Webster v Tom

Background to the Builder's Appeal

1. The Builder's claim against the Engineer relied on common law negligence and misleading and deceptive conduct under s 42 of the Fair Trading Act 1987 (NSW) ("the FT Act").
2. The Tribunal's rejection of the Owners' claim against the Builder to demolish and rebuild the House due to the structural deficiencies in the Engineer's structural design and soil classification had the practical result that the Builder's claim for indemnity against the Engineer should also have been dismissed.
3. However, the Tribunal rejected the Builder's indemnity claim on the basis of s 48K(3) of the Act, namely that the Builder's claim was lodged more than 3 years after the Engineer had classified the site and prepared the structural design of the House: [18] of the Reasons in HB 16/35212.
4. The Builder filed a Notice of Appeal to appeal the Tribunal's decision in HB 16/35212 on 11 April 2018. The Builder accepts that this was three (3) days later than the 28 day time limit specified in r. 25(4) of the NCAT Rules. Accordingly, the Builder sought in the second Appeal an extension of time under s 41 of the Civil and Administrative Tribunal Act 2013 ("the NCAT Act").

Scope and nature of internal appeals

1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80 (2) the NCAT Act. 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 sch. 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).
2. 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 sch. 4 may have been suffered where: "… [T]here 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."
3. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl. 12(1) of sch. 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 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.

The "Grounds" of Appeal by the Owners

1. The Owners' grounds of appeal are set out in written single spaced submissions attached to the Notice of Appeal lodged on 4 April 2018. These submissions actually address specific paragraphs of the Tribunal's Reasons for Decision in HB 15/64016, with the paragraph numbering mirroring the paragraph numbering of the Tribunal's Reasons. To illustrate, paragraph B[2] of the Owners' appeal grounds address paragraph [2] of the member's Reasons for Decision in HB 15/64016, which stated: The position of the [the Builder] is, if I may summarise it, that while there may be minor defects present and repairs required which form part of routine maintenance, the demolition and rebuilding of the residence is not warranted.
2. Whereas the Tribunal in that paragraph of the Reasons is doing no more than setting out the Builder's position, and not making any express finding, the Owner's "grounds" submit: The home owners have produced evidence that confirms major defects and non-compliance with the BCA. Decisioning based on Aesthetic defect repair is not fair and equitable to the Home Owners given the evidence provided and the responses provided by 2 separately engaged experts (Mr Fox for the Engineer and Mr Tozer for the owners who both believe more cracking will be forthcoming). To apply a bandaid solution to a serious structural issue could see owners seriously out of pocket. The Home owners based on evidence have a structurally deficient house that will see further movement in its design life. We are unable to find an Engineer who will provide a certificate of Structural Adequacy for our house given its footing under design and so clearly this significantly affects the value of our house.
3. Paragraph [10] of the Reasons in HB 15/64016 points to an express term of the Contract, and reproduces the definition of "contract documents" in an unobjectionable way. This results in a submission in the "grounds" of appeal as to the fact that the Builder provided a quotation, the plans and drawings of Mr Biddle (referred to in [36] and [37] of the Reasons in HB 15/64016) and the Engineer provided the structural drawings before the Contract was signed. This submission is consistent with the findings made in [11] of the Tribunal's Reasons in HB 15/64016, which in turn is the subject of a bare factual submission, without any identification as to the error which is being addressed.
4. Without intending any criticism of the Owners, the Appeal Panel sees that various paragraphs of the Grounds of Appeal are really not a statement as to a ground of appeal, but rather a commentary on particular parts or aspects of the Tribunal's decision in HB 15/64016. Often the Owners do no more than make a statement as to their disagreement with the Tribunal's findings, without any, or any proper, analysis as to whether the disagreement relates to some error in principle by the Tribunal, instead of a bare contest on the part of the Owners as to the Tribunal's ultimate finding.
5. The Owners' grounds of appeal, as supplemented by the Owners' submissions to the Appeal Panel raised the following significant matters: 1. That the Tribunal made a factual error in its determination that the Owners were responsible for retaining the Engineer, rather than the Builder having retained the Engineer; 2. That the Tribunal's decision was not fair and equitable; and 3. That the Tribunal's decision was contrary to the weight of the evidence.
6. Each of these grounds requires leave to appeal.
7. The Appeal Panel has previously remarked (see CEU v University of Technology Sydney [2018] NSWCATAD 13 at [79]), that it is not necessary to make findings on every argument or every submission advanced on a ground, particularly where the arguments advanced are numerous and of varying significance. In the circumstances we have not done so: Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 at 443.

The Owners' Retainer of the Engineer

1. The Tribunal's reasoning for finding that the Owners were responsible for retaining the Engineer is in [35] - [43] of the Reasons in HB 15/64016. This is the subject of detailed submissions by the Owners in B[11], B[15] and under the sub-heading "overview" under the main heading "slab design" in the submissions which were attached to the Notice of Appeal. Essentially, the written submissions in this Appeal repeat the submissions that the Owners made to the Tribunal, namely that: 1. the Engineer's structural drawings became contractual documents because the Builder provided the Owners with the drawings at the time they signed the Contract; 2. the Owners did not meet the Engineer until 2014, and did not discuss their plans with him; 3. the Engineer met with the Builder to discuss the engineering requirements as the Builder needed the documentation to get the Council's approval; 4. the Owners paid the Engineer's account dated 14 May 2009, because the Builder requested them to do so; 5. the Engineer provided no receipt for the Owners' payment of the invoice; 6. it is common practice that a builder will ask an owner to pay for an engineer directly to avoid the payment "going through the builder's books"; 7. the Owners did not make a claim against the Engineer because they did not engage him; and 8. the Engineer provided all invoices and plans to the Builder.
2. The Tribunal had regard to both the Owners' submissions and the Builder's submissions on this issue (see [36] - [40] of the Reasons in HB 15/64016).
3. The Tribunal's finding that the Owners were responsible for the Engineer turned on: 1. the express terms of the Builder's Tender and clause 3.1 of the Specification, which set out the Owners' obligations as including the requirement to provide the Builder with the Engineer's soil classification and the Engineer's footing and slab design; and 2. the Tribunal's factual finding, based on the Tribunal's assessment of the evidence of Mr Biddle, the Owners and the Builder, respectively, that the Owners told Mr Biddle that they had chosen the Engineer and that Mr Biddle delivered Mr Biddle's plans to the Engineer following the Owners' indication as to their selection of the Engineer.
4. The Owners have not established any error in the Tribunal's construction of the terms of the Tender and the Specification as reflecting the scope of the Builder's work, and the responsibility which the express provisions imposed on the Owners for the Engineer's classification of the site, and structural drawings. We agree with the Tribunal's construction of those provisions.
5. The findings made by the Tribunal were open to the Tribunal on the material before it. The Tribunal's reasoning process is clear and unexceptional and reveals a thorough consideration and assessment of the relevant material, and the submissions made on this issue. We see no error in the Tribunal's Reasons, and nothing in the Owners' submissions which would warrant the Appeal Panel granting the Owners leave to appeal on this issue.
6. The Owners' grounds do not directly deal with the Tribunal's finding that if the Builder's scope of works did not include the classification of the site, the Builder did not breach either s 18B(1)(a) of the Act, or its contractual equivalent in clause 38, by any error in the Engineer's misclassification of the site: [80] of the Reasons in HB 15/640016. It must follow that if the Tribunal correctly determined that the Owners were responsible for the Engineer's classification of the site, the consequence is that the Builder did not breach either s 18B(1)(a) of the Act or the clause 38 contractual equivalent because the Engineer misclassified the site.

Ongoing cracking

1. The risk of ongoing cracking due to the structural inadequacy of the House's slab and footing system and the Builder's failure to install the piers to provide the structural support for the structure was a major part of the Owners' case as justifying the demolition and reconstruction of the House. The Tribunal's reasoning on this issue is set out in paragraphs [132] to [156] of the Reasons in HB 15/64016.
2. The crux of the Tribunal's reasoning on that issue appears in the following passages of the Tribunal's reasons: [152] I have had regard to the expert's evidence. The difference between the experts is I find that Messrs Tozer and Fox take into account future weather events on the soil conditions whereas Mr Hammond does not. [153] I have had regard to the fact that the cracking of the external masonry of the residence seven years after practical completion is minimal which gives support to Mr Hammond's opinion that moisture conditions under the slab may be normal. I have also taken into account the CSIRO report that it is normal for the incidence of cracking to stabilize which I find seems to have occurred. These factors lead me to conclude that the prospects of ongoing cracking appear to be slight. Against all of these considerations is the possibility of future weather events. I find that the effect of future weather events cannot be ruled out. In that regard I have placed weight on Mr Fox's evidence as he has considered rainfall patterns, while acknowledging that to be an informal process Mr Tozer states that it is possible that there may be more and larger cracks in the future. Mr Fox states that the damage might be significant. I regard both of those opinions to be speculative. However the evidence and opinions regarding future weather events do not provide a compelling scenario that it is inevitable that the residence will be subject to future cracking of a serious and significant nature. [154] The evidence of Messrs Tozer and Fox as to the inevitability of larger cracks and significant future damage does not give me a sense of actual persuasion such that I am able to accept their evidence in order to make a finding on the balance of probabilities that there will occur in the future larger cracks and significant damage to the residence, although I cannot exclude that there will be some minor cracking at some point in the future. The evidence does give me a sense of actual persuasion that moisture conditions under the slab have stabilised and that the incidence of cracking to the residence has stabilized. [155] As a result while I find that there is a possibility of minor future cracking to the owners' residence I also find that moisture conditions under the slab have stabilised and that the incidence of cracking to the residence has stabilized.
3. The Owners disagreed with these findings, and submitted that the Tribunal should have accepted the evidence of Mr Fox and Mr Tozer, over the evidence of Mr Hammond. The Appeal Panel considers that the Tribunal appropriately assessed all of the relevant evidence and was entitled to come to the conclusion that it did. The Owners' dissatisfaction with the Tribunal's finding that the Owners' expert evidence, and the report of Mr Fox, had not satisfied the Tribunal that there would be significant future damage to warrant the complete demolition of the House amounts to a challenge to the Tribunal's finding on the basis that it is either a finding that is not fair or equitable, or alternatively, contrary to the weight of the evidence.
4. It is clear that the Tribunal did not fail to appreciate or understand some nuance of the expert evidence on which the parties relied. A fair reading of the Tribunal's Reasons for Decision reveals a full and clearly and cleanly expressed rationale for the Tribunal's decision as to the "future cracking" issue. The Reasons demonstrate a complete appreciation of the nature and extent and rationale of the respective competing views of Mr Hammond, Mr Fox and Mr Tozer.
5. Once it is appreciated that the Tribunal was fully alive to the aspects of the expert evidence, and once it is accepted that the Tribunal was mindful of the considerations involved in the expert views as to the factors and possible causes for any future cracking, as the Tribunal here was, the finding preferring the evidence of Mr Hammond involved a careful and balanced weighing of all of the evidence: 1. the nature and type of cracking manifest since the completion of the House; 2. the reasoning of Mr Tozer, and the fact that Mr Fox had not been called and therefore the fact that Mr Fox's evidence was not tested by cross-examination; and 3. the significance of the settlement of the moisture conditions affecting the House's footings and foundations.
6. The Appeal Panel finds no error in the way the Tribunal approached and assessed the evidence relating to the risk of future cracking, and the finding that having regard to the time that had passed since the House was built, stable soil conditions had been reached, as Mr Hammond stated.
7. The Tribunal's account of the expert evidence reveals that: 1. although Mr Hammond's opinion was that stable moisture conditions beneath the slab had likely been reached, he did recommend the stabilisation of the strip footings along the eastern and north-eastern sides of the House by the installation of properly designed piers: [141] of the Reasons in HB 15/64016; 2. Mr Fox's report expressed the opinion that the footings should be underpinned because of the possibility of future weather events causing potentially significant damage, with Mr Fox recommending the location and details of the work required ([145] of the Reasons in HB 15/64016).
8. However, as the Tribunal's assessment of the expert evidence did not satisfy the Tribunal on the balance of probabilities that any "significant future damage" would occur, the Tribunal dismissed the Owners' claim for the demolition and reconstruction of the House.
9. The Owners submit that the Tribunal's finding was incorrect on the following grounds: 1. Mr Fox and Mr Tozer's reports should have been accepted as establishing the likelihood of future movement with the potential of significant future damage; 2. The Tribunal's finding that the Owners had not satisfied the onus of establishing future significant damage to warrant the demolition of the House was based on an incorrect factual finding that the Builder had installed piers under the slab. The Tribunal appears to have accepted that Mr Hammond's report which expressed the opinion that the piers had been installed, and failed to take into account that: 1. the Owners submit that "all experts at the second conclave agreed there were likely no piers following observation of one of the lowest critical corners having been excavated and showing none"; 2. Mr Hammond accepted he was in error at that conclave (see [24] of the Owners' submissions). 1. at the conclusion of their conclave on 19 October 2016 ("the 19 October Memorandum"), Mr Jenkins, Mr Hammond, Mr Noland, Mr Tozer and Mr Nowlan agreed that: All agree that the current concrete slab and footings design is "Alternative design" pursuant to BCA and AS 2870 All agree that if currently designed slab and footings are found contrary to the BCA requirements then proposed demolition and reinstatement are required. In alternative, if slab and footings are found to meet the BCA requirements, then a localized rectification as agreed to as detailed on attached pages 2 to 6.
10. The Owners' reference to the experts' agreement that the Engineer's slab and footing design was an "Alternative design" pursuant to the BCA and AS 2870 was specifically addressed by the Tribunal. It found (with underlining for emphasis): 87 The engineer's evidence is that in designing the slab and footings for the owners' residence he used locally proven designs and alternative designs in accordance with engineering principles, as permitted by section 4 of AS 2870 - 1996. 88 Mr Hammond on behalf of the builder on 12 September 2016 replied to Mr Tozer's report. He states in connection with Mr Tozer's comments, as referred to above, that AS 2870 does not designate as a requirement the footing sizes asserted by Mr Tozer. In that regard the dimensions referred to by Mr Tozer are 'deemed to comply' dimensions contained in section 3 of AS 2870. As stated the engineer's evidence is that he did not prepare the footings and slab design on a 'deemed to comply' basis. He states that his design was based on locally proven designs and alternative designs in accordance with engineering principles, an approach permitted by AS 2870. 89 I find that Mr Tozer's 1 June 2016 evidence is wrong insofar as it states or infers that the builder was required to and failed to construct footings to a depth of 400mm. I accept Mr Hammond's evidence in that regard. … 91 I find that the owners have not established by evidence that gives me a sense of actual persuasion in favour of their contention, that the slab and footing system was structurally inadequate to support loads from the dwelling. At best the owners have established that the footing system was inadequate to prevent 2 category 3 cracks, 2 category 2 cracks and 6 category 1 cracks in the external masonry. The category 1 and 2 cracks should I find based on the statement in B3 of Appendix B of AS 2870 - 1996 be regarded as normal maintenance issues.
11. There is no substance to the Owners' complaint that the Tribunal did not have regard to the experts' agreement about the design of the footings and slab, as recorded in the 19 October Memorandum. The agreement recorded in the 19 October Memorandum, i.e. that the slab and footings would require demolition, was predicated on the Tribunal's finding that the design did not comply with the permitted "alternative design" provisions of the standard and the BCA. The Tribunal rejected Mr Tozer's evidence that the slab and footing design was structurally inadequate for the House loads (which would have been a breach of the BCA and AS 2870 - 1996), and therefore the Tribunal was not satisfied the design did not comply with the "alternative design" provisions.

The construction of the piers

1. The Owners submit in the Notice of Appeal that the main problem with the Engineer's classification of the site as a Class P site was that: …the [Builder] did not do a cut and fill with piers. He did a strip footing and infill slab on compacted sand or crusher dust method instead and simply stepped the strip footings down on natural ground without regard for piers. This is why the piers could not be located at the most critical location. This would also mean that the Site P classification was irrelevant.
2. The submission touches upon the issue of whether the Builder did, in fact, fail to install piers beneath the slab, or to use the words of the Owners, whether the Builder's construction was "without regard to piers".
3. The Tribunal had conflicting evidence as to the Builder's construction of the piers beneath the slab required by the Engineer's structural design.
4. Mr Tozer's opinion was that the Builder had not installed the piers beneath the slab; whereas Mr Hammond's evidence was that he located a pier at each of four (4) locations excavated by him along the eastern side of the House. The Tribunal was faced with having to determine whether to accept Mr Tozer's opinion, or Mr Hammond's opinion as the more reliable. Having weighed up the evidence of each expert, the Tribunal accepted Mr Hammond's evidence as more reliable on the basis that it was "more systematic and careful".
5. The Tribunal's finding as to the Builder's construction of the piers was further corroborated by the evidence of the inspections carried out by employees of the Clarence Valley Council as regards the footings and slab during construction. The important fact here is that those who had inspected the construction at the time raised no compliance issues. The Tribunal was entitled to have regard to that evidence in determining whether to accept Mr Tozer's evidence, or Mr Hammond's evidence, on the installation of the piers. The Tribunal considered that the Council witnesses' oral evidence was consistent with Mr Hammond's evidence of his investigations as to the construction of the piers.
6. The Appeal Panel is of the view that the Tribunal's finding that the Builder's construction complied with the structural design of the footings, piers and slab was a finding that the Tribunal was entitled to make on the evidence that it had before it.
7. The Owners' submission that Mr Hammond was "prepared to change that opinion, at a conclave" is not the subject of any finding by the Tribunal, and does not appear to have been the subject of any direct challenge to Mr Hammond's evidence by way of cross examination of Mr Hammond. The suggested concession by Mr Hammond does not appear to have been referred to by Mr Tozer, or any other expert witness.
8. On the basis of the Appeal Panel's assessment of the factual findings which the Tribunal made, and the reasoning process that appears on the face of the Tribunal's Reasons, the Appeal Panel finds no error in the Tribunal's findings as to the risk of significant future cracking in the House, or the Builder's failure to construct the slab, footings and piers as shown on the Engineer's structural drawings.

New Evidence

1. The Owners also sought to rely upon further "new" evidence.
2. In Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111, the Appeal Panel stated in relation to evidence not being "reasonably available" at the time of the original hearing that the intention of those words in cl. 12(1)(c) of Sch. 4 of the NCAT Act is to provide an additional limitation on a party's entitlement to seek leave to appeal. The words "reasonably available" are not qualified by other words such as "to the party". The test is objective. It does not involve subjective elements concerning the particular situation of a party. Something more than a party's inability to procure the evidence is required.
3. Dealing with the particular items of "new" evidence relied upon by the Owners: 1. Five (5) "new" photographs which appear to have been provided in support of a submission of the Owners that the footings in the House were inadequate. We are not satisfied that there is any reason why these photographs could not have been tendered during the hearing of the proceedings at first instance. 2. A "Col Jenkins defects list", which is a document of an unknown author. It contains bald assertions about the quality of the Engineer's work on other dwellings. Apart from issues as to its admissibility as evidence, we do not think it can be said that the document was not reasonably available at the time of the original hearing. 3. An email from a Mr Eric Lume. We find that this document could have been obtained for the original hearing. 4. An engineering report of a Mr Mallam. We find that this document could have been obtained for the original hearing. 5. An engineering report from a Mr Burridge. We also find that this document could have been obtained for the original hearing.
4. For the foregoing reasons, we find that leave should not be given to the Owners to appeal on any of their grounds for which leave is required under the NCAT Act, nor to adduce any further evidence.

Conclusion

1. In light of the findings we have made as to the merits of the Owners' Appeal, our determination is that the Appeal must be dismissed.
2. As the claim is for an amount greater than $30,000, r. 38 of the NCAT Rules applies to costs of this appeal in consequence of r. 38A.
3. The Builder has been successful in the appeal. Accordingly, we make an order that the Owners pay the Builder's costs of the appeal on the ordinary basis as agreed or as assessed in accordance with the applicable costs assessment legislation.
4. Provision is also made for a party to apply for a different costs order if appropriate.

Orders 1. Appeal dismissed. 2. Subject to order (3), the appellants are to pay the respondent's costs of this Appeal on the ordinary basis as agreed or as assessed in accordance with the applicable costs assessment legislation. 3. If any party contends for a different costs order, such application (including submissions and evidence) must be filed and served within 14 days of the date of these orders. The respondent to the costs application is to file and serve submissions and evidence in reply within 14 days from the date of these orders. The applicant for costs may file and serve submissions in response 14 days thereafter. Submissions must include submissions about whether an order should be made dispensing with a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 4. In the event that an application is made under the previous order 3 above, order (2) shall cease to have effect.

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: 02 April 2019