On 17 March 2016 Mr Con Veneziano, Secretary of the Owners Corporation SP 82076, applied on behalf of the Owners Corporation to the Tribunal under the Home Building Act 1989 (NSW) (the HB Act) seeking "an order regarding incomplete rectification works for SP 82076 being residential premises at 35-39 Deakin Street Silverwater".
The amount claimed was $200,000.00. The application provided a copy of an agreement from an inspection undertaken on 17 September 2013 for the respondent, Taricon Pty Ltd, to carry out specified rectification works for building defects. In the application Mr Veneziano stated that development consent DA317/02 had been granted by Auburn Council in 2002; a construction certificate submitted to the Council in May 2008; a strata certificate submitted to Council in March 2009; and "occupation premises 2009".
The name of the applicant was subsequently amended to be Owners Corporation SP 82076.
At a directions hearing on 29 September 2016 leave was granted to both parties to be legally represented. The presiding Tribunal Member noted that both parties agreed that the occupation certificate for the property was issued in January 2009 and that even if a 7 year statutory warranty applied, the application may be out of time. The matter was adjourned to allow the parties to seek legal advice in relation to jurisdiction. At a further directions hearing on 27 October 2016 the matter was adjourned for hearing on the issue of jurisdiction, with directions for exchange of documents on which the parties proposed to rely.
The matter was listed for hearing on 20 December 2016 on the issue of whether the Tribunal has jurisdiction to hear and determine the application.
At the hearing Mr Nicholas Silva, instructed by Mr John Karacan, appeared on behalf of the applicant. Mr Deo Indevar, solicitor, appeared for the respondent.
The applicant tendered a Statement by Con Veneziano dated 16 November 2016 with annexures. The annexures included an expert report by Craig Nisbett dated 16 June 2016; list of building defects dated 23 June 2011; email correspondence between various parties between August 2011 to June 2012; an application dated 14 October 2016 to Cumberland Council for access to documents concerning the development including applications and determinations, construction and occupation certificates and plans; covering email dated 21 October 2016 from the Council providing documents; an occupation certificate dated 29 January 2009; an application under s 96 of the Environmental Planning and Assessment Act 1979 (the EPA Act) received by the Council on 22 January 2009; internal Council documents and a Notice of Determination dated 9 June 2009 relating to the s 96 modification application; and a construction certificate dated 16 November 2007.
The respondent tendered an affidavit sworn by Tarik Mostafa, sole director of the respondent, dated 1 December 2016 with annexures. The annexures included a copy of Conditions of Contract identifying the respondent as the contractor and Latifeh Rahmani as the owner; a compliance certificate dated 16 January 2009 for installation of mechanical ventilation in the carpark and bathrooms; a copy of an occupation certificate dated 29 January 2009; a signed copy of an occupation certificate dated 29 January 2009, with an email from Ivan Boulle dated 29 November 2016; and a copy of the s 96 modification application received by the Council on 22 January 2009.
Both statements were admitted into evidence without objection.
At the commencement of the hearing on 20 December 2016 the applicant applied to have the hearing adjourned. After hearing from the parties, the application was refused. Written reasons for the refusal of the adjournment were provided to the parties on 21 December 2016.
The respondent was ready to proceed on the issue of jurisdiction. Following discussion with the parties, the Tribunal heard oral submissions on behalf of the respondent in support of its contention that the proceedings should be dismissed as having been brought out of time. The applicant was directed to provide written submissions in support of its contention that the Tribunal has jurisdiction by 17 January 2017. The respondent was directed to provide written submissions in reply by 31 January 2017.
As discussed with the parties at the hearing and noted in the directions made on 20 December 2016, the question of whether there is a legal basis for the Tribunal's jurisdiction is to be determined on the papers. If the Tribunal were to conclude that there is no legal basis on which the Tribunal has jurisdiction to determine the application, the Tribunal proposed to dismiss the proceedings, giving the parties an opportunity to be heard on any application for costs. If the Tribunal were to conclude that there is jurisdiction to determine the application, or that the existence of jurisdiction depends on further evidence (for example, to support an argument based on estoppel or contract), the matter would be listed for directions to determine the future progress of the matter.
The applicant provided written submissions in support of its position that the application should not be dismissed on the jurisdictional issue on 17 January 2017. The respondent provided written submissions in reply on 3 February 2017.
The applicant's written submissions included the submission that the issue of jurisdiction should not be determined on a preliminary basis, and that it would seek to obtain leave from the Tribunal to issue summons to produce documents on other entities, and it would need to cross examine witnesses. The Tribunal is satisfied that in the context of these proceedings it is consistent with the implementation of the guiding principle in s 36(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act), and with the Tribunal's practice in other matters arising under the HB Act, for the question of jurisdiction to be determined as a preliminary issue, before the parties are put to the delay and expense of finalising their expert evidence, including joint conferencing, and lay evidence. The parties have been on notice since at least September 2016 that there is an issue as to whether the application was made within time. Both parties have had the opportunity, extended at the request of the applicant, to provide all the evidence on which they intended to rely on the hearing of the issue of jurisdiction, and the opportunity to make submissions on that issue. On the findings below, there is no basis on which it would be relevant to the issues going to the Tribunal's jurisdiction, or consistent with the implementation of the guiding principle, to delay finalisation of the matter on the jurisdictional issue to enable the applicant to obtain further evidence.
[2]
Submissions
In written and oral submissions it was common ground between the parties that:
1. the application is a "building claim" as defined in s 48A of the HB Act, and relates to "residential building work" as defined in Sch 1 to the HB Act, and that the Tribunal has jurisdiction to hear and determine it, subject to the question of time limitation;
2. the application was lodged on 17 March 2016, and is in relation to breach of the statutory warranties implied under Part 2C of the HB Act; and
3. the relevant limitation period under s 18E of the HB Act is 7 years.
While not the subject of submission from the parties, there was no dispute that the claim against the builder is brought by the applicant as successor in title.
The parties disagreed as to whether the applicable provision for determining the date of completion of the building work for the purposes of the limitation period is s 3B or s 3C of the HB Act.
[3]
Respondent's submissions
The respondent contends that in determining the date of completion of the building work the applicable date is 29 January 2009, the date of the issue of an occupation certificate. The respondent relies on s 3C(2)(a) of the HB Act which provides that the completion of building work occurs on the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building. The respondent submits that the fact that the copy of the occupation certificate dated 29 January 2009 held by Auburn Council was not signed is merely a trivial error. In response to the applicant's reliance on an application made in January 2009 under s 96 of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act), the respondent submits that that application was to modify a rear wall and to construct a ventilation room and was not approved, and is not relevant in determining the date of completion of the building work.
[4]
Applicant's submissions
The applicant submits that s 3B of the HB Act is the relevant provision for determining the date of completion of the work. Section 3C deals with new buildings in an already existing strata scheme and the strata scheme in this matter was not set up until on or after 26 February 2009.
The applicant contends that the respondent is estopped from raising s 18E as a defence in opposition to the claim, due to the agreement of 2 October 2013 in which the respondent agreed to carry out building works in respect of incomplete work and work requiring repair from work previously undertaken by the respondent, that agreement being facilitated by Fair Trading. It was an implied or express representation that the applicant would not pursue a cause of action against the respondent, and when the respondent defaulted in relation to the terms of that agreement the applicant subsequently commenced proceedings in the Tribunal. In circumstances where one party has agreed to provide further services to rectify and repair works on the basis whether impliedly or expressly that legal action would not be commenced that party should not benefit in the running of time of a limitation period in which proceedings would otherwise have been commenced.
The applicant submits that an additional basis on which the Tribunal has jurisdiction is the existence of a further cause of action, being the enforcement of the contract made on or about 2 October 2013. The applicant would seek leave to amend the application to add that cause of action if successful on the question of jurisdiction. That contractual claim would be within the 6 year limitation period of 6 years under s 14 of the Limitation Act 1969 (NSW); the subject matters are intertwined and should not be relitigated in separate proceedings; and if this cause of action cannot be brought in these proceedings, an Anshun estoppel would prohibit raising this in subsequent proceedings.
[5]
Respondent's submissions in reply
The respondent submits in reply that the doctrine of estoppel does not apply in the present circumstances. The agreement of 2 October 2013 on which the applicant relies was drafted by the Office of Fair Trading, provided an opportunity for the respondent to complete rectification works, and does not expressly preclude the applicant from commencing proceedings for breach of statutory warranty. Further, the additional cause of action asserted by the applicant for breach of the 2013 agreement does not represent a separate cause of action and the limitation period for breach should not extend beyond that available under the HB Act for breach of statutory warranty.
[6]
Consideration
The jurisdiction of the Tribunal to hear and determine residential building claims is provided in s 48K of the HB Act. Section 48K relevantly provides:
48K Jurisdiction of Tribunal in relation to building claims
(1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations).
…
(7) The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E).
…
Section 18E of the HB Act as it applied to contracts entered into before 1 February 2012, when the amendments made by the Home Building Amendment Act 2011 (NSW) (the 2011 Act) came into force, provided:
18E Proceedings for breach of warranties
(1) Proceedings for a breach of a statutory warranty must be commenced within 7 years after:
(a) the completion of the work to which it relates, or
(b) if the work is not completed:
(i) the date for completion of the work specified or determined in accordance with the contract, or
(ii) if there is no such date, the date of the contract.
The limitation period under s 18E was amended with effect from 1 February 2012 to 6 years for structural defects and 2 years for non-structural defects. That amendment did not apply "in respect of a contract for residential building work entered into before the commencement of the amendment": Sch 4, cl 109, HB Act. Section 18E was further amended by the Home Building Amendment Act 2014 (NSW) (the 2014 Act); however Sch 4 cl 109 applies, so that the applicable statutory warranty period in respect of a contract for residential building work entered into before 1 February 2012 remained at 7 years. It was common ground between the parties that the relevant limitation period in these proceedings is 7 years. While the copy of the contract provided by the respondent is not signed and dated, based on the documents provided by the applicant, which include Minutes of an EGM held on 26 August 2011 at which steps to rectify various defects were discussed, the Tribunal is satisfied that the contract was entered into before 1 February 2012, and agrees with the parties that the relevant limitation period is 7 years.
What is in dispute is whether that period had ended before the application was lodged.
By reason of the operation of sections 3B, 3C, 18E and 48K of the HB Act, if the date of completion of the residential building work was earlier than 17 March 2009, then the proceedings are out of time and the Tribunal has no jurisdiction to hear and determine the proceedings. Section 41 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) does not apply so as to confer power on the Tribunal to extend the limitation period: Karan v Champion Homes Sales Pty Ltd [2016] NSWCATCD 84.
Section 18E as in force before 1 February 2012 provides that the limitation period runs from the date of completion of the work, or if the work is not completed, the date for completion specified in or determined in accordance with the contract, or the date of the contract.
Sections 3B and 3C of the HB Act apply in the determination of when completion of building work occurs. Section 3B was introduced into the HB Act by the 2011 Act, and applies to residential building work commenced or completed before the commencement of the amendment: Sch 4, cl 106(a), HB Act:
3B Date of completion of residential building work
(1A) This section does not apply to residential building work to which section 3C applies.
Note.
Section 3C provides for the date of completion of new buildings in strata schemes.
(1) The completion of residential building work occurs on the date that the work is complete within the meaning of the contract under which the work was done.
(2) If the contract does not provide for when work is complete (or there is no contract), the completion of residential building work occurs on practical completion of the work, which is when the work is completed except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose.
(3) It is to be presumed (unless an earlier date for practical completion can be established) that practical completion of residential building work occurred on the earliest of whichever of the following dates can be established for the work:
(a) the date on which the contractor handed over possession of the work to the owner,
(b) the date on which the contractor last attended the site to carry out work (other than work to remedy any defect that does not affect practical completion),
(c) the date of issue of an occupation certificate under the Environmental Planning and Assessment Act 1979 that authorises commencement of the use or occupation of the work,
(d) (in the case of owner-builder work) the date that is 18 months after the issue of the owner-builder permit for the work.
(4) If residential building work comprises the construction of 2 or more buildings each of which is reasonably capable of being used and occupied separately, practical completion of the individual buildings can occur at different times (so that practical completion of any one building does not require practical completion of all the buildings).
Section 3C was introduced in the amendments made by the 2014 Act, and is also retrospective. As at the date of commencement of these proceedings, s 3C provided:
3C Date of completion of new buildings in strata schemes
(1) This section applies to residential building work comprising the construction of a new building in a strata scheme (within the meaning of the Strata Schemes Management Act 1996) where the issue of an occupation certificate is required to authorise commencement of the use or occupation of the building.
Note.
Section 3B provides for the date of completion of other residential building work.
(2) The completion of residential building work to which this section applies occurs on:
(a) the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building, unless paragraph (b) applies, or
(b) the occurrence of some other event that is prescribed by the regulations as constituting completion of the work.
(3) If a contract to do residential building work (the primary contract) comprises the construction of 2 or more separate buildings, the date of completion of that work is to be determined as if there were a separate contract for each separate building (with each contract on the same terms as the primary contract) so that the work for each building will have a separate completion date. For the purposes of this section, a building is separate if it is reasonably capable of being used and occupied separately from any other building.
Note.
Separate buildings can still have the same completion date if they are completed at the same time.
(4) This section applies for the purpose of determining when completion of residential building work occurs for the purposes of any provision of this Act, the regulations or a contract of insurance under the Home Building Compensation Fund.
(5) In this section:
building means any structure that, as a new building, requires the issue of an occupation certificate to authorise its use and occupation.
occupation certificate means an occupation certificate under the Environmental Planning and Assessment Act 1979.
Note.
A swimming pool, tennis court or detached garage can be a building for the purposes of this section if an occupation certificate is required to authorise its use and occupation. If a structure in a strata scheme does not require an occupation certificate, section 3B will apply to it instead of section 3C.
The applicant submits that s 3B is the relevant provision; the respondent submits that s 3C applies.
The building is described in the various expert reports provided by the parties as a two storey townhouse development with 12 townhouses. It was common ground that it is a strata scheme. There is no evidence as to when the strata scheme was formed, other than a statement in written submissions on instructions from the applicant that the scheme was set up on or after 26 February 2009. Neither party referred the Tribunal to any authority on the application of s 3C. If s3C is limited, as the applicant submits, to construction of a new building within an existing strata scheme, on the evidence before the Tribunal it would not apply in the circumstances of this application, and s3B would apply.
However, even if s 3C applies, there being no event that is prescribed by the regulations as constituting completion of the work for the purposes of s 3C(2)(b), the relevant date would be the date of issue of an occupation certificate that authorises use and occupation of the whole of the building. That issue is discussed below, and s 3C(2)(a) would not assist the applicant.
In considering s 3B, subsection (1) provides that the relevant date is, first, the date that the work is complete within the meaning of the contract under which the work was done. The Tribunal has been provided with the Conditions of Contract (ex 1, annexure A), which identify the owner as Latifeh Rahmani and the contractor as Taricon Pty Ltd, provide for a completion date of 1 November 2008, and reference plans and development consent conditions determined by Auburn Council in DA317/2 determined on 12 March 2003. The Tribunal has not been provided with the other documentation identified in cl 1.1 as the documents constituting the contractual relationship between the parties, namely the Formal Agreement, the Contract Particulars, the Works Description, or any other documents referred to in the Contract Particulars.
The applicant in written submissions refers to this document as "the alleged contract". However, there is no indication in those submissions as to why the applicant has not provided a copy of any documentation which it would assert is the relevant contract for the building work, and which would specify a date for completion other than 1 November 2008. The applicant has been on notice since at least the directions hearing of 29 September 2016 that the jurisdictional issue would need to be determined by the Tribunal. The applicant has had the opportunity to provide any relevant documents on which it wished to rely in accordance with the directions made on 27 October 2016, as extended on 15 November 2016.
The only evidence as to the terms of the contract is the document in Annexure A of exhibit 1. There is no evidence before the Tribunal as to whether any notices were served in accordance with cl 13 or any other provisions of that document. Accordingly, the Tribunal is unable to make a finding as to the date that the work is complete within the meaning of the contract for the purposes of s 3B(1) of the HB Act.
The Tribunal must next consider s 3B(2). As noted in Karan v Champion Homes Sales Pty Ltd [2016] NSWCATCD 84 at [57], the statutory definition in s 3B(2) reflects the position at common law that the date of practical completion is the date on which building work is complete and the premises are fit for occupation. While the applicant's position as stated in the application to the Tribunal was that there was a strata certificate submitted in March 2009 and the premises were occupied in 2009, the evidence provided by the applicant does not establish any date for which a finding could be made for the purposes of s 3B(2), either earlier than the date determined in accordance with s 3B(3), or later. That being the case, s 3B(3) is to be considered in determining a date for practical completion.
Section 3B(3) provides four different ways to determine when practical completion occurred, depending on the relevant circumstances and available evidence, and it is the first in time of those that is to be applied to determine the relevant date: Griffith v Gates (Home Building) [2013] NSWCTTT 302 at [60]. There is no evidence before the Tribunal to establish the dates for s 3B(3)(a) or (b), and s 3B(3)(d) does not apply. Applying s 3B(3)(c), the date for practical completion would be the date of issue of an occupation certificate that authorises commencement of the use or occupation of the work.
The applicant submits that the occupation certificate on which the respondent relies is not an occupation certificate for the purposes of s 3B of the HB Act, as the copy obtained from Auburn Council was not signed by the certifier.
Both the statement of Mr Veneziano and the affidavit of Mr Mostafa include as an annexure a copy of an occupation certificate dated 29 January 2009 (the OC) (ex A, p 160; ex 1, annexure C). Both stated that the OC had been obtained from the Council (confirmed in Mr Veneziano's statement by a copy of an email from Cumberland Council dated 21 October 2016). Given the consistency of that evidence, and the fact that the copies of the OC provided by each party are identical, the Tribunal accepts that the OC is the document held by Auburn Council and provided to each of the parties in 2016.
At paragraph [9] of his affidavit Mr Mostafa recounts a conversation with Ivan Boulle, the certifier named in the occupation certificate, in which Mr Boulle is said to have stated that he had a signed copy available and must have sent the unsigned copy to the council. There was no direct evidence from Mr Boulle, and the email from Mr Boulle dated 29 November 2016 provided as annexure D to Mr Mostafa's affidavit simply states that he is providing a copy of the occupation certificate. In the absence of an opportunity for the applicant to test this evidence, the Tribunal has proceeded to consider whether the unsigned document is an "occupation certificate under the Environmental Planning and Assessment Act 1979 that authorises commencement of the use or occupation of the work" as specified in s 3B(3)(c) of the HB Act.
An occupation certificate is one of the four types of certificates that may be issued under Part 4A of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act), and authorises the occupation and use of a new building: s 109C(1)(d). Section 109M makes it an offence for a person to commence occupation or use of the whole or part of a new building, unless an occupation certificate has been issued in relation to the building or part. Section 109H(2) and (5) relevantly provide restrictions on the issue of an occupation certificate:
(2) An occupation certificate must not be issued unless any preconditions to the issue of the certificate that are specified in a development consent or complying development certificate, or any requirements of a planning agreement referred to in section 93F that, by its terms, are required to be complied with before such a certificate is issued, have been met.
…
(5) A final occupation certificate must not be issued to authorise a person to commence occupation or use of a new building unless:
(a) a development consent or complying development certificate is in force with respect to the building, and
(b) in the case of a building erected pursuant to a development consent but not a complying development certificate, a construction certificate has been issued with respect to the plans and specifications for the building, and
(c) the building is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and
(d) such other matters as are required by the regulations to be complied with before such a certificate may be issued have been complied with.
The requirements for the determination and issue of an occupation certificate are provided in the regulations, pursuant to the power conferred by s 109Q of the EPA Act:
109Q Regulations under Part 4A
(1) In addition to any other matters for or with respect to which regulations may be made for the purposes of this Part, the regulations may make provision for or with respect to the following:
(a) the documents to be provided to, and the matters to be notified to, a consent authority, council or certifying authority for the purposes of this Part,
(b) the records to be kept by certifying authorities under this Part,
(c) applications for Part 4A certificates,
(d) the form and content of Part 4A certificates,
(e) the manner in which complaints in respect of development are to be dealt with by certifying authorities.
(f) exempting classes of temporary structures from requirements relating to construction certificates or occupation certificates.
Part 8 Div 3 of the Environmental Planning and Assessment Regulation 2000 (the EPAR) contains the provisions for occupation certificates. Clause 151 provides the procedure for determining an application for an occupation certificate. Clause 151(1) provides:
151 Procedure for determining application for occupation certificate
(1) The determination of an application for an occupation certificate must be in writing and must contain the following information:
(a) the date on which the application was determined, and
(b) whether the application has been determined:
(i) by approval, or
(ii) by refusal, and
(c) if the application has been determined by refusal:
(i) the reasons for the refusal, and
(ii) if the certifying authority is a consent authority and the application relates to a final occupation certificate, of the applicant's right of appeal under the Act against the refusal.
Clause 151(2) requires the certifying authority to notify the consent authority and the council of the determination, by forwarding to the council within 2 days after the date of the determination, documents including a copy of the determination, and if an occupation certificate was issued, a copy of the certificate.
Clause 155 provides for the form of an occupation certificate:
155 Form of occupation certificate
(1) An occupation certificate must contain the following:
(a) the identity of the certifying authority that issued it, including, in a case where the certifying authority is an accredited body corporate, the identity of the individual who issued the certificate on behalf of the body corporate,
(b) if the certifying authority is an accredited certifier, the accreditation number of the certifying authority, including, in a case where the certifying authority is an accredited body corporate, the accreditation number of the individual who issued the certificate on behalf of the body corporate,
(b1) if the certifying authority is an accredited certifier who is an individual, the signature of the accredited certifier,
(b2) if an individual issued the certificate on behalf of the certifying authority, the signature of the individual who issued the certificate,
(c) the date of the certificate,
(d) indicate the type of certificate being issued (that is, interim or final),
(e) a statement to the effect that:
(i) the health and safety of the occupants of the building have been taken into consideration where an interim occupation certificate is being issued, and
(ii) a current development consent or complying development certificate is in force for the building, and
(iii) if any building work has been carried out, a current construction certificate (or complying development certificate) has been issued with respect to the plans and specifications for the building, and
(iv) the building is suitable for occupation or use in accordance with its classification under the Building Code of Australia, and
(v) a fire safety certificate has been issued for the building (if a fire safety schedule is required under Part 9), and
(vi) a report from the Fire Commissioner has been considered (if required).
(2) The occupation certificate must be accompanied by a fire safety certificate and a fire safety schedule for the building (if a fire safety schedule is required under Part 9).
…
The OC dated 29 January 2009 states the information required to comply with s 109H(5) of the EPA Act. It contains the information required by cl 154(1)(a), (b), (c), (d), and (e) of the EPAR. There was no issue taken by either party that ACG Building Approvals Pty Ltd and Ivan Boulle were respectively the principal certifying authority and the accredited certifier. The OC states that it relates to the land the subject of these proceedings, and is a final certificate; identifies the applicable development consent as 317/02 granted 12 March 2003; states that construction certificate 07/107 was issued on 16 November 2007; applies to the whole of the building (BCA Class 2 and 7); and identifies and provides details of the Principal Certifying Authority.
However, the copy obtained by each of the parties from the council is not signed by the accredited certifier who issued it, as required by cl 154(1)(b1) or (b2). The issue is whether the lack of a signature means that it is not an occupation certificate for the purposes of s 3B or 3C of the HB Act, both of which refer to "an occupation certificate under" the EPA Act.
There has been some limited judicial consideration of the question of the circumstances in which an occupation certificate will be found to be invalid. In Cessnock City Council v Laila Investments Pty Ltd [2012] NSWLEC 206 Pain J declared invalid an occupation certificate issued in circumstances where several conditions of development consent had not been complied with, based on s 109H(2) of the EPA Act. In Bankstown City Council v Ramahi (No 2) [2016] NSWLEC 34 Craig J held that an occupation certificate issued where the precondition specified in cl 154(1B) of the EPAR requiring consistency with the development consent, was not met, was in breach of the EPA Act.
The respondent relies on comments made at first instance in Amaya v Estate Property Holdings Pty Ltd [2010] NSWSC 32. The issue in those proceedings was whether an occupation certificate provided by a vendor which did not have a fire certificate physically attached to the document, met the requirement in cl 155(2) of the EPAR that an occupation certificate "be accompanied by" a fire safety certificate. At paragraph [56] White J held:
56 I would accept that the occupation certificate to be served pursuant to the prescribed term of the contract must be a valid certificate, that is, it must authorise the use and occupation of the building. It would not be every failure to comply with a requirement of reg 155 which would invalidate a certificate. But even if it be assumed that a certificate issued by the accredited certifier without the accompanying documents required by reg 155(2) was for that reason invalid, it would not follow that the certificate required to be served pursuant to the prescribed term of the contract for sale had to be accompanied by those documents.
That comment was not the subject of specific consideration on appeal to the Court of Appeal: Amaya v Everest Property Holdings Pty Ltd [2010] NSWCA 315. However, the Tribunal notes that the proposition that not every failure to comply with a legislative requirement would invalidate a certificate is consistent with the principles stated by the High Court in Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 104 CLR 355 for determining whether an act done in breach of a statutory requirement is invalid. On appeal Young JA, with whom Beazley and Campbell JJA agreed, held (at [67]-[68]) that the reference in the contract for sale to "an occupation certificate within the meaning of" the EPA Act was a reference to an "occupation certificate" as defined in s 4 of that Act, which was "a certificate referred to in s 109C(1)(c)", namely, a certificate "that authorises …the occupation and use of a new building". The fire certificate was not a part of the occupation certificate; and as the regulation was dealing with the form of the certificate required to be issued by a certifying authority, it was dealing with the form of the certificate and associated documents required to be accompanying it at the time of issue.
In the absence of any direct authority on the issue, determining whether the absence of a signature means that the document dated 29 January 2009 is not an "occupation certificate under" the EPA Act requires application of the principles in Project Blue Sky. The test for determining whether an act done in breach of a statutory provision is invalid is (at [93]):
to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid. … In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and object of the whole statute".
The principle was explained in the following terms:
91. An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the condition. Unfortunately, a finding of purpose or no purpose in this context often reflects a contestable judgment. The cases show various factors that have proved decisive in various contexts, but they do no more than provide guidance in analogous circumstances. There is no decisive rule that can be applied; there is not even a ranking of relevant factors or categories to give guidance on the issue.
The first consideration is the text of s 109H of the EPA Act and the relevant clauses of the EPAR. Section 109H(1)(b) states the effect of an occupation certificate, that it authorises a person to commence occupation or use of a new building. Section 109H(5) states the preconditions for the issue of a final occupation certificate, which include compliance with "such other matters as are required by the regulations to be complied with" before a certificate may be issued. The EPAR provides the matters that must be included in an application for an occupation certificate (cl 149), and the procedure for determining an application (cl 151). The determination must be in writing: cl 151(1). Clause 155 provides the form of an occupation certificate. All these provisions are expressed in mandatory terms: "must not be issued unless" ( s 109H(5)); the determination "must be in writing and must contain…" (cl 151(1)); and the certificate "must contain" (cl 155(1)). However, even where mandatory language is used, an act done in breach of a statutory provision is not necessarily invalid, as discussed by the Court of Appeal in Burwood Council v Ralan Burwood Pty Ltd (No 3) [2014] NSWCA 404:
163 It must be borne in mind that an act done in breach of a statutory prohibition is not necessarily invalid, even if the prohibition is expressed in emphatic or mandatory language. An example is provided by Smith v Wyong Shire Council, which was concerned with a breach of s 117(3) of the EPA Act. Section 117(3) provided that a public authority to which a Ministerial direction was given in connection with the preparation of a draft local environmental plan "shall comply, and is hereby empowered to comply, with the direction". Section 117(3) fell to be construed in the light of s 9(2) of the Interpretation Act 1987 (NSW), which states that "[i]n any Act the word 'shall', if used to impose a duty, indicates that the duty must be performed". Despite the emphatic language used in s 117(3), the Court unanimously held that an amendment to a local environmental plan which failed to comply with a Ministerial direction was valid.
The authorities referred to above in which the Land and Environment Court determined that an occupation certificate was invalid, namely Cessnock City Council v Laila Investments Pty Ltd and Bankstown City Council v Ramahi both concerned failure to comply with the substantive precondition of consistency and compliance with the relevant development consent. It is in that context that the Court in Cessnock City Council v Laila Investments Pty Ltd in particular placed emphasis on the mandatory language and character of the precondition. Neither of those decisions would require a conclusion that a failure to comply with a requirement as to the form of an occupation certificate would necessarily mean that such a document could not be regarded as an occupation certificate under the EPA Act.
The scope and purpose of the legislation, and the consequences of adopting the applicant's approach, are significant factors, and count against the applicant's contention. An occupation certificate authorises use and occupation of a new building (s 109H(1)); and a person must not commence occupation or use of a new building unless one has been issued (s 109M(1)). On the material provided by the applicant including in the application, the building the subject of these proceedings has been occupied since 2009. The inconvenience to and possible consequences for innocent third parties occupying a building in breach of s 109M if the failure to comply with the formal requirement of cl 155 meant that there was no occupation certificate under the EPA Act would point against the conclusion contended by the applicant.
The legislative history also counts against the applicant's contention. Clause 155(1)(b1) and (b2) were inserted, together with amended cl 155(1)(a) and (b), by the Environmental Planning and Assessment Further Amendment Regulation 2008 with effect from 3 November 2008. Similar amendments were made at that time to the requirements for compliance, construction and subdivision certificates. Those amendments were made as a consequence of the amendments to the Building Professionals Act 2005 by the Building Professionals Amendment Act 2008, which included the introduction of accreditation of bodies corporate in addition to natural persons. In that context, cl 155 specifies the additional information required to identify the certifier, including identification of the individual certifier if the certifying authority is an accredited body corporate. The importance of being able to identify the relevant individual is demonstrated by the Court of Appeal decision in Burwood Council v Ralan Burwood Pty Ltd (No 3) [2014] NSWCA 404, a challenge to the validity of a construction certificate, where Sackville AJA (with whom McColl and Barrett JJA agreed) characterised the statutory scheme in the following terms:
182The statutory scheme suggests that Parliament has chosen to guard against the risk of accredited certifiers failing to comply with their statutory obligations by an accreditation and disciplinary regime, rather than by the blunt mechanism of rendering a non-complying construction certificate void. This conclusion is reinforced by the explanation given by the Minister in the Second Reading Speech for the Building Professionals Bill 2005:
"[t]he major benefits of the bill include the creation of uniform professional standards for private certifiers, a simpler regulatory system, and stronger measures to protect the safety and property of the public."
NSW Parl Deb, Legislative Assembly, 16 December 2005 (Hon D Beamer).
In a context where the primary consequence provided in the regulatory scheme for failure of certifiers to comply with their statutory obligations is for potential disciplinary sanctions, the identity of the certifier is critical. Here, that is not in doubt.
In circumstances where the OC states compliance with the substantive statutory requirements and preconditions, provides the information as to the relevant consents and certificates, and provides sufficient information to identify the person issuing the certificate, the Tribunal is satisfied that this document is the occupation certificate required to be provided by the certifying authority to the council within 2 days after determination under cl 151(2)(c) EPAR. On the evidence before the Tribunal, no issue was raised by the council as to the validity of the occupation certificate at the time it provided a copy to each of the parties. The email dated 21 October 2016 from the council (ex A, p 157) indicates that it was one of a number of documents held by it relating to the approval, construction and certification of 35-39 Deakin Street Silverwater. The document is stated to be a final (rather than an interim) certificate, and authorises the occupation and use of the building. The Tribunal is satisfied that the OC is an occupation certificate under the EPA Act that authorises the commencement of the use or occupation of the work. On that basis, the date for practical completion of the residential building work as determined under s 3B(3)(c) of the HB Act was 29 January 2009.
Section 3B(3) provides a rebuttable presumption as to the date of practical completion. The applicant has provided no evidence to establish a date later than the date determined in accordance with s 3B(3)(c), namely 29 January 2009.
Section 18E(1)(b) provides for the commencement of proceedings where residential building work is not completed. The applicant's written submissions on jurisdiction proceed on the basis that the issue for the Tribunal is "to determine a date of completion to determine when the limitation period effectively ends". However, the applicant's evidence appears to raise the alternative position that the works are not completed, so that s 18E(1)(b) might apply. For the sake of completeness, that alternative position is addressed.
In his statement Mr Veneziano outlines the applicant's position that the works the subject of these proceedings are incomplete, and in support of the argument that the statutory period has not elapsed relies upon:
1. The issue of incomplete works as outlined in its expert witness report dated 16 June 2016;
2. The standard and quality of the works do not comply with Australian Standards and Building Codes;
3. The respondent's failure to complete rectifications in the past;
4. An occupation certificate has not been issued.
The issue of the occupation certificate has been considered above. In relation to the matters identified in (1), (2) and (3), the statement of Mr Veneziano recounts (paragraph [20]) the history of attempts by the applicant and the strata manager to deal with building defects, from July 2011 to May 2015. At paragraph [21] Mr Veneziano summarises the parts of the works "which are either defective or has not been completed by the builder" in the following terms:
(i)Failure to install cavity flashing causing damage to internal building/s;
(ii)No external waterproofing membrane at south western corner;
(iii)installation of the cavity walls to the living rooms are defective as water is penetrating the wall cavity;
(iv)no membrane or cavity flashing installed at this level to prevent water ingress;
(v)respondent has failed to install flashing correctly and at correct level in relation to the floor and terrace slab;
(vi)terrace tiles defective and waterproofing has failed;
water penetration caused by waterproofing failure and effecting slab joints by causing calcification;
(vii)concrete pavement subsidence;
(ix)masonry walls defective and has cracked through subsidence;
(x)basement car park walls are defective as builder has failed to install adequate waterproof membrane;
(xi)failure to provide information and plans to Auburn Council to obtain formal approval for the ventilation system for the basement car park;
(xii)failure to complete the ventilation system.
In addition to this list Mr Veneziano states (paragraph [22]) that there are 8 townhouses where the respondent has failed to comply with the approved plans and construct laundry chutes.
The applicant relies on a s 96 application made in January 2009. The applicant has provided a copy of the application received by Auburn Council on 22 January 2009, stated to be for:
A slight modification to dividing wall in rear courtyard of townhouse 12, plus the addition of a mechanical ventilation room in basement.
The estimated cost of development was $3,500. The assessment documents (ex A, p 175) indicate that the proposed modifications related to construction of a room 4m by 1.8m in the basement car park to accommodate mechanical ventilation equipment, and modification of the partition wall between the courtyards of townhouses 11 and 12 from being straight to being staggered. The council refused the application on 9 June 2009 on the basis of insufficient information, earlier requests having been made for details of where the mechanical ventilation would exhaust to and whether the proposed mechanical ventilation equipment would be suitable to adequately ventilate the basement car park.
The Tribunal is not satisfied that the making of this application supports the contention that the work was not complete. Section 96 of the EPA Act provides for the making of an application to modify a development consent in a broad range of contexts, from modifications of minimal environmental impact (s96(1A)) to modifications of potentially greater environmental impact (s 96(2)); modifications to the physical structure of a building or to other aspects of a development including the use of a building; and includes applications for modification of a consent where development including physical work has already taken place: Windy Dropdown Pty Ltd v Warringah Council [2000] NSWLEC 240. The fact that a s96 modification application was required, or made, in relation to the provision of mechanical ventilation of the basement car park and the alteration of configuration of a courtyard wall would not of itself support a conclusion that residential building work was incomplete. In any event, on the evidence provided by the applicant, at its highest the matters included in the s 96 application relate to defects, and not incomplete works. At paragraph [7] of his statement Mr Veneziano states that the basement car park has an installed ventilation system which he states is incomplete and not operational, and cannot be connected until further works are carried out, an issue not addressed by the applicant's expert witness in his report of 16 June 2016. Based on Mr Veneziano's evidence, including (at paragraph [18]) his report of a visual inspection of the ventilation system, at its highest it appears that the ventilation system was not constructed in accordance with the construction certificate plans. That is evidence of a defect, and not of the works being incomplete.
Even if this analysis of the evidence on which the applicant relies is not correct, and even if the matters identified by Mr Veneziano could be characterised as incomplete, rather than defective, building work, in the absence of any finding as to the date under s 18E(1)(b)(i), the 7 year period would commence on the date of the contract (s 18E(1)(b)(ii)). The documents in evidence do not establish the date of the contract, however given the terms of the document provided in exhibit 1, that date could not have been a date any later than 1 November 2008. Section 18E(1)(b) would not assist the applicant.
[7]
Estoppel
The applicant contends that the respondent is estopped from raising s 18E as a defence in opposition to the claim, due to an agreement entered into on or about 2 October 2013 by the respondent with the applicant to carry out building works, an agreement facilitated by Fair Trading. The applicant described those building works as works in respect of incomplete work and work that required repair from work previously undertaken by the respondent. The applicant contends that the respondent through their conduct created a situation where the applicant did not enforce its legitimate legal rights.
The applicant relies on the summary of the principles of estoppel in Smithers v Parisi (Home Building) [2008] NSWCTTT 1299, and submits that it altered its position in respect of bringing a cause of action against the respondent, as the respondent had entered into an agreement to repair and complete works on or about 2 October 2013; that it was an implied or express representation that the applicant would not pursue a cause of action against the respondent; and that when the respondent defaulted in relation to the terms of the agreement the applicant subsequently commenced these proceedings. The applicant submits that the Limitation Act 1969 (NSW) applies so that the time that has run prior to the confirmation is not counted in the reckoning of the limitation period.
The evidence provided by the applicant in support of its claim that an agreement was entered into in October 2013 is a document on Fair Trading letterhead, headed Complaint Inspection Advice, relating to an inspection on 17 September 2013 at which two named unit owners (one of whom was Mr Veneziano), Mr Fred Rahmani (described as developer and unit owner), Mr Mostafa, and Chris Hall (Fair Trading Inspector) were present (ex A, pp146-148). The document states:
The following agreement has been reached between the parties for the contractor to carry out the following items:
…
And lists repairs and rectification work for 7 of 12 units (the other five not inspected), and common areas. The document is not dated, or signed.
At paragraph 20 of his statement Mr Veneziano states that on 2 October 2013 "a draft agreement was received from the department of Fair Trading, which was then sent to the Builder, for comment. The Builder agreed to carry out all repairs, as per the agreement".
Another copy of that document (ex A pp 104-106) has annotations which indicate that some of the work specified had been carried out. At paragraph [19] of his statement Mr Veneziano states that this copy of the document is "the orders made by the Fair Trading for which the respondent has not complied".
The first issue to determine is whether as a matter of law the applicant is entitled to rely on an estoppel in the face of the statutory limitation period provided in s 18E. The general principle is that a party cannot rely on an estoppel in the face of a statutory right or prohibition, however, an estoppel may operate depending on the terms of the statute. As explained in Ryde Developments Pty Ltd v The Property Investors Alliance Pty Ltd (No 4) [2017] NSWSC 436 at [109] per Ball J, estoppel may be available where the statute, on its proper construction, is designed to confer a benefit on an individual or class of individuals, and is not available where the purpose of the statute is to protect a particular class of individuals in the public interest (Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 at 404-7 per Mason CJ; at 456 per Dawson J; Tudor Developments Pty Ltd v Makeig (2008) 72 NSWLR 624; [2008] NSWCA 263 at [15] per Basten JA (with whom Beazley JA agreed); [89]-[90] per Handley AJA). Nor is it available where the statute prevents the parties from contracting out of the rights it confers and the obligations it imposes (Metropolitan Health Service Board v Australian Nursing Federation (2000) 99 FCR 95; [2000] FCA 784 at [21] per French J).
The proceedings in Smithers v Parisi (Home Building) [2008] NSWCTTT 1299 concerned a contract for sale of a property at a discount price, which the Tribunal Member accepted was referrable to the fact that the building was not complete or with a valid occupation certificate or drainage diagram. The contract included a term in which the purchasers acknowledged that the improvements were sold in their present condition and subject to all faults and defects, and "shall make no objection or requisition in that regard". In proceedings by the purchasers to enforce the protections of Part 2C of the HB Act, the Tribunal Member found that the purchasers had in negotiating a reduction in price consciously bargained away the rights they might otherwise have had, and that they were estopped from relying on s 18B of the HB Act.
More detailed analysis of the issue was undertaken by the Court of Appeal in Tudor Developments Pty Ltd v Makeig (2008) 72 NSWLR 624; [2008] NSWCA 263, in proceedings concerning rescission of a contract for sale of land where the vendor had not provided the certificate of insurance required under s 96A(1) of the HB Act. The majority characterised s 96A as imposing a statutory prohibition subject to a significant penalty for breach, with the purpose of providing protection for those who obtain the benefit of residential building works, usually home owners. In dismissing the appeal from the primary judge's determination that estoppel could not be validly pleaded for non-compliance with s 96A, Basten JA (with whom Beazley JA agreed) held (at [76]) that the statute should be allowed to operate in its terms, which did not import equitable principles from the general law.
In these proceedings, the Tribunal accepts the characterisation by the applicant in submissions that the limitation period of 7 years in s 18E was put in place to balance the rights of consumers and service providers, while protecting consumers and to establish some certainty in the litigation process. This is not a situation of a party exercising or not exercising statutory rights, or where the statute, on its proper construction, is designed to confer a benefit on an individual or class of individuals, but whether an estoppel can be pleaded in the face of s 48K(7) of the HB Act. Whether or not an estoppel could be pleaded in proceedings in a court, the effect of s 48K is that the Tribunal does not have jurisdiction in respect of a building claim arising from a breach of statutory warranty if the date on which the claim is lodged is after the period provided in s 18E.
That conclusion makes it unnecessary to determine whether the document on which the applicant relies, namely the document referred to in paragraph 20 of Mr Veneziano's statement, would provide a basis in fact for an estoppel, or whether there may be other documents or other evidence which the applicant has not provided on which an estoppel could be based.
[8]
Enforcement of the contract
The applicant submits that the document referred to at paragraph 20 of Mr Veneziano's statement is a contract, made on or before 2 October 2013, being an agreement for the provision of services being building work, for the implied or express consideration of not being sued. The applicant's contention is that it has a further cause of action based on this contract, for which it would seek leave to amend this application if successful on the question of jurisdiction; that this cause of action is within the limitation period specified in s 14 of the Limitation Act 1969; and that if that contractual claim cannot be litigated in these proceedings, there would be a danger of inconsistent findings and possible Anshun estoppel.
The findings above on the application of s 3B, 3C and s 18E of the HB Act mean that applying s 48K(7), the Tribunal has no jurisdiction to hear and determine the application made by the applicant on 17 March 2016. That being the case, the Tribunal does not have jurisdiction to grant leave to amend the application to add a claim based on a cause of action that might be within jurisdiction. The present proceedings must be dismissed.
There are no findings which could found an argument based on Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, or issue estoppel, should the applicant initiate proceedings based on that document. It is not necessary, and would not be appropriate for that reason, to consider or determine whether the Complaint Inspection Advice listing repair and rectification works identified at a meeting at which unit owners, the developer, the builder and a Fair Trading inspector were present, or whether the carrying out of works by the builder to rectify some of those defects, could support a claim of the kind foreshadowed by the applicant. It is also unnecessary, and would not be appropriate, for additional evidence to be obtained in the context of these proceedings that might support such a claim.
[9]
Conclusion
For the above reasons, the Tribunal concludes that the application was made outside the time specified in s 18E of the HB Act, and that as a consequence, pursuant to s 48K(7) of the HB Act, the Tribunal has no jurisdiction to hear and determine the claim. The Tribunal is also satisfied that the two additional bases on which the applicant contends the Tribunal has jurisdiction, namely estoppel and the existence of a further cause of action, could not apply so as to confer jurisdiction on the Tribunal. The proceedings must be dismissed.
As discussed with the parties at the hearing, an opportunity is to be provided for consideration of any costs application.
The Tribunal orders:
1. The application is dismissed.
2. Any application for an order for costs is to be made within 14 days of the date of these reasons and to be accompanied by any submissions and evidence in support of such an application.
3. The party against whom an application for an order for costs is made is to file and serve submissions and any evidence in reply no later than 14 days after the date in order 2.
4. Any application for costs will be determined on the papers. If either party wishes to be heard in person that party must notify the Registrar within 7 days of the date in order 3, and the Registrar will advise the parties.
L Pearson
Principal Member
Civil and Administrative Tribunal of NSW
4 May 2017
[10]
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: 21 June 2017
Parties
Applicant/Plaintiff:
Owners Corporation SP 82076
Respondent/Defendant:
Taricon Pty Ltd
Legislation Cited (10)
Building Professionals Act 2005(NSW)
Building Professionals Amendment Act 2008(NSW)
Environmental Planning and Assessment Regulation 2000(NSW)