Qui v Balmoral Street Developments Pty Ltd

NCAT Appeal Panel|2023-02-28

Summary

This appeal, lodged a significant period after the decision at first instance and well beyond the time allowed to bring the appeal, challenges a decision of the Consumer and Commercial Division to dismiss the appellant's claims against the respondent and to order that he pay the respondent's costs on the ordinary basis. The Tribunal determined, having reviewed the material lodged at first instance and conducting a hearing on 13 September 2021, that the appellant sought to prosecute claims under the warranties contained in the Home Building Act 1989 (NSW) ("HBA"), ss 18B & 18C.
The Tribunal found that the warranties did not apply as between these parties and so the claim must fail. To use the technical term, the appellant did not have "standing" to make the claims against the respondent. The Tribunal went on to find, in any event, that the amount of the claim, which was for the lost opportunity to rent the appellant's unit, was not substantiated by probative evidence. The Tribunal ordered costs because it was satisfied that the claim was for an amount exceeding $30,000, meaning that the usual rule in this Tribunal that parties pay their own costs unless there are special circumstances warranting an order for costs did not apply. As a result, the Tribunal was satisfied costs should follow the event.
The parties sought to have the appeal determined on the papers. I am satisfied that is appropriate and will make an order to that effect.
The appellant fails to grapple with the Tribunal's central finding, that the warranties in the HBA did not apply between these parties. His concern was simply to demonstrate that there were building defects in common property which allowed water to enter into and affect his unit. That was not actually in dispute. His concern that the Tribunal misconstrued the amount of his claim when determining the issue of costs is no more than merely arguable.
On that basis, there is no proper basis demonstrated to extend time to appeal and I have decided to refuse to extend time to do so.

Background

The background to the dispute is helpfully summarised in the respondent's written submissions. To the extent that there may be any contest between the parties about specific aspects of the history there recited, it will have no bearing on the determination of the appeal: 1. The respondent was incorporated to undertake a development located at Waitara, comprising of a five-storey residential building with 39 units (Development). The Development was constructed by Developcorp Constructions Pty Ltd (Developcorp). 2. The Development commenced in about July 2014 and a final occupation certificate was obtained on 17 December 2015. 3. On about 20 September 2013, the appellant and respondent commenced negotiations with respect to the proposed purchase of a unit in the Development (Unit). 4. On 2 October 2013, the contracts for the sale of the Unit were exchanged. 5. On about 1 December 2015, Ironfish Pty Ltd as sales agent for the Development commissioned a defect report with respect to the Unit. 6. The strata plan was registered on or about 22 December 2015 and the owners corporation came into existence on the same date. SMS Strata was appointed as the strata managing agent by the owners corporation. 7. The contract for the sale of the unit to the appellant settled on 6 January 2016. 8. Between January 2016 and July 2018, the appellant and respondent exchanged emails regarding alleged defects and maintenance issues at the Unit. Developcorp (on behalf of the respondent) facilitated the rectification of the defects at the Unit during the defect liability period of two (2) years pursuant to the contract for sale. 9. In about early 2020, the appellant notified the respondent that there was damp carpet at the Unit and the respondent arranged for an inspection to be undertaken. The inspection was complete, and the appellant was directed to SMS Strata to deal with the issue. 10. On 7 February 2020, the respondent arranged for access to the Unit to repair the water ingress. 11. Between February 2020 and 15 April 2020, SMS Strata was dealing with damage and flooding from the storms at the Development. 12. On about 15 April 2020, SMS Strata notified the respondent that they had made an insurance claim regarding the flooding event. 13. On or about 26 May 2020, Aaron Hutchinson from Quickaz Plumbing services conducted a flood test to the balcony of unit 48 and subsequently provided a report (QPS Report). The QPS Report explains that the 'balcony membrane has failed' and the sliding doors are to be 'resealed'. The QPS Report gave no particulars of any other defects. The report failed to identify the exact cause of the water penetration. 14. The respondent obtained access to the Unit between 16 and 23 September 2020 during which time it undertook further tests and commenced rectification works. 15. On or about 29 October 2020, the owners corporation commissioned a report from Mark Irvine of Tyrells who then undertook flood testing to balcony of the Unit at the request of SMS Strata. 16. Following the flood testing, a report titled "Technical Report - Balcony Flood Test" (Tyrells Report) was provided to SMS Strata. The Tyrells Report identified, inter alia, evidence of water ingress to the common property wall and balcony doors. 17. The Tyrells Report concluded that the balcony water proofing membrane had failed to achieve the required performance. 18. Following the Tyrells Report, the owners corporation submitted a scope of works to the respondent who agreed to undertake those works. 19. By 22 December 2020, the respondent completed the rectification of the defects contained in both the Tyrells Report and the QPS Report.

The Tribunal's central findings

The Tribunal at first instance found in its reasons for decision ("Reasons"): 26 It is apparent that the applicant does not seek to sue the respondent for breach of the Contract of Sale executed in 2013. The applicant included the first page of that contract in his first bundle of documents but did not tender any part of the Contract of Sale which might support any claim by the applicant against the respondent in respect of loss of rent by reason of defective building works. 27 It is apparent that the applicant's claim is dependent upon the provisions of sections 18B and 18C of the HBA. 28 Section 18B of the HBA provides for statutory warranties to be "implied in every contract to do residential building work". Those warranties include: (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, … (e) a warranty that, if the work consists of the construction of a dwelling, … the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling 29 Section 18C of the HBA provides: 18C Warranties as to work by others (1) A person who is the immediate successor in title to an owner-builder, a holder of a contractor licence, a former holder or a developer who has done residential building work on land is entitled to the benefit of the statutory warranties as if the owner-builder, holder, former holder or developer were required to hold a contractor licence and had done the work under a contract with that successor in title to do the work. (2) For the purposes of this section, residential building work done on behalf of a developer is taken to have been done by the developer. 30 It is clear in my view that, by virtue of s 18C, the statutory warranties are available to the purchaser of property from a developer, as if they were contained in a notional contract between the purchaser and the developer by which the developer agreed to carry out the construction of the property which the purchaser so acquired. It was not in dispute that, for the purposes of s 18C, the respondent was the developer, and the applicant was the immediate successor in title to the respondent, in respect of the lot within the strata plan which the applicant purchased from the respondent. 31 Thus the applicant would be entitled to enforce the statutory warranties against the respondent in respect of all construction within the lot (within the applicable warranty period set out in s 18E). 32 However, as Mr Connor pointed out, the walls, water pipes, external doors and balcony surfaces were all common property, which vested in the Owners Corporation of the strata scheme immediately upon registration of the strata scheme. 33 Mr Connor referred to s 24(2)(a) of the Strata Schemes Development Act 2015 (NSW) as the provision pursuant to which the common property was vested in the Owners Corporation, but that provision was not in force in January 2016. The relevant provision was s 18(1) of the Strata Schemes (Freehold Development) Act 1973 (NSW). Schedule 8 to the Strata Schemes Development Act 2015 provided that strata schemes registered under the Strata Schemes (Freehold Development) Act 1973 continued as strata schemes under the Strata Schemes Development Act 2015. 34 Nevertheless, Mr Connor was correct to submit that the respondent does not owe any obligation to the applicant in respect of any breach of statutory warranty in relation to common property. The respondent's obligations in respect of statutory warranties in relation to common property within the strata scheme are or were owed to the Owners Corporation. 35 Accordingly, the applicant has no cause of action against the respondent in respect of the water penetration into his unit through the walls, external doors and balcony hob, all of which were common property.
Clearly, then, the appellant's ability to maintain his claim was determined against him by the Tribunal based on its findings at [34] and [35] of the Reasons.
However, the Tribunal went on to find, on an alternative basis, that: 39 Although it is not necessary that I assess whether the applicant has proved that he suffered any loss by reason of the water penetration, I note that, had it been necessary to decide, I would have accepted that the evidence established that the applicant could have let the premises for $560 per week throughout the period from 2017 to 2020. 40 However, the evidence presented by the applicant concerning the letting of the property was so imprecise and non-specific that I cannot be satisfied on the balance of probabilities that the applicant was prevented from letting the premises by reason of water penetration or water damage at any time during the period in respect of which the applicant claimed to have lost rent. The applicant did not tender any rent ledgers or other documentary evidence to establish when the property has been tenanted since the applicant took possession in January 2016. Therefore I cannot be satisfied either that the applicant had sought to rent the property after January 2017 (when an email in the applicant's documents suggests that the tenants then in occupation gave notice - with no reference to water penetration) or that the applicant had at any time been prevented from letting the property by reason of water penetration.

The grounds of appeal

As the appellant is unrepresented, a broad interpretation of the grounds of appeal should be allowed unless it unreasonably prejudices the respondent: Prendergast v Western Murray Irrigation Ltd [2004] NSWCATAP 69.
The appellant raised three grounds of appeal, which I have re-ordered in the way I will deal with them and reframed where possible as questions of law: 1. Did the Tribunal deny the appellant procedural fairness warranting reconsideration of the decision by allowing the respondent to lodge submissions beyond the timetable provided in directions made to prepare the proceedings for determination? 2. Did the Tribunal deny the appellant procedural fairness warranting reconsideration of the decision by allowing the respondent to rely on submissions made beyond the scope of the directions made to prepare the proceedings for determination, where those submissions were only emailed to the appellant on the day of the hearing? 3. Did the Tribunal make a finding for which there was no evidence, in determining that the appellant's claim was for a sum greater than $30,000.
As the appellant sought leave, I will also consider whether the alleged errors could warrant a grant of leave, even if those questions of law should be answered in the negative.

Scope and nature of internal appeals

An appeal to the Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10]. To succeed in an appeal, the appellant must demonstrate either an error on a question of law, which, except in an appeal from an interlocutory decision, may be argued as of right; or that permission (that is, "leave") to appeal should be granted to bring the appeal: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2).
The principles governing an application for leave to appeal under the NCAT Act are well established and are repeated in many decisions of the Appeal Panel, often quoting Collins v Urban [2014] NSWCATAP 17. They are the same principles applied by the courts. It is enough as a summary to refer to the Secretary, Department of Family and Community Services v Smith [2017] NSWCA 206, where the Court said at [28] (citations omitted): Only if the decision is attended with sufficient doubt to warrant its reconsideration on appeal will leave be granted. Ordinarily, it is only appropriate to grant leave where there is an issue of principle, a question of general public importance, or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable. It is well established that it is not sufficient merely to show that the trial judge was arguably wrong.
Where the appeal is from a decision made in the Consumer and Commercial Division (other than in respect of interlocutory decisions), there is a further qualification to the possible grant of leave in that I may only go on to consider a grant of leave in the broader sense if I am first satisfied that the elements of cl 12(1) of Sch 4 of the NCAT Act are made out, in that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
I may decide to conduct a new hearing if I am satisfied that the grounds for appeal warrant it: NCAT Act, s 80(3)(a). A new hearing under s 80(3) of the NCAT Act is a hearing de novo, or "from the beginning": Yuen v Thom [2016] NSWCATAP 243 at [17].

An Appeal commenced out of time

The Notice of Appeal records that the appellant received the Tribunal's reasons for decision on 9 December 2021. The Appeal was not lodged until 1 April 2022, some months beyond the 28 days allowed for filing the notice under Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules). I may, though extend time for filing the Notice of Appeal: NCAT Act, s 41.
In Kelly v Szatow [2020] NSWSC 407, the Court summarised the principles that apply to an extension of time to appeal. Relevant considerations include the length of the delay and any associated reasons for such, the strength of the plaintiff's case and consideration of whether the defendants would be prejudiced by a granting of the application: see Jackamarra v Krakouer (1998) 195 CLR 516 at [3]-[5]; Tomko v Palasty (No 2) [2007] NSWCA 369 at [55].
The appellant bears the onus of demonstrating that strict compliance with the timeframe would work an injustice: see Gallo v Dawson (1990) HCA 30; 93 ALR 479 ("Gallo"). In Gallo, McHugh J stated at [2]: "[2] …The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v National Trustees Executors and Agency Co. of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194-5. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-4; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has 'a vested right to retain the judgment' unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v Cumarasamy [1965] 1 WLR 8 at 12; [1964] 3 All ER 933 at 935: 'The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.'"
The appellant explains his delay by way of what has been, I have no doubt, a serious medical condition he has experienced in the past few years.
He has provided a discharge summary indicating that he was hospitalised between February and April 2020, and further in a relevant period between 21 and 31 December 2021. He provides a somewhat generic and unhelpful medical certificate, stating that he was "unfit for work or study" between 28 March and 28 June 2022.
The delay is long, however the respondent simply submits that it is ultimately a matter for the Appeal Panel to determine whether or not leave ought to be granted, and whether the medical records adduced by the appellant are sufficient to justify the 85-day lapse between the expiry of the appeal period and the filing of Notice of Appeal. It does, however, submit that the appellant's poor prospects of success weigh against the grant of an extension.
As the matter is to be determined on the papers, I decided to consider all the substantive issues, so that I might be better informed about the prospects of the appeal to guide my decision as to an extension of time. If the appeal's prospects are strong, that may indicate an extension is warranted. If fairly arguable, it may warrant more extensive and careful consideration of the other relevant factors such as the extent and reason for delay, and the prejudice to the other party if an extension is granted. If particularly weak or apparently bound to fail, the appellant may be unable to demonstrate that refusal of an extension will work an injustice: see, for example, Rizk v FA Constructions Australia Pty Ltd (No 2) [2016] NSWCA 203 at [7], per Basten JA with Sackville JA in agreement.

Grounds one and two, alleging a breach of procedural fairness.

The Tribunal dealt at some length with the issue of non-compliance with its directions leading up to the hearing in its Reasons. It noted that the appellant was given the opportunity to make further written submissions in reply to the respondent's material, although it found that what was lodged was not, in fact, in reply.
Without a transcript of the hearing, which the appellant was directed to lodge and serve if relevant, it is difficult for the appellant to demonstrate a breach of procedural fairness as alleged, particularly where he was given an opportunity to ameliorate any prejudice by being given leave to respond. I note the comment of Mason J in Kioa v West (1985) 159 CLR 550; [1985] HCA 81 at page 582 that: It is a fundamental rule of the common law doctrine of natural justice expressed in traditional terms that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it.
It has not been established that the appellant was deprived of that right here.
There is another, equally significant, issue to be considered. Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54 is the commonly quoted authority on procedural unfairness and whether such unfairness will entitle a party to a new trial.
In Giretti v Deputy Commissioner of Taxation (1996) 70 FCR 151, Lindgren J, with whom Jenkinson J agreed, said that in Stead could be found both a forward-looking test and a backward-looking test. The question in Stead was whether a new trial should be ordered when there had been a denial of the opportunity to make submissions. The forward-looking test was whether a new trial would inevitably result in the making of the same order, so that ordering a new trial would be a futility. The backward-looking test was whether it could be concluded that giving the opportunity to make submissions "could have made no possible difference to the result".
Here, the appellant's material fails to deal with the Tribunal's central finding, that he had no standing to make the claims he did against the respondent, except to a limited extent in his written submissions in reply (which in a similar position to the Tribunal at first instance sought to traverse issues not strictly in reply), which appear to accept that finding as correct. There, the appellant submits that: We were guarded (sic) by NCAT in the first order in March 2021 to prepare of point of a claim under the Home Building Act 1989. But we believe our case needs to consider other laws: Design and Building Practitioners Act 2020 No 7 and Common law of Duty Of Care. From 10 June 2020, owners of buildings with defects will benefit from the statutory duty of care that applies to new buildings, and existing buildings where an economic loss first became apparent in the previous 10 years. According to Design and Building Practitioners Act, 2020 No 7; the Act introduces important protections for property owners by clarifying that a legal duty of care is owed to them by people who carry out construction work.
The appellant's claim was lodged in January 2021 as a claim under the Home Building Act. It is apparent from the Reasons at [26] to [27] that the Tribunal engaged with ensuring that it had understood the nature of the claims made and the underlying legislation relied upon by the appellant. In the absence of the transcript, and noting that part of the Reasons is unchallenged in the appeal, I could not be satisfied the appellant raised a claim other than under the HBA. The Tribunal does not err by failing to determine claims not raised before it for consideration.
To the extent that the appellant's claim of procedural unfairness arises from the respondent having made unsolicited submissions seeking to re-open the issue of costs after the primary decision was made, the Tribunal determined that application against the respondent by further order dated 27 April 2022. As a result, the appellant's concern that he may have to pay the costs of those submissions are unfounded.
Nor does the appellant address how the Tribunal was wrong in finding on an alternate basis that he had failed to lodge probative evidence to support his claim for lost rent. The fact that finding was made on an alternate basis does not rob it of its significance or effect: Quader v Bell [2016] NSWSC 623 at [27].
Therefore, even if there was a breach of procedural fairness, it could have made no possible difference and a rehearing would inevitably lead to the same result. The grounds do not warrant granting a hearing de novo.
Grounds one and two have insufficient merit to warrant an extension of time.

Ground 3

The importance of ground 3, which has been overlooked by the respondent, is not that the alleged error has a bearing on the issue of standing but rather the issue of costs. A central finding of the Tribunal was that, as the amount claimed or in dispute exceeded $30,000, the "usual" rules as to costs applied by courts applied to the determination of costs, by virtue of the application of r 38 of the NCAT Rules.
If the appellant can demonstrate that factual finding was made without evidence, or is likely to be incorrect to an extent or in a way sufficient to warrant a grant of leave to appeal, there might be a strong argument that the time to appeal from this finding should be extended.
However, in that regard I note that: 1. The appellant put on no direct evidence by way of statement or corroborating document which supports his assertion that he "correct[ed] the amount to $29,185 by reducing the amount of days used by our private (sic) from February 2020 to 22 December 2020 on the 1st hard copy we had lodged with NCAT and the respondent. [W]e (sic) pointed out and requested NCAT's attention to this correction during the first hearing over the phone on 8th March 2021 but we were refused by the NCAT officer said (sic) too late without any further instruction."; 2. No copy of such an amended document has been drawn to my attention in the material lodged by the appellant or located by me; 3. The hearing on 8 March 2021 would have been recorded but no sound recording or transcript has been provided to substantiate the appellant's assertion; and 4. Despite the appellant having been directed to lodge any material from the proceedings at first instance which remains relevant, I can locate no such amended claim in what has been lodged. 5. The appellant did lodge what appear to be his (undated) points of claim from the proceedings at first instance, but only with his submissions in reply in the appeal. They do appear to revise the claim to $29,185, based on rent for the relevant periods of $560p/w and $570p/w, respectively. However, later submissions of 22 July 2021, again only lodged with the submissions in reply, indicate the claim may have been increased to $79,843. That figure was repeated by the appellant in submissions of 6 October 2021. 6. The respondent's written submissions at first instance make it plain it understood that an amended amount was sought, but the amount it understood to be pursued was $30,040: Respondent's submissions of 6 July 2021 at [1] & [2]; 7. The Tribunal recorded that the relevant evidence the appellant relied on at the hearing was from a Mr Teng, indicating the rent lost could be quantified at between $550 to $600 p/w. Self-evidently, if the Tribunal had accepted the high end of that range the claim would have exceeded $30,000; and 8. There is, therefore, no clarity as to the exact amount sought, and no transcript put before me to demonstrate that the issue was clarified before the Senior Member at first instance. Given the repeated reference to a claim of $79,843, and the potentially enlarged weekly sum sought, I could not be satisfied the finding the sum sought exceeded $30,000 was made with no evidence, or that it is more than merely arguable that the Tribunal erred. There is no issue of general principle at stake or question of public importance.
Furthermore, even if I was to extend time, grant leave, make a contrary finding and re-determine the issue, the likelihood of the costs order remaining unchanged would remain high. The claim was, on any version, in the order of $30,000 and the Tribunal's finding that the appellant had no standing remains unassailed. There is still insufficient evidence before me to demonstrate that the quantum of the claim could be made out. The application could, in those circumstances, be properly considered lacking in substance, a strong factor in awarding costs where s 60 of the NCAT Act applies: NCAT Act, ss 60(3)(c) &(e). Furthermore, the respondent had advised the appellant in writing of the defects in both the nature and substance of his claims, in ways consistent with the Tribunal's findings, by letter dated 3 September 2021. It had invited him to withdraw his claim.
The allegation of error on this basis is too weak, and the likelihood of the appellant achieving a different result too slim, to warrant an extension or grant of leave.
Weighing those issues, I am not satisfied that there is sufficient merit in the appeal to warrant an extension of time to lodge the Notice of Appeal.

Costs of the appeal

The respondent indicated, in the event that it was successful in the appeal, that it sought costs. I will make directions for submissions.

Orders

My orders will be: 1. A hearing of the appeal is dispensed with. 2. Leave to extend time to lodge the Notice of Appeal is refused. 3. The respondent is to lodge submissions and evidence in support of its costs application with the Appeal Registry and give them to the appellant within 14 days of the publication of these orders; 4. Any submissions and evidence in response to the costs application are to be lodged with the Appeal Registry and given to the respondent within 14 days thereafter. 5. Submissions on the application for costs are not to exceed five pages in length. 6. The Appeal Panel may dispense with a hearing and determine any application for costs on the basis of the written submissions and evidence provided. If the parties oppose this course they should make submissions on this issue when complying with the directions as to their submissions on the substantive costs application. 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: 28 February 2023

Strata Schemes (Freehold Development) Act 1973(NSW)

At a glance

Court

Decision date

Source

Judgment (10 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (18)

Cited By (1)