Gassman v Peck

The Evidence

1. The Tribunal had before it the following exhibits from the parties: 1. Bundle of documents received by the Tribunal from the applicants on 18 July 2016 (Exhibit 1). That bundle included the following: 1. an affidavit of Andrew Connor dated 12 July 2016 2. Scott Schedule of Andrew Connor dated 12 July 2016 3. A Scott Schedule which included an estimate for work orders 1-9 dated 9 July 2016 1. A folder of documents which had been received from the respondent on 21 September 2017 which included a report of Safe House Property Consultants dated 31 July 2016 and Appendix A -G (Exhibit 2) 2. A statement of Nathan Peck dated 14 February 2017, together with 10 attachments (Exhibit 3) 3. A table prepared by the respondent summarising the position of the experts (Exhibit 4) 4. Record of Conclave dated 16 November 2015 (Exhibit 5) 5. Record of Conclave amended 11 December 2015 (Exhibit 6)
2. The Tribunal in coming to its decision has considered all exhibits (subject to objections) and oral evidence and submissions of the parties.

Jurisdiction of the Tribunal

1. It is uncontested that the homeowners entered into a residential building contract with the builder on 29 April 2010. Practical completion occurred on or about 15 July 2011. The homeowners had made application HB 14/17549 on 1 April 2014. The claim made by the homeowners was for breach of statutory warranty for defective works. The consent orders made provision for renewal of the matter.
2. The right to renew arises out of Cl 8 of Sch 4 of the Civil and Administrative Tribunal Act 2013 (NCAT Act) which relevantly states: (1) If the Tribunal makes an order in exercise of a Division function in proceedings, the Tribunal may, when the order is made or later, give leave to the person in whose favour the order is made to renew the proceedings if the order is not complied with within the period specified by the Tribunal. (2) If an order has not been complied with within the period specified by the Tribunal, the person in whose favour the order was made may renew the proceedings to which the order relates by lodging a notice with the Tribunal, within 12 months after the end of the period, stating that the order has not been complied with. (3) The provisions of this Act apply to a notice lodged in accordance with subclause (2) as if the notice were a new application made in accordance with this Act. (4) When proceedings have been renewed in accordance with this clause, the Tribunal: (a) may make any other appropriate order under this Act or enabling legislation as it could have made when the matter was originally determined, or (b) may refuse to make such an order. (5) This clause does not apply if: (a) the operation of an order has been suspended, or (b) the order is or has been the subject of an internal appeal.
3. For the purposes of determining jurisdiction the Tribunal finds that the parties contracted for 'residential building works' as defined in clause 2 of schedule 1 of the Home Building Act 1989 (NSW) (HBA). The Tribunal is satisfied that the application involves a building claim as defined by s 48A of the HBA. The Tribunal is also satisfied renewal application was made within time and that the Tribunal has jurisdiction to determine matter.

Did the builder fail to complete the works the subject of the work order?

1. Both Mr Gassman (one of the homeowners) and Mr Peck (the builder) gave statements and were cross examined at the hearing. The homeowners allege that the builder failed to complete the works within the time agreed in the orders.
2. In his statement dated 14 February 2017 Mr Peck stated that when he agreed to the orders on 11 December 2015, he felt the time allowed to complete the works was not sufficient due to co-ordination of all the "experts", Xmas closures, the amount of work and client's up and coming overseas trip that was for a period of a few months.
3. He lists the chronology of the works completed and times that his workers were on site. Mr Peck relevantly states that: I would like to note, that predominately the hold ups have been from the applicant's expert's and engineer's as the emails reflect. I would like to know, they are aware of the deadline and claim they want the work carried out, why are they making it more difficult to carry out the works, and make it impossible to meet the deadline. From my point of view, it would seem that they have intentionally tried to delay works to put me in a bad light for the next hearing. …. As this document clearly points out, I have been in no way avoiding my obligations and instead have tried my utmost to co-ordinate and carry out what was required of me and I am still willing to return and complete the works but the client has now refused access, which makes it impossible for me to do so.
4. The emails referred to by Mr Peck have been provided with his statement and he was cross examined in relation to them. The email dated 28 January 2016 from Mr Stuart Bullivant refers to a change of date for site meeting with Mr Broune who was the engineer for homeowners. It refers to confirmation of the new meeting time with Mr Broune, but it does not, as Mr Peck alleges, say that Mr Broune "couldn't make 28 January 2016."
5. Mr Gassman refers to the scheduled hold point meeting for 28 January 2016 in his statement of 3 March 2017 at paragraphs 65 and 66. He states that he was advised by Mr Connor his building expert that on the morning of 28 January 2016, Mr Connor received a call from Mr Bullivant that the inspection has been cancelled. Mr Connor then contacted Mr Broune to advise him of the cancellation. Mr Gassman also states that Mr Broune had advised him that Mr Connor had rung him to cancel the meeting. Before the Tribunal was also an affidavit sworn by Mr Connor dated 12 July 2016 (who was also cross examined at hearing). At paragraph 6, Mr Connor stated that it had been the respondents engineering expert Mr Kevin Mayes who had not been available for the inspection.
6. In his statement dated 3 March 2017, Mr Gassman states that at the Tribunal hearing on 11 December 2015 he had advised Mr Peck that he and his wife would be going on holidays for three months at the end of March 2016. He states that on that basis he had agreed not to include rectification of the bathroom ensuite in the agreement. He states that after the engineering meeting which took place on 10 March 2016 (his statement has 2015, but the Tribunal accepts that this is a typographical error, as the builder statement also refers to the meeting as happening on 10 March 2016) he did not hear again from the builder until 30 March 2016.
7. Mr Peck states that on 23 March 2016 he followed up the matter and on 30 March 2016 he contacted Mr Gassman and was informed that he would not be allowed access while the homeowners were away overseas.
8. The builder also refers in submissions to the complexity of rectifying the defective windows. The work orders made 11 December 2015 allow for hold point inspections to allow the experts building consultants and engineers to further confer on resolving the defective windows. The builder makes submissions that the method of rectification agreed by the experts in relation to the windows leaking was only communicated to him on 23 March 2016, the day prior to the work orders requiring completion.
9. Having considered the evidence on this point the Tribunal does not find that the hold point inspection that was schedule for 28 January 2016 was postponed due to the unavailability of the applicant's engineer. Mr Bullivants email does not state, as Mr Peck alleges that the meeting was postponed due to the unavailability of Mr Broune. It only states that new dates have to be confirmed with Mr Broune for meeting. Similarly, the subsequent emails between various parties simply reveal what is ordinary in these circumstances, correspondence to facilitate a date that is suitable for all the parties to be in attendance for the hold point inspection. It is noted for instance that in an email from Nathan Peck himself dated 26 February 2016 he states: My only available days next week are Thursday or Friday morning
10. Mr Peck consented to the Tribunal orders to finish the works by 24 March 2016. As part of agreeing to those orders Mr Peck should have considered the time it takes to facilitate multiple parties for hold inspections. The Tribunal does not find that any unreasonable delay has been caused by the homeowner's experts to attend inspections. The Tribunal does not find that prior to 23 March 2016, the homeowners themselves have done anything to delay the works proceeding or that they refused to give access. The Tribunal finds that Mr Peck has not completed the works as he has agreed. In relation to the complexity of rectifying the windows, the defect was known to Mr Peck at the time he made the agreement and he should have considered how the hold point inspections may impact on the work schedule. The Tribunal finds that the works have not been completed within time by Mr Peck because he did not properly plan for them.

Section 48MA of the Act

1. Section 48MA was inserted into the HBA as part of a series of amendments which were enacted by Home Building Amendment Act 2014 and took effect on 15 January 2015. Clause 121 of schedule 4 of the HBA extends to residential building work or specialist work commenced or completed before the commencement of the amendment with the exception of proceedings that commenced before the commencement of the amendment. Consequently, section 48MA is applicable to these proceedings.
2. The homeowners in this case stated that the preferred outcome should not be applied. The builder seeks that a work order be made in accordance with the preferred outcome.
3. Section 48 MA states: 48MA Rectification of defective work is preferred outcome in proceedings A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the "responsible party") is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
4. Firstly, the Tribunal notes that these are renewal proceedings under the NCAT Act. While the right to renew arises out of the NCAT Act, they are still a renewal of proceedings which have been brought under the HBA and as such the Tribunal is satisfied it should consider the preferred outcome.
5. It is noted that in the case of Galdona v Peacock [2017] NSWCATAP 64, the Appeal Panel observed: … section 48MA of the Home Building Act only required the Tribunal Member to have regard to the principle that that rectification of the defective work by the appellants was the preferred outcome. Section 48MA did not make the preferred outcome the mandatory outcome.
6. In 3D Design & Build Pty Ltd v Lynch [2016] NSWCATAP 229, the Appeal Panel dealt with a ground of appeal raised by the appellant that the Member should have made a work order in renewal proceedings. They relevantly stated We have had regard to the principle set out in s48MA and the preferred outcome, but consider the Tribunal Member's findings in paragraphs [36] - [42] of his reasons are sufficient to warrant the further conclusion that it would have been inappropriate to make further work orders. The consent orders were made on 12 October 2015 and required the rectification work to be completed by 9 November 2015. The renewal application was filed on 5 December 2015. It is apparent that no rectification work had been carried out by that date. No explanation was provided for that delay. That alone would have been sufficient to render a further work order inappropriate. The parties did agree in January 2016 to negotiate a further timetable for the carrying out of rectification work after the builder's engineer had provided a report. However the builder had failed to complete the work by 10 March 2016 when the renewal application came before the Tribunal. We also note that the Tribunal Member determined, in the first sentence of paragraph [48] and in paragraph [50] of his reasons for decision that the builder had not carried out with due care and skill the rectification work which had been performed. Those findings are not affected by the Tribunal Member's conclusions concerning his powers on a renewed application. In light of the builder's repeated failure to complete the rectification work and the finding that the rectification work carried out had not been performed with due care and skill, it cannot be said that a further work order could conceivably be (or have been on 28 April 2016) an appropriate order on the renewed application. We therefore conclude that, notwithstanding the Tribunal Member's error in determining the extent of his powers on the renewed application, the Tribunal Member's decision, to make orders requiring the builder to pay the home-owners the cost of rectification rather than making further orders requiring the builder to rectify the defects, was correct. The appeal and application for leave to appeal must therefore be dismissed.
7. The Appeal Panel also dealt with the preferred outcome in a renewal in the matter of John Peter Maiolo v Frank Chiarelli and Anor [2016) NSWCATAP 81. The Appeal Panel, having regard to Section 48MA as the preferred outcome, ordered, on a renewal application, that the builder complete the work order. That decision related to a builder's failure to comply with work order to install a kitchen. In that case the Appeal Panel found that there had been a denial of natural justice because the Tribunal had denied the builder leave to rely on documents relating to his non-compliance with the work order. The Appeal Panel found at para 43 of its reasons that the homeowners had not given the builder ample opportunity to carry out the necessary work.
8. The builder maintained in its submissions that he should be allowed to return to rectify the alleged defects in accordance with the record of conclave which was amended on 10 March 2016 following the hold point inspection. He refers to the fact that there is no evidence before the Tribunal that the relationship between the parties has broken down or that the parties can't communicate with each other. The builder makes submissions that he is properly licenced, resourced and is ready willing and able to attend to the defects in the shortest period of time available.
9. The builder also refers to the fact that he has previously attended to rectify defects both as part of the Tribunal work order and in relation to other defects lists raised by the homeowners including by agreement in May 2014. He again refers to the complexity of rectifying the window defects. The builder also refers sms messages between him and Mr Gassman on 30 March 2016 in which he was seeking to arrange completion of the works: Mr Gassman: "No Nathan, No access until July" Mr Peck: "OK, let me know when your back"
10. This builder maintains that this reflects that there is an on-going relationship which exists between the parties and reflects the willingness of the builder to attend to the defects in accordance with the work order. The builder makes submissions that it was the homeowners who have failed to cooperate with the builder by first indicating that he would be able to return to complete the works in July and then withdrawing that offer.
11. The homeowner opposes another work order being made because the builder has not been able to complete the work in accordance with the previous consent orders. They point to previous agreements for work to be rectified which they say were made on 15 May 2014 and 18 August 2014 which they allege the builder did not completed.

Findings on s 48MA

1. Having considered the submissions and evidence of both parties, the Tribunal finds, weighing up all the factors that it should make a money order in favour of the homeowners.
2. The Tribunal does not have to order the preferred outcome. As the Tribunal has previously in Brooks v Gannon Constructions Pty Limited [2017] NSWCATCD 12 (this point was not challenged when the matter went on Appeal) … an assessment about whether the preferred outcome should be ordered is an objective one and the Tribunal must weigh up the factors in each case and make the decision accordingly.
3. In particular the Tribunal is persuaded it should not make a work order because of the builder's previous non-compliance with the consent order of 11 December 2015. Unlike the situation in John Peter Maiolo v Frank Chiarelli and Anor, the Tribunal does not find that the failure to comply with the orders is as a result of any interference by the applicants. Rather it has been as a result of the builder not diligently attending to the orders which he consented to being made. The builder has already had the benefit of a work order which was made with his consent. He agreed with the method of rectification contained in those work orders and the time by which they were to be completed by. The fact that he has now determined that it was not enough time and that he will require more time is not a satisfactory reason for his non-compliance. The fact that the window rectification is a complex matter is something the builder should have considered at the time of consenting to the work orders. His request for access on 30 March 2016 was after the date for which he should have already complied with the order. The Tribunal accepts that on 30 March 2016 Mr Gassman told the builder that he would not have access until after his holiday and that later he denied access. However, that occurred after the time the builder was supposed to have already complied with the work orders and the Tribunal does not find it relevant to the homeowners conduct during the time when the works were supposed to be finished. As previously found, the homeowners did not impede access prior to 24 March 2016 which is when the works should have already been completed. The Tribunal has also considered the relationship of the parties. While there is no evidence before the Tribunal that the relationship has broken down and the parties are not communicating effectively, Mr Gassman has stated in his affidavit of 3 March 2017 that he has lost confidence in the builder willingness and ability to satisfactorily rectify the defects. Mr Gassman states that for a number of years the homeowners have had to deal with the builders … poor planning and poor execution when it comes to rectification of the defects at the property.
4. Certainly, in relation to the work orders made on 11 December 2015, the Tribunal finds it was the poor planning of the builder which has resulted in the work order not being completed within time. The builder has provided in his statement the dates and details of the steps he took to attend the work order. However, in the end whether it is due to him choosing an unrealistic time frame to complete the works or not properly planning so that he could complete the works within time, it was the builder's fault that the works have not been completed. The Tribunal finds that the failure of the builder to comply with the work order outweighs all the other matters he has raised. On that basis and weighing up all the factors the Tribunal is not satisfied that it should make a work order and instead the Tribunal will make a money order in accordance with s 48O of the HBA in relation to rectification of the defective works.
5. The builder has also made submissions that the Tribunal should also consider applying a discount to the quantum if it chooses to make a money order because the failure of the builder to comply with the work order was due to delays in hold inspections and denial of access. The Tribunal has found against the builder on those assertions and accordingly finds no grounds to allow the discount.

Defective Works

1. In renewal proceedings, the Tribunal may make any other appropriate order under this NCAT Act or the HBA "as it could have made when the matter was originally determined".
2. By the time the matter came for final hearing many of the issues relating to the works had been resolved between the experts. The work order of 1 December 2015 contained 9 items. The experts agreed that items 5 to 9 were not complete and they agreed on the quantum for rectification as follows: 1. Item 5 - corrosion protection $600 2. Item 6 - Corroded external fixtures $2,242 3. Item 7 - safety decals - $526 4. Item 8 - Calcification on the front balcony - $200 5. Item 9 - termite protection - $400
3. The Tribunal is satisfied to make a money order for those agreed amounts as it finds that they are defects for which the builder is liable to rectify (they were not contested by the builder) and the quantum was agreed. Completion of items 1 - 4 of the work orders remains in dispute between the experts and the experts disagreed in relation to the margin. Each item shall be dealt with in turn below. It should be noted that both Mr Moore who was the expert for the builder and Mr Connor who was the expert for the homeowners, appeared at the hearing and were cross examined in relation to each of the items.

Item 1 - South Wall Window

1. The experts agree that this item has not been completed by the builder, however disagree on the quantum. Mr Connor estimated the cost of rectification was $16,968 and Mr Moore estimated an amount of $3,084. This item related to water entry to the study and bedroom. Following the hold point site inspection on 10 March 2016, the method of rectification for the windows was articulated a report. Both experts stated they had costed according to that method of rectification articulated in the report following the hold point inspection. The respondent makes submissions that Mr Connors costing should be rejected on the basis that Mr Connor has quoted for new windows (amounting to $7,000) to be costed instead of remediation as the method of rectification contained in the conclave report. This makes up a large portion of the difference in costing - although not all of it. The builders also makes submissions that Mr Connor has quoted for additional cladding beyond the scope of the conclave. In evidence Mr Connor stated in cross examination that he has allowed for new windows because: Windows are designed to a test - or a tested specimen. The window has to be constricted to that specimen to achieve its window, water and air rating. We don't have the luxury of having that test report or those details. We can't modify, change the window without that information. We've contacted - or I've contacted personally - the window manufacturer… we could not even get him to respond.
2. Mr Moore stated that while he had not seen specifications he was assuming the windows were fit for purpose. He stated … their products are approved window products. I've investigated their own website to the products that they've used. Without evidence otherwise, I would be assuming that the product is fit for purpose. I haven't seen any evidence otherwise.
3. The homeowners make submissions that Mr Connor has been involved in the inspections from the outset and that he is more familiar with the issues.
4. Having considered the evidence and heard the parties and experts on this item the Tribunal is satisfied that the costing of Mr Moore deals more precisely with the scope and method of rectification agreed at conclave. The Tribunal is satisfied that Mr Connors quote goes beyond the agreed method of rectification in the conclave. The Tribunal is not satisfied on Mr Connors evidence that new windows will be required or that they will not meet relevant standards once modified. The Tribunal allows $3,084 to the homeowner.

Item 2 - Roof Water Entry

1. There is a dispute between the experts as to whether item 2 of the works orders required work to be done to the roof. The agreement in relation to this item was that the builder would 'Monitor Allegation of Roof Water Entry'. The respondent stated that does not amount to a defect and is rather a precautionary measure to ensure the roof does not leak. Mr Moore states that no water damage was visible and that no further work is required. However, Mr Moore has not done specific investigations of roof water entry. Mr Connor gave evidence in cross examination that he had inspected the roof and had found an area where he believed "water was entering."
2. It is noted that the consent orders only required monitoring by the respondent. However, as stated previously the renewal provisions allow the Tribunal to make any orders "as it could have made when the matter was originally determined". The Tribunal is satisfied on Mr Connors evidence that he has inspected the roof and that there is water entry in the roof and that this item is a defect for which the builder is liable. The experts agreed as to quantum if this item was found by the Tribunal to be defective and requiring rectification. That amount is $1,652.10 and the Tribunal allows that amount to the homeowner.

Item 3 - External roof areas

1. The dispute between the experts on this point relates to quantum. Mr Connor has allowed an amount of $5,023.02 and Mr Moore has allowed an amount of $2,121.41. It appears that the main difference on this point relates to the fall of the box guttering. Mr Connor stated that he did not believe that the box gutters have been rectified to provide for a minimum fall. He stated that he carried out measurements, but had not included them in his report. Mr Moore contested that they did not comply with the minimum fall. The Tribunal is not satisfied on Mr Connor's evidence that the fall has not been achieved as he has not articulated the measurements in his report and only referred to them in cross examination. The Tribunal prefers the evidence of Mr Moore on this point and allows the amount of $2,121.41.

Item 4 - Water damage soffit linings

1. In relation to this item Mr Connor has allowed for stripping out damaged linings and reinstalling trims in various areas. The builder makes submissions that this goes beyond the work order to rectify. On this point the Tribunal accepts the evidence of Mr Connor in that attempts have previously been made to remedy the sofit lining and have not been successful. The Tribunal accepts Mr Connors method of rectification and finds it is consistent with what was agreed in the work order and allows the amount of $1,883.50.

Builder's margin and GST

1. It appears that the builder is disputing that the Tribunal should allow these amounts because he was unable to comply with the work order because of delays in the hold inspections caused by the homeowner's expert and the denial of access by the homeowner. The Tribunal has already found against the builder on those assertions. On that basis the Tribunal finds that the GST and the builders margin (which the experts agreed should be 25% if found) should be added to the amounts allowed to the homeowners.

Orders

1. The Tribunal allows the following amounts to the homeowners 1. Windows $3,084.25 2. Roof water entry $1,652.10 3. External Roof area $2,121,41 4. Sofit linings - $1,883.50 5. Corrosion protection $600 6. Corroded external fixtures $2,242 7. Safety decals - $526 8. Calcification on the front balcony - $200 9. Termite protection - $400 Total - $12,709.26 Plus builder margin of 25% totals - $15,886.56 Plus 10% GST totals - $17,475.22
2. The Tribunal has also made orders for submissions in relation to any application for costs. T Simon Senior Member Civil and Administrative Tribunal of New South Wales 13 October 2017 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: 01 December 2017