Southern Pacific Builders Pty Limited v Kelly

1. Ground 1 was stated in the Notice of Appeal to be:

The Tribunal erred (at [126]-[134]) in its construction of Clause 3.3 of Australian Standard 3740-2011 (sic) ("AAS 3740"), in finding that Clause 3.3 required, in the general bathroom area, a minimum fall to any installed waste of 1:100.

Particular

1.1. Clause 3.3 requires a fall of 1:100 in any wet area where such a fall "is required";

1.2. Clause 3.3 does not of itself require a fall in any wet area;

1.3. AAS 3740 does not otherwise require a fall to the wastes in the general bathroom area (cf. an enclosed shower area).

1. It was common ground that AS 3740-2010 was the applicable Australian Standard to the resolution of this dispute. A copy of the standard was provided to us and marked as Exhibit A1. At the hearing of the appeal we were told that this standard has been superseded by a more recent standard.
2. Australian Standard AS 3740-2010 is titled "Waterproofing of domestic wet areas".
3. Clause 3.3 of AS 3740-2010 provides:

3.3 FALLS IN FLOOR FINISHES

Where required, falls in floor finishes shall allow all surface water to drain without ponding except for residual water remaining due to surface tension.

For general bathroom floor area, the minimum fall to the waste shall be 1:100.

NOTES:

1 For information on falls in the floor finishes, see Appendix B.

2 For information on the laying of tiles to enable them to drain without retaining water, see AS 3958.1.

3.4 SHOWER FLOORS

Falls in shower floors shall be sufficient to prevent-

(a) surface water being retained on the shower floor (except for residual water remaining due to surface tension); and

(b) water from discharging outside the shower area.

For shower areas with a vertical separation between the shower area and the wet area, such as a shower screen, hob, step-down or water stop, the fall to the waste shall be 1:100.

As a minimum for other shower areas, the fall shall be a minimum of 1:80.

3.11 REQUIRED FLOOR WASTES FOR WET AREA FLOORS

Where a floor waste is required, floor finish shall be constructed so that water flows to the waste without water being retained on the finished surface with the exception of residual water remaining due to surface tension

NOTE: For additional information on floor gradients, see Appendix B.

1. According to clause 3.1 of AS 3740, clause 3 sets out the details for the installation of waterproof-resistant materials to be used in domestic wet areas of a building.
2. "Wet area" was defined as:

An area within the building supplied with water from a water supply system, which includes bathrooms, showers, laundries and sanitary compartments and excludes kitchens, bar areas, kitchenettes domestic food and beverage preparation areas.

1. As we have already said, the Builder's position on the appeal was that grading at a ratio of 1:100 was a requirement of AS 3740 in the shower area because of the terms of clause 3.4, but it was not a requirement of AS 3740 in the "general bathroom floor area". It was this latter area which was the area the subject of the appeal, as was common ground between the parties.
2. On appeal the Builder did not contend that the general bathroom area with which we are concerned was not a "Wet area" as found by the Tribunal (at [127]-[129]). The short point made by the Builder was that this distinction in respect of the "general bathroom floor area" resulted from the use of the phrase "Where required," at the start of clause 3.3.
3. We elaborate on the Builder's submissions later in these reasons.
4. Before examining the parties' submissions in more detail there are five other preliminary aspects of the argument that we should mention.
5. Firstly, the Tribunal concluded that by failing to comply with clause 3.3 of AS 3740-2010 the Builder breached the warranties in s 18 B (1) ( c) of the Home Building Act 1989 (NSW) and the warranty in cl 1 (b) (iii) of the building contract between the parties (at [134]). There was no challenge on appeal to the Tribunal's conclusion that these warranties had been breached if it was the case that the builder's construction of clause 3.3 was not the correct construction.
6. Secondly, the Tribunal concluded that the Builder had failed to comply with the fall provision concerning general bathroom areas in clause 3.3 of AS 3740-2010 (at [134]) but did not address the Builder's contentions about the correct construction of this section. On appeal, the Builder took the position that it did not contend that the decision was affected by inadequate reasons. Instead, it contended that its construction of clause 3.3 was the correct one and that for this reason the relevant the orders should be set aside.
7. Thirdly, the Tribunal concluded that the Builder was not required to satisfy clause 3.11 of AS 3740-2010 (at [132]). In arriving at this conclusion, the Tribunal stated that there was no evidence that a floor waste was required in the general bathroom areas with which we are concerned and that there was no evidence that the building contract itself required these floor wastes outside the shower areas.
8. None of these conclusions were disputed on the appeal. Mr Chatterjee, Counsel for the Builder, said that the installed floor wastes in the bathroom areas with which we are concerned were not "required" floor wastes according to any applicable Australian Standard or any contractual specification but instead had been installed "voluntarily" by the Builder. Mr Lonergan, Counsel for the Owners, did not take issue with this position.
9. Accordingly, whilst noting that we have received no argument about this subject and make no determination about the correctness of the contention, we proceed to determine the appeal on the basis that Mr Chatterjee's proposition is correct.
10. Fourthly, there was no contention on appeal by the Builder to the effect that the grated facility in each of the general bathroom areas to which we have referred as "floor wastes" did not fall within the term "the waste" in the second sentence of clause 3.3 of AS 3740-2010. We mention this aspect because at the hearing of the appeal Mr Chatterjee said that the grated facility had been installed to access a drainage trap rather than to drain water. Furthermore, in oral submissions in reply he referred us to the definition of "Floor waste" in AS 3740-2010 being "A grated inlet within a graded floor intended to drain the floor surface (see Clause 3.14.2)."
11. However, there was no contention by the Builder on the appeal that the Tribunal erred in fact and/or in law by failing to find that this facility was not something that fell within the term "the waste" in clause 3.3. As to this, the decision of the Tribunal appears to proceed on the basis that these facilities were "floor wastes". We also note that the appellant's opening submissions to the Tribunal identified them in these terms where, for example, it stated at [35]:

As identified above, the issue with the bathrooms (with the exception of ensuite two which has two additional alleged defects) concerns grading to floor wastes. The experts agree that the floor wastes in question are not required by the NCC, as they are floor wastes that are installed in the main bathroom area, and separate to the floor wastes installed in the shower areas.

1. Fifthly, it was common ground that we are not concerned with the construction of legislation or delegated legislation. Furthermore, the Builder did not submit that any of the provisions of the Interpretation Act 1987 (NSW) were applicable.
2. Whilst we were not assisted by precise submissions on the subject, we accept that we are concerned with the construction of "deemed to satisfy" provisions that a builder must comply with in order to comply with the National Construction Code (which Code includes the Building Code of Australia in Volumes One and Two) in the absence of an alternative solution to meet performance. The Tribunal made reference to the provisions of the relevant Environmental Planning and Assessment Regulation concerning the statutory requirement for building work to comply with the Building Code of Australia (at [53]-[69]).
3. As appears from AS 3740-2010, the standard was prepared by Committee BD-038 and approved on behalf of the Council of Standards Australia on 9 September 2010 and published on 5 November 2010.
4. The Building Code of Australia is published by the Australian Building Codes Board (ABCB). There was no issue on the appeal concerning the Tribunal's conclusion that the National Construction Code relevant to the proceedings was released by the ABCB in May 2019 (at [59]).

1. At the forefront of the appellant's submissions were passages in an article in a newsletter identified as "ABCB" and "CONNECT", dated 22 November 2017. The article was titled "Too grade, or not to grade". The passages relied upon were set out on the first page of the newsletter, which was marked Exhibit A2 on the appeal. The relevant parts of the passages were set out in the Tribunal's reasons at [118] (2)] where the Tribunal referred to the ABCB newsletter entitled "Connect" as an attachment to the expert report from Mr Baker presented by the appellant.
2. The passages relied upon by the appellant were as follows (they commenced underneath a photograph of part of a tiled floor with a grated inlet):

Have you ever wondered whether the floor surrounding a floor waste is required by the NCC to be graded to that floor waste in all circumstances?

While not likely to be a dinner party conversation topic, this question has been occupying the minds of some NCC users. So earlier this year at a joint meeting of the ABCB's Building Codes Committee and Plumbing Code Committee considered it.

When are floor wastes required?

Floor wastes are only required by the Deemed-to Satisfy Provisions of the NCC in prescribed situations:

• In a shower area, as part of the AS 3740 wet area waterproofing requirements (Volume One F 1.7 and Volume Two 3.8.1.2).
• In a room containing a urinal (Volume One F1 .7 & AS 3500.2 through Volume Three Part C2).
• In a Class 2, 3 or Class 4 part of a building, where a bathroom or laundry is located above a sole occupancy unit or public space (Volume One F 1.11).

In the above situations, the floor is required by the NCC to be graded to the floor waste to prevent water overflow from penetrating or other occupancies public spaces in the same building.

......

Floor wastes not required by the NCC

Floor wastes may also be installed even though they are not required by the NCC, for example, outside the shower area in a residential bathroom. As there is no requirement in the NCC to control overflows in these circumstances, it follows that there is also no requirement in the NCC to drain the floor to these floor wastes.

Of course, even though the NCC may not require floors to be graded to some floor wastes, there is nothing that prevents this being done if desired, but in those circumstances it should be understood it is not a regulated requirement under the NCC.

1. The appellant submitted that this was "commentary from the Australian Building Codes Board". However, the passages themselves referred to the consideration of the issue by a joint meeting of the two committees referred to with the opinions set out, apparently, being the outcome of that consideration.
2. It was submitted that this commentary was an aid to the proper construction of the relevant provisions of AS 3740-2010.
3. The appellant's written submissions then continued as follows:

13. Reading AS 3470 as a whole therefore, the requirements for the grading of the floor in a bathroom area are as follows:

13.1 Clause 3.4 requires the installation of a floor waste in the shower area;

13.2 Clause 3.11 applies to all wet areas where a floor waste is required, and therefore applies to shower areas;

13.3 Clause 3.11 requires falls in all wet areas to which it applies, with the consequences that shower areas must have falls;

13.4 Clause 3.3 applies to all wet areas where falls are required, therefore applies to shower area;

13.5 Clause 3.3 requires the floors where falls are required to be "constructed so that water flows to the waste without water being retained on the finished surface with the exception of residual water remaining due to surface tension", with the result that shower area floors have to be constructed in that manner; and

13.6 As AS 3470 does not otherwise require floor wastes or falls to be installed in the general bathroom area, clauses 3.3 and 3.11 do not apply to that area.

14 That construction is entirely in keeping with the commentary published by the ABCB.

1. In oral submissions Mr Chatterjee addressed the express reference in clause 3.3 to a fall provision in the general bathroom floor area, which, correctly, he accepted was a separate provision from the fall provision concerning the shower area in clause 3.4. This was a matter that had not been directly addressed in the written submissions. It was submitted that the express reference in the second sentence of clause 3.3 to the fall to waste for a general bathroom floor area should be read as subject to the "where required" condition in the opening sentence of clause 3.3.
2. It was also submitted that properly construed clause 3.3 was only concerned with what was meant to be achieved by a fall in floor finishes. Clearly, that is not correct.
3. Returning to the relevance and utility of the Connect newsletter, whilst recognising that it was not legislation that was being construed, the Builder referred to the decision of Allsop P in Wilson v State Rail Authority of New South Wales [2010] NSWCA 198 at [10] concerning the relevance of context in construing legislation where context is to be considered in the first instance, not merely when some ambiguity is discerned, and is to be understood in its widest sense to include such things as the existing state of the law and the mischief or object to which the statute was directed.
4. The Builder submitted that in the present case the context included that the purpose of the Standard is to set out in clear and unambiguous terms exact steps that a builder must take and that:

5. In that context, publications by the Board, whose responsibility it is to produce the Standard, which articulate in definitive terms what those requirements are where there is ambiguity, is highly relevant to the proper construction of the Standard. In this regard, the Appeal Panel can take into account that the Board must have an educative function for the profession, as well as an obligation to articulate what the relevant requirements are for the public at large.

6. The Connect article is plainly published for the purposes of those functions.

1. In this connection it was also submitted that the commentary in the article should be treated as an aid bearing in mind the mechanical or technical nature of the provisions and the need for clarity for users.
2. The Builder referred to the decision of Lindsay J in The Owners - Strata Plan No 69312 v Rockdale City Council & Anor; Owners of SP 69312 v Allianz Aust Insurance [2012] NSWSC 1244 in which the Court addressed the relevance of the Guide to the Building Code of Australia in construing the term "effective height". In that case it was concluded that the Guide was not relevant because it added nothing material to the language of the text- Mr Lonergan referred us to the different conclusion reached by Stevenson J in The Owners - Strata Plan 82089 v Omaya Holdings Pty Ltd (No 3) [2024] NSWSC 1511. The Builder submitted that the decision of Lindsay J was not authority for the proposition that regard could not be had to extrinsic materials such as the Guide. It also submitted that the Guide, which indicated it was for "guidance only", was of a different nature to the Connect article which was issued as part of the functions of the Board outlined in the above extract of the submissions.
3. We interpose to note that in both of these decisions concerning the Guide each Court expressed the view that the Code was to be construed by reference to the language used and not by reference to expert opinion evidence as to the meaning of the term in the Building Code of Australia: see, for example, Stevenson J in Omaya at [31].
4. In response to debate with the Appeal Panel about the status of the views expressed in the article, given that the article referred only to consideration by two committees and did not indicate that it expressed a determination or a view of the ABCB itself or a position approved by the ABCB, Mr Chatterjee sought leave to adduce new evidence upon this issue. He submitted that this could be quickly done, although it would involve an adjournment of the hearing of the appeal. He submitted that it appeared to be central to the argument and there would be procedural unfairness to the appellant if it was important to the outcome in circumstances where the issue had not been raised with the appellant at first instance.

1. The Owners submitted that the Builder relied primarily on the Connect article but this was irrelevant to the construction of clause 3.3 of AS 3740. They submitted that the article was not even a guide to the Building Code of Australia. They also adopted points raised by the Appeal Panel in debate with the Builder about the status of the views expressed in the article. They also submitted that the article was not as broad the Builder submitted-it did not address the second sentence of clause 3.3 and say that there was no requirement to grade to an installed floor waste in the general bathroom area. They opposed the application for leave to adduce new evidence on appeal and submitted that Builder had ample opportunity to present evidence on the issue at first instance.
2. Turning to the text of clause 3.3, the Owners emphasised the second sentence and its application to the area in issue rather than to a shower area. They submitted that the word "shall" imposed a mandatory obligation for the relevant floor to have a defined gradient towards the waste. They submitted that the Builder's submissions about the significance of the words "where required" imposed a further step in relation to the "general bathroom floor area" which was contrary to the principle of generalia specialibus non derogant such that the general language of "where required" should yield to the specific language of "shall" when the "general bathroom floor area" is the subject matter. They submitted that the preferred interpretation of the clause is that a fall to waste of 1:100 is always required in the general bathroom floor area. They submitted that this interpretation provides for internal consistency in clause 3.3 and consistency with the definition of "wet area".

1. We do not agree with Builder's construction of clause 3.3 of AS 3740-2010.
2. We start with the relevance of the Connect article. We do not regard it as context for discerning the meaning of the clause. Leaving aside the question as to the status of the views expressed, the article does not purport to provide any information about the meaning to be attributed to clause 3.3 at the time when it was incorporated as part of AS 3740. Plainly, it is not a guide or akin to an explanatory memorandum about the clause or related provisions. At its highest, it provides an expert opinion on the general subject in issue. Even then, it is an opinion of limited value because it does not expressly address clause 3.3, including the terms of the second sentence of that clause. As an expert opinion, we regard it as irrelevant to the construction of the clause. We follow the approach expressed in the above decisions of Lindsay J and Stevenson J about the relevance of an expert opinion to the meaning of the text.
3. For this reason, there is no utility in the provision of new evidence about the status of the views in the article. This is a sufficient reason to refuse the application for leave to adduce new evidence and to adjourn the hearing of the appeal for that purpose.
4. As to the text of clause 3.3, the Builder relies upon a claimed difference between clause 3.4 concerning a shower area, which clause is said to require a fall to waste, and clause 3.3 concerning a general bathroom floor area, which clause itself is said not to require a fall. However, the pertinent mandatory language in both, being the second sentences, is in substance the same.
5. The Builder points to the opening words to the first sentence of clause 3.3 "Where required," and submits that this qualification should be read into the second sentence as well. However, this construction is at odds with the actual language used-no such qualification is expressed in the second sentence. Nor is any such qualification to the second sentence obviously or necessarily implicit. The two sentences can be read harmoniously without the qualification "where required" being introduced into the second sentence. The first sentence is concerned with the outcome to be achieved by falls in floor finishes generally, where they are required. The second sentence describes the requirement in the specific case of a general bathroom floor area.
6. This construction is assisted by another factor, namely that the Builder was not able to point to any other part of AS 3740-2010 which specified circumstances in which a fall to waste in a general bathroom floor area was required and which, therefore, might supply some rationale for the specification of the gradient in the second sentence of clause 3.3 in the event that the qualification "where required" were to be read into the second sentence.

(1) An extension of time until 12 March 2025 is granted in which to lodge the appeal.

(2) The appellant's application for leave to adduce new evidence on the appeal and for that purpose to adjourn the hearing of the appeal is refused.

(3) The appeal is dismissed

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.