The Owners-Strata Plan No 102171 v Ceerose Pty Ltd; Zone Q Milsons Point... [2025] NSWCATCD 137 | Case summary

[2]

Civil Procedure Act 2005 (NSW)

The Owners-Strata Plan No 102171 v Ceerose Pty Ltd; Zone Q Milsons Point... [2025] NSWCATCD 137 | Case summary | Zoe

[56]

On or about 15 December 2017, the developer (Zone Q) entered into a written contract with the builder (Ceerose) involving the construction of the strata building.
On or about 10 March 2019, the builder (Ceerose) entered into a written contract with the sub-contractor (Southern Cross) for the design and construction of certain air-conditioning and ventilation system works.
Southern Cross performed the air-conditioning and ventilation system works between about May 2019 and November 2020.
On 6 November 2020, an interim occupation certificate was issued for the strata building.
On 3 November 2022, the owners corporation obtained an expert building defects report by Mr Dahrie, engineer (assisted by Mr Chalita) of Noviion Engineering. That report referred to water ingress into the strata building in the basement; Level 5 northern fire stairs; ground floor northern fire stairs; ground floor southern fire stairs; residential waste and recycling room; outdoor barbeque area; ground floor sofit slab; basement entry ramp; basement 1 car park; basement 2 car park; and rooftop.
On 3 November 2022, the owners corporation filed Tribunal proceedings against the builder and the developer.
Those proceedings have been filed within the two year period from the deemed date of completion of the works pursuant to s 3C(2)(a) of the HB Act; s 18E of the HB Act and s 48K(7) of the HB Act. The owners corporation has the benefit of the statutory warranties under s 18B of the HB Act against both the builder (Ceerose) and the developer (Zone Q) by reason of s 3A of the HB Act (which applies the statutory warranties to developers) and the extension of the statutory warranties to successors in title under s 18D of the HB Act.
In respect of the owners corporation's proceedings against the builder and developer for breach of the statutory warranties under s 18B of the HB Act, by reason of the Tribunal proceedings being brought within 2 years of the deemed date of completion of the work (the issue of the interim occupation certificate), no findings need to be made whether the allegedly defective work involves "major defects" under s 18E(1)(b) and (4) of the HB Act.
As will be elaborated upon later in this decision, the builder and sub-contractor dispute that the owners corporation has discharged its onus of proof in respect of breach of statutory warranties under s 18B of the HB Act. The developer also does not admit that the owners corporation has proved breach of statutory warranties, but it's submissions focus upon its claim for a contractual indemnity against the builder if the owners corporation proves breach of statutory warranties. Further, the sub-contractor submits that any statutory warranties claim by the builder against it can only be brought in respect of "major defects" under s 18E(1)(b) and (4) of the HB Act. The sub-contractor denies that the Tribunal has jurisdiction in the builder's claim against the sub-contractor to consider anything other than any established "major defects" under s 18E(4)of the HB Act.
Although ostensibly the factual and legal findings pertaining to the issue of defects appear straightforward, there are legal complexities and nuances to address by reason of the separate applications.
On 16 January 2023, the developer filed Tribunal proceedings against the builder.
On 14 July 2023, the builder filed Tribunal proceedings against the sub-contractor.
During the course of the proceedings, the parties resolved certain aspect of the dispute, and entered into a Deed of Release. However, there were 19 defect items that were not resolved.
After a procedural history that is unnecessary to set out in detail, the proceedings set down for a two-day hearing. That hearing occurred on 27 and 28 August 2024.
At the hearing, Mr Bambagiotti of Counsel appeared for the owners corporation. Mr Cameron, Solicitor, appeared for the builder. Mr Wathukarange of Counsel appeared for the developer. Ms Woods of Counsel appeared for the sub-contractor.
At the conclusion of the hearing, the Tribunal reserved its decision. A procedural timetable was set for the parties to file and serve written submissions and file an agreed transcript of the hearing on 27 and 28 August 2024.
That timetable was to conclude (subject to any application for extension) by 27 November 2024.
However, in early November 2024, the builder made an application to transfer its claim against the sub-contractor in Case Number 2023/00385628 to the Local Court under Clause 8 of Schedule 4 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). That application arose in circumstances where the sub-contractor had taken Local Court proceedings against the builder in October 2024 seeking damages for allegedly unpaid retention monies under various contracts, including the contract to perform the ventilation and air-conditioning system works that are part of the dispute in these Tribunal proceedings.
That transfer application required procedural directions, and was listed before the Tribunal on 16 December 2024. On 16 December 2024, Mr Bambagiotti of Counsel appeared for the owners corporation; Mr Wathukarage of Counsel appeared for the developer; Ms Woods of Counsel appeared for the sub-contractor; and Ms Dargan of Counsel appeared for the builder.
On 23 December 2024, the builder's transfer application was dismissed with written reasons provided. The Tribunal reserved the issue of costs of the transfer application, and extended the timetable for the filing and serving of written submissions and an agreed transcript to 5 February 2025.
All parties have filed and served written submissions, and an agreed transcript has been provided.

[76]

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).

(2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section.

(3) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made).

(4) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that are required under a contract to be supplied to or for the claimant on or by a specified date or within a specified period but which have not been so supplied if the date on which the claim was lodged is more than 3 years after the date on or by which the supply was required under the contract to be made or, if required to be made in instalments, the last date on which the supply was required to be made.

(5) The fact that a building claim arises out of a contract that also involves the sale of land does not prevent the Tribunal from hearing that building claim.

(6) The Tribunal does not have jurisdiction in respect of a building claim arising out of a building cover contract required to be entered into under this Act if the date on which the claim was lodged is more than 10 years after the date on which the residential building work the subject of the claim was completed.

(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).

(8) The Tribunal does not have jurisdiction in respect of a building claim relating to -

[107]

In Little v J & K Homes Pty Ltd [2017] NSWCATAP 84, at [28] the Appeal Panel stated:

Alternatively, s 48O(1)(c)(ii) is clearly intended to authorise the making of orders having wider operation than requiring the performance of building work by the builder. That provision would authorise an order that the builder cause specified work to be completed.

Further in Howe v NSW Coastal Homes Pty Ltd [2016] NSWCATAP 127 the Appeal Panel, at [21] commented upon the breadth of the discretion of the Tribunal when considering making orders pursuant to section 48O of the Act in terms:

Firstly, section 48O of the Home Building Act permits the Tribunal to make a work order to rectify any defective work, but does not require that the Tribunal make such an order. The exercise of that power is a matter of discretion and dependent upon the evidence and findings made by the Tribunal: see for example Jubian v Clark; Clark v Jubian [2016] NSWCATAP 56 at [43]. The power to make such an order against a party, as was made in this matter, relying upon section 48O, was undoubted by the plurality of the Court of Appeal in Italiano v Carbone & Ors [2005] NSWCA 177.

...

Subsection 48O(c)(ii) refers to an order to "do or perform" ..."any specified act, matter or thing", which appears to permit a wider category of actions which might be the subject of an order. Any such order would however have to be based upon some liability to undertake the action on the party who is required to comply. There would need to be some nexus between the necessity for action and a legally enforceable duty to act. There does not seem to be any such nexus involved in the terms of the Orders insofar as they require the builder to engage engineers to advise as to the means of rectification.

Although the Tribunal has wide powers under section 48O of the Act to "determine" a building claim by way of making an order that "specified work" or "specified services" be performed by the builder, an order that a builder engage experts and rectify work in accordance with the recommendations of such experts engaged by the builder should not be made unless the Tribunal identifies a proper basis for such an order. The Tribunal must clearly articulate how such an order is a practical and certain resolution of the dispute to put the homeowner in the position the homeowner should have been had the builder performed its obligations under the contract, particularly if the homeowner has not provided evidence in regards to the manner of rectification of the defect(s).

If it is considering such an order, rather than making an alternative order such as adjourning the proceedings so that the homeowner can obtain evidence regarding a scope of works to rectify the breach by the builder, the Tribunal must be very cautious to avoid any perception that the homeowner in Tribunal proceedings only has to prove that defective work by the builder has occurred, and that it then becomes the responsibility of the builder to establish how to rectify the defect, including the builder engaging expert evidence in that regard. The evidentiary onus remains on the homeowner to prove both breach (i.e. what is the defective work) and the method of rectification (so that the Tribunal can make an appropriate work order for rectification of the defective work; or if a work order is not the preferred outcome, assess damages according to the principles set out in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613). However, in the circumstances of this matter, there was some evidence (as discussed below) before the Tribunal regarding an appropriate scope of works to rectify the defect.

[116]

Both the builder and the sub-contractor adopt the position that the owners corporation's evidence is insufficient to prove breach of statutory warranty, notwithstanding Mr Jacotine agreed in the Joint Scott Schedule with Mr Warner on a large number of defect and method of rectification issues.
There was a significant amount of questioning of the experts at the hearing by the Solicitor for the builder and Counsel for the sub-contractor. Counsel for the developer did not question the experts to any great degree; nor addressed the issue of defects in its closing submissions other than in the context of its contractual indemnity claim, but the developer does not admit the building work is defective.
The mere fact that an expert gives an opinion does not mean the Tribunal must accept it. The principles regarding expert evidence in the Tribunal, including what weight (if any) should be given to such evidence, is discussed in Shakiri v Holland [2024] NSWCATAP 28 at [88]- [110] and BuildPlatinum Pty Limited v Micaleff [2021] NSWCATAP 129 at [71]- [75].
If a party makes a submission that the Tribunal should not accept the evidence of its own expert (in the context of a joint expert report, where, consistently with an expert's duty to the Tribunal, experts should in conclave discuss issues and attempt, if possible, to agree) that submission must be carefully considered. Rarely does a party make a submission that it resiles from the evidence of its own expert. However, as discussed previously, what is a breach of statutory warranty is a legal conclusion based on factual evidence.
There are 19 defect items pressed by the owners corporation. Those items (using the identification in the Joint Scott Schedule first, then the identification in the Scott Schedule prepared by Mr Warner) are as follows:
M1 (Item 6); M2 (Item 7); M3 (Item 8); M4 (Item 9); M6 (Item 11); M9 (Item 14); M11 (Item 16); M13 (Item 18): M14 (Item 19): M15.1 and 15.2 (Item 20); M16.1 and 16.2 (Item 21); M17 (Item 22); M19 (Item 24); M20 (Item 25): M22 (Item 27): M23 (Item 28): M24 (Item 29); M25.1 (Item 30) and M25.2 (Item 31).

[124]

Mr Marshall's reports do not comment on this defect item. His reports deal with the refrigeration pipe insulation and stair pressurisation relief defects.
As discussed previously, neither the builder (Ceerose) nor the developer (Zone Q) filed and served any expert reports.
At the hearing, Mr Warner was extensively questioned by Mr Cameron for the builder, and there were also questions from the owners corporation's Counsel. Most of the questions from Mr Cameron involved (a) the number of Lots inspected; (b) whether existing access was sufficient; and (c) the manufacturer's recommendations. Mr Warner was not questioned by Counsel for the developer or sub-contractor on this defect issue. Mr Jacotine was not questioned.
The builder's submission (paras [88]-[91] of its submissions in chief) are that the evidence of Mr Warner should not be accepted because (a) only 17 Lots were inspected; and (b) the scope of works was unclear as to whether a second access panel is required, or current access panels are to be replaced with a single large panel or an additional panel. The builder submits that if a work order is made, it should only be in respect of the 17 Lots that Mr Warner inspected.
The owners corporation submits that (a) there is nothing to indicate the ceilings are not common property, and so it is the responsibility and decision of the owners corporation to repair the ceilings. The builder and developer owe the statutory duties under s 18B of the HB Act in respect of the common property in the strata scheme. The comments about "consultation" with Lot owners are superfluous; (b) Mr Warner's inspection of the same defect in the ceiling of 17 Lots is a sufficient "sample" to conclude that the defects is systemic to all residential Lots. In that regard, the owners corporation cites authorities dealing with evidence by "sample" in building defect proceedings (The Owners-Strata Plan No 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612 and The Owners-Strata Plan No 66375 v Suncorp Metway Insurance Ltd (No 2) [2017] NSWSC 739).
The owners corporation further submits that there is clear evidence of breach of the statutory warranties under s 18B of the HB Act; and the scope of works identified by Mr Warner (and agreed to by Mr Jacotine) is sufficiently detailed.
The sub-contractor submits generally (in respect of all defects identified by Mr Warner) at paragraph [71] of its closing submissions that the evidence of Mr Warner should be discounted by reason of the limited number of parts of the building inspected, and that he "incorrectly" assumed there were "no alternative/performance based solutions associated with the ventilation, air-conditioning or stair pressurisation systems". The sub-contractor does not make any specific submission about alleged defect M1, which is unsurprising as the builder, in its closing submissions, makes clear that it is not seeking any work order in respect of this item against the sub-contractor, as the sub-contractor did not install the ceilings or perform other work relevant to alleged defect M1.
The Tribunal is satisfied that the evidence establishes breach of statutory warranties under s 18B of the HB Act as set out in the evidence of Mr Warner (and agreed with by Mr Jacotine). Access to the FCU is inadequate. The works do not comply with legislative requirements (both under the Building Code of Australia, and Public Health Act 2010 (NSW)). Further, the work has not been performed with due care and skill because the builder had not followed the manufacturer's recommendations regarding an appropriate location of an access panel beneath the FCU.
The Tribunal is satisfied that the evidence of Mr Warner (with whom Mr Jacotine agreed) established breach of the relevant statutory warranties under s 18B of the HB Act.
The builder argues that because Mr Warner only inspected 17 Lots, the evidence is insufficient to establish a defect beyond those particular ceilings. In The Owners-Strata Plan No 62930 v Kell & Rigby Holdings Pty Ltd [2010] NSWSC 612, Ward J was not satisfied that the evidence was sufficient to infer the absence of water stops in certain bathrooms of a strata building were also absent in other bathrooms that had not been inspected by the expert (at [166]-[167]). However, Ball J stated in The Owners-Strata Plan No 66375 v Suncorp Metway Insurance Ltd (No 2) [2017] NSWSC 739 at [80]:

[130]

It is clear from the evidence of Mr Warner that he based his opinion on both the ceilings he inspected and the plans. From that, he believed that the same method of construction was used in all of the ceilings of the residences of the strata building. Considering the number of Lots he inspected, that is a logical conclusion to draw, and the Tribunal is satisfied that he is appropriately experienced and qualified to express that view. In re-examination by the owners corporation's Counsel (T:28/8/24:P13) Mr Warner stated, in substance (although part of his answer was not transcribable) that installation of the FCU and position of the access panel was consistent.
Mr Warner also explained in evidence why the FCU's needed to be serviced, and the potential problems if they were not serviced. He also explained why he believed that a large access panel was necessary. Mr Warner made clear that he was proposing a second panel be constructed in the ceiling, not an enlargement of the existing panel (T:28/8/24:P8:L40-46).
The builder provided no evidence that the access panels had been constructed in different locations in the ceilings of the residential Lots.
The builder submits that it is not clear from Mr Warner's evidence whether an additional access panels are required, or enlargement of the existing panels. That issue was clarified in oral evidence at the hearing. Mr Warner believes a sufficiently large additional access panel needs to be installed below the FCU, not an enlargement of the existing panel, which is located too far away from the FCU.
The builder submits (and Mr Warner was questioned on this issue) that it is "possible" to service the FCU's via the existing panels. Mr Warner's evidence (both in his report and at the hearing) explains why the works are defective, even if it is theoretically possible to access the FCU's. The Tribunal does not accept the builder's submission on this issue.
Mr Warner explained in his report why the relevant works did not require a prior design by a suitably qualified person under the DBP Act. There is no evidence proffered by the builder, the sub-contractor or the developer that a prior design is required.
The Tribunal is satisfied that the ceilings are common property (see, for example, the discussion of the distinction between Lot property and common property in The Owners - Strata Plan 99960 v SPS Building Contractors Pty Ltd [2024] NSWSC 687 at [110] and Owers-Brown v The Owners-Strata Plan No 92562; Nakkan v The Owners-Strata Plan No 92562 [2025] NSWCATCD 67 at [306]- [323]).
The Tribunal is satisfied that the access panels installed by the builder in all of the ceilings of the residential Lots are defective and a breach of the statutory warranties under s 18(1)(a) (because a builder exercising due care and skill would follow the manufacturer's recommendations); and s 18B(1)(c) (by failing to comply with applicable Australian Standards and legislative requirements).
The Tribunal is satisfied that the scope of works contained in the Joint Scott Schedule "Warner rectification concept" is necessary to achieve compliance with the contract, and a reasonable course to adopt.
In respect of the scope of works proposed by Mr Warner, the Tribunal accepts that it could have been expressed in a more detailed manner. The scope of works states the "rectification concept for this defect is likely to include..." (emphasis added) and the scope of works also uses the phrase "where necessary" on a number of occasions.
The importance of a scope of works being clear and detailed was discussed in Catapult Constructions, and has also been discussed (in the context of remedial orders against an owners corporation to repair common property under the Strata Schemes Management Act 2015 (NSW)) by Parker J in Glenquarry Park Investments Pty Ltd v Hegyesi [ 2019] NSWSC 425. Remedial orders need to be clear, unambiguous and certain.
However, that legal test is not a test of perfection. The critical issue is whether the scope of works is sufficiently clear. The Tribunal is satisfied that the scope of works contained in Item M1 in Mr Warner's report and the Joint Scott Schedule is sufficiently clear to make an appropriate remedial order under s 48O of the HB Act.

[149]

At the hearing on 28 August 2024, there was extensive questioning of the experts on alleged defect item M2. The questioning covers 46 pages of transcript (T:28/8/24:P13-49).
All experts agreed that if a "performance solution" could not be developed, the pipe insulation that was non-compliant with BCA requirements would need to be removed and replaced with compliant insulation. Mr Warner stated that the pipe insulation was a systemic defect, and his investigations were sufficient to conclude that the same issue existed throughout the building. Mr Marshall elaborated upon what he meant by "performance solution," which may be satisfied by further testing and certification of the existing pipe insulation, that may involve minimal further work.
According to Mr Marshall, testing may involve the taking of samples, sending them to be tested and then certified. That process may cost approximately $20,000 and take 3-6 months. The Solicitor for the builder also questioned Mr Warner extensively about the mixture of different types of pipe insulation he observed, and whether if it was found that Black Pair Coil was not a defect by White Pair Coil was, how it could be ascertained how much White Pair Coil there was in the building. Mr Warner accepted that he would have to perform further investigations.
None of the experts were questioned about Mr Warner's opinion in his expert report and in the Joint Scott Schedule that a design would have to be obtained from an appropriately qualified person under the DBP Act before the pipe insulation in the building was removed and replaced.
The owners corporation's economical closing submissions, and submissions in reply, are that all of the experts agree there is a defect and in circumstances where no "performance solution" beyond speculation, the pipe insulation should be replaced throughout the building in accordance with Mr Warner's scope of works. The owners corporation emphasises the comment in Tabcorp Holdings that a method of rectification that is necessary to achieve compliance with the contract will only not be regarded as a reasonable course to adopt in "fairly exceptional circumstances" and there were no such circumstances.
The submission of the builder is that the evidence about defect was, essentially, that White Pair Coil was non-compliant with the BCA; Black "Standard" Pair Coil may, or may not, be compliant (subject to further testing); K-Flex ST was BCA compliant; and Black Armaflex was BCA compliant.
The builder submits that the evidence is insufficient to be satisfied where the White Pair Coil is located throughout the building; and accordingly it would be excessive and inappropriate to make an order that the pipe insulation throughout the building be replaced.
The builder concedes that there is evidence of White Pair Coil in "apartments 109 and 306" and proposes (at paragraph [130]) a scope of works that involves replacement of the White Pair Coil. The builder asserts that any order that it rectify should include that the sub-contractor is "also required to carry out that work." The scope of works does not refer to any evidence of the experts, but is a submission of the builder.
The sub-contractor submits that the Tribunal should make factual findings as set out in paragraph [75] (a)-(e) of its submissions. In essence, those proposed findings are that there are 4 types of pipe insulation used in the strata building. Of those, K-Flex and Armaflex are BCA compliant. Standard Pair Coil (White or Black) is BCA compliant for use in dwellings, but not for use in Class 2 buildings such as this dwelling as there is insufficient evidence that it passes the AS 1530.3:1999 test required for use in Class 2 buildings. The owners corporation has not provided evidence identifying the brand or manufacturer of the Standard Pair Coil. There is a sprinkler system in the building which will assist to supress any fire. Mr Marshall is "confident" a performance solution can be developed.
The sub-contractor submits as follows (at paras [79]-[80] of submissions in chief):

[152]

(1) There is a mixture of types of pipe insulation in the building, as set out in the reports of Mr Warner and Mr Marshall.

(2) Of those types of pipe insulation Standard Pair Coil (both Black and White) does not meet Australian Standards, because it has not been tested and certified as appropriate for Class 2 buildings. The Tribunal does not accept the submission of the builder that it is only White Standard Pair Coil that is non-compliant with the BCA because it has not been tested. That is not a fair reflection of the evidence of Mr Warner in his report, nor what he said at the hearing (T:28/8/24:L15-17; T:28/8/24:P37:L42-45). The evidence of Mr Jacotine and Mr Marshall is consistent with the evidence of Mr Warner that Standard Pair Coil (whether White or Black) does not comply with the BCA, rather than a distinction being drawn between compliant "Black" and non-compliant "White." That is sufficient to establish breach of statutory warranties under s 18B(1)(c) of the HB Act.

(3) There is a further defect in the pipe insulation where K-Flex insulation of insufficient thickness (e.g. less than 19mm thickness for a 15 mm pipe) has been used. That is also failure to comply with the BCA (because the Tribunal accepts the evidence of Mr Warner, which Mr Jacotine agrees with) although the insulation has been tested, it is of insufficient thickness to comply with the applicable Australian Standard.

(4) In respect of both the areas of pipe insulation where Standard Pair Coil and insufficiently thick K-Flex have been used, the work has also not been performed with due care and skill as a builder exercising due care and skill would have ensured that it used pipe insulation material that had been tested and was suitably compliant with the BCA (s 18B(1)(a)) of the HB Act.

(5) The defect is a systemic defect throughout the building. The Tribunal accepts the evidence of Mr Warner in this regard, for equivalent reasons that were expressed in respect of Item M1.

(6) In respect of Standard Pair Coil insulation, there is a mixture of White and Black. Even if the Tribunal was satisfied that only White was non-compliant with the BCA, the evidence does not establish that the mixing of insulation could be easily separated such that one type of insulation removed. If there was removal, it would involve both White and Black.

(7) All experts agree that there are further testing and potential works that may achieve a "performance solution" with the BCA in respect of the Standard Pair Coil. However, the Tribunal does not accept the submission of the sub-contractor that the "performance solution" can be easily and clearly defined.

[153]

The Tribunal accepts the owners corporation has proved there is a defect in respect of Item M2. However, proving a defect is not, of itself, sufficient to make a work order under s 48O of the HB Act. As expressed previously, orders need to be clear, certain, and unambiguous so that the party ordered to do the work knows what needs to be done to comply with the order. Making orders that are vague, ambiguous or overly conditional on various matters is not appropriate.
There are license ramifications under the HB Act on a builder if Tribunal orders are not complied with. Under Sch. 4 Cl. 8 of the NCAT Act, a party in whose favour a work order is made may renew proceedings if the order has not been complied with within 12 months from the date that the order is to be complied with. Contrary to various submissions of some of the parties that the Tribunal needs to make an order granting "leave" to renew, the right to renew is set out in statute (although the Tribunal can order a renewal period of less than 12 months if it regards it as appropriate).
The legal principles regarding certainty of work orders referred to by Parker J in Glenquarry under ss 106/232 of the SSM Act are also applicable to work orders under s 48O of the HB Act (In-Style Developments at [323]-[324]). The importance of finality and certainty of orders has also been referred to in the context of injunctive orders e.g. ACCC v Dataline.Net.Au Pty [2007] FCAFC 146; (2007) 244 ALR 300 at [104]- [114].
When parties renew proceedings, a critical issue to be determined is whether or not the orders of the Tribunal have been complied with, which then leads to the further enquiry of (if so) what are appropriate orders to make in the renewal proceedings (Blessed Sydney Constructions Pty Ltd v Vasudevan [2018] NSWCATAP 98; Minifie v Maxwell [2020] NSWCATAP 30; Mania v NSW Land and Housing Corporation [2022] NSWCATAP 376). If orders are vague, uncertain and overly conditional, the parties may be led into a quagmire of further litigation as to whether or not the orders have been complied with.
In Catapult Constructions, the Appeal Panel (at [68]) was prepared to exercise its appeal powers under s 81 of the NCAT Act to identify a work order, in circumstances where the appeal succeed (because the Member had erroneously ordered a builder to obtain expert evidence to rectify a found defect, and perform whatever rectification work was identified by the expert). However, that outcome was dependent upon the evidence in the case. There was sufficient evidence for a work order to be identified, consistent with the principles of certainty and precision.
The Tribunal accepts that there may be situations where there is sufficient evidence to make a work order for rectification even if the evidence comes from different sources. However, fundamental principles apply. The Tribunal can only make orders based on their being sufficient evidence to make appropriate findings, and it is the party who seeks the order who bears the onus of persuading the Tribunal an appropriate order should be made. The orders need to be sufficiently clear, certain and unambiguous. The Tribunal cannot make orders using its own intuition in the absence of sufficient evidence. There must be sufficient evidence to support the order being made.
There are significant flaws in the submissions of the parties in respect of rectification of the defect.
In respect of the owners corporation (who is the party seeking the order), Mr Warner states that a design by an appropriately qualified person under the DBP Act is required before rectification work is performed, and the work needs to comply with that design. Mr Warner does not provide such a design, presumably because he is not suitably qualified under the DBP Act.
The owners corporation is inviting the Tribunal to make an order that is speculative and contingent upon a design of which there is no evidence. The owners corporation could have obtained such a design by a duly qualified person and provided it in evidence together with a sufficiently detailed scope of works for the removal and replacement of pipe insulation. It has failed to do so.
The limited scope of works proposed by the builder (a) does not contain a DBP Act design; and (b) is not based on any evidence in respect of any evidence provided by the builder by way of expert evidence; or put to the other experts in cross examination at the hearing. It is a submission not founded in evidence that was before the Tribunal.
In respect of the "performance solution" proffered by the sub-contractor, that contains even more contingencies and uncertainties as the lack of a DBP Act design by the owners corporation. The Tribunal does not accept that it can form the basis of sufficiently clear, certain and unambiguous orders. Further, Mr Marshall did not provide any substantial details of the proposed "performance solution" in his reports. He provided some oral evidence at the hearing about what would occur, but that evidence does not overcome the lack of a detailed scope. However, considering the amount of contingent events involved (e.g. testing; certification; potential further works) a sufficiently detailed scope of works may not have been achievable in any event.
The Tribunal is not satisfied that it can make a work order under s 48O of the HB Act as sought by the owners corporation (i.e. the complete removal and replacement of pipe insulation) as set out in the scope of works of Mr Warner (and further set out in the Joint Scott Schedule) in the absence of a design from a suitably qualified designer under the DBP Act which forms the basis of a scope of works to remove and replace pipe insulation.
Had there been such evidence, the Tribunal would have found that the proposed method of rectification of Mr Warner was necessary to achieve compliance with the contract and a reasonable course to adopt based on the current evidence, in circumstances where the "performance solution" proposed by Mr Marshall (and which Mr Warner and Mr Jacotine agree may theoretically resolve the defect issue) is more uncertain and speculative than removing and replacing the pipe insulation.
The Tribunal has the power to make orders that are conditional (s 58 NCAT Act).
However, for reasons previously expressed, the absence of a DBP Act compliant design is fatal to the orders sought by the owners corporation for the rectification of this defect.
There is also no utility in making an order that the builder and/or developer and/or sub-contractor obtain an expert report from a designer under the DBP Act. That order will not resolve the dispute. The only way that order would make sense is for the Tribunal to further order that the rectification work be done in accordance with that design. For reasons previously expressed, that is inappropriate. These are not proceedings under the SSM Act, where an owners corporation has an ongoing duty to keep and maintain common property in a reasonable state of repair. In that situation, a singular order to obtain an expert report may have utility, because of the nature of the owners corporation's ongoing duty under s 106 of the SSM Act. Here, the duty arises from s 18B of the HB Act, and the remedial orders are under s 48O of the HB Act.
The Tribunal has a discretion to adjourn proceedings to allow further evidence to be obtained, or to make a limited work order under s 48O of the HB Act (such as the builder and/or developer obtaining a design under the DBP Act to address the rectification of the defect). However, that is not appropriate. The owners corporation made no application for an adjournment; or for the proceedings to be heard in stages with the builder and/or developer being ordered obtain a design under the DBP Act, and the matter to then be listed for further hearing. As no application was made, the builder and developer have not addressed this issue. In any event, to hear a matter in stages, while possible (see the discussion in Catapult Constructions; and The Owners Strata Plan 94800 v Aushome Constructions Pty Ltd [2025] NSWDC 143) may be inconsistent with ss 36(1) and (3) of the NCAT Act, in circumstances where the owners corporation had a reasonable opportunity to obtain such evidence.
The Tribunal is also not satisfied that it is appropriate to make the work order proposed by the builder and the sub-contractor as alternatives for removing and replacing the pipe insulation, for reasons previously expressed.
This defect item is dismissed.

[161]

The owners corporation, in its written submissions in chief, presses the defect be rectified in accordance with the scope of works of Mr Warner, because the "experts agree on the existence of the defect."
The builder submits (at paragraphs [132]-[142]) of its written submissions in chief that Mr Warner's opinion is flawed because it is based on the manufacturer's manual for FXMQ models, and the plans and specifications for the building refer to FSDQ and FXSQ models. The builder submits that AS366.1 is to be read in conjunction with the manufacturer's recommendations, and the Tribunal should not be satisfied the drain pipes to the FCUs fails to comply with the applicable standard.
The builder submits that if a work order is made, it should "include the subcontractor and the builder."
The subcontractor submits in its written submissions that the "technical defect" is not causing any loss to the owners and the rectification would be unnecessarily disruptive and unlikely to provide any benefit to the owners corporation, echoing the comments in the Joint Scott Schedule of Mr Warner and Mr Jacotine.
In written submissions in reply, the owners corporation submits that it is a "strange" submission that defect not be the subject of a remedy, and there is no "contradictory evidence to the method of rectification proposed by Mr Warner in his report.
The Tribunal is satisfied that there is a defect (i.e. breach of s 18B(1) of the HB Act) in respect of the FXMQ FCUs. Mr Jacotine does not disagree with Mr Warner's opinion. It is not clearly established that this defect extends to the FXDQ units.
However, the Tribunal is not satisfied that a work order should be made under s 48O of the HB Act in the terms set out at paragraph [208] of the Warner report. The owners corporation bears the onus of establishing that (a) the method or rectification is necessary to achieve compliance with the contract and a reasonable course to adopt; and (b) that the remedial orders sought are sufficiently clear, certain and unambiguous.
The evidence of Mr Warner in his report does not clearly refer to the plans and specifications and explain which models of FCU's are located in the building. His scope of works refers to changing the pipework on all FCU's. Both he and Mr Jacotine accept that the pipework of 20mm internal diameter is performing adequately, and the there is no clear evidence of any deficiencies in performance, or likely (as compared to possible) future problems if the current pipework remains in place.
As the authorities referred to by Nixon J in Lipari, a proposed method of rectification "would be unreasonable if it was out of all proportion to the achievement of that objective or to the benefit to be obtained therefrom." In this matter, considering the evidence of Mr Warner and Mr Jacotine (particularly the oral evidence of Mr Warner at the hearing and the comments in the Joint Scott Schedule of Mr Warner and Mr Jacotine), the "technical defect" of some of the FCU's having internal diameter drain pipework that does not strictly comply with applicable Australian Standards, the proposed method of rectification is out of all proportion to the benefit to be obtained.
This defect item is dismissed.

[167]

The Joint Scott Schedule then sets out an agreed scope of works between Mr Warner and Mr Jacotine based on their agreement at the conclave (under the heading "rectification concept") and, further, a diagram to describe the proposed works.
At the hearing, there was only very brief questioning of Mr Warner on this alleged defect item (T:28/8/24 pp 52-53). Mr Warner explained why he believe the works were non-compliant with Australian Standards.
The builder's Solicitor briefly questioned Mr Warner about having the works inspected by a hydraulic engineer.
The builder's closing submissions assert that Mr Warner "can't determine whether this is a defect or not" because he was not a hydraulic engineer, and the issue needed to be assessed by a hydraulic engineer.
The Tribunal does not accept the builder's submission that Mr Warner had not identified a defect, or was not appropriately qualified to address the defect issue. Mr Warner clearly explained why the works did not comply with Australian Standards. His comment regarding the owners corporation possibly engaging a hydraulic engineer was distinct from his opinion about the works non complying with Australian Standards. It was an additional suggestion, but his opinion was not predicated on what a hydraulic engineer may, or may not, opine on this defect item.
As discussed previously, Mr Jacotine agreed with Mr Warner on the issue of defect and method of rectification. The builder's Solicitor did not question Mr Jacotine on this defect item.
The Tribunal is satisfied that the works breach the statutory warranty in s 18B(1)(c) of the HB Act because they do not comply with applicable Australian Standards. The Tribunal is satisfied the defect is systemic throughout the building.
In respect of the appropriate scope of works to rectify, the Tribunal does not accept the owners corporation's brief submission that the Tribunal should find the scope of works in Mr Warner's report is necessary to achieve compliance with the contract and a reasonable course to adopt. That submission does not address the agreement reached by Mr Warner and Mr Jacotine in their conclave discussions (as reflected in the Joint Scott Schedule) of a different scope of works that will achieve compliance with the contract.
The Tribunal is satisfied that the scope of works jointly agreed by Mr Warner and Mr Jacotine in the Joint Scott Schedule is sufficiently detailed to support a work order under s 48O of the HB Act. The Tribunal is satisfied that the scope of works identified in the columns "Agree/Disagree" and "Comments" in the Joint Scott Schedule is necessary to achieve compliance with the contract and a reasonable course to adopt.
The Tribunal does not make any order that there be further investigation by a hydraulic engineer because (a) it is not necessary to rectify the defect and a reasonable course to adopt; and (b) in any event, such an order would be too uncertain.

[173]

At the hearing (T:28/8/24:P53-57), the builder's Solicitor briefly questioned Mr Warner on this defect item. Mr Warner agreed that a "young nimble person with long arms" could install the missing draw bands without removing the ceiling. Mr Jacotine believed the bands could be installed without removing the ceiling. Mr Warner again explained that he believed it was a systemic defect because there were no bands on the ductwork of the units he inspected.
Mr Warner does not assert a DBP Act design is required before rectification work can be performed.
The owners corporation submits that this is a systemic defect that should be rectified according to the agreed scope of works. The builder submits that there is a defect, but (a) there is no evidence it goes beyond the units inspected by Mr Warner; and (b) the experts only agree to engage an investigation, which is too uncertain to form the basis of a work order. The builder submits that no removal of ceilings is required and proposes (at paragraph [156]) a scope of works that only involves installing draw bands on the ductwork of exhaust fans in four units and does not involve removal of ceilings.
The sub-contractor confines its submissions to the defect not being a "major defect."
The Tribunal is satisfied that there is breach of the statutory warranty in s 18B(1)(c) of the HB Act. The Tribunal is satisfied that there is sufficient evidence that it is systemic defect. The Tribunal does not accept the submission that the defect is only in respect of the units inspected by Mr Warner.
The Tribunal does not accept the submission of the builder that a work order cannot be made because it is possible, upon further inspection or investigation, that some of the ductwork has draw bands. There is sufficient evidence to find there is a defect, and that it is systemic. If, during rectification, it is found there are draw bands, all that will mean is the work does not have to be performed because there is nothing to rectify and so the work order has been complied with. That is an entirely different issue to a rectification scope of works that is entirely dependent upon a design being created pursuant to the DBP Act, and then the scope of work needing to be based on that design.
Regarding the issue of removal of ceilings, this issue is of no avail, because the Tribunal has previously identified that parts of ceilings need to be removed for rectification work. In respect of this defect item, the Tribunal accepts the rectification work can be done without removal of ceilings. However, as the Tribunal's orders will involve removal of ceilings, there is no reason this rectification work cannot be performed concurrently.
Accordingly, the Tribunal is satisfied the appropriate scope of works to rectify the defect is identified in the Joint Scott Schedule under Item M6 (pp 1455-1456 of the Joint Tender Bundle).

[185]

The sub-contractor also submits that there is insufficient evidence to establish breach of the statutory warranties; and even if a defect is established it is not a "major defect" under s 18E of the HB Act.
There are two critical factual issues in respect of this defect item.
The first is whether there is sufficient factual evidence for the Tribunal to be satisfied that it can make a factual finding that balancing dampers have not been installed. Both experts agree that if they have not been installed they are a defect (which will constitute a breach of the statutory warranties under s 18B of the HB Act) because there is a failure to comply with the building plans, or in the alternative, failure to comply with applicable Australian Standards (ss 18B(1)(a) and 18B(1)(c) of the HB Act).
However, to make the factual finding that balancing dampers have not been installed, the Tribunal must be persuaded by the evidence, beyond mere conjecture. Neither Mr Warner or Mr Jacotine removed grilles and conducted an inspection. Although Mr Warner explains his opinion on the basis of his experience of where a damper is located and his ability to see it through a grille, Mr Jacotine believed it was possible the dampers were there but could not be seen. Neither experts' evidence on this issue is not irrational or illogical. There is simply a disagreement that became apparent at during evidence at the hearing (notwithstanding the reference to the "defect" being "agreed" in the Joint Scott Schedule) and uncertainty.
The Tribunal not persuaded that there is sufficient factual evidence for the Tribunal to make a finding that the balancing dampers have not been installed.
The second issue is that a design by a suitably qualified person under the DBP Act is required before rectification work is performed. The Tribunal has dealt with the appliable legal principles previously in this decision. Those principles do not require repetition. The owners corporation did not provide a design under the DBP Act. Even if the Tribunal was satisfied that there was a defect established that constitutes a breach of the statutory warranties under s 18B of the HB Act, the absence of a DBP Act design means the Tribunal is not satisfied that it is appropriate to make a work order under s 48O of the HB Act to reflect the scope of works set out in the Joint Scott Schdule.
This defect item is dismissed.

[187]

It is unnecessary to set out the evidence on this defect item in any great detail, as there is little or no disagreement between the experts, and the builder's submissions at paragraphs [179]-[184] do not dispute that where mechanical pipe insulation is exposed to weather it should be covered. The builder submits that there is only photographic evidence of one area exposed to sunlight, and so any scope of works should be limited to that area.
The Joint Scott Schedule contains an agreed "Rectification concept" (pp 1458-1459 of the Joint Tender Bundle).
The builder also does not press this defect item against the sub-contractor.
Mr Warner deals with this defect item at paragraphs [365]-[386] of his report.
However, the difficulty that none of the parties legal practitioner have addressed is that Mr Warner (at paragraph [385]) states that a design is required by a suitably qualified designer under the DBP Act. No such design has been provided. The scope of works to rectify is dependent on there being such a design, on the evidence of Mr Warner.
Notwithstanding that the builder has not raised the requirement of a design under the DBP Act, it is still part of the evidence. As discussed previously, it is the owners corporation who bears the onus of proving not only the defect, but the appropriate scope of works to rectify. The Tribunal cannot simply overlook the owners corporation's expert referring to their needing to be a design under the DBP Act, and the absence of the owners corporation providing such a design.
Had a design under the DBP Act been provided and evidence that the proposed scope of works accorded with such a design, the Tribunal would have found a breach of statutory warranties under s 18B of the HB Act and that a work order should be made in accordance with the "Rectification concept" identified in the Joint Scott Schedule. The builder's submission that only one area was demonstrated in photographic evidence would not have been accepted, by reason of weight of the other evidence in Mr Warner's report and the Joint Scott Schedule.
However, in the absence of a design under the DBP Act, this defect item is dismissed.

[195]

Mr Warner analyses this alleged defect at paragraphs [458]-[472] of his report.
According to Mr Warner, based on his review of the Aerow drawings (plans), there is "no provision for operation of the mechanical ventilation system for the fire hydrant and sprinkler pump room during loss of electrical power."
Mr Warner states that in his experience, diesel motor driven pumps are used for fire pumps, so the pumps continue to operate during loss of electrical power during a fire and water for firefighting purposes continues to be available.
According to Mr Warner, the "design" of the room is deficient, because the installed fan relies on electrical power, and if there was a blackout/loss of electrical power "the fan would not operate to assist in controlling the room temperature."
Mr Warner asserts that the builder has not performed work with due care and skill because there was no installation of a backup diesel motor; the design is not "in accordance with the implied requirements for the system;" and the ventilation system has "not been designed to be reasonably fit for purpose."
Mr Warner also asserts that that the failure to install a backup diesel motor is a breach of s 37 of the DBP Act, because the works have not been done with due care and skill. However, s 37 of the DBP Act refers to the duty of care of a person who performs construction work to use reasonable care to avoid economic loss caused by defects.
The type of duty and cause of action that provision creates was discussed in The Owners-Strata Plan No 84674 v Pafburn Pty Ltd [2023] NSWCA 301; and Pafburn Pty Ltd v The Owners-Strata Plan No 84674 [2024] HCA 49 (although the focus of the High Court decision was whether the duty under s 37 of the DBP Act was delegable; and whether the proportionate liability provisions of under Part 4 of the Civil Liability Act 2002 (NSW) applied).
However, the type of duty imposed by s 37 of the DBP Act is not the obligation to comply with any law pursuant to the statutory warranty under s 18B(1)(c) of the HB Act. The evidence of Mr Warner does not identify any provision of Australian Standards; or the Building Code of Australia, or any other legislative requirement other than the duty identified in s 37 of the DBP Act.
Mr Warner states as follows (at paragraphs [468]-[470] and [472]):

[201]

The questioning of the experts at the hearing is at T:28/8/24:P66-76.
In summary, both experts agreed there was no applicable standard under Australian Standards/BCA that had not been complied with in respect of the failure to install a backup power source for the fan.
Mr Jacotine was questioned by the owners corporation's Counsel. Mr Jacotine stated it was "not necessarily a defect" and that although if there is a fire and failure of the power supply to the building, you "ideally" want the diesel pump to keep running." However, it was not a requirement to "design for that kind of catastrophic event." Mr Jacotine agreed it was possible that if diesel pump was running and the fan was not operating that it could reach a point where the diesel pump stopped operating due to an increase in temperature in the room, but pointed out that, at some point in time, the fire brigade would arrive. Mr Jacotine also stated that if the fan did not work, because of ventilation in the room "the operation of the pump may not necessarily be compromised by that, and that is something you can only do by actually doing a test."
Mr Jacotine agreed it was possible that an electrical power failure could, through heat generated by the operation of the pump, cause the pump to fail, and then the fire hydrant system in the building to fail.
Mr Warner was questioned by the builder's Solicitor. Mr Warner was asked about the comments in the Joint Scott Schedule about further testing, and the possibility there that there was sufficient thermal intertia of the room and it may not be necessary to provide mechanical ventilation. Mr Warner stated he had the expertise and experience to perform such testing, but had not been instructed to do so.
The owners corporation's economical written submission in chief (p 7) state that the experts agreed "there should be more testing" but "did not contradict Mr Warner's findings". It was submitted that Mr Jacotine's evidence, and the comments in the Joint Scott Schedule were "equivocal" and the Tribunal should order rectification work be performed as set out in the scope at paragraph [472] of Mr Warner's report.
The builder submits (pp 26-27 of the written submissions) that the evidence is not sufficient to prove breach of statutory warranty; and that even if breach is proven, the Tribunal should decline to make a work order because the experts agree that further testing should occur. Additionally, the builder is critical of the scope of works proposed by Mr Warner because it involves creation of an open air louvred wall between the diesel pump room and the carpark, which would create "potential new BCA/fire non-compliance issues" and development approval by the Local Council."
In respect of that last submission, the Tribunal notes that Mr Warner was not questioned by the builder's Solicitor about his proposed scope of works at paragraph [472] of his report and that, if adopted, it would create potential further fire safety building issues or require Council approval.
In very brief reply submissions, the owners corporation states the builder's arguments do not undermine Mr Warner's opinion or Mr Warner's proposed scope of works.
The sub-contractor submits (pp 18-20 of written submissions) that there is insufficient evidence to establish a breach of statutory warranty under s 18B of the HB Act, and it is not a "major defect" under s 18E of the HB Act in any event, such that no work order can be made against the sub-contractor.
It is clear that there is no breach of any Australian Standard/BCA requirement (s 18B(1)(c) of the HB Act), nor any failure to construct according to the plans and specifications (s 18B(1)(a) of the HB Act).
There are three issues. Firstly, whether there is sufficient evidence that any other of the statutory warranties under s 18B(1) of the HB Act have been breached. Secondly, if so, whether there is sufficient evidence to find what work is necessary and a reasonable course to adopt to rectify the defect. Thirdly, whether there is sufficient evidence to make an appropriately clear, unambiguous and certain work order .
Although Mr Warner referred to the builder not having performed the work with "due diligence" in oral evidence at the hearing, it is clear from his evidence that the critical statutory warranty is whether the work was performed with "due care and skill" under s 18B(1)(a) or work, and materials used in the work, is not "reasonably fit for the "specified purpose or result" under s 18B(1)(f). "Due diligence" involves the period taken to complete the work, and there is no evidence that the builder took an unreasonably long period of time to complete. Mr Warner
In respect of the work or materials being reasonably fit for specified purpose or result, the statutory warranty in s 18B(1)(f) that is dependent upon the person for whom the work is being done making know to the builder the particular purpose or result desired to be achieved. No such evidence was provided by the owners corporation. No breach of s 18B(1)(f) is established.
The relevant potential statutory warranty enlivened is s 18B(1)(a) of the HB Act. The Tribunal needs to be satisfied a builder exercising reasonable care and skill would have installed the backup power source for the fan to deal with circumstances where there may be no electricity to the fan. As discussed previously, the BCA does not require such a backup power source, nor was indicated on the plans. The applicable test is not whether it would have been optimal to install a backup power source, but rather whether a builder exercising due care and skill in all the circumstances would have done so. Considering that:

[219]

The owners corporation's reply submissions to the builder's submissions (at paragraphs [40]-[42]) are simply that (a) what is a "habitable room" involves a "common sense" interpretation of the BCA; and (b) the builder's arguments regarding both interpretation of the BCA and that the rectification works proposed by Mr Warner are too vague and uncertain are "unnecessarily pedantic, are not persuasive, and do not contradict the tenor of the evidence". No specific submission is made in reply as to whether the water meter room alleged defect is withdrawn, and the owners corporation's written submissions in chief and oral submissions at the hearing contained ambiguity about whether or not the meter room alleged defect was being withdrawn. However, for reasons that are later expressed, whether or not the meter room defect was withdrawn does not affect the outcome.
Neither the sub-contractor not the developer make any specific submissions about defect Item 15.1 and 15.2.
The Tribunal is satisfied that the interpretation of Mr Warner that the rooms are "any other room occupied by a person for any purpose" under BCA F4.5 in circumstances where they are rooms that may be occupied by a person for a brief period of time, such as to store items (or retrieve stored items) and maintain plant and equipment is the correct interpretation of the BCA. That is a logical and rational interpretation of the words of the standard, assessed objectively. When Mr Jacotine's evidence in the Joint Scott Schedule and at the hearing is assessed, he does not clearly disagree with Mr Warner's interpretation. Mr Jacotine stated he would allow for ventilation of a storeroom, and he agreed with Mr Warner there was a defect.
The Tribunal is satisfied that the storage room and plant room have been constructed by the builder in a manner that is non-compliant with applicable standards under the BCA (and Australian Standards). Accordingly, the Tribunal is satisfied that the statutory warranty under s 18B(1)(c) of the HB Act has been breached. There is insufficient evidence to establish any other breach of statutory warranty under s 18B(1) of the HB Act.
However, the Tribunal is not satisfied that the owners corporation have established a certain and unambiguous method of rectification. The proposed scope of works that Mr Warner identified (and the modified scope in the Joint Scott Schedule) is dependent upon a registered designer preparing a design under the DBP Act. The brief scope of works that will likely be "included" after a design is performed is not a scope of works that can for the basis of an order under s 48O of the HB Act. Again, the owners corporation have only provided evidence that a design by an appropriately qualified designer needs to be prepared under the DBP Act as the starting point to then prepare a scope of works. The Tribunal has identified why it cannot simply overlook the fact that the owners corporation's own expert says a design under the DBP Act is required, yet the owners corporation have failed to provide evidence of such a design, or evidence that any design will not affect the proposed scope of works postulated in the expert evidence.
The owners corporation's dismissal of this issue in submissions as "unnecessarily pedantic" is rejected.
This defect item is dismissed.

[227]

Mr Warner asserts that the builder has breached the statutory warranties because the work has not been done with due care and skill; and does not comply with statutory requirements under the PH Act and Australian Standards. Mr Warner again comments that the work was not performed with "due diligence," but for the same reasons as previously sets out the Tribunal does not accept there was a breach of the statutory warranty in respect of the work being performed with due diligence.
Mr Warner also makes similar comments about the builder breaching s 37 of the DBP Act. The Tribunal has previously dealt with this issue in respect of other defect items and does not accept that a (potential) breach of s 37 of the DBP Act is a breach of the statutory warranty under s 18B(1)(c) of the HB Act.
Mr Warner states (at paragraph [528] that his "rectification concept" does not (emphasis added) require the preparation of a Regulated Design under the DBP Act.
Mr Warner sets out his "rectification concept" (i.e. scope of works) at paragraph [529]. Although it uses the phrase "likely to include" it is sufficiently detailed.
Mr Warner does not believe any "performance solution" to achieve compliance is possible, because the non-compliance involves the PH Act (paragraph [530]).
Mr Jacotine, in his report (pp 1151-1153 of the Joint Tender Bundle) disagrees with Mr Warner's interpretation of AS1668.2 and AS3666.1. According to Mr Jacotine, Mr Warner's interpretation is dependent upon any item of equipment that provides air movement (i.e. a fan) is "air handling plant." Mr Jacotine disagrees. In his opinion, "a fan does not control (or change) the condition of the air. To change the condition of the air requires a heating coil, cooling coil, humidifier or a heat exchanger...a fan forced system that contains no means of changing the condition of the air is not an air handling system under this definition..."
Mr Jacotine states that in his experience, he has never seen any instance of the provision of filters in a carpark supply air system, noting that carparks usually have a degree of natural air ventilation and the air supply system is primarily focused upon reducing carbon monoxide. Mr Jacotine states that the installation of filers in the car park air system will "not aid in this process and will substantially increase the maintenance burden of this system, requiring regular filer changes for no productive benefit..."
However, in respect of the lobby ventilation system, Mr Jacotine agrees it is "good industry practice" to provide filters. He does not believe the failure to provide filters in the lobby ventilation system is a breach of statutory requirements under applicable Australian Standards.
The Joint Scott Schedule (pp 1465-1466 of the Joint Tender Bundle) sets out in more detail the disagreement. It is stated that if Mr Warner's interpretation is correct, the experts agree that Mr Warner's rectification concept is appropriate to rectify the defect. If Mr Jacotine's interpretation is correct, "no work is required." However, the Joint Scott Schedule appears to overlook Mr Jacotine's comments that it would have been "good industry practice" to install filters in the lobby supply air system.
Questioning of the experts at the hearing is at pp 77-90 of the transcript (T:24/8/24:P77-90).
Mr Warner and Mr Jacotine stated the point of difference in their interpretation of Australian Standard AS 3666.1 was that Mr Jacotine believed it involved changing the condition of the air by changing the temperature or the humidity of the air (by an air-conditioner, coil, or duct) and Mr Warner believed it was sufficient that the movement and direction of the air flow was changed by the system, irrespective of whether the system changed the temperature or humidity.
Both experts were extensively questioned. Mr Warner referred to "sitting on the committee" for Australian Standards. Mr Warner continued to assert that his interpretation was correct, and filters in the car park system would assist in reducing the risk of legionella. It was put to Mr Warner that he had "jumped straight to" the PH Act rather than the BCA, but Mr Warner pointed out that it was the PH Act that adopted the applicable Australian Standards. Mr Warner agreed that if filters were installed in the car park system the owners corporation would need to clean and maintain them on a periodic basis, and it was possible if they were blocked or not maintained it would potentially create a safety risk by reason of affecting the level of carbon monoxide.
Mr Warner agreed that in his experience, car park supply air systems did not usually have filters, but he asserted that this meant it was a "common defect."
Mr Jacotine did not change his opinion during questioning that the failure to install filters in the car park air system was not a breach of Australian Standards; and was not otherwise required. Mr Jacotine continued to assert that installing filters into the car park system would have no benefit.
In its closing submissions, the owners corporation submits that the "only point of difference" between Mr Warner and Mr Jacotine regarding the interpretation of the applicable Australian Standard was that Mr Jacotine believed "condition of air" had the same meaning as "air conditioning" and that such an interpretation did not make sense. Accordingly, the Tribunal should accept the evidence of Mr Warner.
The builder submits that, in respect of the car park system, fresh air is coming from the outside atmosphere at roof level and directly to the basement. Mr Warner is "in effect asking for that air to be filtered before it comes into the basement so that the outside air coming in is cleaner." The builder asserts that Mr Jacotine's evidence is "more reliable and doesn't rely on the selective reading of clauses in particular standards." The builder submits that if filters are installed, it may have "unintended health and safety consequences to building occupants" and there was a "good reason" the design of the building did not require filters.
In respect of the lobby air system, the builder repeated its submissions.
The sub-contractor submitted that the owners corporation had failed to prove a defect in respect of both the car park air supply system and the lobby air supply system. The sub-contractor submits that Mr Warner's interpretation is "inconsistent with the interpretation widely accepted and adopted by the industry." Further, in respect of the claim by the builder against the sub-contractor, the sub-contractor submits if there is any defect it is not a "major defect" under s 18E of the HB Act.
In respect of the failure to install filters in the lobby air system (referred to in submissions as defect Item 16.2), all parties appear to have overlooked the opinion expressed by Mr Jacotine in his report that it is "good industry practice to provide filtration of outside air to a habitable enclosed space" and "I agree that filters should be provided for the lobby ventilation system."
Mr Jacotine's evidence in respect of the lobby ventilation system (referred to as Item 16.2) is sufficient, when considered in the addition to Mr Warner's evidence, to find that a builder exercising due care and skill would have installed filters in the lobby ventilation system is established. Accordingly, the builder has breached the statutory warranty under s 18B(1)(a) f the HB Act because the work was not performed with due care and skill, irrespective of whether the plans referred to filters in that area, or the statutory requirements.
In respect of the lobby ventilation system, Mr Jacotine agrees with Mr Warner on the scope of rectification (should defect be found) and the Tribunal is satisfied that Mr Warner's scope of works is necessary to achieve compliance with the contact and a reasonable course to adopt. The Tribunal is satisfied that the scope of works is sufficiently detailed that it can form the basis of a work order under s 48O of the HB Act.
The issue in dispute is whether there is a breach of statutory warranties in respect of the failure to install filters in the car park air system, the salient issue is whether there is breach of the statutory warranty under s 18B(1)(c) of the HB Act. There is insufficient evidence to establish a breach of any of the other statutory warranties contained in s 18B(1) of the HB Act.
The Tribunal accepts that there is a genuine disagreement between Mr Warner and Mr Jacotine. Both experts gave evidence in a measured and logical manner, and neither was, in my view, being an advocate for their respective clients rather than assisting the Tribunal to understand a contentious issue. Both experts gave cogent explanations for their respective positions in cross examination at the hearing, and neither made any concessions or there were inconsistencies that cause the Tribunal to place less weight on their evidence.
Ultimately, the Tribunal has to accept one expert over the other, or find that neither's evidence is more cogent and it cannot accept one over the other. If the Tribunal made that finding, the owners corporation, being the party who bears the onus of proving breach of statutory warranty, would have failed to discharge its onus.
The Tribunal does not accept the submission of the owners corporation that Mr Jacotine's opinion is that to change the condition of the air within the definition in AS 3666.1 ("air handling plant") required an air conditioning system, in the sense of a coil that either heated or cooled the air. Rather, Mr Jacotine's opinion was that "air handling plant" required some mechanism to cause the changing of the temperature or humidity of the air.
However, Mr Warner gave a detailed explanation at paragraphs [514]-[518] of his report as to why the air handling system includes the supply air system and the exhaust system that jointly serve to direct the air in a positive and controlled manner from the carpark. That is consistent with an objective analysis of the definition of "air handling plant" that is set out in paragraph [516], which includes "equipment for the purpose of controlling the direction, rate of airflow, division of airflow and condition of air". The Tribunal is satisfied that the definition of "air handling plant" in the standard is wider than Mr Jacotine's interpretation, and that the interpretation of Mr Warner reflects a correct objective interpretation of the words of the standard.
Accordingly, the Tribunal is satisfied that the absence of filters in the car park is a breach of the statutory warranty in s 18B(1)(c) of the HB Act. The fact that Mr Warner and Mr Jacotine both state that other similar car parks do not, in their experience, have filers installed is of limited utility in the context of whether a legal standard for this building stipulated by the applicable Australian Standard has been met.
In respect of whether Mr Warner's method of rectification is necessary and a reasonable course to adopt, the builder and sub-contractor submit that to install filters will have little benefit and may cause safety issues. The Tribunal accepts the explanation of Mr Warner as to why there is a benefit. In respect of future safety issues, that was not explored in detail in cross examination of Mr Warner at the hearing. However, to the extent that it was referred to and Mr Warner accepted that it was possible that a lack of future cleaning and maintenance may cause safety issues, the owners corporation will have a responsibility for keeping the filters in a state of good repair under s 106(1) of the SSM Act, and the possibility that the owners corporation may not comply with its own separate duty in respect of future maintenance is not a basis for concluding that the method of rectification is unnecessary or unreasonable.
The Tribunal is satisfied that the method of rectification proposed by Mr Warner is necessary to achieve compliance with the contract and a reasonable course to adopt. The Tribunal is also satisfied that the scope of works is sufficiently detailed to form the basis of an appropriate work order under s 48O of the HB Act.

[231]

Mr Jacotine refers to this alleged defect item in his report at pp1153-1154 of the Joint Tender Bundle. He agrees that "access for maintenance of the condensers is poor" and agrees that a defect exists that should be rectified. The defect was caused by "a failure of coordination and spatial planning of the design team." According to Mr Jacotine, moving the condensers will require architectural and structural changes that will require "planning authority approval" and any solution "requires a collaborative approach by the mechanical designer, the architect and the structural engineer to develop a solution that can achieve planning approval."
In the Joint Scott Schedule (p 1467 of the Joint Tender Bundle) , Mr Warner and Mr Jacotine agree that there is a defect and agreed with the "rectification concept" of Mr Warner. In the "comments" section, the experts, in substance, agree with the comments by Mr Jacotine in his report about the "failure of coordination and special planning of the design team...to provide adequate space to install the condenser units..."
Questioning of the experts on this alleged defect item is at T:28/8/24:P97-103. The questioning was by the builder's Solicitor. Both experts agreed it was possible, but very difficult, to access the condenser units for maintenance because it was possible to "potentially construct something that might get a screwdriver down their" (Mr Warner at P102 of the transcript) but there was not sufficient space for a tradesperson to get their hand into the area. Mr Warner stated (and Mr Jacotine agreed) that any architectural (and Council approved) design would not involve an extra level of height on the building, but "a moderate increase in height" so that the units could be stacked directly on top of each other (T:98:L43-47).
The owners corporation's submissions in chief are simply that Mr Warner and Mr Jacotine agree on the issue of defect and the method of rectification, so the Tribunal should make an order to reflect the rectification concept in Mr Warner's report.
The builder "does not press this item against the sub-contractor." The builder submits that there were revised plans as part of the Construction Certificate, and the builder built according to those plans and it is not established that the location of the condenser units does not comply with those plans. The builder submits that Mr Warner based his opinion on "superseded plans." The builder submits that the Tribunal is not bound to accept the 1 m space gap recommendation by the manufacturer, and there is simply insufficient space on the roof to provide that amount of clearance for 64 condenser units.
Further, the builder submits that the method of rectification proposed by the experts is too conditional, uncertain and vague to form the basis of a work order under s 48O of the HB Act. The rectification is dependent upon further designs being prepared and approved by the local Council (planning authority).
In reply submissions, rather than engaging with the issues raised by the builder in the builder's submissions, the owners corporation simply submits that "there is no sound reason from the builder's submissions at BS para 241-255 as to why the Tribunal would decline to make an order or would decline to order Mr Warner's rectification method, as agreed in the JER".
In respect of breach of the statutory warranties, the information contained in the manufacturer's recommendations is relevant to whether the work has been performed with due care and skill under s18B(1)(a) of the HB Act. The evidence of both Mr Warner and Mr Jacotine is sufficient for the Tribunal to find that the builder has not exercised due care and skill, because of the method by which the condenser units are stacked and overlap, such that there is clearly insufficient room to reasonably access the front of the units for the purpose of maintenance. The possibility that a screwdriver might be able to be put into the space does not mean there is adequate space. Both Mr Jacotine and Mr Warner agree there is insufficient space, and a builder exercising due care and skill would have provided adequate space.
Mr Warner's evidence is also that the units have not been stacked on top of each other in accordance with the plans. Failure to construct in accordance with the plans is a separate breach of statutory warranty under s 18B(1)(a) of the HB Act. As discussed previously, a builder constructing in accordance with the plans does not extinguish the builder's separate obligations under s 18B(1) of the HB Act. Further, although it is noted the builder did not raise a defence under s 18F of the HB Act, building in accordance with the plans does not provide a general defence to a breach of statutory warranty proceedings under s 18F (Fisher v N. Phillips and M. Phillips t/as Arise Building Services [2022] NSWCATCD 80 at [139]- [144].
The submission of the builder that there were updated plans that the builder complied with was not clearly explored in evidence at the hearing. Mr Warner was asked about updated plans that formed the basis of the Construction Certificate, but there was not clear and detailed questioning of Mr Warner (or Mr Jacotine) such that the Tribunal is satisfied that there are updated plans that clearly show the condenser units in the position that the builder located them. The Tribunal is satisfied that Mr Warner's evidence in chief that the location of the units were not in accordance with the plans (and accordingly, a breach of s 18B(1)(a) of the HB Act) should be accepted, in circumstances where there is no evidence of a clear concession by Mr Warner in cross examination that there were updated plans that show the current position of the condenser units, or that these updated plans are clearly and specifically referred to in closing submissions.
Accordingly, there are two separate breaches of s 18B(1)(a) established, the first in respect of due care and skill and the second in respect of failing to construct in accordance with the plans and specifications.
It is unnecessary for the Tribunal to make findings on the issue of whether a breach (or potential breach) of work health and safety legislation is a breach of the statutory warranties under s 18B(1)(c) of the HB Act. There is no evidence of any failure to comply with Australian Standards or the BCA.
However, even though the Tribunal is satisfied that breach of statutory warranty has been established, the owners corporation has failed to provide sufficient evidence of a method of rectification that is necessary to achieve compliance with the contract and a reasonable course to adopt, and that there is sufficient evidence to make an appropriately detailed, certain and unambiguous work order under s 48O of the HB Act.
The proposed scope of works is speculative and contingent on a number of matters. Architectural and engineering designs need to be prepared. The local Council/planning authority will likely have to authorise the designs and work by way of Development Approval to a Development Consent. Whether there is an approval, and exactly what type of works will be approved, is speculative. It is not appropriate for the Tribunal to order the builder (and/or the designer) to engage experts or have the proposed works approved by the local Council and then do the work that is approved.
Having proved breach, but not remedy, this defect item is dismissed.

[237]

Mr Jacotine, in his report (p 1155 of the Joint Tender Bundle) states he was "asked not to comment on this issue". In the Joint Scott Schedule (p 1470 of the Joint Tender Bundle) it is stated the item was not discussed, and Mr Warner comments that accordingly, his opinion stands.
Questioning of Mr Warner at the hearing is set out at T:24/8/24:P90-91. Mr Warner stated that he had provided a "very basic" scope of works, but the "increased ventilation" would involve provision of an additional plate mounted fan. The builder's Solicitor questioned Mr Warner as to whether he had done any testing of the temperature of the room, or received any test results. Mr Warner sated no tests had been performed regarding the temperature of the room in its current condition. Mr Warner also referred to the louvre being redesigned and rebuilt, to alleviate the heat.
The owners corporation submits in its closing submission that, in the absence of any contrary opinion of any other expert, Mr Warner's evidence on the issue of defect and the method of rectification should be accepted.
The builder submits that no breach of statutory warranty has been established, in circumstances where no evidence was provided of any temperature testing to support Mr Warner's view that the level of ventilation was inadequate and may lead to overheating of condenser units.
The builder further submits that the scope of works proposed by Mr Warner is too vague and uncertain to form the basis of a work order. The builder points out that the only time that there was any detail about what should be done to rectify the defect was in Mr Warner's oral evidence at the hearing, and even then there was no clarity as to whether additional or different louvres were proposed, or the installation of a fan.
The sub-contractor submits that the builder had withdrawn any claim against the sub-contractor in respect of this defect item at the hearing, yet referred to the sub-contractor performing works in Annexure A of its closing written submissions (which summarised the defect items pressed against the sub-contractor). The sub-contractor submits that it would be a denial of procedural fairness for the builder to maintain such a claim, in circumstances where the sub-contractor did not ask any questions of Mr Warner on the basis that the builder was not pressing any claim against the sub-contractor in respect of this defect item (if found). Additionally, if a defect claim is considered in the builder's proceedings against the sub-contractor, the sub-contractor submits that (a) no breach of statutory warranty is established and, even if it were, the proposed rectification is too vague and uncertain to form the basis of a work order (adopting the builder's submissions against the owners corporation); and (b) in any event, it is not a major defect under s 18E of the HB Act.
In reply submissions, the owners corporation repeats its submission that Mr Warner's evidence is not contradicted by any other expert evidence and the Tribunal is bound to accept it
The Tribunal acknowledges that there is no expert evidence on this alleged defect item other than Mr Warner. However, that does not mean the Tribunal is automatically bound to find there is a breach of statutory warranties (Shakiri v Holland [2024] NSWCTAP 28 at [88]-[98] and the authorities discussed therein). The owners corporation bears the onus of proof in its proceedings, not the builder or the developer.
On the issue of breach of statutory warranty, Mr Warner opines that based on his experience and expertise, the room has inadequate ventilation and may cause overheating of the condenser units. However, in the absence of any testing by him, or a more detailed explanation for the basis of his opinion, the Tribunal is not satisfied that there is a factual foundation established to form the basis of the opinion. Accordingly, the Tribunal is not satisfied that a reasonable builder exercising due care and skill would have constructed the room differently, or installed additional ventilation systems.
The Tribunal is not satisfied that breach of any of the statutory warranties under s 18B(1) of the HB Act is established.
Even if the Tribunal was satisfied that breach was established, there is insufficient evidence for the Tribunal to find what is the method of rectification necessary to achieve compliance with the contract and a reasonable course to adopt, such that the Tribunal can make a work order that is sufficiently detailed, certain and unambiguous.
The scope of works set out at paragraph [624] of Mr Warner's report is vague. It would be inappropriate for the Tribunal to make a work order under s 48O in the terms set out in that paragraph.
The brief oral evidence of Mr Warner at the hearing about installing a fan is also insufficient to form the basis of a work order. There is no detail of where the fan would be located or sufficient detail about what the builder (or developer) would need to do to install it. Mr Warner could have set out in detail a scope of works to install a fan in his report but did not do so. The same issue arises in respect of the brief comment at the hearing about redesigned or modified or additional louvres.
This defect item is dismissed.

[243]

The evidence of the experts at the hearing is contained at T:28/8/24:P103-104. Mr Jacotine and Mr Warner agreed the defect issues was "partly" caused by the position of the sewer vents and "partly" caused (or contributed to) by inadequate maintenance by the owners corporation. However, Mr Warner stated that inadequate maintenance by the owners corporation was not the "root cause of the problem." The main cause was the use of materials that had inadequate corrosion protection. Mr Warner also pointed out that if a "maintenance technician" arrived on site and saw fairly new fixings had started to corrode, they could have arranged for the fixings to be treated and painted so it "didn't get to this stage, but they should not have needed to in my view."
The owners corporation submits that the issue of defect and method of rectification is agreed between Mr Warner and Mr Jacotine, and there is no reason not to make a work order in accordance with Mr Warner's scope of work.
The builder only makes brief submissions on this defect (paragraphs [269]-[271]) and does not clearly explain why the owners corporation has failed to prove breach of statutory warranty or that Mr Warner's scope of works is inappropriate. The builder submits it "presses" this item against the sub-contractor.
The sub-contractor submits there is insufficient evidence to prove defect, in circumstances where there is no evidence of any maintenance by the owners corporation. The sub-contractor submits that Mr Jacotine's "agreement" in the Joint Scott Schedule is nothing more than that he agrees equipment is corroded, the position of the sewer vent has contributed; and the equipment affected by corrosion needs to be treated. The sub-contract submits that this is not a "major defect" under s 18E of the HB Act in any event.
The Tribunal is satisfied that the owners corporation have established breach of the statutory warranty in s 18B(1)(b) that building materials used in the work will be "good and suitable for the purpose for which they have been used". It is unnecessary to make findings regarding any other breach of statutory warranties under s 18B(1).
The Tribunal does not accept the submission of the sub-contractor that Mr Jacotine has only agreed with Mr Warner on a limited basis in the expert conclave and Joint Scott Schedule. Counsel for the sub-contractor did not question Mr Jacotine at the hearing in a manner that supports the submission that was made. The Joint Scott Schedule is consistent with Mr Jacotine having adopted the position that he agreed that the works were defective in the manner expressed by Mr Warner (relevantly including that the materials used were not suitable for purpose under s 18B(1)(b) of the HB Act) and he agreed that the corroded materials either needed to be replaced, or suitably coated.
The Tribunal does not accept that any lack of adequate maintenance by the owners corporation is the sole cause of the corrosion. Mr Warner dealt with this at the hearing. The "root cause" is that the materials, when installed, where not adequately corrosion proof. The placement of the sewer vents, and whether or not there has been a separate agreement in respect of that issue, is not a basis for overlooking the breach of the statutory warranty in s 18B(1)(b) of the HB Act. The Tribunal notes the owners corporation did not press defect Item M10.
The Tribunal is satisfied that the scope of works proposed by Mr Warner at paragraph [638] of his report is necessary to achieve compliance with the contract, a reasonable course to adopt, and is sufficiently detailed to form the basis of a rectification order under s 48O of the HB Act. The scope of works could have been more detailed, but it is sufficiently detailed, certain and unambiguous to form the basis of a work order.

[257]

Mr Marshall's supplementary report dated 28 August 2024 (Exhibit 2) did not refer to defect Item 22).
Questioning of the experts at the hearing is contained at T:28/8/24:P108-110. Mr Marshall elaborated briefly on what a "Performance Solution" to achieve performance compliance with the applicable standards may be achieved without significant structural changes to the building, but no detailed scope of works was provided as distinct from a potential concept. Mr Warner did not agree that the strata building would have been unable to obtain an occupation certificate with the defective positioning of the vents in situ. Mr Warner stated "Unfortunately...that's what happened." Mr Warner agreed with Mr Marshall that a Performance Solution may be possible.
The owners corporation submits in its closing submission that there is no real dispute that there is a defect (i.e. failure to comply with AS1668.1) and that as no detailed "Performance Solution" was in evidence, the Tribunal should make orders in accordance with Mr Warner's scope of works.
The builder's submits (at paragraphs [273]-[278] of its closing submissions that all experts agree there is a defect. However, Mr Marshall was "not saying he is able to prepare the alternative solution" and there is "no guarantee the person who prepares it cand considers the relevant documentation will ultimately sign off on the performance solution." The builder also points out that Mr Marshall referred to a Complying Development Certificate application or voluntary fire safety order, neither of which currently exist.
In respect of Mr Warner's proposed scope of works, the builder submits that the substance of Mr Warner's proposal is to engage a mechanical engineer to prepare a regulated design and effectively modify the location of the exhaust grilles in the lobby area. The builder submits that is "another example of the owners corporation wishing to rely on other experts to work out what the scope of works should be."
The sub-contractor submits that it relies on Mr Marshall's report and "a Performance Solution that supports the current location of the louvres/vents." The sub-contractor submits at paragraph [125]-[126] of the submissions:

[259]

The sub-contractor submits that the Tribunal should not find that the defect is a "major defect" under s 18E of the HB Act (as briefly referenced by Mr Warner at paragraph [674] of his report), as Mr Warner's comments do not establish the "second part of the test for a major defect under s 18E(4) of the Act". The sub-contractor submits the building has an automatic sprinkler system, and the defect is not "likely to cause one of the Relevant Consequences."
The owners corporation, in its reply submission to the builder's submissions, repeats its position that there is no detailed "Performance Solution" that could form the basis of an appropriate work order, and the Tribunal should accept Mr Warner's scope of works in the absence of any sufficiently detailed "Performance Solution" as generally postulated by Mr Marshall.
The owners corporation, in its reply submissions to the sub-contractor's submissions, asserts that, contrary to the sub-contractor's submissions, there is no detailed "Performance Solution" postulated by Mr Marshall, and the potential development of a "Performance Solution" is "both speculative and quite irrelevant" (owners corporation's reply submission to sub-contractor's submission at paragraph [22]). The owners corporation again emphasises that under Tabcorp Holdings principles, Mr Warner's proposed scope of works should be accepted unless it is not a reasonable course to adopt, and that is a "very high threshold" (owners corporation's reply submissions to sub-contractor's submissions at paragraph [19]).
It is clear from the evidence of Mr Warner, Mr Jacotine and Mr Marshall that the stair pressurisation relief grilles located in the residential tower lobbies do not comply with Australian Standard AS1668.1 because they have been located a low to mid-level rather than a high level. The Tribunal is satisfied that the owners corporation has established the work breaches the statutory warranty under s 18B(1)(c) of the HB Act.
The critical issue is whether there the owners corporation has discharged the evidentiary onus (by way of the owners corporation's evidence, or the evidence of the sub-contractor) for the Tribunal to be satisfied of a method of rectification that is necessary to achieve compliance with the contract and a reasonable course to adopt, such that the Tribunal can make a work order under s 48O of the HB Act that is sufficiently certain and unambiguous.
The Tribunal does not accept the submission of the sub-contractor that Mr Marshall's potential "Performance Solution" is sufficiently certain and unambiguous to form the basis of a work order under s 48O of the HB Act. It was not sufficiently detailed in Mr Marshall's expert report, nor did Mr Marshall's oral evidence at the hearing provide sufficient detail. Mr Marshall's "Performance Solution" is a broad concept, and is dependent on a number of contingent matters to achieve a clear scope of works. The sub-contractor's submission at paragraph [125] encapsulate the ambiguities and contingencies.
In respect of Mr Warner's proposed scope of works, the same difficulty arise in respect of a number of the other defects. That is, Mr Warner clearly states a regulated design must be prepared under the DBP Act as a first step. No such design has been provided, nor is there a clear explanation by Mr Warner that the proposed scope of works would be unaffected by a regulated design, as distinct from the "rectification concept" being predicated on what is contained in the design.
As discussed previously, the Tribunal has the power to make orders which are subject to conditions (s 58 of the NCAT Act). It has the power to made orders that identify a scope of works, but order a non-licensed person to engage a suitably licensed builder to perform the works that are identified in the scope of works pursuant to the s 48O HB Act work order (Leung v Alexakis [2018] NSWCATAP 11).
However, it is not appropriate for this defect item, just as it is not appropriate for the other defect items where Mr Warner has stated a design is required under the DBP Act, to order that work be done on the condition that a regulated design is obtained. That may have been an appropriate outcome if there had been evidence (by Mr Warner, or some other evidence) that the scope of works would not be changed or altered by the design. However, what the Tribunal is left with is the type of situation that was the subject of criticism in Glenquarry Investments and Catapult Constructions, where the builder (and/or developer) would be ordered to perform a scope of works that is predicated upon a design that has yet to be created and the builder (and/or developer) ordered to obtain that design. That does not provide the basis of a sufficiently clear, certain and unambiguous order under s 48O of the HB Act.
It is surprising that the owners corporation's submissions do not address Mr Warner's opinion that a design is required under the DBP Act. The owners corporation had the opportunity to do so. It also had the opportunity to explain in submissions why Mr Warner's opinion that a design is required under the DBP Act is incorrect, and that the provisions of the DBP Act do not require a design. It has not done so, and there is no basis for the Tribunal to overlook or disregard Mr Warner's evidence that a design under the DBP Act is required.
Although the Tribunal is satisfied that there is a breach of the statutory warranty under s 18B(1)(c) of the HB Act, the Tribunal is not satisfied that there is sufficient evidence to make a rectification order under s 18B of the HB Act.
Accordingly, this defect item is dismissed.

[269]

The sub-contractor makes no direct submissions on this defect in circumstances where the builder is not claiming against the sub-contractor in respect of this defect item. For the sake of completeness, it submits that if a defect is established, it is not a "major defect" under s 18E of the HB Act.
In submissions in reply, the owners corporation submits that the builder is adopting "double negatives" to argue that an defect and method of rectification agreed by the experts should not be adopted.
The Tribunal is satisfied that there is a breach of s 18B(1)(a) of the HB Act, in circumstances where Mr Warner and Mr Jacotine agree that certain areas of the building have not been constructed in accordance with the Aerow plans. The builder submits that the plans have been superseded by later plans. However the questioning of Mr Warner (the builder did not question Mr Jacotine) does not clearly demonstrate what are the plans that superseded the Aerow plans. The notation referred to in the builder's submission does not point to any specific plan, and refers to revised mechanical plans being adopted.
The builder, as the party who constructed the strata building, had the ability to provide clear evidence that there was a more recent mechanical installation plan. Mr Warner was referred to a plan in questioning at the hearing, but there was no clear evidence that this was the applicable plan that superseded the Aerow plans, or that Mr Warner made an concession in that regard.
The Tribunal is satisfied that, to the extent of the items identified by Mr Warner and Mr Jacotine in their evidence, a breach of s 18B(1)(a) of the HB Act is established.
Importantly, as discussed previously, the owners corporation does not seek that the builder perform works to the building in respect of this item. All the owners corporation seeks is that the builder (and/or developer) provide updated plans to reflect what has been constructed in the areas identified by Mr Warner (and to which Mr Jacotine agrees). If there are updated plans that reflect the work, then the builder(and/or developer) can simply provide them. The method of rectification proposed by Mr Warner and Mr Jacotine is necessary to achieve compliance with the contract and a reasonable course to adopt.
The Tribunal is satisfied that the scope of works contained at paragraph [695] of Mr Warner's report (reflecting the areas identified at paragraph [685]) is sufficiently certain and unambiguous to form the basis of an appropriate work order under s 48O of the HB Act.

[283]

These alleged defect items are set out at paragraphs [726]-[734] of Mr Warner's report.
Mr Warner states that "building materials have been left on the roof;" and "drain pipes were not secured in place on the floor of the ground level plant room."
Although, again, Mr Warner refers to the builder not performing work with "due diligence," it is clear from paragraph [728]-[729] that he is asserting that the work has not been performed with due care and skill.
Mr Warner states the "leftover building materials" should be removed from site and disposed of in an appropriate waste management facility.
Mr Warner states rectification of the drainpipes "would involve securing the drain pipes in place using pipe clamps or similar fixtures. The details of this work are outside the scope of my expertise because it involves plumbing work."
It is unnecessary to set out Mr Jacotine's report where the item is only briefly referred to. In the Joint Scott Schedule, Mr Jacotine states he agrees with the defect and the method of rectification of Mr Warner.
Questioning of the experts at the hearing is set out at T:28/8/24:P123-124. Mr Warner agreed (at T:28/8/24:P123:L39-41) that it was possible that the items he saw on the roof were left there by persons doing maintenance after the builder had completed works.
In circumstances where Mr Warner stated it was "possible" that the items on the roof were not left there by the builder, the Tribunal is not satisfied that there has been a breach of s 18B(1)(a) of the HB Act in respect of the builder not exercising due care and skill, nor a breach of any other statutory warranties.
Even if the Tribunal was satisfied that there was a breach, there is not sufficient information about what particular items need to be removed to make a certain and unambiguous work order.
In respect of further securing the drain pipes, Mr Warner states that another expert would need to prepare a scope of works because it is outside his field of expertise. Even if the Tribunal found that the builder did not exercise due care and skill, it is not appropriate for the Tribunal to make an order that the builder (and or developer) obtain a further expert evidence and perform a scope of works set out by that expert. There is no expert evidence from a plumber or builder with a scope of work as to how to secure the drain pipes appropriately.
These defect items are dismissed.

[304]

Under s 18B(2) of the HB Act, the builder has the benefit of the statutory warranties in is contract with the Sub-contractor.
By reason of the operation of s 48K(7) and 18E(1)(b) and (4) of the HB Act, the Tribunal only has jurisdiction in respect of breach of any breach of the statutory warranties under s 18B of the HB Act if the breach of statutory warranty involves a "major defect" under s 18E(4) of the HB Act. There is no doubt that the builder commenced Tribunal proceedings more than 2 years (and less than 6 years) after the date of the completion of the work by the sub-contractor. It is unnecessary to determine whether the applicable date of completion of the work is the date the sub-contractor was last on site performing work (other than rectifying defects) under the contract under s 3B(3)(b) of the HB Act; or the date of the occupation certificate (which is clearly the requisite completion date from the perspective of the owners corporation's statutory warranties claim against the builder and developer by reason of s 3C of the HB Act) as the proceedings were commenced more than 2 years after both of those dates.
In respect of a claim in contract other than a statutory warranties claim (or a contractual claim to which the statutory warranties limitation period applies) s 48K(3) of the HB Act provides for a limitation period of 3 years from the last date the Sub-contractor provided building goods or services to the builder. The Tribunal interprets that to mean 3 years from the date the Sub-contractor was last on site performing works (other than rectifying defects in work it had performed). In the circumstances of this matter, that means 3 years from November 2020, and the Tribunal proceedings have been commenced within that period. Section 48K(3) is not to be confused with s 48K(8) of the HB Act, which applies to circumstances where the party bringing the proceedings is the supplier of the building goods and services, such as a builder claiming against an owner for unpaid contractual monies (BKB Constructions Pty Ltd v Sawan [2022] NSWCATAP 103 at [47]- [48]).

[309]

"Section 7(a) of the Limitation Act has the effect that, if there is another limitation period specified in another "enactment", the other limitation period will apply rather than the one specified in the Limitation Act. Thus, if the owners' claim is properly to be characterised as one for breach of statutory warranty, the limitation period of two years in s 18E applies and not the limitation period of six years in s 14 of the Limitation Act for claims for breach of contract.

In the present case, the owners argued, and the Court below found, that the owners' claim was not one for breach of a statutory warranty, but rather a claim for breach of contract. Thus, it is necessary, for the purposes of ground 1 to examine this proposition to assess whether such a distinction is maintainable in the present case.

It was common ground that, if cl 39 had not been included in the contract, the owners had a claim against the builder for breach of statutory warranty (under s 18B) but that their right to commence proceedings had become statute-barred by the time they in fact commenced proceedings either in NCAT or in the Court below: (s 18E).

Section 7(2)(f) of the Act required that the statutory warranties (defined as a warranty established by Part 2C) be included in the contract. If her Honour's construction were correct, it would mean that a builder who complied with s 7(2)(f) by expressly including the warranties implied by s 18B into the contract would be in a worse position than a builder who was party to a contract which did not contain warranties in its written form. On her Honour's construction, a builder who had not included the warranties would be entitled to rely on s 18E but one who had would not be.

It is important to read the contract in light of the Act. Clause 39 of the contract is plainly designed to comply with s 7(2)(f) and replicate the warranties in s 18B. The prefatory words of the clause, "[t]o the extent required by the [Act], the builder warrants that" (emphasis added) are, in my view significant because the warranties in sub-clauses (a)-(f) are given subject to the rider in the prefatory words. Thus, the objective intention of the parties is that the warranties are given only in so far as they are required by the Act. The Act requires only warranties in respect of non-major works that are enforceable for two years. In these circumstances, the builder ought not to be taken to have given wider warranties than those which the Act implied into the contract.

If there is any ambiguity in cl 39, regard can be had to the surrounding circumstances: Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 at 352 (Mason J); [1982] HCA 24. Such surrounding circumstances include matters known to both parties at the time the contract was entered into. In the present case, such matters included the Consumer Building Guide which was Attachment B to the contract which said in part, of the statutory warranties (in s 18B):

[311]

Nor is there a sensible distinction in these circumstances between an action for "breach of statutory warranty" and an action for "breach of contract." A warranty is merely a term of a contract, which is neither a condition (any breach of which will entitle the injured party to terminate), nor an innominate or intermediate term (a fundamental breach of which will entitle the injured party to terminate), breach of which will not entitle a party to terminate: see the summary of principles in Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [47]-[53] (Gleeson CJ, Gummow, Heydon and Crennan JJ) and the discussion in John Carter, Carter on Contract (7th ed, 2018, LexisNexis) at Ch 14 "Classification of Terms". A statutory warranty is a term which is implied, by legislation, into a contract, irrespective of the intentions of the parties. It thereby becomes a term of the contract between the parties. In the present case, the warranties in cl 39 did not lose their character as statutory warranties merely by having been expressed in the contract document. As referred to above, s 7(2)(e) required that they be included in the contract.

Further, s 18G makes it clear that the parties cannot exclude the statutory warranty "to remove the rights of a person" and any provision which purports to do so, is void. It is significant that s 18G refers to "rights of a person". The word "person" in this context includes not only the owners but also the builder. The owners have a right to the benefit of the statutory warranties in terms but the builder has the right not to be sued in respect of non-major defects after the two year period has elapsed. That "person" ought be construed in this way derives some support from the use of the different expression "person entitled to the benefit of a statutory warranty under this Act" in s 18D(1). The owners might reasonably be thought to be the persons entitled to the benefit of a statutory warranty but "person," without that qualification in s 18G, includes not only the owners but also the builder. "

[318]

(1) Decisions are only authority for what they decide, as opposed to what was held without argument: Randren House Pty Ltd v Water Administration Ministerial Corporation [2020] NSWCA 14 at [45] ; Spence v Queensland 93 ALJR 643; [2019] HCA 15 at [294] (Edelman J).

(2) An intermediate appellate court should not decline to apply a legal principle which has been set out in "seriously considered dicta" by a majority of the High Court, and which is otherwise consistent with a substantial line of common law authority: Farah Constructions at [134].

(3) Although "considered dicta" of an intermediate appellate court is not strictly binding on courts in a lower or equal position within the judicial hierarchy, it must be afforded great weight and should be departed from only with the greatest of caution: Ying v Song at [19] ; Fullerton Cove at [279].

(4) Intermediate appellate courts should not depart from the decisions of intermediate appellate courts in other jurisdictions in relation to the interpretation of the same legislation or of common law principles: Farah Constructions at [135]; Gett v Tabet at [286] ; Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 483; [1993] HCA 15 at [4] .

(5) The same principle should apply when the Court is asked to depart from one of its own decisions that is on point, and when it is confronted with a decision of an Australian intermediate appellate court of comparable jurisdiction in relation to similar legislation: Harrison v Melhem [2008] NSWCA 67 at [188] (Mason P).

(6) Generally speaking, intermediate appellate courts are not legally bound to follow their own earlier decisions (including statements made in ratio decidendi). However, as a matter of practice, they should only depart from such authority, or the authority of courts of coordinate jurisdiction within the national system, if they are of the view that the decision is "plainly wrong": Gett v Tabet at [273] , [277] -[278] , [281] .

(7) As a matter of comity, single judges of the NSW Supreme Court will generally follow an earlier decision of another single judge, although they are not legally bound to do so: see eg Segal v Waverley Council [2005] NSWCA 310 at [48] , [57] -[59] ; New Cap Reinsurance Corporation Ltd (in liq) v A E Grant [2008] NSWSC 1015 (New Cap Reinsurance) at [109] (White J).

(8) Statements made in obiter dicta have varying degrees of authority. For example, a "mere passing remark or a statement or assumption on a matter that has not been argued" or "broad observations made on the spur of the moment" will have less weight than "a considered judgment on a point fully argued": Nowicka at [21]-[25].

(9) The weight accorded to obiter dicta will vary depending on the circumstances in which it was made: Ying v Song at [19] , [23] .

(10) In circumstances where a matter was not fully argued before the earlier court, and "relevant material" was not drawn to its attention, a subsequent court of coordinate jurisdiction may consider that a party before it should not be "disadvantaged" by reason of the earlier obiter conclusion: Sok at [34] (per Branson J, with Marshall J agreeing); see also New Cap Reinsurance at [109].

(11) In order to depart from such earlier authority, a court must have a "strong conviction" that the earlier decision was erroneous (not merely that the former approach is no longer preferred), and must be able to clearly demonstrate "the nature of the error ... by the application of correct legal analysis": Gett v Tabet at [294] -[295] .

(12)That reasonable minds may differ on a question is not a foundation for a conclusion that a decision supported by exposed reasons for judgment after full argument is "plainly wrong": Nowicka at [21]-[22]."

[319]

In this matter, the Tribunal rejects the builder's submissions that Onslow is inconsistent with higher legal authorities; is distinguishable from the facts of this matter, and is legally wrong.
Although the builder has referred to various contractual provisions in its Points of Claim and submissions, it has not articulated how those contractual provisions are, in substance, any different to the statutory warranty provisions, nor how there is any separate breach of those provisions as distinct from a breach of the statutory warranty provisions.
The provisions of s 48K(7) and 18E of the HB Act are jurisdiction time limits, as discussed in Rayson Constructions. The builder's claim against the Sub-Contract is "properly characterised" (per Onslow at [52]) as involving, in substance, the same obligations (and breaches) as the statutory warranties in s 18B(1) of the HB Act.
If the builder could identify a separate contractual obligation and breach that was different to, and not "properly characterised" as in substance the same as the statutory warranties in s 18B of the HB Act, then it would have a potential cause of action (and remedy) to which the jurisdictional provisions of s 48K(3) of the HB Act apply. However, it has not. The substance of the contractual provisions it relies upon, and the substance of the statutory warranties in s 18B(1) of the HB Act in the factual circumstances of this matter are no different.
Onslow is not authority for the proposition that a builder (or owner) cannot sue for breach of contract that is separate and distinct from the statutory warranty provisions under s 18B(1) of the Act. However, it cannot simply assert that it relies upon a breach of contract that is properly characterised as a breach of the statutory warranty provisions to avoid the limitation provisions in s 48K(7) and s 18E(1)(b) and (4) of the HB Act. If that approach was accepted, there would be separate limitation regimes for what, in substance, is the same cause of action.
The NSW Court of Appeal and High Court decisions in Brookfield do not identify a legal principle that is different to the principles referred to in Onslow. Those decisions do not deal with the same issues as this matter under ss 48K(7); 18B; 18E and 18G of the HB Act. The references to the statutory warranties implied into a contract by s 18B supplementing other potential causes of action is in the context where the owners corporation was suing in the tort of negligence.
The potential rights of a party to bring a "building claim" for "building goods and services" (s 48A of the HB Act) within the jurisdiction of the Tribunal under s 48K of the HB Act is not limited only to breach of statutory warranties under s 18B of the HB Act. Onslow is not authority for that proposition, nor is such a proposition legally correct. However, what the builder cannot do is avoid the limitations and restrictions of s 18E of the HB Act by dressing up what is properly characterised as a breach of the statutory warranties under the guise of contractual provisions that are, in substance, the same as the provisions of s 18B(1).
The builder's submission that the requirement in s 7(2) of the HB Act that the contract be in a certain form is critical, and by reason of s 7(8)(a) of the HB Act the same requirements do not apply to a contract between a builder and sub-contractor is rejected. It is not the form of the contract or the requirements of s 7(2) of the HB Act that was critical in Onslow. It is that the contractual provisions under Clause 39 of the contract was "properly characterised" as the same statutory warranty obligations implied into the contract under s 18B(1) of the HB Act.
The builder could have brought and established a breach of contract claim that was separate and distinct in its substance from a breach of statutory warranties claim. It has failed to do so. It could also have brought a claim under s 37 of the DBP Act against the sub-contractor (subject to the Tribunal limitation periods referred to previously, and establishing breach-see, for example Deaves v Sigma Group NSW Pty Ltd [2023] NSWCATAP 94). It has failed to do so.
The Tribunal does not accept the builder's submission in respect of s 18G of the HB Act. As was pointed out in Onslow, the statutory warranty provisions operate for the benefit of both the builder and the sub-contractor. The Sub-contractor obtains the benefit of the limitation provisions in ss 48K(7) and s 18E of the HB Act and there is no basis for accepting that parties can agree to contract out of the applicable limitation periods for a contractual claim that is "properly characterised" as a breach of statutory warranties claim.
The Tribunal does not accept the builder's submissions that the form of the contract (being a commercial contract between a builder and a Sub-contractor) makes a difference. By reason of s 18B(2) of the HB Act, the statutory warranties are implied into the contract between the builder and Sub-contractor no differently to them being implied into a contract between an owner and a builder.
The Tribunal does not accept the submission of the builder that a brief extract from the second reading speech of legislation is critical. Second reading speeches are of limited assistance in statutory interpretation, and words of intention do not override the words of the statute, interpreted on the basis of their plain language and statutory context (Harrison v Melhem [2008] NSWCA 67; (2008) 72 NSWLR 380 at [159]- [173]).
Accordingly, the only claim by the builder against the Sub-contractor the Tribunal has jurisdiction to consider is a "major defect" claim under s 18E of the HB Act.
Section 18E of the HB Act states as follows:

[332]

The Appeal Panel in Ashton v Stevenson; Stevenson v Ashton [2020] NSWCATAP 233 ('Ashton') considered the applicable principles for whether or not a defect was a "major defect" under Section 18E (1) (b) and (4) of the HB Act. Such principles are summarised as follows:

(a) The test under s 18E (4) of the HB Act has two parts. The first is that there must be a defect in "a major element of the building" attributable to one of the specified mattes. The second is that the defect must "cause" or "is likely to cause" (a) the inability to inhabit or use the building (or part of the building) for its intended purpose; or (b) the destruction of the building or any part of the building; or (c) a threat of collapse of the building or any part of the building (Ashton at [63]);

(b) Expert evidence may be necessary to establish the fact of the defect and the likely effect on the ability to inhabit the building or cause the destruction of the building. However, the homeowner may also give lay evidence on such issues, including matters such as observations about the absence of relevant elements of the work; the location of water staining; the fact of water ingress during a rain or flooding event; photographs of such matters; or other observations about which a non-expert could give evidence and which could rationally affect the determination of what is likely in the future (Ashton at [68]).

(c) Whether a particular defect is likely to cause the relevant consequences in the future is evaluated in the context of (a) how long the defect has existed; and (b) whether the defect has resulted in any damage that might indicate the likelihood the premises will become uninhabitable or destroyed in the future by reason of the defect (Ashton at [69]).

(d) The design life of the structure and materials used may be relevant considerations (Ashton at [70]).

(e) Determination of the matters in s 18E (4) (a) (i)-(ii) are questions of fact (Ashton at [130]-[131]). Evidence is required from which it can be concluded the defects will likely cause the specified outcome (Ashton at [134]).

(f) Defects in the drainage system (and the roof structure) designed to keep rainwater from entering the dwelling is a major element under s 18E (4) (c) of the HB Act; and evidence may establish defects are likely to cause the premises to become uninhabitable in the future due to flooding, even if such a rain event has not yet occurred (Ashton at [169]-[170]).

Further, the Appeal Panel stated in Ashton at [135]:

The Owners-Strata Plan No 102171 v Ceerose Pty Ltd; Zone Q Milsons Point Development Pty Ltd v Ceerose Pty Ltd; Ceerose Pty Ltd v Southern Cross Climate Control Pty Ltd [2025] NSWCATCD 137;

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Judgment (376 paragraphs)

Legislation Cited (18)

Cases Cited (8)