Vella v Mir

Tribunal hearing and decision

1. The hearing occurred on 30 and 31 August 2017. The closing date for post-hearing submissions was 17 November 2017.
2. The main issues between the parties at the hearing were those items of the Mirs' claims on which the expert witnesses disagreed, who was responsible for defective work and whether a money or a work order should be made.
3. As noted above, Cathayne accepted liability for Item 4 only, which the experts agreed could be rectified at a cost of $2,044. Otherwise, Cathayne attributed liability to the Vellas.
4. On 13 March 2018 the Tribunal relevantly made the following orders: 1. First respondents to pay applicants $143,161.15, on or before 6 April 2018. 2. Second respondent to pay applicants $3,091.55 on or before 6 April 2018. 3. Note the indicative view of the Tribunal that the costs orders in these proceedings should be that the first respondents pay the applicants' costs and 90% of the second respondent's costs of the proceedings on the ordinary basis as agreed or assessed, including within that assessment the costs as agreed or assessed of invasive expert investigation of the applicants' premises during the course of and for the purposes of the proceedings.
5. The Tribunal made a further order which gave the parties an opportunity to make submissions in respect of costs. The costs decision was made on the papers on 10 May 2018. The Tribunal accepted a submission that the Vellas should have accepted a settlement offer made by the Mirs and made the following orders: 1. Order that the first respondents pay the applicants' costs of the proceedings on the ordinary basis as agreed or assessed up to and including 5pm on 8 September 2017 and on the indemnity basis as agreed or assessed from 5pm on 8 September 2017, including within that assessment the costs as agreed or assessed of invasive expert investigation of the applicants' premises during the course of and for the purposes of the proceedings. 2. Order that the first respondents pay 90% of the second respondent's costs of the proceedings on the ordinary basis as agreed or assessed, including within that assessment the costs as agreed or assessed of invasive expert investigation of the applicants' premises during the course of and for the purposes of the proceedings.
6. The Vellas appealed the Tribunal's substantive decision on 10 April 2018 and lodged an amended Notice of Appeal to include an appeal against the costs decision on 4 June 2018

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with the leave of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NCAT Act).
2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
3. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
4. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
5. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
6. In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.

Submissions and evidence

1. In deciding the appeal, we have had regard to the following:

• The Notice of Appeal lodged on 10 April 2018 and the amended Notice of Appeal lodged on 4 June 2018;
• The Reply to Appeal lodged on 20 April 2018;
• The oral and written submissions made on behalf of the Vellas by Mr Bambagiotti;
• The oral and written submissions made on behalf of the Mirs by Mr Flaherty;
• The oral and written submissions made on behalf of Cathayne by Mr Zikmann;
• Procedural directions made by the Appeal Panel;
• Exhibit A, being the affidavit of Amanda Olic, dated 2 August 2018, which attached an amended partial transcript of the Tribunal hearing;
• The Tribunal's reasons for decision in the substantive proceedings, dated 13 March 2018;
• The Tribunal's reasons for decision in the costs proceedings, dated 10 May 2018;
• The Mirs' application to the Tribunal lodged on 26 July 2016;
• Relevant documents in the agreed Appeal Bundle;
• A post-hearing submission provided by Mr Bambagiotti addressing the disposition of any re-determination of the Tribunal proceedings in the event that we allowed Ground 8 in particular.

Correspondence from Jordan Djunda Lawyers on behalf of the Mirs in response to Mr Bambagiotti's post hearing submission.Notice of Appeal

1. As noted above, the Notice of Appeal was lodged on 10 May 2018 and the Amended Notice of Appeal was lodged on 4 June 2018, which is within the 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules).

Grounds of Appeal

1. The grounds of appeal specified in the amended Notice of Appeal are: 1. The Tribunal erred in finding that John Vella was liable in respect of all items other than the item for which Cathayne took responsibility. John Vella was not the owner builder. The premise of the findings is an error of law. 2. The Tribunal erred in finding (at [35] to [40]) that the provision of certification is residential building work and the finding of liability is inconsistent with the finding that "no one knows whether or not the item is defective". The finding of liability is inconsistent with the findings in relation to there being a potential defect and so without foundation or evidence. 3. The Tribunal erred in its approach to and findings of loss at [38] to [40] with respect to the balustrades in that: 1. It makes no findings of loss as opposed to identifying potential loss, which is speculative and not a basis to determine damages or recovery; 2. The Tribunal erred in its identification and application of evidential onus in finding that the onus was on the appellants when it had not determined the proper nature and extent of loss. 3. The Tribunal made a determination of compensation without competent findings of loss, which is an error of law. 4. The Tribunal should have found that there was no loss and dismissed that part of the claim. 1. The Tribunal erred in its findings at [45] to [47] with respect to the determination of loss and quantum issue arising from the bi-fold doors, in that: 1. It asked itself the wrong question as to the proper method of rectification and hence quantum of loss in that it overlooked the effect of its finding that there was no evidence that repair would not result in any necessary warranty being given and so proceeded on a wrong basis. 2. The requirement of a warranty was in the circumstances of owner builder work without any lawful foundation and hence an error of law. 3. The Tribunal found that there was a major defect without having undertaken analysis and on the mistaken assumption that agreement of the expert was agreement of the parties which is a mischaracterisation as to the law relating to expert evidence and hence an error of law. 4. It reached its conclusion in favour of replacement over rectification by reversing and mischaracterisation of the onus of proof as to loss and applied the wrong test as to loss 1. By the above mentioned errors the Tribunal's finding at [48] of overall defect is in error. 2. The Tribunal erred in its analysis of s 48MA. 3. The Tribunal erred in its findings at [56] as to formal admissions and its refusal to allow the application to withdraw the admissions was in error in that: 1. There were no formal admissions, so the finding was made in the absence of evidence; 2. To the extent to which formal admissions were said to have arisen from opinions provided by an expert witness, the findings that those opinions were admissions were wrong in that: 1. There was no evidence as to how the opinion of an expert expressed in conclave amounts to a concession by a person on behalf of a party; 2. The Tribunal failed to make the necessary ancillary finding of authority or to alert the appellants that it had formed a view about the issue of the authority of the expert, which is a denial of procedural fairness. 1. The Tribunal should have found that there were no admissions. 1. The Tribunal erred in its findings as to the limitation defences in [70] to [75]. 2. The Tribunal failed to have regard to submissions and evidence in making findings which amounts to a failure to properly exercise jurisdiction and/or involved a failure to provide procedural fairness, which is an error of law. 1. The Tribunal failed to have regard to the Vellas' submission as to major defect and does not deal with that submission in the decision. 2. The submission should have been addressed in [35], [44] and [47] where the finding was made without any reasoning. 3. The Tribunal failed to have regard to the Vellas' submission that there was a second contract with Cathayne commencing 1 November 2012 in its findings at [4], [8] and [60] - [61]. 1. Ground 9A - The Tribunal erred in making a Jones v Dunkel inference. 2. Ground 9B - The Tribunal erred in its findings by failing to address submissions which amounted to a constructive failure to exercise jurisdiction and an error of law. 3. Ground 9C - The Tribunal erred in its findings by failing to address evidence which amounted to a constructive failure to exercise jurisdiction and an error of law. 4. Ground 10 - The Tribunal erred in making a Bullock / Sanderson order. 5. Ground 11 - The Tribunal erred in making its costs finding and regarding indemnity costs.

Ground 1: Identity of first respondent

1. It is not in dispute that Joyce Vella and not John Vella was the owner builder. While it does not appear that any application was made to remove John Vella as a party to the Tribunal proceedings, the Mirs agree that no order should be made against Mr Vella.
2. This ground of appeal is allowed. We have removed John Vella as a party to the Tribunal and Appeal proceedings.

Grounds 2 and 3 Balustrade certification

1. We do not need to consider these grounds because of our findings in relation to Ground 8. This is because, at the appeal hearing, the Mirs stated that if we allowed Ground 8, they would not press Items 1, 2 and 5. Item 5 concerns the balustrade certification issue.

Grounds 4 - Bi-fold doors - Item 7

1. This issue concerns bi-fold sliding glazed window door units, which the Tribunal referred to as doors for ease of reference. The Vellas submit that the Tribunal's approach to the issue of loss and quantum relating to the bi-fold doors is in error.
2. Mr Zakos' opinion was that the appropriate remedy for water ingress through the doors was their replacement with commercial units. Mr Capaldi's opinion was that the water penetration could be prevented by the installation of new rubber and brush weather seals.
3. The Tribunal found in favour of the Mirs, stating: 43. ….. The experts agreed quantum for each posited solution: install new rubber and brush weather seals $3,180; supply new doors $16,000. 44. The experts also agreed that there was a major defect, being water ingress through the doors. 45. The issue, particularly between the current and former owners' experts, was whether the appropriate resolution was new commercial doors or the cheaper solution of rubber and brush seals added to the existing semi-commercial doors. 46. There was no evidence that modifications to the door system by the new seals would or would not void the warranty for the doors. 47. In circumstances where there is an agreed major defect in the existing system, it seems to me that (again) the respondents have not satisfied the evidential onus placed on them. That evidential onus was to put forward proper evidence that warranty integrity would be maintained by the partial solution and that the upgrade would resolve the problem when the existing doors were clearly defective. There was no effective evidence to contradict the builder's description that the doors with seals came assembled, as the product supplied as a unit. There was no clear evidence of inadequate assembly or installation by the builder or anyone else.
4. In summary, the Vellas submit that:

• The Tribunal inappropriately reversed the onus of proof when it found that repair of the doors would not be adequate.
• It was a misapplication of principle to require the Vellas to prove a negative.
• The Tribunal made no finding as to the source of the Vellas' obligation to provide any warranty to a purchaser. No evidence or argument was advanced as to contractual warranties and there were no findings as to the source of any such obligation.
• The Tribunal's finding of major defect adopted the opinion of the expert witnesses. Whether there is a major defect is a conclusion of law and an expert's opinion cannot be decisive. The Tribunal did not engage with and analyse the definition of a major defect found in s 18E of the HB Act.
• In favouring replacement over rectification, the Tribunal was addressing the exception to the presumption articulated in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8 (12 February 2009) concerning the appropriateness of rectification in relation to damages in home building cases. There is no indication that the Tribunal considered whether there were exceptional circumstances that would supplant rectification as the appropriate remedy. Mrs Vella argues that in determining that the doors should be replaced, the Tribunal misapplied Bellgrove v Eldridge (1954) 90 CLR 613.

1. We have dealt generally with the s 18E issue (that is, the Tribunal's finding in relation to major defect) under Ground 8 below. However, it is not in dispute that Cathayne installed the bi-fold doors under the 2011 contract: Affidavit of Wayne Weatherburn, page 488 Folder 2 of the Appeal Bundle. In such circumstances, it would appear that a seven year statutory warranty period attaches to this item in any event.
2. In our view, the Bellgrove v Eldridge argument lacks merit. A finding that defective doors should be replaced rather than repaired (or modified by the addition of seals and brushes as suggested by Mr Capaldi) is not inconsistent with the principle articulated in Bellgrove v Eldridge that an owner of a building is entitled to rectification of defective work, subject to a test of necessity and reasonableness. As stated in Bellgrove v Eldridge: But the work necessary to remedy defects in a building and so produce conformity with the plans and specifications may, and frequently will, require the removal or demolition of some part of the structure. And it is obvious that the necessary remedial work may call for the removal or demolition of a more or less substantial part of the building. Indeed - and such was held to be the position in the present case - there may well be cases where the only practicable method of producing conformity with plans and specifications is by demolishing the whole of the building and erecting another in its place. In none of these cases is anything more done than that work which is required to achieve conformity and the cost of the work, whether it be necessary to replace only a small part, or a substantial part, or, indeed, the whole of the building is, subject to the qualification which we have already mentioned and to which we shall refer, together with any appropriate consequential damages, the extent of the building owner's loss. The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt. (Our emphasis)
3. We are also not satisfied that the finding that the Vellas had not proven that modification of the doors by the installation of new seals would not void the manufacturer's warranty on the doors was a reversal of the onus of proof. Rather, it was a reason not to accept Mr Capaldi's proposed method of rectification and instead opt for Mr Zakos' method of rectification. We are satisfied that it was open to the Tribunal to prefer Mr Zakos' opinion over that of Mr Capaldi and to order replacement of the doors.
4. Subject to our findings concerning Grounds 8, 9B and 9C, this ground of appeal is refused.

Ground 5 - Overall findings in relation to defects

1. At [48] of the reasons for decision, the Tribunal found: 48. I therefore conclude that the current owners have established that the items complained of constituted defects, and the amount of those defects totalling $96,696. With agreed rates for preliminaries, margin and GST mentioned earlier, the respective totals, with serial addition of each element, are $106,365.60, $132,957 and $146,252.70.
2. The Vellas submit that the net effect of each of the Tribunal's errors establishes "a want of adequate reasoning and care for the whole of that decision as led to the findings in [48]."
3. This ground of appeal adds nothing to the other grounds of appeal.

Ground 6 - section 48MA

1. This ground of appeal was not pressed at the hearing.

Ground 7 - Admissions

1. This ground of appeal concerns admissions the Tribunal found had been made by the Vellas concerning items 1, 2 and 5.
2. It is not necessary for us to make findings in relation to this ground of appeal because of our findings in respect of Ground 8. As noted above, at the appeal hearing, the Mirs stated that if Ground 8 was allowed and the matter re-determined, they would not press these items.

Ground 8 - Section 18E - Limitation defence or jurisdictional threshold issue

1. Relevant to this ground of appeal are the Tribunal's findings at [70] to [75] of the reasons for decision: 70. In written submissions the former owners, with derivative support from the builder in reply submissions, raised a limitation question under HBA s 18E, to the effect that none of the items in dispute was a major defect (the builder's submission in support was but faint in that respect on the water penetration issues). 71. The limitation defence was not expressly pleaded, was mentioned briefly in opening but not developed, was directly contrary to the expert evidence from the former owners' expert (that was led by the former owners in respect of all the defects) except for the coating to the front wall (on which the current owners' expert said it was a major defect and the former owners' expert said it wasn't) and the roof capping system (on which the builder accepted responsibility). The former owners' expert's position was recorded in the first conclave report added to tab 7 in Ex J1. There was no cross-examination of the other experts or of any party to suggest that any of the items apart from the front wall coating was not a major defect. Consequently, there was no opportunity to explore in evidence the characteristics of disputed items as a basis for making submissions whether or not a disputed item sat within the definition of "major defect" in s 18E(4). 72. Since a limitation defence had not been expressly pleaded by the former owners, no other party was on notice to develop a case in response, in evidence or in submissions. In particular, no other party was on notice that there was to be non-reliance upon expert evidence where the former owners otherwise relied upon that evidence and conducted their case on the basis of that expert evidence: compare Verwayen v The Commonwealth (1990) 170 CLR 393. 73. I reject the submissions of the former owners (derivatively supported by the builder) on this topic as not squarely raised during the hearing so as to found the submissions sought to be made. 74. In any event, it seems to me that the former owners' expert's opinion was correct as to the items where he expressed an opinion. On the wall coating he differed from the current owners' expert on the degree of rectification and I have preferred the comprehensive solution of the current owners' expert, who regarded this as a major defect. In dealing with questions of limitation which involve technical definitions, as those in HBA s 18E are, I am entitled to take into account expert evidence about the application of those definitions to particular building works. 75. Further, for reasons I elaborated in the Nichols v MAG case referred to earlier in these reasons at [85]-[104], to the extent the disputed items were within the scope of the 2011 written contract they were subject to the 7 year limitation period then in force and these proceedings were brought well within time.
2. The Tribunal's jurisdiction in relation to building claims is set out in s 48K of the HB Act, which relevantly provides: 48K Jurisdiction of Tribunal in relation to building claims ……. (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). ……
3. Section 18E of the HB Act provides: 18E Proceedings for breach of warranty (1) Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions: (a) proceedings must be commenced before the end of the warranty period for the breach, (b) the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case, (c) the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work), (d) if the work is not completed, the warranty period starts on: (i) the date the contract is terminated, or (ii) if the contract is not terminated - the date on which work under the contract ceased, or (iii) if the contract is not terminated and work under the contract was not commenced - the date of the contract, (e) if the breach of warranty becomes apparent within the last 6 months of the warranty period, proceedings may be commenced within a further 6 months after the end of the warranty period, (f) a breach of warranty becomes apparent when any person entitled to the benefit of the warranty first becomes aware (or ought reasonably to have become aware) of the breach. ……. (2) The fact that a person entitled to the benefit of a statutory warranty specified in paragraph (a), (b), (c), (e) or (f) of section 18B has enforced the warranty in relation to a particular deficiency in the work does not prevent the person from enforcing the same warranty for a deficiency of a different kind in the work (the other deficiency) if: (a) the other deficiency was in existence when the work to which the warranty relates was completed, and (b) the person did not know, and could not reasonably be expected to have known, of the existence of the other deficiency when the warranty was previously enforced, and (c) the proceedings to enforce the warranty in relation to the other deficiency are brought within the period referred to in subsection (1). (3) The regulations may prescribe defects in a building that are not (despite any other provision of this section) a major defect. (4) In this section: major defect means: (a) a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause: (i) the inability to inhabit or use the building (or part of the building) for its intended purpose, or (ii) the destruction of the building or any part of the building, or (iii) a threat of collapse of the building or any part of the building, or (b) a defect of a kind that is prescribed by the regulations as a major defect, or (c) the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act. Note. The definition of major defect also applies for the purposes of section 103B (Period of cover). major element of a building means: (a) an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams), or (b) a fire safety system, or (c) waterproofing, or (d) any other element that is prescribed by the regulations as a major element of a building.
4. Sections 48K(7) and 18E go squarely to the Tribunal's jurisdiction to hear and determine claims which concern breach of statutory warranty. They set out criteria satisfaction of which enlivens the Tribunal's power to hear and determine an application regarding such claims.
5. Generally speaking, when deciding whether the Tribunal has jurisdiction to hear and determine a statutory warranty claim the Tribunal must: 1. Decide when the statutory warranty period starts; that is (generally) the date on which the work was completed: see s 18E(1) and s 3B (unless the building work is in a strata scheme, in which case s 3C applies in respect of completion date); 2. If a statutory warranty has previously been enforced, decide whether s 18E(2) applies; 3. Decide whether each of the claimed defects is in a major element of a building as defined in the note to s 18E(4); 4. Decide whether each of the claimed defects in a major element is a major defect as defined in s 18E(4); 5. Decide whether the application has been made in time by reference to the date on which the statutory warranty period commenced, the date on which the statutory warranty period will end (or the date on which it ended) and the date on which the application to the Tribunal was lodged.
6. We note that s 18E applies to contracts entered into and building work undertaken after 1 February 2012. A seven year statutory warranty period continues to apply to in relation to contracts entered into and work undertaken prior to that date: Gregorio v Cheadle [2018] NSWCATAP 118. It is not in dispute that Mrs Vella obtained an owner builder permit in November 2012. The six year statutory warranty period for major defects and the two years statutory warranty period for non-major defects apply to work undertaken by Mrs Vella as an owner builder.
7. Jurisdiction is not conferred on the Tribunal by the consent of the parties or by the failure of a respondent to raise the issue of jurisdiction. The Tribunal must determine whether it has jurisdiction to consider and determine an application. In Australian Education Union v Lawler [2008] FCAFC 135 the Court held: It is well-established that there will be no estoppel against an attempt by a party to hold a public authority or official within the relevant designated statutory jurisdiction or other limits.
8. That said, parties may agree on jurisdictional facts; that is, on the elements which enliven the Tribunal's jurisdiction. In relation to claims involving a breach of statutory warranty, the relevant jurisdictional facts are the criteria set out at [45] above. However, even if the parties agree on the relevant jurisdictional facts, whether an application in respect of a breach of statutory warranty has been made within the time limits prescribed by s 48K(7) is a jurisdictional issue and not merely a limitation defence to be argued by a respondent: see Vero Insurance Ltd v Buckle; Reynell v Buckle [2008] NSWSC 73 at [64]. The onus is on an applicant to establish that the Tribunal has jurisdiction to hear and determine a claim.
9. Expert evidence is clearly relevant to whether a claimed defect is in a major element of a building and whether it meets the definition of a major defect in s 18E(4). However, it is not determinative of the issue.
10. In this case, the Mirs' expert Mr Zakos expressed the opinion that all of the claimed defects other than Item 3 (missing glazed balustrade) were major defects. The Vellas' expert Mr Capaldi's view was that a number of the claimed items were not defects. However, in relation to whether the claimed defects were major defects, he agreed with Mr Zakos on an "if found" basis otherwise than in respect of Item 1 (cracking in the render). The joint report echoes the experts' respective views in this regard.
11. A significant problem with the expert evidence is that the basis for Mr Zakos' conclusion that particular items were major defects is not properly explained in his evidence. Furthermore, Mr Capaldi provided no reasoning for agreeing with Mr Zakos' opinion in relation to whether items were major defects on an "if found" basis.
12. One example of the problems with Mr Zakos' evidence concerns Item 1. In his report Mr Zakos states that Item 1 (cracking in the render) is a major defect, setting out his reasoning as follows (at page 26 of Folder 1 of the Appeal Bundle): 6.7 Major or Minor Defect (a) In my opinion, the front wall coating has become loose and should be considered a major defect as the wall does not conform with Part Fr.1(b) of the BCA and Part P2.1. That is the coating part of the building and it has become unstable and hence it is my opinion that is [sic] should be regarded as a major element. (b) Further, the failure of the wall may cause or is likely to cause the inability to inhabit or use part of the building for its intended use and there may be a threat of collapse of part of the building.
13. Mr Zakos' report does not make it clear whether Mr Zakos was of the view that the coating or the underlying wall is the relevant "major element". If it was his opinion that the coating was the major element, then it is not clear on what basis, taking into account the definition of major element in the note to s 18E(4). Nor does Mr Zakos' report explain why an unstable coating could lead to a failure of the wall, the inability to use part of the building for its intended use or a threat of collapse of part of the building.
14. Another example concerns Item 2 (awnings). In his report Mr Zakos stated that the northern end of the north balcony awning had separated from the building. The separation measured 5 mm tapering to 0 mm for a length of one metre. Mr Zakos further stated that he observed separation at the southern end of the south balcony. The separation was approximately 1-2 mm wide: pages 27-28 of Folder 1 of the Appeal Bundle.
15. In relation to major defect, Mr Zakos states (at page 29 of Folder 1 of the Appeal Bundle): 7.7 Major or Minor Defect (a) In my opinion, the awning becoming loose should be considered a major defect as the balustrading does not conform with Part F2.1 of the BCA and Part P2.1. That is the awning part of the building and it has become unstable, and hence it is my opinion that it should be considered a major element. (b) Further the failure of the awning may cause or is likely to cause the inability to inhabit or use part of the building for its intended use and there may be a threat of collapse of part of the building.
16. In this part of his report, Mr Zakos again does not engage with the definition of "major element". It is not clear how an awning that has become partially separated from a building constitutes a major element as defined by the note to s 18E(4). The fact that an element of a building is unstable or may fail does not of itself bring that element within the definition of "major element".
17. In their points of claim, the Mirs did not claim that the defects the subject of their claim were major defects. This issue was also not raised by either of the respondents in the points of defence: pages 1-7 Folder 1 of the Appeal Bundle. Further, an examination of the transcript particularly between pages 69 and 89, during the period the expert witnesses were giving concurrent evidence, indicates that the experts were not questioned in any detail in relation to whether an item met the definition of a major defect.
18. That said, it is clear from the transcript that by the time of the hearing, the Vellas did not concede that at least Items 1, 2 and 5 were major defects, as this was the basis on which admissions concerning those items were sought to be withdrawn: see Transcript, page 25, Folder 5 of the Appeal Bundle. It was also argued in closing submissions provided on behalf of the Vellas that none of the claimed defects were major: pages 1835 to 1846 and pages 1874 to 1886 of Folder 6 of the Appeal Bundle. It is clear from this that the parties had not agreed on relevant jurisdictional facts, notwithstanding Mr Capaldi having expressed agreement with Mr Zakos.
19. In such circumstances, the Tribunal was not bound to accept expert evidence provided on behalf of the Mirs, even if it was not contradicted by the expert evidence provided on behalf of the other parties: Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305. This was particularly so when the evidence was relevant to the threshold issue of whether the Tribunal had jurisdiction.
20. If the Tribunal was going to accept Mr Zakos' opinion in relation to whether particular items were major defects, it needed to engage with the definition of a major defect in s 18E(4) and to set out a reasoning process leading to a conclusion that the claimed items were major defects. This was particularly important given the significance of the definition of major defect in s 18E(4) in determining whether the Tribunal had jurisdiction in respect of particular items. It was also particularly important given the inadequacy of Mr Zakos' analysis of the issue.
21. The Tribunal in effect adopted Mr Zakos' opinion in relation to whether items were major defects, without reference to the statutory definition. The exception is Item 3 (missing glazed balustrade) which the Tribunal determined in favour of the Mirs, therefore impliedly accepting that it was a major defect. This was so, even though Mr Zakos had opined to the contrary. It appears that there was no evidence before the Tribunal which supported a conclusion that Item 3 constituted a major defect. We have discussed Item 3 further below, in connection with Ground 9B.
22. We are not satisfied that Mr Zakos' opinion alone or in conjunction with Mr Capaldi's unreasoned agreement with Mr Zakos was a sound basis on which to conclude that particular items constituted major defects. We conclude that the Tribunal fell into error by characterising s 18E as a limitation defence not properly pleaded by the Vellas rather than as a threshold issue, central to the Tribunal's jurisdiction to deal with the application under s 48K(7), of which the onus of establishing fell on the Mirs. Further, we are not satisfied that the Tribunal's reasons for accepting Mr Zakos' opinion in relation to whether particular items are adequate.
23. Ground 8 is allowed.

Grounds 9, 9B and 9C - Failure to consider evidence and submissions

1. These grounds of appeal concern Mrs Vella's claim that the Tribunal failed to have regard to particular evidence and submissions in making its decision in relation to the existence or otherwise of major defects.

Ground 9

1. The amended notice of appeal articulates Ground 9 as follows. It failed to have regard to submissions seriously put and evidence before it in making its findings in the following respects, all of which amounts to a failure to properly exercise jurisdiction and/or a failure to provide procedural fairness, which is an error of law: (a) The Tribunal failed to have regard to the appellants' submission as to 'major defect' and does not deal with that submission anywhere in the decision, mistaking, in some instances, the opinions of experts on that question of law as admissions. (b) That submission should have been addressed in Paras Principal Decision [35] and [44] and [47], where the finding was made without any reasoning; (c) The Tribunal failed to have regard to the appellants' submission that there was a second contract with the builder, the second respondents, commencing 1 November 2012 in its findings at para Principal Decision [4] and para [8] and [60-61]. (d) Further to (c), the Tribunal failed to have regard to, or to deal with evidence put in support of that submission and its findings.
2. This ground relates to the Tribunal's findings concerning major defect. In view of our findings in relation to Ground 8, we do not need to deal with this ground further.

Ground 9A - Jones v Dunkel inference

1. This ground concerns the inference the Tribunal drew from Mrs Vella's failure to give evidence. At [67] and [68] of the reasons for decision, the Tribunal stated: 67. The female former owner, who was at the centre of events as just described, did not give evidence. The male former owner gave no useful direct evidence. Most of the communications (written and oral) appeared to have been with the female former owner. The male former owner said he didn't instruct the sub-contractors directly and would need to speak to his wife if he wanted to know what was said to the sub-contractors (T 02 p 73). 68. In those circumstances, I draw the inference that the female former owner's evidence, which was the only direct evidence on matters centrally in issue, would not have assisted the former owners' case. This is a permissible use of such absence because the current owners and the builder (the latter being the party most directly engaged with this issue) do not need in the relevant matters the female former owner's absence of evidence as positive evidence in favour of their respective positions, only the absence of contradiction to reinforce the positive evidence, and inferences therefrom, in favour of the relevant findings contended for by them: Jones v Dunkel (1959) 101 CLR 298 esp at 312.
2. The Vellas' amended notice of appeal characterised Ground 9A as follows: Further, its finding at Principal Decision para [68] going to a Jones v Dunkel inference was wrong and amounted to an error of law in that: (a) Although the Tribunal identified the limitations and type of circumstances in which a Jones v Dunkel inference can be drawn and used, its findings did not reflect those limitations and circumstances. (b) The specific inference was not set out, nor were the circumstances and context of the inference identified or supported by the facts. (c) The Vellas were not clearly notified that the Tribunal considered drawing the inference, or the specific terms of the inference and were denied the opportunity to address either the proposal to draw or that aspect of the evidence, which amounts to a denial of procedural fairness and hence an error of law: (d) The Tribunal made a Jones v Dunkel inference in the Mir's favour when then did not ask for one, the Builder's submission, which was not adequate, went in a different direction, again leading to a denial of procedural fairness. (e) The use of the inference, at the Builder's suggestion, relating to production of documents under summons was an incorrect construction and application of the principle, and an error of law. (f) The Tribunal's reasons fail to set out the terms of the inference or to what evidence it is said to support, or how it fits within the Tribunal's decision making process which is either a want of procedural fairness in failure to set out its reasons, or a failure to apply to the principle on the assumption that the absence of reasons evidences a want of rational consideration and use of the inference in the decision making process, either alternative of which gives rise to a constructive failure to exercise jurisdiction and an error of law.
3. The Vellas do not say the rule in Jones v Dunkel did not apply because of one of the restrictions on the rule, conveniently outlined in Cross on Evidence, 11th Ed (2017), JD Heydon at [1215]; for example that the lack of evidence from Mrs Vella could be explained. Rather, Mrs Vella's complaint is in the application of the rule and an allegation that the specific inference was not set out. We disagree. There was no explanation for why Mrs Vella did not give evidence and there was a reasonable inference that it was because the Vellas feared to call her. These are appropriate circumstances for the rule to operate. The Tribunal properly identified in [68] that Mrs Vella's evidence "…would not have assisted the former owners' case.." The Tribunal's characterisation of the inference to be drawn was correct.
4. As to the Vellas not being notified of its application, no authority is offered for the proposition that notice is required to be given by a Tribunal. The Vellas were legally represented and the application of the rule follows from their own failure (in this case) to call a witness. Its application should be obvious. In any event, the Vellas conceded in oral argument that the Tribunal had been invited to draw the inference by one of the other parties (Cathayne). In our view, if notice was required, it was provided by the submission of another party.
5. The reference in (e) to the use of the inference in the production of documents appears to refer to [13] of the Reasons for Decision - but this merely recounts history and is not part of the reasoning leading to a decision.
6. The reference at (f) was developed in oral argument. Mrs Vella complained that the Jones v Dunkel inference infected other parts of the Tribunal's reasons. Mrs Vella was asked to identify the other parts of the decision where this was alleged to have occurred but in our opinion, each of the nominated paragraphs (see below) did not demonstrate that the Tribunal drew a Jones v Dunkel inference: 1. [38] and [47] deal with a different issue being the onus of proof; 2. [62] the final sentence was a "no evidence" point; 3. [63] is a "no inconsistency" issue; 4. [65] relates to analysis of documents; and 5. [66] evaluated evidence without involving an inference.
7. This ground of appeal has not been made out.

Ground 9B

1. The amended notice of appeal articulates Ground 9B as follows: The Tribunal erred in its findings by failing to address submissions which amounted to a constructive failure to exercise jurisdiction and an error of law, such submissions being: (a) The adoption of expert opinions without engaging in the process of determining the criteria for a major defect and applying that criteria to the alleged defects (b) The date of the second contract commencing on 1 November 2012 (c) The absence of a s 18 F defence by the builder (d) The application of s 18 G to the builder's second contract (e) The criteria for an admission and applying that criteria (f) That the installer of the awning would rectify the defect (g) That the second appellant, John Vella, was not the holder of an owner builder permit (h) No loss was suffered as a result of the missing glazed balustrade
2. We have dealt with several of the matters set out in support of Ground 9B when determining other grounds of appeal: 1. The issue in (a) was dealt with when we determined Ground 8. 2. The issue referred to in (e) concerns the admissions the subject of Ground 7. Given that the admissions concern Items 1, 2 and 5, it is unnecessary to determine this issue, because of the findings we have made concerning Ground 8; that is, having allowed Ground 8, the Mirs are no longer pressing Items 1, 2 and 5. 3. The issue in (f) concerns Item 2, which is no longer pressed. We therefore do not need to deal with it. 4. The issue in (g) was dealt when we allowed Ground 1.

Liability for work

1. The issues raised by (b), (c) and (d) concern liability for work found by the Tribunal to be the responsibility of the Vellas rather than of Cathayne. The Tribunal found that the Vellas were liable for all work other than Item 4 (roof capping), for which Cathayne conceded liability.
2. Because we have allowed Ground 8, Items 3, 6 and 7 are now the only relevant items, the Mirs having advised at the hearing that they would not press Items 1, 2 and 5 if Ground 8 were allowed. We have dealt with issues concerning Item 3 below.
3. The Vellas complain that the Tribunal did not take particular evidence and submissions made by the Vellas into account in concluding that the Vellas rather than Cathayne were responsible for particular works, relevantly the installation of balcony waterproofing and tiling (Item 6) and the installation of bi-fold doors (Item 7).
4. In his post hearing submission, Mr Bambagiotti claims that the submissions and evidence relevantly not taken into account were: 1. The second contract with the builder commenced on 1 November 2012: Vellas' submissions in chief [6] to [8] and submissions in reply to Cathayne's submissions [10] to [14]; 2. The bi-fold doors were installed under the supervision of the builder and if the doors were unsuitable, the builder would be liable unless there was a defence under s 18F of the HB Act: Vellas' submissions in chief at [67] to [68], Vellas' submissions in reply to the Mirs' submissions [63] and Vellas' submissions in reply to Cathayne [26]. 3. Balcony waterproofing and tiling and bi fold doors were found to be within scope of the 2011 contract, but liability was excluded by Schedule 4 of the contract. Section 18G of the HB Act applied: Vellas' submissions in reply to Cathayne [14(c)] 4. Stegbar had agreed to return to stop water ingress through the bi-fold doors.
5. In relation to (a), this issue goes to liability for the works the subject to the claim. The second contract between the Vellas and Cathayne was signed on 1 January 2013. The Tribunal's reasons for decision reflect this. Contrary to what appears to be the Vellas' submission on this point, the Tribunal did not find that no work under the second contract was commenced prior to 1 January 2013. In any event, we are satisfied that the Tribunal's reasons for decision in respect of liability for the various items claimed by the Mirs (set out at [56] to [69] of the reasons for decision) were adequate and based on evidence available to the Tribunal. This part of the ground of appeal is refused.
6. In relation to (b), it is not in dispute that the Vellas chose and supplied the bi-fold doors. As noted above, it is also not in dispute that Cathayne installed the bi-fold doors in accordance with the 2011 contract: Affidavit of Wayne Weatherburn, page 488 Folder 2 of the Appeal Bundle.
7. According to Cathayne's submissions in chief to the Tribunal, the bi-fold doors selected by the Vellas "were of a lower quality and were different" to those Cathayne "had proposed and expected would be supplied": page 1863, Folder 6 of the Appeal Bundle.
8. The Tribunal found, at [47] of the reasons for decision, that there was "no clear evidence of inadequate assembly or installation by the builder or anyone else". The Tribunal impliedly accepted that the doors were not suitable and that heavier, commercial doors should have been installed in that location. This was the opinion Mr Zakos expressed in his report: [12.6] page 53 Folder 1 of the Appeal Bundle and Transcript page 1492 Folder 5 of the Appeal Bundle. The rectification costs awarded reflect the expert witnesses' agreed costing of the supply and installation of such doors.
9. The Vellas raised in submissions to the Tribunal that Cathayne did not have a s 18F defence: [68] of submissions in chief at page 1844 and [63] of submissions in reply to the Mirs at page 1884 Folder 6 of the Appeal Bundle. The Tribunal did not address the submission.
10. Section 18F of the HB Act provides that: 18F Defences (1) In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from: (a) instructions given by the person for whom the work was contracted to be done contrary to the advice of the defendant or person who did the work, being advice given in writing before the work was done, or (b) reasonable reliance by the defendant on instructions given by a person who is a relevant professional acting for the person for whom the work was contracted to be done and who is independent of the defendant, being instructions given in writing before the work was done or confirmed in writing after the work was done.
11. In The Craftsmen Restoration and Renovations v Thomas Boland, Thomas Boland v The Craftsmen Restoration and Renovations [2008] NSWSC 660, Howie J stated: 95 Although it is unnecessary for this Court to decide the issue, it seems to me that there is a legislative intention that the warranties and defences available are to be only those set out in the Act. The builder argued that the defence in s 18F was only one defence available. But I find it impossible to accept that, if the defence provided to a statutory warranty does not apply because the builder has not done what was required to engage the defence, the builder can look to some other non-statutory defence that does not have such a precondition. 96 The builder argued that he installed the windows at the express instruction of the architect and that it was obliged to comply with that instruction under the contract notwithstanding the builder's view, orally expressed to the architect, that the windows were defective. It was submitted that "contractual compliance with an Architect's instructions in the face of reasonable objection by a Builder is within the contemplation of section 18F ". I do not accept that submission. The builder could, and should, have raised those concerns in writing with the architect. The defence would then have applied. It seems clear to me that the defence is limited in order to avoid the very contest that arose in this case: a dispute as to whether the builder gave advice against the work it was required to carry out. By not giving advice in writing the statutory defence did not apply. There is no justification to read the defence wider than it is stated or to read some other defence into the Act. 97 In my opinion, if the windows were defective, the builder was in breach of the statutory warranty in respect of them so far as the owners were concerned. The builder would have to look to Trend for any compensation for the breach of any warranty that it gave in selling the windows to the builder.
12. In Pastrovic & Co Pty Ltd v Farrington [2011] NSWDC 94, the Court stated I agree with the submission that, as a party to the contract, the builder only has the defence in section 18F. This provides that, in proceedings for breach of a statutory warranty, there is defence if the builder proves that the deficiencies about which the owner complains arise from instructions given by the person for whom the work was done and contrary to the advice in writing of the builder who did the work.
13. It was not in dispute that Cathayne installed the bi-fold doors as part of the 2011 contract works. As noted above, Cathayne had submitted that the doors supplied by the Vellas were not the doors Cathayne "had proposed and expected would be supplied".
14. In these circumstances, whether Cathayne required and if so, whether it had a s 18F defence was a relevant issue for the Tribunal to decide. We are of the view that it was incumbent on the Tribunal to consider the Vellas' submission concerning s 18F and to make findings about it. The failure to do so constitutes an error of law.
15. We allow the appeal in relation to this issue. Whether Cathayne needed and/or had a s 18F defence can be considered together with other issues relevant to Item 7 in the remitted proceedings.
16. In relation to (c), the Tribunal found at [58] of the reasons for decision that: 58. The first floor balconies' waterproofing and tiling (but not handrails) and sliding doors in question on water penetration were in my view as a matter of contract within the scope of the 2011 written contract because that work was required to render the house lockable, secure and watertight,
17. In general terms we agree that waterproofing and tiling of the first floor balcony, as well as installation of the balcony doors, would have been within the scope of contract to build to lock up stage, which requires a building to be lockable, secure and watertight. However, tiling and waterproofing were specifically excluded from the scope of the 2011 contract. To the extent that installation of windows required waterproofing (by the installation of flashing), then we agree that such waterproofing would be within the scope of work to lock up stage and would not fall within the exclusion in Schedule 4 of the contract.
18. In any event, the Tribunal made findings of fact as to what work was undertaken by Cathayne and what work was undertaken by the Vellas including in relation to the tiling and waterproofing. The Tribunal also made findings in the event that its prior finding about particular works being included in the 2011 contract was incorrect: Reasons for decision [61] to [63]. We are satisfied that there was evidence to support the Tribunal's findings that balcony waterproofing and tiling were undertaken by the Vellas after the first contract had come to an end. In such circumstances, we are not satisfied that s 18G of the HB Act was relevant to the balcony waterproofing and tiling works. Furthermore, the Tribunal was not obliged to refer to every piece of evidence or every submission made to it in its reasons for decision.
19. In relation to (d), the ground of appeal concerning s 48MA was not pressed at the appeal hearing. In such circumstances, evidence that Stegbar had agreed to return to stop water ingress through the bi-fold doors is not relevant in circumstances where the Tribunal's decision not to make a work order is no longer the subject of appeal.

Missing glazed balustrade (Item 3)

1. The issue raised by (h) concerns Item 3 in the Scott Schedule, which is a glazed balustrade on a balcony. The balustrade was shown on the plans but not constructed. Subsequent to purchasing the residence, the Mirs installed planter boxes on the balcony.
2. In relation this item, the Tribunal stated: 29 Beyond the ground floor verandah there was a substantial drop. Safety required the installation of a barrier of some type. 30 The current owners installed, as a "self-help" measure, substantial planter boxes immediately at the edge above the substantial drop, at a cost of $15,255.38. The reasonableness of that cost was agreed by the former owners' expert, but not the necessity. At the hearing the claim was not pressed. 31 Rather, the current owners pressed for the glazed balustrade to the verandah with access gate. The experts agreed the cost at $8,677. 32 The former owners' expert agreed that the approved contract plans showed a glazed balustrade. The compulsory warranty in Home Building Act 1989 (NSW) (HBA) s 18B(1)(a) is in part that the work will be done in accordance with the contract plans and specifications. There was no basis to exclude liability under such warranty, by reason of the compulsory and non-excludable extension of their benefit to successor-owners in HBA ss 18C, 18D and 18G, whatever the terms of the sale contract between former and current owners.
3. In the post appeal hearing submission which dealt with the orders that should be made if Ground 8 was allowed, Mr Bambagiotti stated that Item 3 had been withdrawn. However, the Tribunal's reasons for decision indicate that this is not so. Rather, as stated by the Tribunal, the Mirs abandoned their claim for the cost of installing planter boxes and sought the cost of installing a glazed balustrade. As we understand it, that remains the case, as this was not one of the items the Mirs agreed not to press if Ground 8 was allowed.
4. In their written submission to the Tribunal the Vellas stated (at page 1840 of Folder 6 of the Appeal Bundle): ….The owners did not have the benefit of a statutory warranty concerning the planter box. The applicants seek unjust enrichment. They purchased the dwelling as it was constructed, and presumably the price reflected the absence of the planter box. If the argument succeeds it would follow that any purchaser paying a fair price for a half completed house could then seek the cost of completion of the house from the vendor or builder.
5. Cathayne also addressed this issue in its submission, stating (foot note references to transcript omitted): 69. In cross-examination Mr Mir for the Applicant admitted that he had inspected the subject property on several occasions prior to purchase. This included the area which is the subject of the claim for this item. 70. Mr Mir also agreed that when he purchased the property he "knew the drop off was there" and that he "purchased the house in that condition knowing that there was a drop off there and potentially flat level with a drop off to the area below". 71. Mr Mir agreed that the flower box along the edge of the embankment was built by contractors that he had engaged after moving into the property. It follows that this cannot be building work which could be made the subject of a "defects claim" against either the First or the Second Respondents, (pursuant to the operation of the Home Building Act 1989 or otherwise). 72. Paragraph 4 of the "Special Conditions" in the contract of sale also contains the following disclaimer: "The Purchaser acknowledges that no representation, inducements or warranties have been made by the Vendor or his Agent or representatives relating to the present state or condition of the property and the Purchaser purchases this property in its existing condition and state of repair and shall make no objection requisition or claim for compensation in respect thereto". 73. The Second Respondent submits that it is irrelevant if a balustrade shown on the approved plans had not been installed at the time when the property was purchased by the applicants. This is because the subject property was purchased without a balustrade or flower box, in that condition, and "with notice". The "special conditions" prevent the applicants from successfully bringing a claim of this kind. 74. The Applicants being on notice, had the opportunity to make an allowance in the offer to purchase price for the installation of either a balustrade or a flower box. If they did not take that opportunity and the second respondent submits that there is no basis on which the applicants can now still recover the cost of either of those items in these proceedings [sic].
6. In relation to [72] of Cathayne's submission, the Special Condition in the purchase contract does not displace the statutory warranties in s 18B of the HB Act. That said, the fact that the Mirs were on notice of the lack of a barrier on the balcony at the time they purchased the residence is relevant to the determination of any loss suffered arising from a breach of statutory warranty.
7. As stated by Ipp JA (with whom Hodgson JA agreed) in Allianz v Waterbrook [2009] NSWCA 224: 110 …. [A] successor in title who purchases a building in full knowledge of its defects, suffers no loss from the existence of those defects. In those circumstances, the builder's breach of statutory warranty could not be said to have diminished the successor's assets, nor increased its liabilities. Any adverse impact to the successor's financial position, and any loss to the successor, would result from the successor knowingly and deliberately paying more for the building than it was worth. The loss would be caused by the successor's own decision to purchase at the agreed price. 111 The observations in [110] are predicated on the "full knowledge" of the defects being not only knowledge of the existence of the defects but also knowledge of their significance. A party may know of the existence of defects (because they are patent), but may not appreciate - even acting reasonably - that major expenditure would be required to remedy them.
8. In this case, the evidence given by Mr Mir (as set out in Cathayne's submission), indicates that the Mirs were aware of the lack of balustrade and of the drop from the edge of the balcony at the time they purchased the residence. Whether their knowledge in this regard was the "full knowledge" referred to by Ipp JA is arguable. However, we conclude that the Tribunal's finding that "there was no basis to exclude liability …… whatever the terms of the sale contract between former and current owners" does not sufficiently address what loss the Mirs suffered as a result of the failure to install the balustrade.
9. Moreover, in determining this item, just as it did with the other disputed items, the Tribunal made no specific findings as to whether the lack of a balustrade constituted a major defect within the meaning of s 18E. Rather, the Tribunal accepted Mr Zakos' opinion in relation to this issue: [74] of the Reasons for Decision. We note, to the extent that it is relevant, that although he provided no reasoning for the opinion, Mr Zakos' opinion was that Item 3 did not constitute a major defect (at page 8.5, page 32, Folder 1 of the Appeal Bundle). The Tribunal did not refer to Mr Zakos' opinion in its determination of Item 3. Nor did it refer to evidence that would support a conclusion that Item 3 constituted a major defect.
10. We conclude that the Tribunal's reasons in relation to Item 3 are inadequate, as: 1. they do not identify the basis for jurisdiction in relation to this item; and 2. do not sufficiently address what loss the Mirs suffered as a result of the failure to install the balustrade.
11. Ground 9B is allowed in relation to the s 18F issue concerning Item 7 (bi-fold doors) and Item 3 (missing glazed balustrade).

Ground 9C

1. The Vellas claim that a range of evidence was not considered by the Tribunal. The evidence in the Vellas' submissions on the appeal are: 1. The second contract commenced on 1 November 2012; 2. Clearfit would rectify Item 2 (the awning); 3. Stegbar would return to stop water ingress; 4. Mr Zakos did not consider the missing glazed balustrade to be a major defect.
2. These issues have all been considered elsewhere under other grounds of appeal and do not need to be considered further.

Grounds 10 and 11

1. Both of these grounds concern costs. As we are allowing the appeal in respect of Ground 8 and part of Ground 9B, it is appropriate to set aside the costs orders. This is because rehearing of the remitted proceedings may lead to a different result.

Leave to appeal

1. We have only considered leave to appeal in relation to those grounds of appeal that have not been allowed.
2. In the Amended Notice of Appeal, the Vellas sought leave to appeal on the basis that the decision was not fair and equitable and against the weight of evidence.
3. The leave ground in relation to the decision being against the weight of evidence relates solely to the Tribunal's finding at [55] concerning s 48MA. As this ground of appeal was not pressed at the hearing, there is no basis to grant leave to appeal.
4. In relation to the decision not being fair and equitable, we would not grant leave to appeal as we are not satisfied that a basis for leave to appeal, as set out in Collins v Urban at [20] above has been established.

Conclusion

1. The issues in relation to which we have allowed the appeal are: 1. The naming of Mr Vella as a party in the Tribunal proceedings. 2. Whether the claims in relation to Items 3, 6 and 7 were made within the statutory warranty period. This will require determining whether items 3 and 6 constitute major defects within the meaning of s 18E(4) of the HB Act and whether a seven year statutory warranty period applies in respect of item 7. 3. If Item 3 is a major defect, the correct assessment of the Mirs' loss. 4. Whether Cathayne requires and if so whether it has a defence under s 18F in respect of Item 7. 5. Costs of the Tribunal proceedings.
2. We note that if it is determined that Cathayne has no defence under s 18F, it will need to be determined whether the order for replacement of the doors should be made against Cathayne rather than against Mrs Vella and if so, whether a work order or a money order should be made.
3. At the appeal hearing, the parties expressed a desire not to have the matter remitted for rehearing by the Tribunal. Neither party proposed obtaining new evidence.
4. In our view, the issues remaining in dispute are capable of resolution on the basis of the evidence already provided in the proceedings and written submissions. However, we have decided that it is not appropriate to re-determine the issues in dispute without hearing further from the parties. It may also be more expeditious for the matter to be listed for redetermination by the Tribunal, rather than by the Appeal Panel. We will therefore list the matter for directions before the Appeal Panel to hear from the parties as to the appropriate manner in which to finally dispose of the appeal.
5. We note that the issues to be re-determined are of relatively narrow compass. It may cost the parties more to continue to litigate over those issues than the issues are ultimately worth. To that end, the parties are strongly encouraged to have settlement discussions with a view to resolving all issues in dispute, including costs in the Tribunal and costs of the appeal proceedings.

Orders 1. The appeal is allowed in part. 2. The orders made on 13 March 2018 and 10 May 2018 in proceedings HB 16/34141 are set aside. 3. John Vella is removed as a party to the Appeal and the Tribunal proceedings. 4. The matter will be listed for directions to set a timetable for any additional submissions and to determine the manner in which the appeal will be finally disposed. 5. Any application for costs of the appeal proceedings is to be filed and served within 14 days of publication of these orders, with any response to the costs application to be filed and served within 14 days thereafter. 6. If more than one party makes an application for costs, the parties are to file three copies of the costs submissions in indexed, tabbed and paginated bundles at the end of the submission period.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 January 2019