Impressive Builders Pty Ltd v Cleary

Builder's application

1. The Tribunal's reasoning on the builder's application may be summarised as follows: 1. that application was not maintainable as an action in contract in circumstances where there was no contract in place which complied with s 7AAA of the Home Building Act 1989 (NSW) ("HB Act"), by reason of s 10(1)(c) of the HB Act; and 2. in so far as it was an action in quantum meruit, it was not established to the civil standard of proof.

Homeowners' application

1. The Tribunal's reasoning on the owner's application is set out in the following extract from the Decision: 29. The owners press their claim for defective and incomplete works, as it now falls, against the builder for the amount of $14,306.53 as found by Expert Wallace in his Report dated 1 April 2021. 30. The builder denies it is liable for defective and incomplete works. Apart from the builder's director's commentary in response to Expert Wallace's report, the builder adduces no evidence in support of its defence of any sufficient weight to outweigh the expert evidence adduced by the owners. 31. Expert Wallace has established to the satisfaction of the Tribunal his experience and knowledge as an independent expert complaint with the Tribunal's Procedural Direction 3 Expert's Code of Conduct. 32. Expert Wallace opinion assists the Tribunal make a finding: 1) That the building works carried by the respondent builder were not carried out with due skill and care; 2) The builder has not "packed walls to plumb" being part of the scope of works included in the accepted quote or "pack walls to straight-within reason" as stipulated in the builder's invoice, that is within acceptable tolerances; 3) With the benefit of using a spirit level, ruler and square the works exceed acceptable tolerances; 4) The irregularity in the parallel relationship with the shower wall and waterstop on the shower area is due to the lack of attention to detail in the installation of the waterstop; 5) The issue of defective cornice coves is that the wall tiles should have been installed first and then the cornice coves installed; 6) The damage to the medicine chest cabinet and the positioning of the height of the cabinet, different size and position of the soap niches, is due to the work not being carried out with due care and skill; 7) The defects of vertical alignment, horizontal straightness and square are a breach of the scope of works stated by the builder in the quotation and to rectify it will be necessary to remove the wall tiles, cornice coves, wall linings and some floor tiles to make necessary corrections to the framing so that it meets acceptable tolerances. 8) Using Cordell's Housing Building Cost Guide December 2020 Expert Wallace finds that the estimates to rectify will be $14,306.53 made up of: (a) Strip out bathroom $2,271.75 (b) Make wall framing to be straight, plumb & square +$1,412.65 (c) Install wall linings +$1,492.40 (d) Waterproof walls to shower, wall junctions & floor +$550.00 (e) Install wall tiles to the ceiling and (f) floor +$1,998.64 (g) Install cornice coves +$405.60 (h) Install medicine chest, (i) architraves & door +$970.08 (j) Final fit out +$1,200.00 (k) Sub total +$10,301.12 (l) Locality loading Wollongong (m).006% +$103.63 (n) Builder's margin 25% +$2,601.19 (o) GST 10% $+1,300.59 (p)TOTAL $14,306.53 33. Section 48MA of the HBA provides that preferred outcome of proceedings for rectification of defective work is that the Tribunal make a work order for rectification works. 34. The relevant principles that should be applied by the Tribunal in determining whether to grant a money order instead of a work order include: (1) The assessment about whether the preferred outcome should be ordered is an objective one: Brooks v Gannon Constructions Pty Ltd [2017] NSWCATCD 12 at [64]; (2) The question of appropriateness of a work order turns on the facts of each case: Brooks at [64]; (3) The Tribunal is obliged to consider the operation of s 48MA in determining a building claim involving an allegation of defective residential building work, but section 48MA does not make the preferred outcome mandatory: Galdona v Peacock [2017] NSWCATAP 64 at [50] and [65] and Leung at [139]; (4) A failure to acknowledge that works have been defective in a consideration making a work order: Cuaresma v Delta Constructions Australia Pty Ltd [2017] NSWCATCD 67 at [95]; (5) Other relevant factors include the effectiveness of the defects and whether the relationship between the parties has broken down: see Brooks at [65]; (6) The making of a rectification order need not be an all or nothing proposition and it may be appropriate to make a money order in relation to some portion of the defective works the subject of the claim: Johnson v Lukeman [2016] NSWCATAP 272 at [43]. 35. The Tribunal is satisfied on the evidence of Expert Wallace that the defective work is extensive and will require significant to rectify (sic) . The evidence is, the builder's director, Mr Condon, does not accept the extensiveness of the defects found by Expert Wallace and has not adduced expert evidence or other independent evidence to the contrary. It is clear that the relationship between the builder, its director, Mr Condon and Mr and Mrs Cleary deteriorated to the point that the builder left the building site with the works incomplete without intention to return to work. The renovations are within the dwelling that the owners occupy. They have been denied the use of their bathroom since 22 December 2020 when the builder ceased work leaving the works incomplete and unusable. 36. It would be inappropriate for the Tribunal to order that the builder rectify the defects and for the above reasons exercises its discretion to make a money order rather than a work order. 37. The Tribunal orders that the builder pays the owners the amount of $14,306.53 immediately.

The procedural history of the appeal

1. On 27 July 2021, the builder lodged its Notice of Appeal. The appeal was brought within time.
2. On 20 August 2021, the Appeal Panel made orders for the preparation of the appeal for hearing, including orders that: 1. the appeal be heard on 18 October 2021; 2. each of the builder and the homeowners lodge with the Appeal Panel and serve on the other all of the evidence provided to the Tribunal on which they intended to rely for the purposes of the appeal; and 3. each of the builder and the homeowners lodge with the Appeal Panel and serve on the other the sound reporting or transcript of the hearing before the Tribunal if what happened at the hearing was to be relied upon, together with a typed copy of the relevant parts.
3. On 31 August 2021, Principal Member Suthers dismissed an application by the builder for an adjournment of the hearing date so as to allow the builder to obtain expert evidence. Principal Member Suthers did so because there was no order or agreement for an inspection of the homeowners' premises and such a report would not assist the builder, given the terms of cl 12(1)(c) of Sch 4 to the NCAT Act and the decision of an Appeal Panel in Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111.
4. In this regard: 1. cl 12(1)(c) provides that leave to appeal may be given if the Appeal Panel is satisfied that an appellant may have suffered a substantial miscarriage of justice because significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with); and 2. whether evidence was "not reasonably available" at the time of the hearing is determined by applying an objective test and considering whether the evidence in question was unavailable because no person could have reasonably obtained it: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown at [23].
5. The builder provided to the Appeal Panel: 1. a copy of the orders made on 20 August 2021; 2. a one page document titled "Sound recording - HB 21/02293" which provides references to particular points of time in a sound recording of the 23 March 2021 directions hearing, together with a notation of the effect of what was said at that time (rather than a verbatim reproduction of what was said); and 3. a one page document with miscellaneous submissions, including a copy of s 48MA of the HB Act.
6. The builder did not provide to the Appeal Panel a copy of Exhibit B1, being the bundle of documents upon which he relied at the 29 June 2021 hearing.
7. The homeowners provided to the Appeal Panel: 1. Exhibit HO1, being the bundle of documents upon which they relied at the 29 June 2021 hearing. That bundle included a copy of the expert report of Mr Wallace; 2. a folder of documents which included written submissions, together with various documents, including a full transcript of the 23 March 2021 directions hearing.
8. Neither party provided to the Appeal Panel a sound recording or a transcript of the hearing on 29 June 2021. Thus, there is no record before the Appeal Panel of the oral evidence in chief or in cross-examination of Mr Cleary, Mr Condon or Mr Wallace.

The appeal

1. As this is an appeal from the Consumer and Commercial Division of the Tribunal it is an internal appeal. Internal appeals may be made as of right on a question of law, and otherwise with the leave of the Appeal Panel: s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act").
2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 to the NCAT Act. Clause 12(1) provides: 12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because - (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
3. In Collins v Urban [2014] NSWCATAP 17 ("Collins"), an Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 of the NCAT Act may have been suffered where: "… there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance."
4. If the builder were to establish that it may have suffered a substantial miscarriage of justice in the sense explained above, then the Appeal Panel would have a discretion whether to grant leave under s 80(2) of the NCAT Act. In Collins, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: "(a) issues of principle; or (b) questions of public importance or matters of administration or policy which might have general application; or (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 not merely peripheral, so that it would be unjust to allow the finding to stand; or (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."
5. Where, as in the present case, an appellant is not legally represented it is appropriate for the Appeal Panel to review the stated grounds of appeal, the material provided, and the Decision to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal: Cominos v Di Rico [2016] NSWCATAP 5 at [13]. However, it is not the role of the Appeal Panel to draft grounds of appeal for the appellant not raised, and then resolve them: ZNX v ZNY [2020] NSWCATAP 41 at [29], citing SZTOG v Minister for Immigration and Border Protection [2018] FCA 112 at [30].

Appeal as of right

1. Having considered the stated grounds of appeal, the material provided, and the Decision the Appeal Panel considers that the builder has raised two questions of law. These are considered in turn below.

Procedural fairness

1. In its Notice of Appeal, the builder contended: Hearing on the 23/3/2021 by D Harvey, Tribunal member Made it quite clear and repeated to Mr Cleary multiple times that she is well aware of NR Wallace's building reports and repeated multiple times that there are "standards and tolerances" bases on the original submission. This is why I did not buy my own building report to counter NR Wallace's/Mr Cleary's. I can Purchase my own building report to counter his but I would rather the tribunal look at the New South Wales GUIDE TO STANDARDS AND TOLERANCES 2017 that NR Wallace's report does not follow or Allow fair trading who are not influenced by a monetary gain to make a decision as they physically assess jobs every day.
2. This appears to suggest that the builder chose not to file expert evidence because of statements made by General Member Harvey at the 23 March 2020 directions hearing. This might amount to a denial of procedural fairness if the Member had indicated to Mr Condon that it was unnecessary for the builder to file expert evidence and the Tribunal's Decision relied on the absence of such expert evidence. A failure to afford procedural fairness is an error of law.
3. The Appeal Panel has considered the full transcript of that directions hearing. Having done so it is satisfied that there are no reasonable grounds for Mr Condon to have proceeded on the basis that it was unnecessary for him to file expert evidence in response to the evidence of Mr Wallace.
4. In particular, during that directions hearing the Member: 1. referred on a number of occasions to the need for the builder to obtain its own expert evidence if it wished to counter the evidence of Mr Wallace; 2. on one of those occasions said "... so Mr Condon, I can only invite you in the strongest terms to get your own independent expert put together a response and address the issues that I have referred to"; and 3. made directions which provided the builder with an opportunity to file and serve expert evidence.
5. For the above reasons, the Appeal Panel is not satisfied that there was a denial of procedural fairness.

Exercise of discretion concerning the form of relief

1. The builder contended in its Notice of Appeal that: Mr Cleary had a problem with me not the company or the sub-contractors. Sub-Contractors have been paid and should be allowed to complete/rectify their works under another supervisor.
2. In his oral submissions, Mr Condon emphasised that this was his primary ground of appeal.
3. Once the Tribunal had determined at paragraphs [31] and [32] of the Decision that the work undertaken was defective, it then had to decide on the form of order it should make. Section 48O of the HB Act provides: 48O Powers of Tribunal (1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate - (a) an order that one party to the proceedings pay money to another party or to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings, (c) an order that a party to the proceedings - (i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or (ii) do or perform, or refrain from doing or performing, any specified act, matter or thing. (2) The Tribunal can make an order even if it is not the order that the applicant asked for. (3) Sections 79R and 79T-79V of the Fair Trading Act 1987 apply, with any necessary modifications, to and in respect of the determination of a building claim.
4. Section 48O provided the Tribunal with a discretion to, amongst other things, order the payment of an amount of money, or to order that the builder rectified the work.
5. The failure to properly exercise a discretion can constitute an error of law. In House v R [1936] HCA 40; (1936) 55 CLR 499, Dixon, Evatt and McTiernan JJ said at pp 504-5: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so."
6. In the exercise of its discretion the Tribunal was required by s 48MA of the HB Act to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome. It is clear from paragraphs [33] to [36] of the Decision that the Tribunal had regard to that principle, but decided that in the circumstances of this case, an order that compensation be paid was preferable.
7. The matters which the Tribunal identified as the reasons why it decided that in the circumstances of this case it was preferable to make an order for compensation are set out paragraphs [34] to [36] in the Decision. Those matters were relevant to the exercise of its discretion and there is no reason to doubt that the Tribunal made findings that were open to it on the available evidence. The Tribunal also identified the correct legal principles.
8. Thus, no error in the House v R sense arises from the Decision.
9. There are two other reasons why this ground of appeal fails.
10. First, the builder's suggestion that Mr Cleary had no problem with the builder's subcontractors finds no support in the evidence before the Appeal Panel. Further, Mr Cleary, during the hearing of the appeal, made clear that he did have an issue with the completion of work by any person associated with the builder.
11. Secondly, the subcontractors were not parties to the proceedings before the Tribunal and it follows that no order could have been made against them in any event.
12. Thus, there was no error of law and the builder requires leave to appeal.

Leave to appeal

1. As noted above at [21], before the Appeal Panel is able to give leave to appeal it must be satisfied that the builder may have suffered a substantial miscarriage of justice because: 1. the Decision was not fair and equitable, or 2. the Decision 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 builder contended that the Decision was not fair and equitable and was against the weight of evidence.

Was the Decision not fair and equitable?

1. The builder contended that the Decision was not fair and equitable because: Mr Cleary had a problem with me not the company or the sub-contractors. Sub-Contractors have been paid and should be allowed to complete/Rectify there works under another supervisor.
2. For the reasons set out at [31] - [41] above with respect to the exercise of the discretion this provides no basis from which to conclude that the Decision was not fair and equitable.

Was the Decision against the weight of evidence?

1. For a decision of the Tribunal to be against the weight of evidence the evidence in its totality must preponderate so strongly against the conclusion found by the Tribunal that it can be said that the conclusion was not one that a reasonable Tribunal member could reach: see Collins at [77].
2. To make an assessment whether a conclusion reached by the Tribunal is one that a reasonable Tribunal member could not reach because the evidence in its totality preponderates so strongly against that conclusion, it is necessary to consider the totality of the evidence that was before the Tribunal. However, as noted at [16] - [19] above, the Appeal Panel does not have before it the totality of the evidence that was before the Tribunal and in particular does not have: 1. a transcript of the oral evidence that was given to the Tribunal by Mr Cleary, Mr Condon or Mr Wallace; or 2. the documents provided by the builder to the Tribunal.
3. Whilst the builder set out various arguments why it contends that the Decision was against the weight of evidence, none of those arguments is able to be evaluated, given the evidentiary vacuum described above.
4. For the above reasons the Appeal Panel is not satisfied that the builder may have suffered a substantial miscarriage of justice because the Decision was against the weight of evidence. It follows that the discretion to grant leave to appeal has not been enlivened.

Conclusion and Orders

1. For the reasons set out above, the Tribunal is not satisfied that: 1. the Tribunal made an error of law; or 2. its discretion to grant leave to appeal has been enlivened.
2. The Orders of the Appeal Panel are: 1. Leave to appeal is refused. 2. The appeal is otherwise dismissed.

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: 26 October 2021