These internal appeal proceedings concern the decision of the Consumer and Commercial Division of the Tribunal in HB 16/06736, delivered on 3 April 2017, that the Appellant, as the builder, pay to the Respondents, as the homeowners, $112,899.00, and to decline to make a rectification work order pursuant to s 48MA of the Home Building Act 1989.
The appeal was lodged on 21 April 2017 within the 28 day period prescribed by NCAT Rules. The orders were stayed by the Tribunal on 12 May 2017.
The Notice of Appeal identified nine grounds of appeal, two of which, 3 and 4, were abandoned at the hearing. The remainder were somewhat lengthy and are summarised as:
1. An error by failing to turn its mind to, and to resolve, competing positions as to the application of a particular edition of an Australian Standard under the Development Consent.
2. An error by failing to turn its mind to, and to resolve, competing positions as to the application of an APZA (fire protection) Report under the Development Consent.
5. An error in admitting into evidence, as an expert's report, evidence as to the cost of rectification from a witness, Malcolm Gray.
6. Errors in findings as to the reliability and credibility of the evidence of Mr Gray when he had not attended the hearing and was not cross-examined.
7. Error by adopting the evidence of Mr Gray as to the cost of rectification.
8. Error in a finding of fact that the Respondents were not bound to accept the enclosure of an area to meet fire protection requirements which were not envisaged by the Contract.
9. Error in the exercise of the discretion as to the making of order pursuant to s 48MA of the Act.
The making of internal appeals in the Tribunal is addressed in s 80 of the Civil and Administrative Tribunal Act 2013 (the Act).
Section 80(2)(b) of the Act provides that an internal appeal may be made:
in the case of any kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds.
Leave may only be granted by the Appeal Panel if the appellant can demonstrate that they may have suffered a substantial miscarriage of justice.
Clause 12 of Schedule 4 to the NCAT Act provides:
(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).
The principles applicable to the grant of leave were set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at [76-79]:
76 Accordingly, it should be accepted that a substantial miscarriage of justice may have been suffered because of any of the circumstances referred to in cl 12(1)(a), (b) or (c) 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.
77 As to the particular grounds in cl 12(1)(a) and (b), without seeking to be exhaustive in any way, the authorities establish that:
(1) If there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" - Hutchings v CTTT [2008] NSWSC 717 at [35], Atkinson v Crowley [2011] NSWCA 194 at [12].
(2) The decision under appeal can be said to be "against the weight of evidence" (which is an expression also used to describe a ground upon which a jury verdict can be set aside) where the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal member could reach - Calin v The Greater Union Organisation Pty Ltd (1991) 173 CLR 33 at 41- 42, Mainteck Services Pty Limited v Stein Heurtey SA [2013] NSWSC 266 at [153].
78 If in either of those circumstances the appellant may have been deprived of a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved then the Appeal Panel may be satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision was not fair and equitable or because the decision was against the weight of the evidence.
79 In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result because of one of the circumstances referred to in cl 12(1)(a), (b) or (c), it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred - see the general discussion in Kyriakou v Long [2013] NSWSC 1890 at [32] ff concerning the corresponding provisions of s 68 of the CTTT Act and especially at [46] and [55].
Further, the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 stated that in order to be granted leave to appeal, the appellant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at, or that there is a bona fide challenge to an issue of fact. Ordinarily, it is appropriate to grant leave only if the matters involve:
1. Issues of principle;
2. Questions of public importance or matters of administration or policy which might have general application;
3. 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;
4. A factual error that was unreasonably arrived at and clearly mistaken; or
5. 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.
[2]
Grounds 1 and 2
Both Grounds 1 and 2 are said to involve errors of law. The Appeal Panel accepts that a finding of liability based upon breaches of a particular Standard, or regulatory document might involve an error of law if the finding was based on the wrong Standard.
The Appellant contends that because the Tribunal did not, in express terms, address a controversy as to which edition of an Australian Standard was applicable to the performance of work under the building contract, then the Tribunal has made an appealable error. It is correct that the Tribunal did not make a specific finding as to which version of AS3959 was applicable. However at paragraph 50 the Tribunal stated:
When work is carried out under a Contract by a builder, the then current Australian Standard version will apply to how the work is with the Australian Standard and the development approval. By failing to carry out the work in accordance with these obligations, the work has not been performed with due care and skill and has therefore breached the statutory warranty in s 18B.
It is clear to the Appeal Panel that the Tribunal proceeded on the basis that, although the Appellant contended that an expert for the Respondents had referred to an incorrect version of the Standard, the version with which the Appellant was bound to comply was AS 3959-2009, incorporating Amendment No 3 (the applicable version).
Further it is clear to the Appeal Panel that the Tribunal understood that the expert witness analysis as to the extent of rectification work was based upon the applicable version. The identified defective work was accepted as non-compliant in failing to comply with the applicable version.
Accordingly the absence of an express finding on a subsidiary issue had no consequence to the reasoning and findings of the Tribunal.
The Appellant challenged the statement by the Tribunal in the last sentence of paragraph 50, see [11], of the basis for liability on the part of the Appellant, as involving a conflation of "the common law concept of breach of contract for due care and diligence and the subclauses in s 18B". The Appeal Panel does not accept that there is any relevant conflation as it is clear that the failure to comply with the applicable version had the consequence that the relevant works were incomplete or defective.
As to Ground 2, the Respondents directed attention to the fact that in the hearing before the Tribunal they did not place any reliance upon the APZA Report. The Appeal Panel notes that there is no finding by the Tribunal based upon a breach of any provision of that document.
Whilst it is arguable that a finding of liability based upon breaches of a particular Standard or document might involve an error of law if the finding was based on the wrong Standard, or version of a regulatory document, the Appeal Panel concludes that is not the case in these proceedings. The findings as to the breach of s 18B of the Act were based upon the applicable version of the Standard and did not include a finding of liability based upon the APZA Report
There is no identified error of law, or misapplication of principle involved in Grounds 1 and 2.
[3]
Grounds 5 and 7
All of these grounds concern the evidence of Malcolm Gray in a "building repair quotation report". They raise matters which were not argued before the Tribunal. The submissions are not identified as being errors of law and there has been no application for leave.
The Appellant also seeks to "modify Ground 5 from an appeal against the admission of Mr Gray's evidence to an appeal the Tribunal ought to have rejected Mr Gray's evidence". In so doing the Appellant seeks to merge the submissions on Grounds 5 and 7. The Ground seems to be that the Tribunal should have unilaterally rejected the Gray report notwithstanding the absence of an objection.
In order to assess whether there has been an error, of law or otherwise, the Appeal Panel has considered the procedure adopted by the Tribunal when dealing with Mr Gray's evidence. The question of whether the Appellant has made out the alternative ground that the Tribunal should have rejected Mr Gray's evidence is then considered.
The Appellant did not object to the admission of Mr Gray's evidence. The Tribunal asked the Appellant whether "you wish to ask any questions of Mr Gray in cross-examination" and the response, at Tp 18.1, was:
"Probably not a question but I might ask if we could consider Malcolm Gray's costs by an expert witness and myself we could sit and look at the costs."
It transpired that, when asked by the Respondents solicitors, the Appellant had not advised that Mr Gray was required for cross-examination,
Further it was apparent that Mr Gray's report had been served outside the time directed by the Tribunal. The Appeal Panel understands that the report had been served some five weeks prior to the hearing and whilst the Appellant had complained to the Tribunal about the late service, no responsive evidence had been produced by the Appellant.
The Respondents submitted to the Tribunal that the material evidence in Gray report involved the process of calculating the cost of construction work, with which the Appellant, as an experienced residential builder, should be familiar, and that no effort had been made to address the issues of costing either by Mr Ballinger himself or by an expert engaged by the Appellant.
The Tribunal, conscious that the Appellant was in some difficulty, referred to the possibility of an adjournment and following some explanation of what the Appellant sought from the Tribunal the Appellant responded, at Tp 28.7:
I just want to have a fair costing that is all I want I have no problem with the report.
This response suggests that the Appellant understood what was contained in Mr Gray's evidence but wanted to address the issue of whether the calculations resulted in a "fair costing".
The Tribunal asked whether the Appellant could "address that in your submissions" and received a positive response. The Tribunal continued, at Tp 28.9:
"I am reluctant to adjourn the matter. The upshot is that I can adjourn it subject with what the parties say but one option to me is that I can adjourn the matter to allow you to put evidence on in reply to this or as you sought leave to do I can grant you leave so the matter can be wrapped up today and in your submissions you can address these costings."
The Appellant responded, at Tp 29.2:
"That's what I say we can go through the costings."
The Tribunal then asked:
"And then of course I would have the opportunity to refer (to) them. So you are not asking to adduce any other evidence in relation to the costings all you are asking to have the opportunity to comment on them."
The Appellant responded:
"Yes comment on them."
The Tribunal then concluded with a direction, at Tp 29.6 to .8:
"I think that the matter can proceed today in the interest of resolution and I am prepared to grant leave to (the Appellant) to include in his submissions any comments he wishes to make about the costings in Malcom Gray's report and then of course there will be an opportunity for (the Respondents) to reply.
This direction permitted the Appellant to include any comments as to the costings which he wished to make. It is clear to the Appeal Panel from the discourse which had passed between the Appellant and the Tribunal, see [33] to [40] that "any comments" could have included comments including expert opinion from Mr Moore on behalf of the Appellant.
The Tribunal also explained, at Tp 30, that notwithstanding that there had been no cross-examination of Mr Gray, the presumption of acceptance by the Appellant of evidence in such circumstances would not apply to the evidence.
The Appellant's submissions referred to several cases which addressed the standard, or rigour, which courts and tribunals should expect in the presentation of expert evidence and which, in the absence of an appropriate standard, such evidence should be rejected. These statements of principle involve specific examples of lapses of recognised standards for admissibility which permits an understanding of their application. The Appeal Panel was not taken to specific examples of errors in Mr Gray's evidence which would allow some assessment of whether the evidence was so deficient that its rejection, notwithstanding the absence of an objection, was or should have been obvious. The Appellant expressed no specific criticism, see [26], and as an experienced builder seemed satisfied that such disagreement as to the calculations could be addressed in submissions, see [28 -29], including any comments on the costings.
The Appellant also criticises the approach of the Tribunal when dealing with the admission of the Report of Shawn Moore, a building consultant called by the Appellant. The relevant sequence of events concerning the provision of further comments by Mr Moore is as follows at.
Some time prior to the admission of Mr Moore's Report, at Tp 59, the Tribunal had given the direction, see [29] that the Appellant could include comments as to the costings in the Gray report in the Appellant's submissions.
The Tribunal, at Tp 20 -21, had asked questions of Mr Moore about his qualifications, to ascertain if he could assist with a response to the Gray evidence of costing and stated:
All right it might not be the best evidence that could be obtained by the respondent at this stage. I will adjourn the matter for half an hour so you can have some discussions with your expert and I will grant leave for your expert to make comments in relation to the costs prepared by Mr Gray."
Following the adjournment, at Tp 22.2, the Appellant was asked if he had a discussion with his expert. The Appellant's response referred to the difficulties about the service, and content of the Gray report, and initiated the discussion which concluded with the Tribunal's direction set out at [29].
It is contended that because the Tribunal, after Mr Moore was sworn in and his report located in the Appellant's bundle, the Tribunal moved to consider objections and thereby precluded the Appellant from leading oral evidence from Mr Moore on the issue of costings arising from the Mr Gray's evidence.
The only statement by the Appellant as to what was to occur was at Tp 29.1:
"OK I will get Mr Moore to ask some questions."
There had been adjournments during the hearing to allow the Appellant to confer with Mr Moore. Following these adjournments the Tribunal determined, see [29], to permit the Appellant to deal with the issues concerning Mr Gray's evidence by means of the Appellant's submissions in which the Appellant was able:
"to include any comments he wishes to make about the costings in Malcom Gray's report".
The Appeal Panel, having considered the sequence of the discussions before the Tribunal concludes, that even if not expressly stated, it was clear that the leave to the Appellant for Mr Moore to make comments, see [30], extended to the provision of those comments within the submissions of the Appellant. The response from the Appellant to a question from the Tribunal, see [38], is at least consistent with that being the case. There was no witness of whom Mr Moore could have asked questions, but such questions and comments could have been included in some form in the Appellant's submissions.
The Appeal Panel does not accept that the Appellant was precluded from including in it's submissions comments from Mr Moore on the costings by Mr Gray, or for that matter, comments by Mr Ballinger based on his knowledge and experience as a builder.
In the course of the hearing of the appeal, counsel for the Appellant referred to an obligation upon the Tribunal in circumstances where a party is unrepresented at a hearing to assist or guide the unrepresented party. This submission was made in the context of Grounds 5 & 7.
The Appeal Panel in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 considered the requirements for establishing an "error of law" giving rise to an appeal as of right and noted at paragraph 11 that, in circumstances where appellants are not legally represented, it is apposite to approach the issue by looking at the grounds of appeal generally.
The Appeal Panel accepts that a Tribunal, subject to the guiding principle under section 36 of the Civil and Administrative Act 2013, should apply a similar approach in the course of proceedings at first instance.
Although the definition of any such duty is not without some difficulty, the Appeal Panel has given some consideration to the manner in which the hearing before the Tribunal was conducted to ascertain whether there was any procedural irregularity.
For the reasons at [40 and 41] the Appeal Panel concludes that the Tribunal did in fact assist the Appellant by permitting the inclusion of comments, in reply to expert evidence as to the costing of rectification work, within the Appellant's submissions.
The Respondents' submissions before the Appeal Panel are consistent with the Appeal Panel's conclusion and refer to the absence of comments or evidence in the Appellant's submissions which addressed the issues which the Appellant referred to at the hearing arising from the costing by Mr Gray.
The Tribunal referred to the Appellant's submissions at paragraph 65:
"It was open to the builder to require Mr Gray for cross-examination. Despite the builder's submission arguing the weakness in Mr Gray's evidence and having the report well before the hearing, the builder has not addressed the evidence in reply or sought to have Mr Moore prepare a supplementary report.
In all the circumstances the Appeal Panel concludes that Grounds 5 and 7 of the Appeal are not made out and should be dismissed.
[4]
Ground 6
This Ground concerns some identified errors made by the Tribunal when referring to the reliability of the evidence of Mr Gray. The Tribunal referred, at paragraph 59, to Mr Gary being able under cross-examination to explain the basis for his costing and at paragraph 63 to Mr Gray being "impressive under cross-examination".
Both of these references to cross-examination are incorrect because Mr Gray was not cross-examined. The Appellant's submissions suggested that this was an error of law conceded by the Respondents, which concession was not made.
The complaint is that the finding as to the credit of Mr Gray affects the acceptance and adoption of his evidence. The Tribunal noted that Mr Gray had been a builder since 1987 and that he had been engaged to inspect the works and to cost the rectification of claimed defects, based on reports including additional structural defects identified in the Broune Group Consultants' report.
The Tribunal noted that Mr Gray was engaged on the basis that he would be undertaking any necessary rectification work and that the Tribunal had to have regard to his potential lack of independence.
The Tribunal also referred to the fact that the report was a quotation to complete rectification work and referred to the Appeal Panel decision in Khan v Kang [2014] NSWCATAP 48 as to authority for the use of a quote as evidence of the cost to rectify. The Tribunal also concluded at paragraph 62:
Furthermore, Mr Gray's evidence can be accepted as indicative of the likely cost of the rectification work recommended by Mr Connor. A quotation given by someone actually prepared to carry out work will in many cases be the most reliable indicator of the true cost of remedial work: Landy v Bentleigh Homes Illawarra [2011] NSWCTTT.
In any event, if there was some identifiable unreliability in the costing of Mr Gray, the Appellant had an opportunity to address such unreliability in a supplementary report from Mr Moore, or in explanatory comments from Mr Ballinger in the Appellant's submissions. Further, the Appellant has not, see [32], identified fundamental errors within Mr Gray's evidence which were such that it ought to have been obvious to the Tribunal that it was not reliable and which justified its rejection.
The Appeal Panel concludes that the errors by the Tribunal did not vitiate the Tribunal's reasoning. There has been no suggestion that the reasoning within the decision is inadequate. The Tribunal proceeded to carefully analyse the evidence which was before it.
[5]
Ground 8
This Ground involves a finding of fact and as such leave is required. The issue involved is whether the Respondents were legally obliged to accept as an acceptable alternative a means of addressing a part of the work as executed, which did not comply with the required level of bush fire protection.
The Appeal Panel understands that there was an initial scope of rectification work which was addressed by the experts for the parties. From this initial analysis the scope of the work to be executed by the Appellant by way of rectification was discussed between the experts and the parties.
An element of the work required was to address deficiencies in the bushfire protection treatment of a rear balcony. A proposed solution was discussed which involved the enclosing of an area under the balcony with Colorbond sheeting. There were some advantages for the Respondents in the alternative solution which explains, in part, their acceptance at the time it was discussed.
The Appellant however did not complete the rectification work which lead to the commencement of these proceedings. Further investigation of the building was undertaken by Mr Rod Broune, an engineer, who identified significant additional problems in the construction of the building. A scope of work was developed which was costed by Mr Gray.
The Appellant submits that during attempts at the performance of rectification work there was either an agreement reached for a variation to the work required under the contract, or alternatively, an agreement for the execution of an alternative method of rectification and that the Respondents are estopped from resiling from such agreement.
Accordingly, it is submitted that the Respondents should not be entitled to damages assessed on a basis which differs from the "alternative solution".
The Respondents submit that the discussions as to an alternative solution were in the context of the attempts to have the Appellant complete the rectification works, which were unsuccessful. This is particularly so having regard to the subsequent discovery of further structural defects.
Further, the amount claimed includes, the performance of work which complies with the contract and the Appellant's contentions ignore the serious structural inadequacies which were disclosed after the discussions took place.
The Appeal Panel does not consider that the Appellant has demonstrated any error of principle or any injustice which would justify leave to appeal for Ground 8.
The appeal on Ground 8 should be dismissed.
[6]
Ground 9
This Ground is based upon a contention that the Tribunal erred in the exercise of a discretion when considering whether to make a work order pursuant to s 48 MA and s 48O(1)(c) of the Act.
To succeed in an appeal against the exercise of a discretion an Appellant must, as identified in House v The King [1936] 55 CLR 499, demonstrate that the decision maker:
1. acts on a wrong principle;
2. allows him of herself to be guided by extraneous or irrelevant matters;
3. makes an mistake of fact;
4. fails to take into account a material consideration.
The Appellant must show that in the absence of an identifiable error that it can be shown that on the basis of evidence the exercise of discretion is "unreasonable or plainly unjust".
At paragraphs 70 to 82 the Tribunal carefully considered the issues involved in the exercise of discretion as to whether an order for rectification should be made, including at paragraph 81 summarising the reasons for the conclusion which had been reached:
In making such a finding the Tribunal has had regard to the history of the relationship of the parties. The evidence is that the builder has only reluctantly returned to the site where it is in a position where it is required to do so, for example in response to the Fair Trading inspection. Even after a rectification order has been made, the order has not been complied with and rectification of defects identified remains unfinished. With the defects now identified and the method and scope of rectification known (the builder) the Tribunal has no evidence before it to be satisfied that the builder is capable of satisfactorily carrying out the rectification.
The Appellant referred to the legal principles involved in the exercise of the discretion, including the presumption disclosed in s48MA and s48O(1)(c) of the Act. The Appeal Panel accepts that for an Appellant to succeed there must be shown to have been a fundamental error by the Tribunal, see Mick Fabar Constructions Pty Ltd v Robert Symes & Kim Louise Filmer [2015] NSWNCATAP 123.
The Appeal Panel has considered all of the issues raised by the Appellant as to the principles involved in assessing whether an exercise of discretion has miscarried. The Appeal Panel is however not satisfied that the Appellant has identified any appealable error by the Tribunal in the exercise of the discretion as to whether a rectification order should be made.
[7]
Conclusion
The Appellant has not established an error of law, or that the Tribunal's decision is not fair and equitable, or against the weight of evidence, in relation to any of the grounds of appeal.
To the extent that leave to appeal is required, leave is refused.
The stay order made on 12 May 2017 is lifted and the Appeal dismissed.
[8]
Costs
Any application for costs is to be made in writing to the Tribunal, with a copy to the other party, within 14 days of the delivery of this decision.
Any submissions in response to the costs application is to be made within 14 days of receipt and any submission in reply is to be made within 7 days thereafter.
The costs submissions are to include reference to whether the issue of costs can be determined on the papers without a hearing.
[9]
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: 20 December 2017