At its highest, but not to amount to relevant "awareness", it was put to the plaintiff that the Owners Corporation was aware of the September 1995 "puddling of water" and the February 1996 "finishing problems". It was not until the Rickard & Partners report of 30 August 1996 that awareness of relevant defects arose and even though members of the Council noticed defects from time-to-time which led to the February 1996 decision to refer certain "finishing problems" to Mr Carvalho as the builder's representative on the Council.

88 In Fair Trading Administration Corporation v Owners Corporation-Strata Plan 43551 [2002] NSWSC 624, Burchett AJ as to the six-month requirement said (at [24]): "...It is important to note that the 6 months is measured from the first awareness by the beneficiary (not someone else) of 'the defect', although what must be notified is described as 'matters that could give rise to the losses', not the actual defects that, in a precise sense, are the causes of those matters. A degree of imprecision in a notice seems to be contemplated by a provision so framed."

89 The question was further considered by McDougall J in Owners - Strata Plan 58068 v Fair Trading Administration Corporation [2009] NSWSC 850 where his Honour, in citing with apparent agreement what had been earlier said by Burchett AJ in Owners Corporation-Strata Plan 43551, commented (at [59]): "The language of the comprehensive scheme is not particularly clear. Clause 7(1)(b), (c) speaks of a period 'within six months after the beneficiary first becomes aware of the defect'. However, by the introductory words of cl 7(1), what is required is notification 'of the matters that could give rise to the losses referred to in cl 5...": that is to say, relevantly, losses in rectifying defects in insured building work due to' the specified causes (cl 5(1)(d)). It follows, in my view, that awareness of a widespread problem with (for example) moisture penetration will attract the obligation to notify because it is, obviously enough, something 'that could give rise to' a claim for faulty workmanship or materials or the like. It is not necessary that the precise nature or cause of the defect be known before the obligation to notify arises." 90 For myself, I would only add that the degree of awareness required, in an objective view of the beneficiary's observation of the problems, must be real and reasonably informed and not the result of mere speculation or supposition. In other words, that the matters seen could give rise to discernible financial losses in rectifying whatever be the causes of the defects. Of course, and consistent with what McDougall J said and as to which I did not understand there to be any issue, once notification be given of matters that could give rise to a loss then it is unnecessary to give further notification as and when other defects manifest and become known because the operation of the insurance scheme had already been triggered.

91 In the present case, on the evidence, observations were made as early as 4 September 1995 at the first general meeting at the proprietors as to water puddling on the roof (but, significantly, not as to any water penetration into the building itself) following the constitution of the Owners Corporation on 24 July 1995 and with the building complex completed in August 1995; the first meeting of the Council of the Body Corporate was not held until 19 September 1995 when office bearers were elected. At that stage, no matters of concern with the building were raised other than cosmetic and functional things like locks sticking and loose driveway posts. It was not until 5 February 1996 that only "finishing problems" (but not particularised) were seen and the builder was to attend to them. Then, it seems following observations by various members of the Council, other problems were discussed at Council Meetings until Mr Piccoli prepared a list of defects on 23 July 1996 after his inspection of the building for that purpose on 22 July 1996. Council, at its meeting on 16 August 1996, decided to commission Rickard & Partners to inspect the site and identify defects which it duly did, albeit in a preliminary way due to time constraints, on 30 August 1996.

92 Mr Weinberger in supporting a 7 September 1995 awareness date relied on the proposition that the onus was on the plaintiff to displace what was said in the complaint form, otherwise that date stood. He pointed to the plaintiff's failure to lead evidence from Mr Wyatt and Mr Anderson who were in a position to explain why the strata manager cited that date as the date of awareness. I do not accept that submission. It involves requiring the plaintiff to prove the negative, always a difficult task, where what was asserted by it was a later date: see Apollo Shower Screens Pty Ltd v Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561 at 564-565 per Hunt J. To the extent the plaintiff obtained evidence pointing to a later date then, in my view, the evidentiary onus shifted to the defendant to make good, if it could, its assertion for the earlier date. In that respect, I think it was up to the defendant to call evidence from Mr Wyatt and/or Mr Anderson, and its failure to do so properly enables a Jones v Dunkel (1959) 101 CLR 298 inference against it.

93 I find that the relevant nature and degree of awareness of the defects arose not earlier than when Mr Piccoli inspected the building on 22 July 1996 and prepared the handwritten list the next day which was considered by the Council of the Owners Corporation on 16 August 1996. Therefore, the date the Owners Corporation itself as the beneficiary first became aware of the subject defects was 16 August 1996. The notification to BSC on 26 September 1996 was within the six-month limitation period in cl 7(1)(b) and (c). This aspect of the defence therefore fails.

Notification of defects within limitation period after commencement of building work

94 In a submission/history dated 16 July 1999, Ms Dollimore of the Department in assessing the Owners Corporation's claim for indemnity under BSC Insurance noted the date building work commenced as being 21 September 1993. That was in accordance with a file note in the Department's records of Chitra Sekar of 4 October 1996. On this basis, Mr Weinberger submitted for the purposes of cl 7(1)(c) of Form 4 that the statutory limitation period of three years from the commencement date of insured building work to notify general defects was exceeded as the complaints form was not completed until 26 September 1996, that is, three years and five days later. It was accepted that for major structural defects under cl 7(1)(b) the notification was within time as the limitation period was seven years. Mr Weinberger emphasised, in a manner similar to his earlier approach as to the awareness point, that neither Ms Sekar nor Ms Dollimore was called to give evidence for the plaintiff.

95 Having in mind cl 32 of the BSC Regulation, which provides for the purposes of s 90 of the BSC Act, that residential building work is taken to have been commenced "when the footings of the structure were placed or, if no footings are involved in the work, when the work substantially commenced", Mr Weinberger submitted the test as to the footings was not exclusive and permitted proof of commencement other than by reference to footings. Counsel relied on Owners-Strata Plan 58068 where McDougall J (at [79]) commented to that effect as to the operation of cl 32. Thus, the date recorded by Ms Dollimore should be accepted.

96 Against those submissions, Mr Sirtes put that the date of commencement of building work was after 26 September 1993, a date not earlier than November 1993 was suggested, so that the three-year limitation period was not exceeded. Senior counsel relied on cl 32 of the BSC Regulation to fix the commencement date as the time from when the footings were placed which, on the invoice from N & S Concrete, was probably 2 November 1993.

97 As further support for a November 1993 commencement date, Mr Sirtes relied on the files obtained from Parramatta City Council of correspondence from the defendant builder and the Water Board documents, as earlier specified, which were all created in November 1993 and referred to "commencing construction", "work is about to commence" and "construction activity has commenced".

98 Beyond the file note by Ms Dollimore, I think the evidence of a November 1993 commencement date for the building work was compelling. Further, it seems to me to be extraordinary that a builder, particularly one the size of Meriton Apartments, provided no evidence in either oral or documentary form to support its assertion of a commencement date before 26 September 1993. Even were one to accept Ms Mihail's evidence that the defendant had destroyed relevant documents, difficult to do so because the defendant was well aware of this dispute about defects and the real potential for litigation in a timely way, there remains the position that not one witness was called by it to address this issue and no explanation offered for the omission. It is only appropriate to draw a Jones v Dunkel inference against it.

99 I find that building work commenced on the site, certainly the placement of footings, not earlier than November 1993. The three-year limitation period in cl 7(1)(c) for notification of general defects by 1 November 1996 was met as the notification was given on 26 September 1996. The defence on this point therefore fails.

100 The finding made that notification of the defects was within the six-month limitation period in cl 7(1)(b) and (c) makes it unnecessary to deal with the defence that BSC did not properly exercise its discretion on 19 July 1999 to extend time under cl 7(2) due to circumstances outside the control of the Owners Corporation. This issue simply does not arise.

Distinction between "major structural" and "general" defects

101 In view of the finding that building work commenced on the site not earlier than November 1993 for the purposes of the three-year limitation period in cl 7(1)(c), it is unnecessary to make a distinction as to whether the defects were major structural defects or general defects. The defence on this aspect does not arise.

Whether a "deemed" decision and need to extend time to appeal

102 It was common ground that the Owners Corporation lodged its insurance claim with BSC on 14 October 1998. There was no time-limitation period prescribed in either the BSC Act or in Form 4 within which such claim had to be made once the limitation periods in cl 7(1) had been met to trigger the operation of the insurance scheme.

103 However, Mr Weinberger submitted that, by the operation of s 86(2) of the BSC Act, such a claim was taken to have been refused if BSC as the decision-maker did not serve notice on the applicant of its decision within 40 days of the claim being lodged, that is, by 23 November 1998. A claimant aggrieved by any decision made by BSC was able to appeal against the decision to the Fair Trading Tribunal under s 85(d) but by reason of s 86(1)(b) it had to do so within 30 days, that is by 23 December 1998, after the decision was taken to have been made under s 86(2). As the owners did not lodge an appeal until 21 June 2000, without an extension of time under s 86(3), it was consequently out of time and FTAC, and indeed the Fair Trading Tribunal had no power or competence to deal with it.

104 Mr Sirtes pointed out that Mr Weinberger's submission rested solely on the construction of s 86(2) as contended for by him but that as a matter of law it was wrong-that is, the deeming provision in s 86(2) had no application to the present case of a claimant seeking a decision under BSC Insurance. The direct point, said senior counsel, had received careful and considered attention in Owners Corporation SP56911, cited earlier in these reasons, where Mr GJ Durie, a senior member of the Consumer, Trader and Tenancy Tribunal, found that s 86(2) only applied to an "applicant" under s 85(a) for the issue or alteration of an authority and not to the other classes of persons identified in paras (b), (c), (d) and (e) of the section as a "holder", "respondent", "claimant" or "person".

105 Mr Durie reasoned the matter in this way: "v. Section 85 creates 5 different categories of persons who have a right to appeal to the Tribunal against a decision of the Corporation. In each of those categories the person given the right to appeal is described in a different manner: there are respectively an applicant, a holder of an authority, a respondent, a claimant, and a person who has entered into a contract. Having been so described initially, there is then a qualification applicable to each. The person must be aggrieved.

w. I then turn to s 86(1), which sets out a time limit applicable to all such persons. They are now generically referred to as the persons aggrieved. This is the necessary reference back to s 85. Section 86(2) then provides for applicants whose application to the Corporation has not been served within a specified period.

x. In my opinion, when it came to pass the legislation, Parliament could have continued to use the generic description of person aggrieved in s 86(2) but did not. Instead it used but one of the five particular descriptions given in s 85. It makes sense not to use the descriptions in s 85(b) and (c), but had Parliament intended to give a right to appeal against a deemed refusal for those in all remaining categories, it could very easily have done so. Further, there is the use of the word 'application' in s 85(a) which is picked up in s 86(2). 'Application' is not a word which would normally be used in respect of an insurance matter and both the remaining categories relate to insurance.

y. Does this interpretation further the purpose of the legislation? I consider that it does. Protection of homeowners depends on a supply of competent builders, and a part of providing that supply is to ensure that the numbers are adequate and remunerated. As Ms Campora submitted, livelihood is involved in applications within s 85(a) and a prompt decision is required.

z. There is a negative side for owners. Should the Corporation not respond there would need to be action for a mandamus. One would hope that that was never necessary. There are also the political steps referred to in Ms Campora's submissions and the availability of intervention by the Ombudsman."

106 In deciding the case, as he said, Mr Durie followed his earlier oral decision in Carr v FTAC (unreported). Neither decision has been the subject of challenge on appeal and still stand.

107 According to the pleading here, and as the matter was argued by Mr Weinberger, the unchallenged deemed refusal of the Owners Corporation's claim lodged on 14 October 1998 meant that there was no obligation to consider it further after the deemed refusal on 23 November 1998 and the expiry of the appeal limitation period on 23 December 1998. In the result, counsel put that any later payments made by the plaintiff to the Owners Corporation in purported satisfaction of its claim were ultra vires the insurance scheme and, therefore, irrecoverable under s 98 of the BSC Act.

108 On consideration of Mr Durie's decision, I am of the view that his reasoning was logical and the ultimate result properly open as a matter of pure statutory construction. As an unchallenged decision by a specialist tribunal, and which followed an earlier decision, I think for reasons of comity also that it should be followed in the present case unless one considered it to be clearly wrong. I am not persuaded the decision was erroneous and I propose to follow it. Therefore, the defence on this issue fails.

Whether other decisions for purposes of the insurance scheme

109 The defence pleaded that a number of decisions made by BSC, and later FTAC, were made ultra vires the BSC Act, BSC Regulation and BSC Insurance and so were void and of no effect. It followed that payments made to the Owners Corporation were outside the insurance scheme and therefore irrecoverable from the defendant under s 98 by the plaintiff. It is convenient to deal with each decision in turn.

110 Decision of 19 July 1999: The Owners Corporation was advised on 19 July 1999 by FTAC that its claim lodged on 14 October 1998 had been "approved in principle...The final approval sum will be established upon receipt of an acceptable quotation..." It happened that on 20 July 1999 the Owners Corporation filed an amending claim by completing the statutory declaration portion of the original claim form, but, in my view, nothing turns on this and the relevant decision may be taken as that made on 19 July 1999.

111 As argued, Mr Weinberger put that this decision was made beyond power because s 86(2) of the BSC Act had deemed the Owners Corporation's claim to have been refused 40 days after it was lodged. I have already decided against this submission in dealing with the "deemed" decision point and need to extend time to appeal. In any event, the decision having been made, Mr Weinberger submitted that as no appeal had been lodged against it within 30 days and there being no application to extend time to appeal, FTAC had determined the claim and did not have the power to make any payments to the Owners Corporation beyond the ambit of the decision-that amount was nil and, so, the plaintiff wholly failed in its present case for recovery. In other words, on the making of this decision the power of FTAC was spent, that is, it was functus officio. Counsel relied on the decision, earlier cited, of Latham J in Hristoforidis and on the authorities referred to by her Honour.

112 Mr Sirtes' position was that the 19 July 1999 "decision" was not a decision attracting an appeal as the Owners Corporation could not be said to have thereby been "aggrieved" by an "in principle" decision in its favour to settle the claim as would justify an appeal. As senior counsel said: "The Court is invited to conclude that, by its terms, this correspondence was in substance nothing more than a preliminary indication of FTAC's view with respect to the claim made subject to the provision of further material that FTAC required and upon which it proposed to determine the claim."

113 I agree with what Mr Sirtes submitted. Even though it may be said an "in principle" decision may be appealed, as s 85(d) says by referring to "any decision", I do not see how the Owners Corporation here had the standing to appeal because it could not be said, it seems to me, that it then was aggrieved by what had been decided-it had been advised of approval to settle its claim subject only to quotations for the work being obtained.

114 In any case, the decision concerned could not be said to have determined the claim, certainly not in any final way. The decision in Hristoforidis, in my view, is quite distinguishable in that it was concerned with a decision by FTAC under the BSC Act and BSC Insurance to refuse a claim but then, following intervention by the local member of Parliament and the Minister, it changed its mind and granted the claim. That is not, indeed is far from, the position here.

115 Also, in my view, reliance by Mr Weinberger on the functus doctrine to say this decision "spent" FTAC's power to make further decisions was misplaced. The decision here was of a preliminary or interlocutory nature, whereas the doctrine is concerned only with the "final" determination of something. In Ex parte Hassell; Re Quirk (1937) 37 SR (NSW) 192 Davidson J, with whom Street and Maxwell JJ concurred, said (at 195): "It is established by the cases to which reference has been made that, when an arbitrator or judicial officer has given his award or adjudication, as the case may be, he is functus officio, and cannot add to, amend, or detract from what he has done."

116 In Bailey v Marinoff (1971) 125 CLR 529, the High Court (Barwick CJ, Menzies, Owen and Walsh JJ, and Gibbs J dissenting) held that there was no inherent power in a court to deal further with an appeal which had already been dismissed by formal order. It was observed by Barwick CJ (at 530): "Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in substance, in my opinion, beyond recall by that court. It would, in my opinion, not promote the due administration of the law or the promotion of justice for a court to have a power to reinstate a proceeding of which it has finally disposed."

117 To a similar effect, Menzies J stated (at 531-532): "However wide the jurisdiction of a court may be to vary orders which have been made, it cannot, in my opinion, extend the making of orders in litigation that has been brought regularly to an end."

118 The decision of 19 July 1999 was not a final decision in any relevant sense: The defence so argued that it was must fail.

119 Decision of 23 May 2000: FTAC made a decision on 23 May 2000 approving the Owners Corporation's claim of 14 October 1998 in the amount of $3,500 in respect of two items and otherwise refusing the claim as being out-of-time in respect of the failure to meet the three year limitation period for general defects. It was argued by Mr Weinberger that this decision was ultra vires as the decision-making power was spent in the making of the 19 July 1999 decision but in view of the finding against that submission it must be accepted, in my view, that the ability of FTAC to make the 23 May 2000 decision properly existed. It was a decision in respect of which the Owners Corporation could be aggrieved and so an appeal was available.

120 In fact, on 21 June 2000 an appeal was filed but Mr Weinberger put that it was filed beyond the 30- day period allowed under s 86(1)(a) of the BSC Act so as to be ineffective absent an extension of time. As I have already found, the appeal was lodged in time because the challenged decision was not served on the Owners Corporation until 6 June 2000. Mr Weinberger's submission was not made out.

121 Decision in or about December 2001: In the context of the appeal proceedings, the Owners Corporation through its solicitors, Andreones, made written representations to FTAC on 30 November 2001 providing, in effect, fresh material to support compliance with the three-year limitation period for general defects. As Mr Elliott accepted in his affidavit, that fresh material from Andreones caused the Department to review its position by an assessment carried out by Mr Napthali of the Department's Building Assessment Unit. Mr Napthali, in finding all defects (with one exception) to be general defects, concluded that based on a commencement date for building work of November 1993 "all items quoted by the Builders based on the Engineer's schedule appear to be in time and justified". The previous rejection of the claims that they were brought beyond the time-limitation period could not therefore be supported in light of the fresh evidence raised during the appeal process. Mr Elliott accepted that and gave instructions for the claims to be settled.

122 As a fact, I have found the defects concerned were notified by the Owners Corporation within the limitation period for both major structural and general defects. Therefore, it seems to me, the conclusion reached by Mr Napthali, and as approved by Mr Elliott, was correct. In the context of the appeal process, which essentially had the purpose of reviewing the decision of 23 May 2000, I think Mr Elliott's decision was perfectly proper and open to be made. If it were otherwise, then, in my view, it would be to deny the due process of the statutory appeal. The decision was given effect by the consent orders, as outlined earlier, made by the Fair Trading Tribunal on 3 December 2001.

123 Mr Weinberger's resistance to the ability of the plaintiff FTAC to make this decision was that its power to do so was spent on the making of the 23 May 2000 decision. However, it is plain, as I see it, that the decision was not of the type struck down in Hristoforidis, where there was a mere change of mind following political intervention, but rather a properly based decision on fresh facts available in the appeal proceedings. Indeed, I think one may go so far as to say, in the circumstances as they developed, that FTAC had a duty to decide as it did during the appeal proceedings thereby avoiding a full and costly hearing on appeal but where it genuinely accepted the merits of the Owners Corporation's case. The defence on this aspect must fail.

124 Decision of 23 January 2002: On or about this date, FTAC approved payment to the Owners Corporation of $527,645 in accordance with Mr Seton's recommendation in the report by Wizard Building Services to accept the quotation for the rectification work from BMP International.

125 Again, Mr Weinberger denied the ability of FTAC to make this decision because its power had been spent. In rejecting this, I need only emphasise that the acceptance of the quotation was expressly contemplated in the consent orders made by the Tribunal on 3 December 2001 as part of the ultimate resolution of this dispute. This defence fails.

126 Decision of 22 March 2002: FTAC decided on this date to pay the Owners Corporation an additional amount of $77,000 to cover the claims as to the fire doors and what was described as "new" matters in the Bonacci Rickard report of 28 November 2001 related to water penetration. Yet again, Mr Weinberger submitted this decision could not be made because FTAC had already exhausted its powers. I disagree.

127 It need only be pointed out that in the consent orders made by the Tribunal on 3 December 2001 it was expressly noted that FTAC undertook to the Tribunal to quantify all of the claims made by the Owners Corporation. These so-called additional matters were not specifically notified until they were detailed in the Bonacci Rickard report of 28 November 2001. As to the fire service defects, as I have earlier recorded, they came to awareness in May 1998 on notices being received from Parramatta City Council and the Department was given notice of them on 19 August 1998, that is, within a six-month period of first awareness of them and, as Mr Marosszeky classified them as major structural defects, within seven years of commencement of the building work. The so-called "new" defects as being related to water penetration were effectively included in the original Rickard & Partners report of 30 August 1996 and the handwritten list by Mr Piccoli on 23 July 1996.

128 I consider that FTAC had the power to make this decision as part of the appeal process. The defence must fail.

129 Findings on the various decisions: In the result, I find that FTAC properly had power to make the various decisions referred to. The consent orders made by the Tribunal on 29 July 2002 ultimately resolved the dispute in a final way as between FTAC and the Owners Corporation by an indemnity under BSC Insurance in the sum of $604,645 plus experts' reports and disbursements of $30,263 giving a total of $634,908. In my view, the result so reached was within the terms of the scheme under BSC Insurance. As such, as between the present plaintiff and defendant, on payment being made it became recoverable as a debt under s 98(1) of the BSC Act.

130 A number of matters of a miscellaneous nature arose during argument and it is appropriate to deal with each of them.

131 Section 56(1)(a) of BSC Act: Mr Weinberger submitted that this provision prevented BSC accepting the Owners Corporation's 26 September 1996 complaint for general defects in the building work and treating it as notification pursuant to cl 7(1) of Form 4. Thereby, no notification of defects under cl 7(1) had been made within the limitation period. The section appears in Pt 4 of the BSC Act dealing with dispute resolution and disciplinary provisions concerning builders and the consequent making of rectification orders under s 59 or determinations by the Fair Trading Tribunal under s 74 of disciplinary measures. BSC Insurance is dealt with in Pt 6 of the BSC Act which in s 91 enables the prescription of BSC Insurance by the BSC Regulation; Form 4 in Sch 1 to the BSC Regulation is the result.

132 I have reviewed earlier the statutory scheme and found that it concerned two regimes being those respectively Pt 4 and Pt 6. Mr Sirtes submitted that s 56, and hence Pt 4 also in its entirety, has no application to the present case. However, I commented that the two regimes were not mutually exclusive so that satisfaction of a condition in one may also be satisfaction of a condition in the other. Thus, it seems to me, a complaint under s 56(1) could also be regarded as a notification of defects under cl 7(1). The informality and lack of specificity of a notification under cl 7(1), as was said by Studdert J in McCallum Developments (at [36]), "should not be construed narrowly because of the beneficial nature of the legislation".

133 I am satisfied that the notification given by the Owners Corporation to BSC on 26 September 1996 was a valid notification pursuant to cl 7(1) of BSC Insurance. And that is so whether or not it also was a complaint under s 56(1).

134 Section 57(1)(a) of BSC Act: It was argued by Mr Weinberger for the defendant that s 57(1)(a) operated to prevent BSC accepting the complaint because there was no evidence Meriton Apartments had been informed beforehand in writing of the matters concerned. Mr Sirtes suggested that the section "does not embroider any further requirement upon FTAC (such as communicating with the relevant builder) before it makes a payment under the CIS". I would only add that Meriton Apartments, on an overall view of the evidence, was very well aware from an early stage of the details of this dispute.

135 In my view, s 57 has no relevant application to the present case. It is a provision concerned with the relationship between a builder and an owner whereas BSC Insurance is concerned with the relationship between the statutory insurer and the owner as the insured: see Builders Registration Board of Queensland v Rauber (1983) 47 ALR 55 where the High Court made plain that the statutory insurer need not have any dealings with the builder as a pre-condition for making payments under the insurance scheme. I see nothing in the present BSC Act or Form 4 to require any advice to the builder before any payment is made to a beneficiary. In any event, on the facts, it is to be accepted that Meriton Apartments was made aware of the complaint about the defects and in the following years it was engaged in detailed contact with FTAC, and to some extent the Owners Corporation through its representative on the Council and the strata manager.

136 "Notification" or "claim" as distinct from "complaint": Perhaps related to the s 56 point, Mr Weinberger relied on Flood for the proposition that "complaints" made under s 56 were not to be confused with "claims" made under the scheme of BSC Insurance. In Flood (at 6), Mr R Phillips, a senior member of the Consumer, Trader and Tenancy Tribunal, referred to his earlier decision in Woods & Wilson v Fair Trading Administration Corporation [2004] NSWCTTT 523 and said complaints under s 56 "which can act as a trigger for disciplinary hearings, are not to be confused with claims under the comprehensive policy".

137 Given the distinction, as I have said, I do not see why a complaint as to defective building work may not also properly be a notification of defects for the purposes of the insurance scheme. After all. what is required for each regime is simply a trigger to commence its operation.

138 That the advice (to use a neutral term) may have a dual purpose is clearly apparent from the pro-forma in this respect. In s 56 and Form 4 situations the form is to be completed and sent to BSC, the same entity dealing with both dispute resolution and disciplinary matters, on the one hand, and the insurance scheme, on the other. Further, the form itself asks the question "on which date did you first become aware of the disputed items"-the answer only can have relevance to the insurance scheme where cl 7(1)(b) and (c) require the six-month limitation period from date of first awareness of the defects whereas no such limitation is made under s 56(1); yet both cl 7(1)(b) and (c) and s 56(1)(b) and (a) respectively lay down the limitation period of three years for general defects and seven years for major structural defects from the date work commenced, a matter raised in the form. Although it is true, as Mr Weinberger pointed out in support of the distinction he relied upon, that s 56(1) talks about "residential building work" and cl 7(1) refers to "insured building work", in my view that is a distinction without a relevant difference because cl 1(1) of Form 4 defines the latter as meaning the former where performed, as here, by a licensed builder. The dual purpose of the complaint form, such as that completed and filed here on 26 September 1996, will be manifest and as being consistent with the respective statutory provisions. I do not think Mr Phillips in Flood suggested otherwise, only that there was to be no confusion between the two. However, if he did consider each excluded the other then I would respectfully disagree. It follows, I am satisfied, that Mr Weinberger's argument on this aspect is not accepted.

139 Defects Identified in November 2001: A submission was put by Mr Weinberger that certain defects which were not specifically identified by the Owners Corporation until the Bonacci Rickard report of 28 November 2001 were outside the time limitation periods in cl 7(1) of Form 4 and so should be excluded from consideration as not being in the original notification of 26 September 1996. This related to the fire services defects and the so-called "new" defects from water penetration. I have earlier, for the reasons then given, included such defects in the allowable claim but the general question arises whether defects claimed for rectification need to be specifically identified in the original notification for the purposes of cl 7(1). Mr Sirtes said not.

140 In Owners Corporation-Strata Plan 43551 Burchett AJ (at [24]) emphasised that what was to be notified within the limitation period were 'matters that could give rise to the losses', not the actual defects that, in a precise sense, are the causes of those matters". In McCallum Developments (at [42]), Studdert J found to a similar effect. It follows, in my view, that Mr Sirtes was correct in his submission.

141 I am satisfied on an overall view of the evidence as detailed earlier, particularly that of Mr Marosszeky and that in the Bonacci Rickard reports, and even in the reports of Mr Zakos, that there existed in this building a variety of defects reasonably requiring rectification but which the defendant failed to remedy. The plaintiff's assessment of the defects by Mr Fox and Mr Dickinson was to a similar effect. The quotation to do the rectification work by BMP Industrial, as recommended by Mr Dyer, represented "value for money" for the work to be done. Mr Weinberger did not seriously challenge this.

142 The plaintiff made payments for the rectification work. The defendant is liable under s 98(1) of the BSC Act to recover to the plaintiff the losses thereby incurred. It only remains to determine the amount.

143 The plaintiff approved for indemnity to the Owners Corporation the amount of $634,908. However, it sought recovery from the defendant of only $634,824. In the amended Scott Schedule prepared by Mr Marosszeky the actual total cost of the rectification work was $628,879 ascertained from the payments made to BMP Industrial and for the experts' reports, a difference of $5,945.00 although the amended schedule noted a "discrepancy" of $5,481. On the state of the evidence, I am unable to settle on a precise figure and, indeed, in evidence Mr Marosszeky could not explain the differences. In the absence of clarification by the parties, who may wish to further consider this aspect, I would feel it only reasonable to accept the lower figure of $628,879.

144 From the appropriate total amount, it was agreed that an amount of $107,584 should be deducted for betterment pursuant to the joint experts' report of Mr Marosszeky and Mr Zakos dated 14 October 2009. I accept that.

145 Preliminaries were claimed in the amended Scott Schedule in the amount of $120,120 which was equivalent to 25 per cent of the tender price. However, the joint experts' report said the rate should reasonably be in a range of 12.5 to 17.5 per cent. I have decided earlier to allow 15 per cent which I calculate at $72,072. Thus, $48,048 should be deducted from the total amount for preliminaries.

146 During Mr Marosszeky's evidence he agreed that items 5 (roof drainage for $4,680), 10 (exposed electrical cabling for $780) and 11 (handrail in car park for $1,456) in the amended Scott Schedule related to incomplete work rather than defective work-the total amount is $6,916. Mr Weinberger added in his submissions, but without asking Mr Marosszeky, that items 4, 6, 7 and 11 in the Schedule in the total amount of $11,516 related also to certain incomplete work and should be disallowed. The total for which a deduction was sought was $18,432. I disagree. It is true that the plaintiff pleaded in the statement of claim losses in "rectifying" the building work as distinct from "completion"-the distinction is made in Form 4 in cl 5(1)(d) and cl 5(1)(c) respectively. However, rectification in cl 5(1)(d)(iii) includes in rectifying defects, and as was pleaded, "failure to comply with plans and specifications" which, I think, may properly apply to all of these items in that they were simply not finished as required. On the other hand, I think the completion of building work in cl 5(1)(c) refers more to the failure to perform building work to completion in the time allowed or as required under the contract. There should be no deduction for these items.

147 Mr Weinberger identified items 6 and 16 in the amended Scott Schedule as appropriate for deduction as Mr Marosszeky said in his report of 8 April 2009 that they were not defects under the insurance scheme as they both related to the provision of waterproof membranes on roofs but where there were no leaks through the slabs into habitable spaces. The amount for these two items in the schedule is respectively $2,600 and $83,044, a total of $85,644. However, as I have earlier remarked, Mr Marosszeky and Mr Zakos in the joint experts' report accepted the reasonableness of this amount for rectification work but only that it should be reduced by $66,544 for betterment-that will therefore be attended to within the deduction of $107,584 for betterment and no further deduction need be made.

148 In the joint experts report in relation to items 26 to 51 of the amended Scott Schedule it was noted that they comprised items from the Bonnaci Rickard report of 28 November 2001 and "approved variations for which there is no documentation explaining the basis of the variation". Mr Weinberger submitted these items, which amounted to $91,114 should be disallowed, and with a further reduction in preliminaries on this account. It seems that items 26 to 30 and 44 to 51 in the sum of $64,250 were "additional works" and items 31 to 43 in the sum of $26,379 were in the Bonnaci Rickard report as items 44 to 65.

149 The basis for Mr Weinberger's opposition to those amounts was that it was "simply not clear in relation to a number of the items as to whether they are defects within clause 5(1)(d) or some other matter…the result of design for example". Mr Sirtes pressed the claim as being within that approved by FTAC as settled on appeal.

150 It is apparent from the report of Mr Zakos, and indeed that also of Mr Marosszeky and Bonnaci Rickard, that items 26 to 51 in the amended Scott Schedule relate to the so called "new" work in the Bonnaci Rickard report, as referred to earlier, as concerning the water penetration problems. One may concede some difficulty in the state of the evidence in precisely sourcing each and every one of these items. However, what is clear, it seems to me, is that they were the subject of the defects approved for rectification pursuant to the quotation from BMP Industrial and within the approved amount for indemnity as settled on appeal. I am satisfied they should be allowed for recovery by the plaintiff.

151 In the result, using an actual loss of $628,879 and allowing for deductions of $48,048 for preliminaries and $107,584 for betterment, a total of $155,632, the net amount I would calculate for recovery by the plaintiff under s 98(1) of the BSC Act is $473,247. This is subject to the parties having leave to address the so called "discrepancy" amount in the amended Scott Schedule and checking my mathematical calculations.

152 Mr Sirtes claimed interest at rates prescribed by Sch 3 of the Uniform Civil Procedure Rules 2005 from 21 May 2002 when the plaintiff made its first of seven progress payments to BMP Industrial for the rectification work. Mr Weinberger, although not opposing interest, submitted that it should not commence until the date of the filing of the statement of claim, that is, 20 March 2006. Counsel supported this by the proposition that the defendant had no debt under s 98(1) until it was sued and was under no obligation before then to make any payment to the plaintiff.

153 It is true that the defendant was informed by the plaintiff on 23 January 2002 of approval of an indemnity in favour of the Owners Corporation under BSC Insurance and that recovery as a debt would be sought. The defendant's response, however, on 12 February 2002 was that it would defend any attempted recovery. The course of these proceedings shows the vigour with which recovery was opposed. In any event, it was not for about four years later that proceedings were commenced in this Court.

154 I think it to be only just and reasonable in the circumstances that interest be allowed on the amount of the debt but commencing from the date of filing the statement of claim on 20 March 2006 to the date of judgment.

155 The parties were agreed that costs should follow the event. The defendant should pay the plaintiff's costs of the proceedings on the ordinary basis in an amount as agreed or assessed.

156 The plaintiff is entitled to a verdict against the defendant in an amount to be quantified plus costs. The parties are directed to confer and to prepare short minutes of order to give effect to this decision including as to interest.

157 The matter will be listed at 10.00 am on Friday, 22 January 2010 for a speaking to the minutes and the making of final orders.

158 In the determination of this matter I make the following orders- 1. Verdict and judgment for the plaintiff against the defendant in the sum of $473,247 plus interest from 20 March 2006 to 22 January 2010 in the sum of $174,128.96. 2. The defendant is to pay the plaintiff's costs on the ordinary basis up to and including 22 April 2009 and on an indemnity basis from 23 April 2009 onwards. 3. The exhibits are to remain with the file, to be returned on application by the parties to the Registry after 28 days.

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