The plaintiffs argued that s 48L of the Home Building Act was not applicable to the particular circumstances of this case.
As I have said, above, s 48L(1) and (2) of the Home Building Act says:
48L Tribunal to be chiefly responsible for resolving building claims
(1) This section applies if a person starts any proceedings in or before any court in respect of a building claim and the building claim is one that could be heard by the Tribunal under this Division.
(2) If a defendant in proceedings to which this section applies makes an application for the proceedings to be transferred, the proceedings must be transferred to the Tribunal in accordance with the regulations and are to continue before the Tribunal as if they had been instituted there.
…
As I have said, these proceedings were started by the plaintiffs on 10 March 2023 by application 2023/219219 filed in the Consumer and Commercial Division of NCAT. The proceedings were transferred to the District Court by the following order made by NCAT on 22 June 2023:
1. These proceedings are transferred to the District Court of New South Wales and are to proceed before that Court as if they had been instituted there.
The plaintiffs argued that the condition precedent to the application of s 48L of the Home Building Act, namely that "a person starts any proceedings in or before any court in respect of a building claim…" is not present in this matter. In addition to the argument that the proceedings are not a building claim, it was argued that the plaintiffs did not start any proceedings in or before any court. They started the proceedings in NCAT. There is no doubt that NCAT is not a court (see Attorney-General for New South Wales v Gatsby [2018] NSWCA 254). The order made by the Tribunal transferring the proceedings to the District Court said that the proceedings "are to proceed before that Court as if they had been instituted there" and, in saying so, referred to the future conduct of the proceedings, but did not change the past by, for example, deeming the proceedings to have been started in the District Court.
The defendant, in oral submissions in reply, submitted, in effect, that s 48L(1) should be read as if it said:
(1) This section applies if a person starts any proceedings in any court or comes before any court in respect of a building claim and the building claim is one that could be heard by the Tribunal under this Division.
I reject that submission. There is no warrant for reading the plain words of s 48L(1) in the manner contended for by the defendant.
I determine that s 48L of the Home Building Act is applicable when a plaintiff starts proceedings in a court, in the sense of initiating them by filing proceedings in a court or by oral application before a court and is not applicable in any other circumstance.
The defendant's application for the transfer of these proceedings back to NCAT under s 48L of the Home Building Act cannot, therefore, succeed.
[2]
Claim for Misleading and Deceptive Conduct
The Statement of Claim sets out an alternative claim of misleading and deceptive conduct within the meaning of s 18 of the Australian Consumer Law (NSW). The particulars relied upon are as follows:
Particulars
A. The Builder's Direction [ie, that the plaintiff select flooring from a specified flooring supplier and convey that selection in a specified way] constituted a representation by the Builder to the Home Owner that it would carry out works under the Contract in accordance with any selection made by the Home Owner pursuant to that Direction.
B. The Builder failed to supply and install Preference Select Flooring and supplied and installed Fiddleback Australian Hardwood flooring without consent or agreement of the Home Owner.
It is further pleaded that the Builder's Direction was made in trade or commerce and that the plaintiffs relied upon the Builder's Direction by choosing other finishes based upon the colour and appearance of the flooring they selected.
The damages claimed in this alternative claim are the same as those claimed for breach of contract. The damages claimed are set out above at [11] and amount to $154,406.10. Interest and costs are also claimed.
The Fair Trading Act provides, in s 28:
28 Application of Australian Consumer Law
(1) The Australian Consumer Law text, as in force from time to time -
(a) applies as a law of this jurisdiction, and
(b) as so applying may be referred to as the Australian Consumer Law (NSW), and
(c) as so applying is a part of this Act.
(2) This section has effect subject to sections 29, 30 and 31.
The Fair Trading Act further provides, in s 79J and s 79S:
79J General statement of jurisdiction
The Tribunal has jurisdiction, except as otherwise provided by this Division, to hear and determine a consumer claim the subject of an application under this Division.
…
79S Monetary limit on Tribunal's jurisdiction to make orders
(cf CC Act 1998, s 14 and CC Reg 2014, cl 4)
(1) The Tribunal has no jurisdiction to make, in respect of a particular consumer claim, an order or orders in favour of the claimant (or, where there are two or more claimants, in favour of those claimants) if the relevant total under or because of the order or orders would exceed the prescribed amount.
(2) For the purposes of subsection (1), the relevant total is the total of -
(a) the amount or amounts (if any) of money to be paid, and
(b) the value or values (if any) of the work to be performed, or the services to be supplied, and
(c) the amount or amounts (if any) of money to be declared not to be due or owing, and
(d) the value or values of goods (if any) to be delivered or replaced.
(3) The Tribunal has no jurisdiction to make in respect of a particular consumer claim an order or orders referred to in section 79O if the amount or the total of the amounts (if any) to be paid under or because of the order or orders would exceed the prescribed amount.
(4) The Tribunal has no jurisdiction to make in respect of a particular consumer claim an order or orders under section 79P if the relevant total under or because of the order or orders would exceed the prescribed amount.
(5) For the purposes of subsection (4), the relevant total is the total of -
(a) the amount or amounts (if any) of money to be paid, and
(b) the value or values (if any) of the services to be supplied, and
(c) the value or values of goods (if any) to be delivered.
(6) Subsections (1), (3) and (4) do not apply in relation to a consumer claim -
(a) arising from the supply of a new motor vehicle that is used substantially for private purposes within the meaning of the Motor Vehicles Taxation Act 1988, or
(b) relating to commission fees charged by agents licensed under the Property and Stock Agents Act 2002.
(7) In this section -
new motor vehicle means a motor vehicle that is not a second-hand motor vehicle within the meaning of the Motor Dealers and Repairers Act 2013.
prescribed amount means $40,000 or such other amount as is prescribed for the purposes of this section.
The prescribed amount was increased from $40,000 to $100,000 under reg 13A of the Fair Trading Regulation 2019, which applies to these proceedings.
The plaintiffs submitted that NCAT could also have jurisdiction in relation to the subject matter of a consumer claim under s 74(3) of the Fair Trading Act, which provides:
74 Actions for damages and compensation orders
…
(3) The Tribunal may decide the matter of whether a person has suffered loss or damage because of the conduct of another person that constitutes a local contravention or a contravention of Chapter 2 or 3 of the ACL if that matter arises in connection with another matter the subject of proceedings in the Tribunal. In deciding the matter of loss or damage, the Tribunal may award such sum, and make such ancillary orders, as it thinks fit.
…
The Appeal Panel of NCAT decided, in John McDonald Building Services Pty Ltd v Gusa [2022] NSWCATAP 60, at [164] - [169], that the jurisdictional limit of NCAT with respect to a claim based on the Australian Consumer Law and brought under the Fair Trading Act is the jurisdictional limit provided for by the Fair Trading Act, even where the claim arises out of a building dispute. I respectfully agree. NCAT's jurisdictional limit with respect to the consumer claim in the present matter is $100,000.
The defendant argued that it did not matter that the claim, as pleaded, was for damages in a sum which exceeds $100,000. Counsel for the defendant asserted (as I understood him) that the conclave of experts in this matter had agreed that the cost of removing the floorboards which have been installed and installing the floorboards chosen by the plaintiffs would be $90,000. There is no evidence before me to that effect. In any event, the moving and storage costs and the accommodation costs claimed by the plaintiffs need to be considered. The claim made is for damages in the sum of $154,406.10. The claim exceeds the jurisdictional limit. It would not be appropriate to predict the amount likely to be awarded ultimately when considering the monetary limit on NCAT's jurisdiction. The decision with respect to monetary jurisdiction must be made based upon the claim for damages as it is made by the plaintiffs.
The defendant argued that the damages could be apportioned in some way between the alternative claims made by the plaintiffs. Again, this would call for a prediction to be made and relied upon about the ultimate outcome of the proceedings, which is not an appropriate exercise to undertake when making a decision about jurisdiction.
The defendant further argued that the claim under the Fair Trading Act and the Australian Consumer Law (NSW) was also characterised as a building claim. I reject this argument. I have set out, above, my determination that the plaintiffs' claim is not a building claim. In addition, the plaintiffs' claim under the Fair Trading Act and the Australian Consumer Law (NSW) does not arise from a supply of building goods or services, but from the alleged commission of misleading and deceptive conduct.
The plaintiffs' claim under the Fair Trading Act and the Australian Consumer Law (NSW) is outside of the monetary jurisdiction of NCAT.
[3]
Civil and Administrative Tribunal Act 2013 Schedule 4 clause 6(2)
The CAT Act, in Schedule 4, sets out provisions applicable only to the Civil and Commercial Division. The CAT Act provides, in Schedule 4, clause 6(2):
6 Transfer of proceedings to courts or to other tribunals
…
(2) If the parties in any proceedings that have been instituted in a court so agree, or if the court of its own motion or on the application of a party so directs, the proceedings are, if the proceedings relate to a matter for which the Tribunal has jurisdiction to exercise a Division function -
(a) to be transferred to the Tribunal in accordance with the procedural rules (if any), and
(b) to continue before the Tribunal as if the proceedings had been instituted in the Tribunal
The plaintiffs relied on ss 56 and 59 of the Civil Procedure Act 2005. I have set out s 56 of the Civil Procedure Act above at [43]. Section 59 provides as follows:
59 Elimination of delay
In any proceedings, the practice and procedure of the court should be implemented with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination beyond that reasonably required for the interlocutory activities necessary for the fair and just determination of the issues in dispute between the parties and the preparation of the case for trial.
In all of the circumstances, having regard to all of their arguments set out above, the plaintiffs submitted that it would not be appropriate to transfer the proceedings to NCAT under Schedule 4 clause 6(2) of the CAT Act.
The defendant argued that the proceedings ought to be transferred to NCAT, if not under s 48L of the Home Building Act, then under Schedule 4 clause 6(2) of the CAT Act. The defendant relied upon all of its arguments but laid particular stress upon the vital importance to it of having the making of a work order under the Home Building Act available as a remedy in preference to an award of damages.
In view of my determination that the plaintiffs' claim is not a building claim and that the Fair Trading Act portion of the proceedings exceeds NCAT's monetary jurisdiction, I do not consider that an order can be made transferring the proceedings under Schedule 4 clause 6(2) of the CAT Act.
[4]
Summary and Conclusion
The defendant seeks the transfer of these proceedings to NCAT.
NCAT has jurisdiction under s 48K of the Home Building Act to hear and determine any building claim for an amount not exceeding $500,000.
NCAT is the preferred jurisdiction for such claims under s 48L of the Home Building Act and has the unique jurisdiction to make rectification work orders which are often the preferable outcome (see s 48MA of the Home Building Act).
I have determined that the subject matter of the plaintiffs' claim is excluded from the definition of "building claim" under the Home Building Act by the effect of Schedule 1 clause 2(3)(k) and the definitions in s 48A of the Act. NCAT therefore does not have jurisdiction with respect to the plaintiffs' claim under the Home Building Act.
I have further determined that the plaintiffs' claim under the Fair Trading Act and the Australian Consumer Law (NSW) is for an amount which exceeds NCAT's monetary jurisdictional limit of $100,000 with respect to such claims.
The defendant's application for the transfer of the proceedings is made under s 48L of the Home Building Act. Under s 48L(1), s 48L applies where a person "starts any proceedings in or before any court in respect of a building claim". These proceedings were started in NCAT and transferred to the District Court by order of NCAT, with the consent of both parties. Section 48L does not, therefore, apply, for that reason, and also because the plaintiffs' claim is excluded from the definition of "building claim" under the Home Building Act.
It follows that the request for the transfer of proceedings under Schedule 4, clause 6(2) of the CAT Act should be refused.
The following order will issue:
1. The defendant's application for the transfer of these proceedings to the Civil and Administrative Tribunal of New South Wales is refused.
[5]
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: 25 June 2024
The defendant's argument as to whether the plaintiffs' claim is a "building claim"
The defendant argued that a transfer of the proceedings to NCAT is mandatory under s 48L of the Home Building Act, which provides:
48L Tribunal to be chiefly responsible for resolving building claims
(1) This section applies if a person starts any proceedings in or before any court in respect of a building claim and the building claim is one that could be heard by the Tribunal under this Division.
(2) If a defendant in proceedings to which this section applies makes an application for the proceedings to be transferred, the proceedings must be transferred to the Tribunal in accordance with the regulations and are to continue before the Tribunal as if they had been instituted there.
(3) This section does not apply to matters arising under sections 15, 16 or 25 of the Building and Construction Industry Security of Payment Act 1999.
(4) This section has effect despite clause 6 (Transfer of proceedings to courts or to other tribunals) of Schedule 4 to the Civil and Administrative Tribunal Act 2013.
The defendant argued, further, that even if it were not mandatory to transfer the proceedings to NCAT under s 48L, transfer would be appropriate because NCAT has been designated as the decision making body chiefly responsible for resolving home building claims. The defendant cited Dyldam Developments Pty Ltd v The Owners - Strata Plan 85305 [2020] NSWCA 327 at [47] in support of this argument.
The defendant also relied upon s 48MA of the Home Building Act, which provides:
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.
The defendant argued that the purpose of s 48MA would be frustrated if the matter were to be heard and determined in the District Court, because the District Court does not have the power to make a work order under the Home Building Act. The defendant cited the following passage from Ippolito v Cesco [2020] NSWSC 561 at [65]-[66] where Ball J said:
65. Section 48MA is a curious provision, at least insofar as it applies to the Court. It is common ground that the section does not give the Court power to order "the responsible party" to undertake rectification work. Section 48O(1)(a) gives the Tribunal power to order that one party to the proceedings pay to the other a sum of money. Section 48O(1)(c)(i) gives the Tribunal power to order a party to proceedings to "do any specified work or perform any specified service". In that context, s 48MA is to be understood as saying that in deciding whether to make a monetary order or order that certain work be performed, the Tribunal should give preference to orders of the latter type.
66. This Court does have power to order specific performance of a building contract, although there is normally a reluctance to do so because of the difficulties in formulating an appropriate order and the expectation that the order will require continual supervision by the Court: see, Forrest v Australian Securities and Investments Commission (2012) 247 CLR 486 at 527 per Heydon J; Graham H Roberts Pty Ltd v Maurbeth Investments Pty Ltd [1974] 1 NSWLR 93 at 105 per Helsham J. It is also generally accepted that an owner has an obligation to give a builder a reasonable opportunity to repair defective work, which is often explained as part of the owner's obligation to mitigate his or her loss: Owners - Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067 at [44]ff; Owners Strata Plan 78465 v MD Constructions Pty Ltd [2016] NSWSC 162 at [27]ff. It is unclear whether and how s 48MA is intended to modify these principles.
The defendant relied upon the following definitions in Part 3A, s 48A of the Home Building Act:
48A Definitions
(1) In this Part -
building claim means a claim for -
(a) the payment of a specified sum of money, or
(b) the supply of specified services, or
(c) relief from payment of a specified sum of money, or
(d) the delivery, return or replacement of specified goods or goods of a specified description, or
(e) a combination of two or more of the remedies referred to in paragraphs (a)-(d),
that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services but does not include a claim that the regulations declare not to be a building claim.
…
building goods or services means goods or services supplied for or in connection with the carrying out of residential building work or specialist work, being goods or services -
(a) supplied by the person who contracts to do, or otherwise does, that work, or
(b) supplied in any circumstances prescribed by the regulations to the person who contracts to do that work.
goods, services and supply have the same meanings as in Part 6A of the Fair Trading Act 1987.
(2) Without limiting the definition of building claim, a building claim includes the following -
(a) an appeal against a decision of an insurer under a building cover contract required to be entered into under this Act,
(b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C.
The defendant argued that the proceedings are a building claim within the meaning of s 48A of the Home Building Act, and thus s 48K requires that the proceedings be transferred to NCAT (see McLachlan v Edwards Landscapes Pty Ltd [2023] NSWSC 532 at [8]).
The defendant relied upon the decision in Grygiel v Baine & Ors [2005] NSWCA 218 ('Grygiel') in which Basten J, with whom Mason P agreed, said at [57]-[63], in relation to the definitions in s 48A of the Home Building Act:
57 It is not necessary to determine whether, in relation to the first limb of the definition, services can be supplied "for or in connection with" the carrying out of residential building work, for the purposes of the definition of "building goods or services", where no residential building is in fact carried out. On one view, the definition of "residential building work" is not limited to activities, such as laying foundations and painting a building, on site, but extends to work of a preparatory nature. Alternatively, preparatory work could be said to have a sufficient connection with the carrying out of building work because its purpose was to give rise to residential building work and it had a sufficient causal nexus with such work: see generally, Technical Products Pty Ltd v State Government Insurance Office (Qld) (1989) 167 CLR 45 at 47-48 (Brennan, Deane and Gaudron JJ). Accordingly, it is at least arguable that project management arrangements, of the kind address in both Collings Homes cases, would fall within the definition of "building claim". Were that not the case, distinctions would need to be drawn which might have an arbitrary result, at least from the perspective of the homeowner. Thus, where an architect or project manager provides plans and designs, locates a builder and coordinates and supervises the actual building work, any loss suffered as a result of inadequate coordination and supervision would fall within the building claim, but other conduct would not.
58 That is not to say that the jurisdiction of the Tribunal under the Home Building Act should be expanded beyond the proper construction of the terms used in Part 3A. The fact that the Tribunal has a jurisdiction under that Part up to $500,000, whereas its current jurisdiction under the Consumer Claims Act is limited to $25,000, demonstrates the need to maintain proper limits on the jurisdiction. Nevertheless, to the extent that the statutory terminology permits, those limits should not be arbitrary, nor should an unduly restrictive construction be given to the words of the statute, especially to the extent that they mirror the terminology of the Consumer Claims Act. Of particular concern would be a construction which meant that services of a project manager might fall within the definition of "building claim" where residential building works actually eventuated, but not otherwise. Such a distinction can be avoided if the phrase "the carrying out of residential building work" is treated as adjectival, in the sense that it is descriptive of the services with which a connection must be established, rather than being treated as a factual pre-condition to the necessary connection.
59 By reference to the first limb of the definition, the question in this case was whether the claim for damages might be said to "arise from" a supply of building services, in circumstances where the loss allegedly suffered flowed from the failure of the solicitor to advise that, without compliance with the statutory pre-conditions of the Home Building Act, the builder would not be able to recover for the services provided. Precisely how the claim is formulated is a matter of some importance. In the absence of any finding by the Tribunal as to the services in question, it must be dealt with on the basis of the "claim", which is to be found in the proposed pleadings before the Tribunal. The causal relationship between the legal advice and the supply of services for which a contractual price could not be recovered is apparent from those pleadings. Without establishing that causal relationship, the Claimant must fail. However, if the causal relationship is established, it is clearly arguable that the loss suffered would "arise from" the supply of building services.
60 If this reasoning is correct, the same result would presumably apply where the solicitors who advised the builder had nothing to do with the homeowner. It might also apply where the advice given did not relate to the Home Building Act, nor obligations under it, but rather concerned doubts the builder had as to the assets of the other contracting party and, for example, the failure of the solicitor to ascertain whether the other party in fact owned the premises on which the work was to be undertaken. If the builder is not paid for the supply of building services, it is equally possible to say that the claim will arise from the supply of the building services and from the negligent legal advice. In the case where, as a result of negligent legal advice, the contract under which the building services were supplied is not in writing the connection will be closer.
61 Similar questions will arise on the other side of the record. Thus, if a homeowner obtains legal advice in relation to a contract entered into with a builder, which does not allow for recovery in the case of defective work, the loss suffered by the homeowner may equally be said to arise from the defective work and from the negligence of the solicitor.
62 The question is whether each of these cases gives rise to a "building claim" for the purposes of s 48A. In my view, the cases in which the section is satisfied include those which specifically involve the terms of the contract between the homeowner and the builder. The case where the negligence of the solicitor was in failing to comply with a request to search the title to see if the occupant having the work done was in truth the homeowner, would not involve a "building claim" because, whilst the supply of building services provides the occasion on which the builder suffers a loss, the claim against the solicitor gives rise to no substantial dispute about the nature of the supply or the terms on which the building services were supplied. In such a case the claim should not be characterised as a claim for a specified sum arising from the supply of building services. This construction may be understood to flow from a reading of the definition of "building claim" as a whole and adopting a purposive approach, consistent with the objects and scheme of the Home Building Act.
63 Whilst such a line must be drawn in an appropriate case, in my view the claim in the present case is a building claim because, as pleaded, it related to the terms on which the builder supplied building services.
I note that the definition of "residential building work" for the purposes of Part 3A of the Home Building Act which was applicable in Grygiel was different from the definition in the current version of the Home Building Act (see [50] below).
The defendant also relied on a decision of the Appeal Panel of NCAT in Syed Ahmad Shoaib Ali Pty Ltd v Jandson Pty Ltd; Jandson Pty Ltd v Syed Ahmad Shoaib Ali Pty Ltd [2018] NSWCATAP 228 ('Syed') in which the Appeal Panel said, at [247], referring to Basten JA in Grygiel:
247 In His Honour's judgment his Honour refers to the first and second limbs of "the definition". It is apparent from [64] of his Honour's reasons that his Honour was there speaking of the definition of "building claim". The first limb was whether the claim arose from a supply of goods or services under a contract. The second limb was whether the claim arose under a contract that was collateral to a contract for the supply of building goods or services.
The defendant argued, on the basis of the decisions in Grygiel and Syed that the Home Building Act contemplates that a building claim will arise in one of the following two situations:
1. Where goods or services are supplied by the person who contracts to do, or otherwise does, the residential building work; or
2. Under a contract that is collateral to a contract for the supply of goods or services supplied by the person who contracts to do, or otherwise does, the residential building work.
The defendant asserted that the present claim falls squarely within (1) and is therefore a building claim and must be transferred under s 48L of the Home Building Act. The defendant referred to the judgment of Sackville AJA, with whom Macfarlan JA and Handley AJA agreed, in May v Christodoulou (2011) 80 NSWLR 462 at [130]-[131]:
130 In the present case, s 48L of the HB Act expressly confers a right upon a defendant in proceedings in respect of a building claim to apply to transfer the proceedings to the Tribunal. It is a matter for the defendant whether or not to apply. If an application is duly made, the proceedings must be transferred. However, there is nothing in s 48L which denies the District Court jurisdiction in respect of a building claim. The District Court has jurisdiction to hear and determine building claims regardless of whether they could have been brought in the Tribunal.
131 The appellant, acting on behalf of the Builder, could have applied before the hearing commenced to have the proceedings transferred. Perhaps he could have applied at the commencement of the hearing. But, having participated in the hearing for two days, the Builder had clearly waived its entitlement to apply to the District Court to transfer the proceedings. If the position were otherwise, the Builder could have waited until the hearing concluded and, having formed the view that it was likely to lose, required the Court to transfer the proceedings to the Tribunal. This cannot have been the legislative intention.
It was submitted by the defendant that one item in the contract between the parties was arguably not "residential building work" under the Home Building Act, (which I take to have been a reference to Schedule 1 clause 2(3)(k) and to the installation of timber flooring). It was argued that this did not matter, as the contract as a whole was a Home Building Contract and could therefore form the basis of a building claim.
The defendant argued that the legislative intention in the Home Building Act is that, when claims such as the claim in the present case are resolved in the plaintiff's favour, the remedy is to be a remedial work order in preference to damages, which indicated that the jurisdiction of NCAT should be interpreted to be as wide as possible, given that the District Court does not have power to make a work order.
The plaintiffs' argument as to whether the plaintiffs' claim is a "building claim"
It was common ground that, in order to be a "building claim" under s 48A of the Home Building Act, the claim must arise from "a supply of building goods or services".
In s 48A of the Home Building Act, "building goods or services" are defined as "goods or services supplied for or in connection with the carrying out of residential building work or specialist work…" [my underlining]. There is no doubt that the work the subject of the claim is not specialist work (see the definition in Schedule 1 of the Home Building Act).
The Home Building Act defines "residential building work" in Schedule 1 (see also [40]-[41] below):
2 Definition of "residential building work"
(1) In this Act, residential building work means any work involved in, or involved in co-ordinating or supervising any work involved in -
(a) the construction of a dwelling, or
(b) the making of alterations or additions to a dwelling, or
(c) the repairing, renovation, decoration or protective treatment of a dwelling.
(2) Each of the following is included in the definition of residential building work -
(a) roof plumbing work done in connection with a dwelling,
(b) specialist work done in connection with a dwelling,
(c) work concerned in installing in a dwelling any fixture or fixed apparatus that is designed for the heating or cooling of water, food or the atmosphere or for air ventilation or the filtration of water in a swimming pool or spa (or in adding to, altering or repairing any such installation).
(3) Each of the following is excluded from the definition of residential building work -
…
(k) any work involved in the installation of any material that forms an upper layer or wearing surface of a floor (even if installed as a fixture) and that does not involve any structural changes to the floor, but not including work involved in the installation of floor tiles unless the regulations otherwise provide,
…
(4) Work referred to in subclause (3)(f) is not excluded from the definition of residential building work if it is part only of the work to be done under a contract to do residential building work.
(5) Internal painting work is not excluded from the definition of residential building work (under subclause (3)(g)) if it is part only of the work to be done under a contract to do residential building work.
(6) Work referred to in subclause (3)(h) is not excluded from the definition of residential building work if it is part only of the work to be done under a contract to do residential building work at the new site of the dwelling (whether or not that work is done under the same contract as the contract to remove and transport the dwelling).
(7) The regulations may -
(a) declare any work to be included in the definition of residential building work, or
(b) declare any work to be excluded from the definition of residential building work.
The plaintiffs contended that the claim is not a building claim because the building goods and services supplied which are relevant to the claim are exempt from the definition of residential building work under clause 2(3)(k) of Schedule 1 of the Home Building Act.
The plaintiffs relied upon the decision of Bell J in Stevens v Gary Lewin trading as Gary Lewin Architecture [2006] NSWSC 1232 ('Stevens'). That case concerned an architect who sued homeowners for monies due on invoices issued for work done under a contract to supervise alterations and additions to a dwelling. The homeowners cross-claimed for negligent approval of certain progress payments claimed by the builder. At the relevant time, "the supervision only of residential building work" by an architect was excluded from the definition of "residential building work" by reg. 9 of the Home Building Regulations 2004. NCAT decided that it did not have jurisdiction in either the claim or the cross-claim. The owners appealed to the Supreme Court.
In Stevens, Bell J said, at [58], referring to Grygiel at [57] (which is set out above at [24]):
48 There is no reference to the exclusion from the definition of residential building work of the supervision of such work by registered architects in Grygiel. This is not to say that Basten JA's observation that loss occasioned by the negligent supervision by an architect of residential building work may be a building claim for the purposes of Part 3A of the HBA is, as the architect's counsel submitted, wrong. The exclusion under the Regulation is of the supervision by registered architects from being residential building work for the purposes of the HBA and Regulation. This does not exclude the supervision of residential building work by registered architects as being a building claim in a case in which the claim arises from the supply of building goods and services (or under a contract that is collateral to a contract for the supply of building gods and services). As the Tribunal observed, and as counsel for the architect acknowledged, the exclusion of the supervision only of residential building work carried out by registered architects from the definition of residential building work under the HBA serves to relieve registered architects from a scheme of duplex regulation.
49 It remains that the scheme of the Act when read with the Regulation suggests that it was not the intention of the legislature that claims by architects for architectural services including the supervision of residential building work were to be building claims and subject to the jurisdiction of the Tribunal under Part 3A of the HBA.
…
51 In Grygiel, the builder's claim for damages for negligent advice possessed the necessary causal relationship to the supply of building goods and services because the loss that the builder claimed was the right to recover his fees under the contract for the supply of the goods and services. Basten JA was concerned to see that the provisions of Part 3A of the HBA are not construed so as to produce arbitrary results (at [58]). In the present case the architect brought a claim for fees due under the agreement. As I have noted, I do not consider that his claim is properly to be characterised as a building claim within the first limb of the definition in s48A(1). The Stevens' cross claim (which is before the Tribunal as a separate application) includes the pleading of claims in breach of contract and/or negligence relating to the approval of progress payments submitted by the builder. In determining the scope of claims that answer the description of building claims under the first limb of the definition in s 48A(1) Basten JA noted that the jurisdiction of the Tribunal is not to be expanded beyond the proper construction of the terms used in Part 3A (at [58]). In my opinion the claims for breach of contract and or negligence relating to the approval of progress payments are not properly characterised as arising out of the supply of building goods and services by Woodfast but rather as claims that arise from the obligations assumed by the architect under the agreement.
52 I consider that the Tribunal did not err in law by its failure to hold that the architect's and the Stevens' claims arise out of the supply of building goods and services by Woodfast.
53 The Stevens' second ground of challenge is to the Tribunal's reasons for holding that neither the architect's claim nor their claim arises under a contract that is collateral to a contract for the supply of building goods or services (the second limb).
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56 Basten JA noted that s 48A makes provision for the supply of services whether under a contract or not and that services in connection with residential building work may have a causal nexus that is not directly dependent on contract. His Honour held that the concept of a collateral contract for the purposes of s 48A(1) will be met where there is an appropriate connection with the supply of building services (at [69]).
57 It is not apparent that the architect's claim arises under a contract that is collateral to the Woodfast contract unless it is considered that every contract for the provision of architectural services with respect to the construction of, or alterations to, a residential dwelling, which makes provision for supervision by the architect of any building contract is collateral to the building contract. The architect's claim under the agreement on the pleadings seems to me to have no appropriate connection with the supply of the building services by Woodfast and is not a claim that arises under a contract that is collateral to the Woodfast contract.
58 The Stevens' claim is one that is substantially dependent upon whether the contract was varied as alleged and whether the architect's design services fell below the services of an architect of ordinary skill. To the extent that a component of the claim in breach of contract and/or negligence involves consideration of whether the supply of building services by Woodfast fell below the appropriate standard, it is to be observed that it is not the major part of the claim. It is the only feature of the claim that may be said to have a connection with the supply of building services. The connection is as to manner in which the Woodfast contract was carried out and not to the terms of it. I do not consider that this connection is such as to characterise the Stevens' claim as one that arises under a contract that is collateral to the Woodfast contract.
With reference to the decision in Stevens, the plaintiffs submitted that, in the present case, the claim concerns work involved in the installation of timber floorboards, which is excluded from being "residential building work" by Schedule 1 clause 2(3)(k) of the Home Building Act, and is therefore not "the supply of building goods or services" under s 48A(1) of the Home Building Act, and cannot therefore constitute a "building claim" under s 48A(1) of the Home Building Act. Work involved in the installation of timber floorboards does not "arise from a supply of building goods and services" as defined under the Home Building Act, because any work involved in the installation of the wearing surface of a floor is expressly excluded.
It was submitted that the scheme of the Act, read with the exemptions, suggest that it was not the intention of the legislature that claims in relation to "upper wearing surfaces" would be "building claims" and subject to the jurisdiction of the Tribunal.
It was further pointed out that there is, in this matter, no suggestion that a collateral contract for the installation of timber floorboards exists. It was argued that even where the installation of timber floors is part of a wider contract, to do work which includes the supply of "building goods or services" as defined in s 48A of the Home Building Act, that does not mean that the installation is collateral to a supply of building goods and services because such an interpretation would be contrary to the scheme and purpose of clause 2(3) of Schedule 1 of the Home Building Act.
The Home Building Act, in clause 2(3) of Schedule 1, exempts the following activities from the definition of "residential building work", in addition to nine other activities, including "any work involved in the installation of any material that forms an upper layer or wearing surface of a floor…" (exempted in clause 2(3)(k)):
(f) any work that would otherwise be residential building work but that by or under another Act a person is prohibited from doing unless the person is the holder of a contractor licence or another authority under that other Act, but subject to subclause (4),
(g) internal painting work, but subject to subclause (5),
(h) any work (other than specialist work) done in relation to the removal and transport of a dwelling, but subject to subclause (6),
Clause 2(3) of Schedule 1 also provides as follows:
(4) Work referred to in subclause (3)(f) is not excluded from the definition of residential building work if it is part only of the work to be done under a contract to do residential building work.
(5) Internal painting work is not excluded from the definition of residential building work (under subclause (3)(g)) if it is part only of the work to be done under a contract to do residential building work.
(6) Work referred to in subclause (3)(h) is not excluded from the definition of residential building work if it is part only of the work to be done under a contract to do residential building work at the new site of the dwelling (whether or not that work is done under the same contract as the contract to remove and transport the dwelling).
The plaintiffs submitted that if the work excluded from the definition of "residential building work" by clauses 2(3)(f), (g) and (h) were, notwithstanding that exclusion, intended to constitute "residential building work" when that work was done under a contract to do work which included other work which came within the definition of "residential building work", then clauses 2(4), (5) and (6) would have no work to do. The legislature has not seen fit to include a similar clause to clauses 2(4), (5) and (6) in relation to the work described in clause 2(3)(k), so it can be inferred that it was not intended that any work involved in the installation of a timber floor should be treated as "residential building work", notwithstanding the exclusion, on the basis that it is part of a contract including other work which is "residential building work".
The plaintiffs argued that, in the event that the matter were to be heard and determined by NCAT, and it was subsequently determined that NCAT did not have jurisdiction, then significant expense and delay would have been experienced by the parties. It was submitted that, in the event that there is any doubt about whether NCAT has jurisdiction, it should be resolved in favour of having the proceedings heard and determined in the District Court, bearing in mind s 56(1) and (2) of the Civil Procedure Act 2005, which says:
56 Overriding purpose
(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule.
The plaintiffs further argued that the matter was transferred to the District Court from NCAT with the consent of the defendant about one year ago. A hearing has been listed to begin on 9 July 2024 for three days. A further transfer would delay the matter by months.
In submissions in reply, counsel for the defendant raised the question of whether the plaintiffs' claim involves "structural changes to the floor" which would take the claim out of the exclusion from the definition of "residential building work" in Schedule 1, clause 2(3)(k) of the Home Building Act. As I understand it, this submission arises from the possibility that the floor may require levelling with a liquid cement product. There is no evidence in support of the contention that such work would constitute "structural changes to the floor". I reject the contention that the possibility that a levelling product may be applied to the floor takes the claim out of the exclusion in Schedule 1 clause 2(3)(k) of the Home Building Act.