Nationwide Builders Pty Ltd v Le Roy

Consideration of the Grounds of Appeal in the Notice of Appeal

Ground 1

1. Ground 1 contends that the Tribunal at first instance erred in law because it had not considered or applied Section 48MA of the Home Building Act 1989 (NSW) (The HB Act). That section relevantly provides that rectification of defective residential building work is the preferred outcome in home building proceedings.
2. We do not accept that there was any error of law. We have considered the Tribunal's Reasons and also the transcript of the sound recording of the proceeding at first instance. We are satisfied that the Senior Member gave proper consideration to Section 48MA and that he gave reasons as to why the preferred outcome of rectification works was not appropriate. In particular, we refer to the following paragraphs: "7. A walk-through inspection was undertaken in January 2017 and the Applicants advised the Respondent as to the extensive defective work which was identified and the Respondent made partial and unsatisfactory attempts to rectify identified defects over many months. The rectification of defects identified in the Building Report and the Fair Trading Rectification Order dated 20 February 2018 (see Ex A3/45) remain incomplete as at the date on the hearing. That is over 2 years and 8 months after the extended date for completion under the contract. This is a remarkable example of incompetence on the part of a residential building contractor. Possibly more remarkable is the fact that at the hearing the Respondent submitted that is should be given yet another opportunity to carry out rectification work under an order pursuant to section 480(1)(c)(i) of the Home Building Act 1989, … 20. It is of some note that the Report by Mr Grieve includes notations for some items listed in the Applicant's Expert's Report (see Ex A3/5) the effect. I am instructed that the Respondent is prepared to rectify this item in accordance with the scope of works of rectification. 21. There is however no evidence that the Respondent has expressed its preparedness to undertake any of the identified defective work in The Report by Mr Capaldi dated 12 November 2018. The capacity on the part of the Respondent to do so seems to have been limited by its inability to maintain its Builders Licence since these proceedings were commenced in September 2018. 22. The Tribunal also notes that although the Respondent's expert conveys the message that the Respondent is prepared to undertake rectification, the message is confined to some, but not all of the items in the Applicants claim, and in some instances only for the scope identified by Mr Grieve. 23. The Applicants oppose the making of an order in accordance with Section 48MA of the Home Building Act 1989. ″
3. As stated by the Appeal Panel in Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 (Kurmond Homes) at [32]: "the Minister made clear s48MA was to operate as a preference, not an absolute right. It was to prevent unreasonable refusal of a homeowner to permit access to a building site to a builder who was willing to carry out rectification work". It also stated: ''while s 48MA provides the court or Tribunal 'is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome', the section does not mandate that a work order must be made in all cases'': at [44].
4. The Appeal Panel in Kurmond Homes at [59] - [60] also concluded that a failure to comply with a rectification order issued under s 48E of the HB Act by officers of the Department of Fair Trading is a relevant factor, particularly where the defect in question is significant.
5. The statement by Ball J in The Owners - Strata Plan No 76674 v Di Blasio Constructions Pty Ltd [2014] NSWSC 1067 at [45] is also relevant to deciding whether or not to make a work order under s 48O of the HB Act, as follows: ''The question of what is reasonable depends on all the circumstances of the particular case. One relevant factor is what attempts the builder has made to repair the defects in the past and whether, in the light of the builder's conduct, the Owner has reasonably lost confidence in the willingness and ability of the builder to do the work …''
6. Further, we note the finding of the Tribunal at [7] that the Appellant had made partial and unsatisfactory attempts to rectify identified defects over many months and that the rectification of defects identified in the Fair Trading Rectification Order dated 20 February 2018 remain incomplete as at the date of the hearing, which is over two years and eight months after the extended date for completion under the contract. In our view, this finding, which was not challenged on appeal, on its own fully justifies declining to give the Appellant yet another opportunity to carry out rectification work.
7. The Appellant also made some specific challenges to the Decision under this ground of appeal. First, the Appellant challenged the statement at [21] of the Decision that there is: "no evidence that the Respondent has expressed its preparedness to undertake identified defective work in the report by Mr Capaldi dated 12 November 2018". It was submitted that the Senior Member erred in making this statement because, firstly, "the builder was licensed and able to perform the work at the time of the determination".
8. In our view, there was no error on the part of the Senior Member because even if the Appellant was "able" to perform the work, it was correct to say that the Appellant had not given any evidence of its " preparedness'' to undertake the work as identified by the Senior Member and this was a relevant consideration.
9. Further, the Appellant sought to lead evidence from Mr Hua to the effect that the Appellant is currently constructing 153 units and therefore, that the Appellant: "has the resources required to complete the rectification works". We decline to permit this evidence to be led on appeal. To do so, in our opinion, would open up a whole new factual enquiry concerning the Appellant's readiness, willingness and ability to perform relevant works. This would necessarily delay the hearing of the appeal to permit the Respondents to deal with this new evidence.
10. We do not think it is fair to the Respondents to have to deal with this new evidence on appeal. This is particularly so given that the Appellant could have led evidence at the hearing directly dealing with its readiness, willingness and ability to perform the relevant works, but it chose not to. Further, any such evidence does not deal with the more fundamental problem for the Appellant that it had over two years to rectify the works identified but it failed to do so. In such circumstances, the Respondents can reasonably claim to have lost confidence in the ability or willingness of the Appellant to perform the work.
11. The Appellant also sought to criticise the Senior Member for referring at [21] to the Appellant's inability to maintain its builder's licence since the proceeding was commenced in September 2018. In our view, there is no basis for criticising the Senior Member in this regard where the Appellant accepted that during the periods 3 - 5 December 2018 and 18 March 2019 -1 May 2019, respectively, its licence was suspended in respect of a hearing conducted on 7 and 8 May 2018.
12. Finally, the Appellant submitted that if Mr Grieve is found to be correct in respect of the rectification work required, then the lack of evidence of a willingness to perform work identified by Mr Capaldi does not arise. However, in response to Ground 2, we declined to disturb the Senior Member's preference for Mr Capaldi' s evidence. Accordingly, this submission is moot. Therefore, we reject Ground 1.

Ground 2

1. Ground 2 is as follows: "The member erred in that he failed to properly and adequately consider the competing expert reports in relation to Quantum and rectification works and therefore came to an incorrect conclusion as to the sum owed in Order 1."

Submissions of the Appellant

1. The Appellant focused upon paragraph [25] of the Decision which is as follows: "The Tribunal considers that it would be inappropriate to give particular weight to the Report of Mr Grieve, Ex R1, having regard to its late service and the fact that he did not attend the hearing. Further the Report to the extent that if [sic] disagrees with parts on the Report of Mr Capaldi is largely devoid of reasoning."
2. The Tribunal at [26] accepted the evidence in the Report of Mr Capaldi, Ex A3/5 that the cost to complete and rectify the work performed is $63,084.77.
3. The Appellant submitted that the late service of Mr Grieve's Report and his non-attendance do not, in any way, affect the substance and accuracy of his report and it was submitted that the reasoning in his report is sufficient in the circumstances. It follows, in the Appellant's submission, that the Reasons of the Tribunal for failing to give appropriate weight to Mr Grieve's Report and for preferring the report of Mr Capaldi, are erroneous.
4. Further, In respect of the competing Building Reports, it was submitted that too much weight was given to the fact that Mr Grieve was unable to attend the hearing. Alternatively, an adjournment should have been given so that both experts could be available to form a conclave of experts to determine the rectification works required and to prepare a Scott's Schedule.
5. The Appellant also pointed out that the difference in the rectification work costs between the two experts was $25,000.00 which was said to be a significant difference, which warranted close and detailed examination and that not to do so was said to be a breach of procedural fairness.
6. Finally, it was submitted that Mr Grieve's Report carried greater weight because of its "Global approach to the rectification required" and therefore should be adopted. The failure to adopt Mr Grieve's Report was said to be a failure: "to adopt the best evidence available and as such is a breach of procedural fairness".

Consideration of Ground 2

1. The Tribunal explained the circumstances of Mr Grieve's Report as follows: "17. The Tribunal had made orders for the Respondent to file evidence on numerous occasions, including Orders on 19 February 2019 for all evidence to be filed by 19 March 2019. This date was extended to 8 April 2019 by Orders made on 15 March 2019. 18. Exhibit R1 includes advice that the inspections by Mr Grieve were undertaken on 26 and 29 April 2019. The Tribunal was advised that Mr Grieve was unavailable to attend the hearing and that he and the Respondent were aware of the fact when Mr Grieve undertook the inspections and prepared the report. 19. Exhibit R1 was accepted by the Tribunal as evidence over the objection of the Applicants. The expert witness for the Applicant's, Mr Capaldi, was in attendance at the hearing but had not been able to consider the contents of Ex R1. He confirmed however that the comments in Ex R1 follow the same sequence of the items set out in his Report dated 6 December 2018. The Applicants' brief response to this Report, in the form of submissions. Is Ex A6. … 25. The Tribunal considers that it would be inappropriate to give particular weight to the Report of Mr Grieve, Ex R1, having regard to its late service and the fact that he did not attend the hearing. Further the Report to the extent that if disagrees with parts on the Report of Mr Capaldi is largely devoid of reasoning. 26. The Tribunal accepts the evidence in the Report of Mr Capaldi, Ex A3/5 that the cost to complete and rectify the work performed is $63,084.77."
2. In our view, it was open to the Tribunal not to place particular weight upon Mr Grieve's Report. In particular, the failure to have Mr Grieve attend the hearing and be available for cross examination, in effect, left the Tribunal with no choice but to pay little regard to his Report. Further, it was also open to the Tribunal not to adjourn the hearing given the Appellant's failure to comply with previous directions for the service of expert reports and the very late service of Mr Grieve's Report. In particular, we note no reasonable explanation for failure to comply with the Tribunal's Orders was provided: see Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175.
3. Accordingly, we reject the submission that the Appellant was not afforded procedural fairness.
4. The balance of the Appellant's ground of appeal concerns a claim that the Tribunal erred in failing to give greater and decisive weight to Mr Grieve's Report over that of Mr Capaldi's Report. This does not involve any error of law and accordingly, leave to appeal is required. To grant leave to appeal we need to be satisfied that the Tribunal's finding with regards to preferring Mr Capaldi's Report was "against the weight of evidence": see cl 12(b) of Schedule 4 to the NCAT Act. In our opinion, this has not been demonstrated.
5. We agree with the Tribunal that Mr Grieve's Report was largely devoid of any reasoning. In addition, the failure to have Mr Grieve available to give evidence in respect of his late Report justified the Tribunal in not placing particular weight upon it.
6. Accordingly, we reject Ground 2.

Orders

1. The Appeal Panel makes the following orders: 1. Leave to appeal is refused. 2. The Appeal is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar 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

Amendments 09 September 2019 - Coversheet parties corrected. Paragraph 29, first sentence: "Mr Capaldi's Report" corrected to "Mr Grieve's Report" 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: 09 September 2019