Wood v J & G Constructions Pty Ltd

Procedural History

1. The re-registered application first came before the Tribunal, differently constituted, for directions on 20 August 2020 by telephone in accordance with the Tribunal's Coronavirus (COVID 19) Temporary Changes to NCAT Operations procedure (18 March 2020 and as subsequently updated). It appears that the Tribunal attempted to conciliate the dispute but the conciliation was unsuccessful. Consequently, directions were made for the filing and exchange of evidence and the application was adjourned for a Special Fixture hearing.
2. Each party has complied with the Tribunal's directions for the filing and exchange of their evidence. The homeowner's bundle was marked Exhibit A1. The developer's bundle was marked Exhibit R1. The builder's bundle was marked R2.
3. The final hearing was again conducted by telephone in accordance with the Tribunal's Coronavirus (COVID 19) Temporary Changes to NCAT Operations procedure. The homeowner attended the hearing in person. Mr Charles Gittany attended the hearing as the authorised representative of the developer. Mr Giorgio Hazzoury, Director attended the hearing on behalf of the builder. Mr Hazzoury was assisted to participate in the hearing by an Arabic interpreter. The homeowner and the respondents' representatives each gave oral evidence under a promise to tell the truth. The parties had the opportunity to present their respective cases, to ask each other questions, and to make final submissions to the Tribunal.

Material facts

1. The dispute arises from a contract between the homeowner and the developer dated 13 June 2017 for the purchase off the plan of a residential apartment in a development being undertaken at the site of 32-36 Princes Highway Sylvania for the price of $1,080,000.00.
2. The development comprised 14 residential and 2 commercial apartments (the development). Suecha Pty Ltd as trustee for Suecha Family Trust was the developer. It engaged J & G Constructions Pty Ltd to build the development under a contract dated 12 June 2015 for the price of $4,000.000.00. A Final Occupation Certificate was issued in relation to the whole of the development on 21 December 2017. The development has subsequently been registered as a Strata Scheme.
3. The developer's principal is Mr Gittany. The builder's principal is Mr Hazzoury.
4. The homeowner's Lot is Lot 9 in the Strata Plan (the property).
5. In or around August 2017 the homeowner had a discussion with Mr Hazzoury and requested him to arrange for the installation of a mosaic tile feature on a wall of each of the property's two bathrooms and as a kitchen splashback, which he agreed to do (mosaic tile wall features). The homeowner paid $1,000.00 in cash to Mr Hazzoury for the labour associated with this work, and supplied the tiles herself at a cost of $3,000.00.
6. Prior to the hearing, in their written submissions, the respondents sought to argue that the homeowner entered into a direct contract with the tiler, and paid the tiler directly, for this work. That is denied by the homeowner, and the respondents did not appear to press the point at the hearing. In any event I am satisfied on the homeowner's evidence that she engaged this work from, and paid, the builder for this work through Mr Hazzoury.
7. The respondents do both contend, however, that Mr Hazzoury, or the tiler, or both, advised the homeowner against the installation of the mosaic tile wall features at the time, as being unsuitable for these areas. The respondents contend that the builder was instructed by the homeowner to proceed to install these features contrary to the advice she was given. The homeowner denies that she was ever given such advice. No statement has been submitted from the tiler in support of the respondents' claim. There is no evidence of any such advice being given in writing.
8. At the end of 2017 the homeowner inspected her unit in the development and made complaints to Mr Gittany and Mr Hazzoury about a number of issues directly and through the solicitor who was acting for her on the purchase. The details of these complaints are not of present relevance because they are subsumed by subsequent developments. However, the respondents rely in these proceedings on a statement contained in an email exchange between the homeowner and her solicitor on 16 December 2017. The statement is highlighted in the passage below. Its surrounding text has been provided to give it context: I am still very concerned regarding the standard and quality of workmanship in some parts of the apartment. I have paid over a million dollars for an apartment which was selected for the water views and high end finishes as well as paying extra to have higher quality carpets and tiling. The kitchen tiling and built-in storage cupboard have been resolved as best as possible, however there are still some areas of concern which I would like addressed before settlement occurs. Views obstructed …
9. The respondents also rely upon a text message the homeowner sent to Mr Hazzoury around this time in which they contend the homeowner 'admits that most of the [rectification] work was done' prior to settlement. A copy of that text message is in evidence. However, the image is of very low resolution and it cannot be read.
10. The homeowner accepts that she communicated to Mr Gittany and Mr Hazzoury that some issues raised in her complaints at that time were resolved or improved. However, she denies ever communicating to the respondents that "all the stated defects were addressed and rectified", which is what the respondents submit. She contends that she remained unhappy about the quality of various finishes throughout the apartment and that this was made clear to both Mr Gittany and Mr Hazzoury.
11. On 17 January 2018 the homeowner obtained a pre-settlement building defect report from Sydney Independent Building Inspections which is in evidence. The salient contents of that report are set out following: 1.0 Summary … Major Defects Nil Minor Defects Improve blemishes to plasterboard wall finishes Improve installation of flyscreen to enclosed balcony Rectify lipping tiles to ensuite shower floor Improve installation of skirting boards and entry doors Improve installation of internal entry door Improve seal at junction of wall tiles and benchtop in kitchen Improve installation of kitchen tap Improve grouting to the kitchen benchtop Complete kitchen installation … 9.0 Internal areas … Walls Type: Internal wall linings are generally of plasterboard in fair to good condition. The standard of plasterboard installation and finishing is below standard in several areas. Plasterboard finishes around light switches, GPO, window reveals and door openings are dinged, rough and uneven. Rectification work is required in several areas. The standard of the timberwork installation is below standard in several areas. The carpenters have failed to achieve clean cut accurate mitres to the skirting boards. The entry door installation is also of a poor standard with excessive uneven fitting gaps. The paint finishes to the timber work, jambs and skirting boards is below standard. There is insufficient paint cover to several surfaces. The nail fixing holes to the skirting boards are poorly filled. Dust and foreign material have settled on the painted surface of skirtings. … Kitchen The kitchen cupboards are in fair to good condition generally. … A Smeg rangehood is present, not tested at time of inspection. … Cupboard installation is incomplete. There is a missing door above the oven. There is a missing side panel next to the oven. The side panel to the fridge alcove is chipped. The benchtop seal is inadequate. The grouting to the benchtop joints is poor. The sink tap is not properly sealed onto the benchtop. The junction of the splash back tiles and underside of overhead cupboards is unfinished. …
12. The respondents also rely upon the following passage taken from the Conclusion of the homeowner's Pre-Handover Building Report: Overall condition of Unit: The overall condition of the areas inspected is fair, ie the building and its parts are in consistent condition when compared to other dwellings of approximately the same age and construction. There may be areas/members requiring repair or maintenance That passage is immediately followed by the following paragraph: Minor defects and maintenance issues that will require attention and remedial maintenance were observed. Left unmanaged some of these defects may become costly in the future and develop into more major defects over time.
13. On 19 January 2018 the homeowner settled her purchase of the property and moved in.
14. On 20 July 2018 the kitchen sink dropped out of the benchtop. The applicant sent an email to Mr Gittany to complain about this and to request its rectification. That email relevantly states: … My sink has dropped out from the benchtop. I've had to put a tin container underneath to hold it in place. Also the drawers are crooked and slope from right to left and the side panel has come right away. It was never any good and was stuck on by George. I can give access to fix the sink on Mondays only as I have work commitments Tuesday to Saturday. I think it's time to have a serious chat re the quality of this kitchen.
15. The homeowner contends that this resulted in Mr Hazzoury contacting her to arrange to attend the property to fix the sink on 23 July 2018, but he did not turn up on that date as arranged. On 30 July 2018 the homeowner sent an email to Mr Gittany to complain about this, requesting that she be permitted to engage someone else to carry out this work at the developer's expense. With respect to the kitchen cupboards and mosaic wall tile features the homeowner also states: … As for the kitchen cupboards, I'm thinking of getting a kitchen company to see if they can fix the drawers etc. I'm embarrassed by the quality of the kitchen cupboards and tiling and very disappointed with what has been supplied. …
16. In the subsequent email exchange Mr Gittany claimed that Mr Hazzoury had arranged to attend the property on 31 July 2018, which the homeowner denied. The homeowner was unable to be home on 31 July 2018, but agreed to Mr Gittany's request to leave the key to the property under the door mat so that Mr Hazzoury could obtain access. Mr Hazzoury attended the property on 31 July 2018 and reinstalled the sink.
17. On 6 August 2018 the sink dropped out of the benchtop a second time and the homeowner contacted Mr Gittany to advise him that this had occurred. She requested that Mr Hazzoury not return to the property because she did not believe that he was capable of carrying out rectification work to the necessary standard. Mr Gittany replied to this email later that day apologising to the homeowner for the inconvenience and offering to arrange for the tradesperson who originally installed the stone benchtop to attend the property (the kitchen installer). He also offered to permit the homeowner 'to get a price' for the rectification work necessary and to 'let [him] know how much it is to fix [and he] will have a look at it.' However, the homeowner agreed to Mr Gittany's proposal that the kitchen installer attend the property to rectify the sink. This was subsequently arranged for 20 September 2018, but the kitchen installer did not arrive as arranged. Subsequently, he notified the homeowner that he would attend on the morning of 21 September 2018, which he did.
18. The homeowner complains that the kitchen installer used a white expoxy glue to reinstall the sink which 'left a thick white line around the top of the sink.'
19. The respondents contend that when Mr Hazzoury attended the property to reinstall the sink on 30 July 2018 this was only ever intended as a temporary fix until the kitchen installer could attend to perform final rectification work. They contend that shortly after that date the kitchen installer tried to attend the property to fix the sink but the homeowner 'did not provide access'. The homeowner denies that she was ever advised that the work Mr Hazzoury was to, or did, carry out was a temporary fix or to expect the attendance of the kitchen installer in the days following 30 July 2018. She denies ever being contacted by the kitchen installer to arrange access. The respondents have not submitted any objective or surrounding evidence that would suggest that it was communicated to the homeowner that the rectification work Mr Hazzoury performed on 30 July 2018 was intended to be temporary only and that she was to arrange for the attendance of the original kitchen installer for a final repair.
20. On 11 October 2018 the builder's kitchen installer attended the property in response to the homeowner's complaints about the kitchen cabinetry. He took one cupboard door away with him to rectify. Despite the homeowner's repeated complaints and requests over successive months (various emails and text messages are in evidence) the cupboard door was never returned. The respondents contend that the kitchen installer attempted to return to the property but the homeowner would not provide him with access after which he refused to attend again. The homeowner denies ever being contacted by the kitchen installer to arrange access to the property to reinstall the cupboard door. No objective or surrounding evidence has been submitted by the respondents that establishes or suggests any attempt by the kitchen installer to contact the homeowner or any refusal by the homeowner to allow him access. The respondents submit that they could not obtain a statement from the kitchen installer because he has died.
21. On 23 July 2019 the Owners Corporation of the Strata Scheme obtained a building defect report which it had commissioned from BDW Solutions. Section 14 of that report deals with the kitchen cooktops installed in each Lot of the strata scheme. BDW Solutions' inspector found that the cooktops had been installed defectively in several Lots and did not comply with Australian Standard 4386 Clause 6.2.4(b) which requires that the minimum distance between cooktop elements or burners and combustible material shall be 600mm or such greater distance as specified by the appliance manufacturer. The manufacturer's specification in this case specified a minimum distance of 600mm from the burner to the rangehood. The rangehood in the homeowner's property was installed 530mm above the cooktop.
22. BDW Solutions' investigator also found other defects in Lot 9 (the property), being water damage and peeling paint on the ceiling of the dining room, the kitchen window was out of alignment, poor workmanship on the kitchen splashback tile installation, the access panel in the kitchen was out of alignment, there were insufficient falls of 0.0 degrees to the laundry drain in 2 directions, doors were out of alignment on the kitchen wall cabinets and floor, there were no visible water stops on the laundry and bathroom door thresholds, the second bedroom window was out of alignment, there was deterioration at the base of the main bathroom mirror, there were insufficient falls (less than 1:100) to the main bathroom drain in all directions, and no joint sealant between the vanity and the wall tiles in the main bathroom.
23. In August 2019 the homeowner became aware by searching on NSW Fair Trading's website that the builder was not licensed. The builder's license history is in evidence. At the material times for this proceeding the builder was licenced as a builder between 13 July 2016 and 12 July 2017. That license was expired from 13 July 2017 to 4 February 2018. It was then re-issued on 5 February 2018 and remained current until 4 March 2019. The license was then cancelled between 5 March 2019 and 29 April 2020. It was reissued on 30 April 2020 and is current until 29 April 2021. Between 13 July 2016 and 12 July 2017 and 5 February 2018 to 29 April 2021 the license operated subject to the condition that the builder was only entitled to enter into building contracts that did not require insurance under the Home Building Compensation Fund.
24. This information caused the homeowner to consult a solicitor. She contends that she was advised that the statutory warranty period for minor building defects was two years and that this period would lapse on 21 December 2019. As a consequence of that advice the homeowner instituted these proceedings on 16 September 2019.
25. Also as a result of this advice the homeowner determined to make her own arrangements to have the building defects in the property rectified. She contends that she was entitled to do so because the builder did not hold a builder's license at that time, the builder's work had been unsatisfactory over an extended period of time, previous requests for repairs had not been attended to within a reasonable time, and because her relationship with Mr Hazzoury had broken down from March 2019.
26. On 28 August 2019 the homeowner engaged ADS Joinery Pty Ltd to project manage the rectification of defects in the kitchen of the property. The homeowner relies upon a statement made by Antonio Del Santos of ADS Joinery Pty Ltd dated 31 October 2019. In that statement Mr Del Santos states that he has over 40 years' experience as a cabinet and furniture maker and that he has installed hundreds of kitchens. The salient sections of his statement are set out following: I was engaged by Ms Wood to provide a quote to make and measure and install a kitchen cupboard door removed by the builder and to move the rangehood and raise it to the height above the gas cook top required by the Manufactuer's Installation Instructions and the Australian Standard AS4386.1 "Kitchen Assemblies". There was a potential fire risk when the gas cooktop is used under normal cooking conditions. … When I went there I saw that the kitchen had many defects. Whoever supplied and installed the kitchen showed lack of kitchen assembly knowledge according to AS4386 and showed sub standard skill as a tradesperson which is why there were many defects with the cabinetry, sink installation and the tiling. To address the defects in the kitchen I advised Ms Wood that it was better to opt for a renovation as this was the cheaper option than removing the kitchen and supplying and installing a new one. The following defects were required to be fixed: Left hand corner cupboard door was missing for almost 12 months. A new door was made to measure and colour matched to be installed. Rangehood was too low and was only 530mm above the gas flame. It should have been 600mm above the gas flame. When the cupboard with the rangehood exhaust inside it was removed it showed that the cupboards were incomplete and needed infill panels. Two infill panels were made to measure and colour matched. As a result the 900mm rangehood did not fit the space anymore. Ms Wood had to supply and install a 800mm rangehood at her own cost. Kitchen drawers set had a side panel missing so stone benchtop had to be removed and a new infill panel made and colour matched and benchtop replaced. Kitchen sink had been installed defectively with thick white sealant. The stone benchtop supplier advised that he could not guarantee that if he took the sink out, cleaned all of the white glue off and put it in again, that it would not drop down again. The benchtop had to be removed to remove sink and new sink installed as clean surface is needed for the clear expoxy glue to adhere to it, otherwise the sink drops out. The splashback was defective. It was very poor workmanship and the tiler had not completed work in a skilled tradesman like manner.
27. Both respondents contend that the defects that were identified by BWD Solutions are all minor defects that could have easily been rectified but the homeowner refused to provide its tradespersons with access to the property. They contend that Mr Hazzoury attempted to attend the property twice sometime after the BDW Solutions report was received and access was refused by the homeowner. The homeowner denies that she did so. There are no details in the respondents' evidence as to the actual dates of Mr Hazzoury's attempts at access and there is no objective or surrounding evidence of any 'refusal' by the homeowner to provide access.
28. However, in this respect, both respondents rely upon the following statements, dated 29 November 2019, made by the electrician and plumber who were engaged to rectify the defects throughout the development: I, George Haklane, Director of Global Tech Electrical & Alarms Pty Ltd, the contracted Electrician for the job site mentioned above Unit 9/34 Princess (sic) Highway Sylvanie, NSW 2160. I attended unit 9 … with the Builder for the site Mr Geogio Hazouri and other tradesman to go through the defects that were listed on the Building Report, in order for us to rectify the defects. However, the person residing at that address did not provide us with access. … I, Harris Georges, the Director of All Seasons Plumbing Pty Ltd and the contracted Plumber for the job site mentioned above Unit 9/34 Princess (sic) Highway Sylvanie, NSW 2160. I attended unit 9 … with the Builder for the site Mr Geogio Hazouri and other tradesman to go through the defects that were listed on the Building Report, in order for us to rectify the defects. However, the person residing at that address did not provide us with access. …
29. The homeowner denies that she refused the builder or any of its tradespersons access to the property. It appears that the Owners Corporation had notified Lot Owners that there would be a defect inspection conducted by the builder on the morning of 2 September 2019. In her submissions she responds to this claim as follows: On 2 September 2019 the builder claims he attended my unit and I refused access. The builder's evidence of signed declarations from the electrician and plumber do not give a date or time at which they attended and I had refused access. On that morning I chocked my front door open at 8:50am. I could not see or hear anyone around the complex. There were no tradesmen or cars belonging to tradesmen in the complex or out on the street. At 10:40am I txt the owner of unit 3. He was out but his wife was at home. The tradesmen did not attend unit 3 either and it would appear that the owner of shops 15 and 16 is the only owner they saw on that date. If they had knocked on my door between 8:30am and 8:50am when I propped the door open, and didn't answer, why didn't they come back? Why didn't the builder txt or call me to see where I was? He made no effort to contact me.
30. On 5 September 2019 the homeowner sent a text message to Mr Gittany to complain that there was water leaking again from the ceiling of the lounge area requesting its rectification.
31. The Owners Corporation advised Lot Owners that there would be a second defect inspection by the builder and tradespersons on 19 September 2019. In her submissions the homeowner states the following in relation to that inspection: I was home and provided access. The builder, electrician and plumber attended. When the electrician and plumber left to go to another unit, the builder said words to the effect to me "I will pay for this. Send me and email" and that he "had a claim against the kitchen installer and if I gets some money from him I will pay you."
32. The homeowner contends that later on 19 September 2019 Mr Hazzoury returned to the property to investigate the lounge ceiling leak, cutting a large hole in the ceiling. The respondents do not appear to deny this.
33. The homeowner also relies upon an email she received from Mr Hazzoury dated 23 September 2019 to establish that she did provide him with access to the property to conduct a defect inspection. Mr Hazzoury appears to have sent that email in the context of recently learning that the homeowner had instituted this proceeding in the Tribunal. That email is in evidence. It has "Re:Tribunal" in the subject line and states: As discussed with you on Thursday that I will try to get the money from kitchen guy. And if I do I will give back to you. But you should have waited for the building rectification works to be sorted out before you did the work. As he has first option to do the works. But leave it with me and I will see what I can do.
34. The homeowner has also put in evidence an email exchange she had with a Assistant Property Manager, Trish Nevison, of Century 21 Realty One dated 25 September 2019. Ms Nevison's agency is apparently Managing Agent for another apartment(s) in the strata plan. Ms Nevison inserts into her email the text of a complaint she received from a tenant about the access visits scheduled for the builder. It relevantly states: …can you shed a little light on what the builder is doing with unity 14, he still didn't attend on the scheduled day, please see the tenant's email below and disappointed as you can imagine we all are in the builder's response "Hi Tish I just wanted to email to touch has in regards to the builders attending our unit at 14/34 Princes Highway Sylvanis to tend to the defects. The builder was scheduled to attend our unit last Thursday (19/09/19), we waiting most of the day before contacting you to get a direct line for the builder, when contacted he told me he forgot our unity and we organised for him to come back this past Monday (23/09/19) which again did not happen. …
35. On 8 October 2019 the homeowner sent the following email to Mr Gittany to advise that she would be away for two weeks and to advise how the builder was to obtain access to the property to rectify defects while she was away: Hi Charlie I am away another 2 weeks but have left a set of keys with Colin in unit 3 for access. I have included in my claim the cost of: Installing the kitchen tap and reconnecting the dishwasher. Tap is in a box on the dining room floor. Installing the new rangehood. The parts are on the floor in the dining room and the vent cover is out on the front verandah. Replacing the shaving cabinet in the bathroom. If it could be installed a bit higher above the basin without exposing any holes in the tiles and the basin needs some sealant across the back of it. If Colin can give you access and you are able and want to supervise the tap, rangehood and cabinet being installed I am happy for you to arrange but ask that you supervise so that the work is done to a good standard. I will then deduct those costs from my claim. …
36. Sometime while the homeowner was away a tradesperson attended the property on an unscheduled basis and was provided with access by the homeowner's son who happened to be there at the time. He patched the ceiling where the water leak had been. The builder submits he "advised Ms Wood that a painter will be there the following day to paint the patch. However, Ms Wood advised the painter not to come back to her unit because she was already renovating it and she advised him she will paint the ceiling herself." The homeowner denies having any conversion or other communication with the builder or painter to this effect or at all. She submits that she could have had such a conversation because she was interstate at the time.
37. It is not entirely clear in the evidence when the kitchen rectification work was carried out by ADS Joinery Pty Ltd. The respondents contend it was completed in September 2019. On 22 November 2019 the homeowner arranged for the ceiling to be repainted where it had been patched.
38. The respondents contend that the homeowner has sought to "upgrade" the property, in particular the kitchen, at their expense in order to improve the property's resale value. That submission is based on the following assertions: 1. a double bowl sink has been installed in place of the original single bowl sink; 2. a larger range hood has been installed in place of the original range hood; 3. a superior stone benchtop has been installed in place of the original bench top; 4. superior kitchen splashback tiles have been installed in place of the original tiles
39. The respondents have only provided one supporting document in relation to these contentions. It is quotation dated 13 February 2017 from Harvey Norman Commercial Division which among other things itemises the supply of 14 60cm Smeg rangehoods at a cost of $181.00 per unit.
40. The homeowner denies that she has "upgraded" the kitchen.
41. In respect of the sink, the homeowner contends that she replaced an existing double bowl sink with a replacement double bowl sink and that she had do so because she was advised that the original sink had been damaged by the builder's attempts at repair and was likely to drop out again if reinstalled. She relies upon the Harvey Norman quotation the respondents have submitted to establish this. It also itemises the supply of 14 Smeg double bowl under mount sinks.
42. In respect of the rangehood, the homeowner contends that it had to be replaced because the original would not fit into the cabinetry the builder had supplied once that cabinetry was completed. The original rangehood was 900mm whereas the replacement is 800mm. She disputes the respondents' contention that the original rangehood was supplied at a cost of $180.00 and that the cost of $880.00 for the replacement is evidence of her choice to "upgrade" on two bases. First, she points out that the Harvey Norman quotation that contains that price is in respect of a 600mm rangehood, not a 900mm rangehood. Second, she contends that the cost variation is explained by the respondents' access to wholesale bulk purchase rates when it installed the original, whereas she had to pay a retail rate for the replacement.
43. In respect of the benchtop the homeowner denies that it is larger or superior to the original. She contends that it is Caesarstone from the standard range and that the only difference between the original and the replacement is its colour. She also contends that the size of the replacement benchtop is the same as the original, which is 40mm. She relies upon the quotation provided by ADS Joinery Pty Ltd which includes the following item: "ADS Joinery to supply and install new stone benchtop with 40mm profile with pencil round finish. The client has chosen the colour Intense White from ceasarstone colour code 6011 standard range."
44. In respect of the kitchen splashback tiles, the homeowner denies the replacement tiles are superior to the original. She contends that the original tiles were Carrera marble and cost $1000.00, whereas the replacement tiles are ceramic and cost $259.00. She has submitted purchase documentation in support of this contention.
45. The homeowners damages claim, which totals to $14,238.50, is made up of the following elements, each of which is supported by evidence in the form of a receipt, invoice or other relevant documentation: 1. The costs of kitchen rectification works carried out by ADS Joinery Pty Ltd: $9,008.00 2. This is in respect of the following work: removal of rangehood and cabinet; supply and installation kitchen cupboard door; supply and installation of missing in-fill panets to kitchen cupboards; supply and install side panel to drawers; removal of double bowl sink; removal of existing stone benchtop and installation of a replacement benchtop and sink; removal of tile splashback; removal and disposal of waste. 3. Cost of a double-bowl sink: $528.00 4. Cost of installation of kitchen splashback 5. (a) cost of tiles and grout: $706.00 6. (b) tiler: $850.00 7. (c) gyprocking: $550.00 8. Installation of new tap over sink: $418.00 9. Cost of installation of new rangehood 10. (a) cost of rangehood: $880.00 11. (b) cost of installation: $368.50 12. Cost of repainting lounge ceiling patch: $550.00 13. Cost of replacement of bathroom having cabinet: 14. (a) cost of cabinet: $122.00 15. (b) cost of cabinet installation: $330.00

Jurisdiction

1. The developer and the builder both submit that the homeowner's application should be rejected without being determined because it is a building claim that has not been investigated under Division 2 of Part 3A of the HB Act (Resolving Building Disputes and Building Claims). That submission is founded upon section 48J of the HB Act, which is set out following: 48J Certain applications to be rejected The principal registrar of the Tribunal must reject any application to the Tribunal for the determination of a building claim unless - (a) the principal registrar is satisfied that the subject-matter of the building claim has been investigated under Division 2, or (b) the President of the Tribunal directs that the building claim be accepted without such an investigation having been made.
2. On 1 August 2017, the then President of the Tribunal issued NCAT Procedural Direction 5 Acceptance of Home Building Claims pursuant to section 48J(b) of the HB Act. In paragraph 4 of that Procedural Direction the President directs the Principal Registrar to accept building claims in certain categories specified in that paragraph even if the Principal Registrar is not satisfied that the subject matter of the claim has been investigated under Division 2 of Part 3A of the HB Act. Those categories relevantly include: (e) claims involving unlicensed contractors.
3. It is clear on the face of the file that the Registrar's delegate accepted this application in circumstances where there had not been a prior investigation of the complaint under Division 2, of Part 3A of the Act because she was satisfied that the respondents were not licenced to carry out residential building work when the application was made. That fact appears to be beyond dispute. The developer is not a builder and has never held a builder's license. The builder's license history is in evidence. It relevantly states that the license was expired from 13 July 2017 to 4 February 2018 after which it was reissued, that it was cancelled from 5 March 2019 to 29 April 2020, after which it was reissued.
4. The builder contends that its license was cancelled due to administrative oversights by NSW Fair Trading in not issuing it with renewal information to its correct address and that it rectified the situation as soon as its license cancellation was brought to its attention, which appears to have been in the context of the original proceedings. Whether or not that is the case, the temporal focus for section 48J of the HB Act and NCAT Procedural Direction 5 is the date the application is made. On the date of the homeowner's application, being 16 September 2019, it is clear that the builder's license was cancelled. The Principal Registrar was therefore subject to a direction of the President to accept the claim despite it not having been the subject of an investigation under Division 2, Part 3A of the HB Act because it involved an "unlicensed contractor".
5. In any event, even if the Principal Registrar has accepted the application in error, the Tribunal itself has no power now to hear an appeal from her decision or to set it aside on some other basis in the context of these proceedings. The appropriate form of action in relation to such a complaint would be judicial review of the Principal Registrar's decision by a court. I also note in this respect that even if there had been non-compliance with section 48J that would not deprive the Tribunal of jurisdiction to hear and determine the application for the reasons stated by the Appeal Panel of the Tribunal in S & G Homes Pty Ltd t/as Pavilion Homes NSWCATAP 190 at [39] to [66]: see also Maygood Australia Pty Ltd v The Owners - Strata Plan 85338 [2020] NSWCATAP 237 at [18] to [51]
6. Otherwise, there is no issue that the Tribunal has jurisdiction pursuant to section 48K of the HB Act to deal with this application. The claim is a "building claim" as that term is defined in sub-section 48A(1)(a) of the HB Act in that it is a claim for a specified sum of money that arises from a supply of building goods and services by the builder to the homeowner. The work involved is "residential building work" as that term is defined in Schedule 1, sub-sections 2(1)(a) of the HB Act in that it was work involved in the construction of the homeowner's dwelling. The reasonable market value of the work, being the cost of the overall development, which was $4,000,000.00, exceeds the minimum threshold of $5,000.00 for a building claim set by Schedule 1 Clause 2(3)(a) of the HB Act and Regulation 12 of the Home Building Regulation 2014. The claim is within the monetary limit on the Tribunal's order making power prescribed by subsection 48K(1) of the HB Act.
7. The building defects that are the subject of these proceeding are not "major defects" as that term is defined in section 18E of the HB Act. The statutory warranty period that applies to them is thus 2 years: section 18E(1)(b) of the HB Act. The homeowner was thus required by section 18E(1)(a) to commence proceedings within two years of the issuing of the final occupation certificate, which was on 21 December 2017. She did so on 16 September 2019, which was within the warranty period.

Applicable law

1. Subsection 18B(1) of the HB Act sets out warranties by the holder of a contractor license that are implied into every contract to do residential building work. In this case the relevant warranties are found in subsections 18B(1)(a), (c) and (e). 18B WARRANTIES AS TO RESIDENTIAL BUILDING WORK (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work: (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, (b) … (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, (d) … (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, (f) ... (2) ...
2. Section18B applies to J & G Constructions Pty Ltd because it is a builder who is required to maintain a builder's licence, whether or not that licence is maintained. Section 18B applies to Suecha Pty Ltd as trustee for Suecha Family Trust by operation of section 18C of the HB Act because it was the "developer" of the residential/commercial complex in which the property is located within the meaning of section 3A of the HB Act. The builder constructed the complex on its behalf. The homeowner is the immediate successor in title to Suecha, having purchased the property off the plan.
3. Section 18BA of the HB Act imposes certain duties on persons, such as the homeowner in this case, who have the benefit of the statutory warranties implied into a contract for residential building work by section 18B. Relevantly to the circumstances of this case it provides that when a breach of the statutory warranty becomes apparent, the person must make reasonable efforts to ensure the person against whom the warranty can be enforced is given notice in writing of the breach within 6 months after the breach becomes apparent: subsection 18BA(3)(a). Also, they must not unreasonably refuse a person who is in breach of the statutory warranty such access to the residential building work concerned as that person may reasonably require for the purpose of or in connection with rectifying the breach (the "duty to allow reasonable access"): subsection 18BA(3)(b). Subsection 18BA(5) of the HB Act provides that if a failure to comply with a duty under this section is established in proceedings before the Tribunal concerning a breach of a statutory warranty, the failure is a matter that the Tribunal may take into account and if the failure is a failure to comply with the duty to allow reasonable access that the Tribunal must take into account.
4. Section 18F(1)(a) of the HB Act relevantly provides that in proceedings for a breach of a statutory warranty, it is a defence for the respondent to prove that the deficiencies of which the applicant complains arise from instructions given by the person for whom the work was contracted to be done contrary to the advice of the respondent or person who did the work, being advice given in writing before the work was done.
5. Section 48MA of the HB Act provides that when it is determining a claim involving an allegation of defective residential building work by a party to the proceedings (the "responsible party") the Tribunal is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.
6. The operation of section 48MA has been discussed by the Appeal Panel of the Tribunal in a number of cases. In summary, the principle it contains is to be interpreted as a "preference" as to the remedy the Tribunal should order if a claimant establishes the responsible party has carried out defective work. This 'preference' is not correctly to be conceived of as a "presumption". Nor is it to be conceived of as a builder's "right". It does not mandate that a work order must be made in all cases. In determining what order should be made, the Tribunal may consider such factors as whether there is a reasonable basis for any objection raised by the homeowner to the builder being permitted to rectify the defective work, whether the builder is willing to return to rectify the defective work, and whether such an order would support a timely and cost effective resolution of the dispute: Clements v Murphy [2018] NSWCATAP 152; Brennan Constructions Pty Ltd v Davison [2018] NSWCATAP 210.
7. The homeowner bears the onus of proving her case on the civil standard of proof, which is the balance of probabilities: Briginshaw v Briginshaw (1938) 60 CLR 336. This standard of proof was described by Lord Denning in Miller v Minister for Pensions [1947] 2 All ER 372 [at 374] as requiring the Tribunal to be satisfied that an alleged fact was "more probable than not". However, the Tribunal must "feel an actual persuasion of [the alleged fact's] occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality".… [the occurrence or existence of the fact must be established]… to the reasonable satisfaction of the Tribunal": Briginshaw [at 361-2].
8. If the Tribunal decides to make a money order, the homeowner must prove that the damage and loss for which she claims compensation is a reasonably foreseeable consequence of the breach of the statutory warranties: Hadley v Baxendale [1854] 9 Ex 341. The purpose of an award of damages is compensatory. It is designed to put the injured party in the position in which they would have been in had the breach not occurred, so far as money is capable of doing so: Marcourt v Clark [2012] NSWCA 367 at [98-99].

Consideration

1. Having regard to the homeowners cause of action, the evidence and contentions of the parties, and the applicable law, the questions the Tribunal must pose and answer in order to determine the outcome of this application are as follows: 1. Has there been a breach of the statutory warranties contained in section 18B of the HB Act by the builder and developer with respect to the building defects alleged by the homeowner? 2. If so, are the builder and developer entitled to resist the claim either on the basis: 1. That any defect is the result of instructions given to them by the homeowner in spite of their advice to the contrary? and/or 2. That the homeowner obstructed them from rectifying the defects? 1. Should the "preferred outcome" contained in section 48MA be applied in this case, and if so, how? 2. If not, is the homeowner entitled to be compensated for the costs she has incurred in rectifying the defects, and if so, in what amount?

Breach of statutory warranties

1. I am comfortably satisfied that the homeowner has established on her evidence that there has been a breach of the statutory warranties by the respondents in relation to various building elements in the homeowner's property.
2. In relation to the warranty as to due care and skill found in section 18B(1)(a) I make the following findings: 1. The respondents failed to install the rangehood in accordance with Australian Standard 4386 Cabinetry in the Built Environment - Commercial and Domestic 2018 Clause 6.2.4(b). Additionally, the rangehood was not installed according the manufacturer's instructions as to its distance from the cooktop. 2. The kitchen cabinetry was incomplete and defectively installed. In-fill panels were missing from the rangehood cabinet, one cupboard side panel was missing, and one cupboard door did not fit, was removed, and then lost. 3. The kitchen sink was defectively installed with the result that it dropped out of the benchtop twice. The second repair was also defective because it resulted in a highly visible and unsightly white epoxy ring around the top of the sink and in the epoxy bleeding onto the the adjoining Caeasarstone. 4. The repair of the water leak above the lounge room ceiling was not completed. The ceiling was not made good by repainting it afterwards. 5. The mosaic tile kitchen splashback was defectively installed. The caulking was white and the grouting grey creating a highly visible and unsightly contrast in the setting of the tiles. The corner finishes were not even or straight. Many of the tiles were not set properly.
3. In relation to the warranty as to compliance with law found in section 18B(1)(c) I make the following findings: 1. The respondents failed to install the rangehood in accordance with Australian Standard 4386 Cabinetry in the Built Environment - Commercial and Domestic 2018 Clause 6.2.4(b).
4. In relation to the warranty as to fitness for occupation as a dwelling found in section 18B(1)(e) I make the following findings. 1. The respondents failed to install the rangehood in accordance with Australian Standard 4386 Cabinetry in the Built Environment - Commercial and Domestic 2018 Clause 6.2.4(b). The installation of the rangehood lower than 600mm above the cooktop created a fire hazard. 2. There was a water leak above the lounge room ceiling that leaked onto the ceiling and into the dwelling, creating a risk of ceiling collapse and damage to the contents of the dwelling. 3. The kitchen sink was broken and incapable of being used for a period in excess of 3 months, and there remained a likelihood that it would collapse again following its second repair.

Was the homeowner warned not to install mosaic tile wall features?

1. On the evidence before me, and as a matter of fact, I am not satisfied that Mr Hazzoury or the tiler ever advised the homeowner not to install mosaic tile wall features in the bathrooms and kitchen. The homeowner denies ever receiving such advice, and the respondents have not provided any objective or surrounding evidence that has a tendency to support their claim to the contrary. Moreover, there is nothing in the respondents' evidence that would explain why they would take the view that tiles were unsuitable in these areas.
2. But in any event, in order for this defence to be available, section 18F(1)(a) of the HB Act requires that any such advice be given in writing. The respondents do not contend that this was the case. Consequently, this defence fails.

Did the homeowner obstruct the builder's access to the property to carry out repairs?

1. On the evidence before me I am not satisfied that the homeowner obstructed or hindered the builder or its tradespersons from carrying out repairs in any way whatsoever. Most of the evidence points in the opposite direction. The homeowner persistently requested and demanded the developer's and builder's attention to defects in the property, but the builder and his tradespersons were either slow to respond or completely unresponsive (in the case of the kitchen installer).
2. The statements from the builder's electrician and plumber offer very little assistance to the respondents' case. They are almost identical in form and have clearly been prepared by the same person, in all probability by, Mr Gittany. They do not include any particulars of dates and times when access was refused, nor do they indicate what work was supposed to have been carried out during such attendances at the property. There is no objective or surrounding evidence that has a tendency to support the contents of these statements. For example, there is no contemporaneous record of any attempt to contact the homeowner (phone record, text message, email), no contemporaneous record of any complaint by the developer or builder to the Owners Corporation to the effect that the homeowner would not provide access to the Lot, and there is no contemporaneous record of any notification or complaint passing between the builder and the developer or the builder and his tradespersons to this effect.
3. Specifically with respect to the visits scheduled by the Owners Corporation for 3 and 19 September 2020, I am satisfied that the homeowner was at home and waiting to provide access to the builder on 3 September 2019 but he did not attend, and that she was at home and did provide the builder with access on 19 September 2020.
4. It is true that the homeowner states several times in her correspondence with Mr Gittany that she has lost confidence in Mr Hazzoury and 'does not want him back' or words to this effect. She makes similar statements in relation to the kitchen installer. However, those statements are made in the context of her continuing requests and demands that the respondents rectify the defects in the property. The homeowner is expressing objections to the attendance of specific individuals based upon the quality of their previous work, as she perceives it. She is not refusing the developer or builder access to the property. That is undoubtedly the case because, in spite of what she stated to Mr Gittany at various times, she provided Mr Hazzoury with access to the property for a defects inspection on 19 September 2020.
5. For the foregoing reasons, the respondents' defence that they were obstructed by the homeowner from carrying out repairs fails.

Should the preferred outcome be applied in the circumstances of this case?

1. The preferred outcome could not have any instrumental utility in this case as the homeowner has already engaged other contractors to rectify the defects that are the subject of this application and this work has been completed. If it were to be applied it would have the effect of depriving the homeowner of a remedy, which in my view would lead to an injustice.
2. Both section 18F defences raised by the respondents have failed for the reasons stated above. I am satisfied that the respondents were on notice as to the building defects that are subject matter of the application and that they were provided with ample time and opportunity to rectify them by the homeowner.
3. These are minor building defects which are subject to a two year statutory warranty. At the time the homeowner engaged other contractors, that warranty had about three months to run. The builder had not made any formal response to the Owners Corporation accepting liability for the defects set out in the BDW Solutions report, and as a corollary, there was no implementation plan and timetable for this rectification work in situ. In these circumstances the homeowner could reasonably doubt that the rectification work would be completed within the period of the statutory warranty, and be concerned that she would be left without any remedy. The respondents have submitted no evidence to establish that the defects in other Lots were rectified within the period of the statutory warranty or at all.
4. It was also reasonable for the homeowner to be concerned that the builder was unlicensed at this time and had been for a considerable period. Although it is correct that the builder could nevertheless have carried out rectification work by engaging other licensed tradespersons to complete it, that does not mean that it was unreasonable that the homeowner's confidence in the respondents was severely shaken by this revelation. In any event, the homeowners' experience with the builder's tiling and kitchen installation sub-contractors up to the point she engaged her own contractors had been disastrous. It was not unreasonable for her to doubt the respondents' capacity to engage sub-contractors capable to carrying out rectification works to an acceptable standard within a reasonable time.
5. It is also relevant that two of the rectification works required were urgent. The defective installation of the rangehood created a fire hazard. The homeowner was left three months without the use of the kitchen sink and there was a likelihood it would fail again due to its shoddy repair.
6. For the foregoing reasons, I have therefore determined that the preferred principle should not be applied in the circumstances of this case.

Remedy

1. As a consequence of the conclusions I have reached above the homeowner is entitled to be compensated by the respondents for the costs she incurred in having the defects rectified by other contractors. She is only entitled to be put in the position she would have been in had the statutory warranties not been breached. She is not entitled to be put in any better position.
2. The respondents case in relation to quantum of the homeowners claim is that it constitutes an "upgrade" of the kitchen and that if this claim were to be allowed the homeowner would be better off than she is entitled to be. This case is put by bare assertion without any supporting evidence. The only objective evidence offered by the respondents is the Harvey Norman invoice which it emerged at hearing does not even refer to the rangehood originally installed in the property. It is of no assistance to the respondents.
3. By contrast, the homeowner's evidence in relation to her quantum of loss is detailed and robust. I am comfortably satisfied that the homeowner has done no more than put herself in the position she is entitled to be in as the beneficiary of the section 18B warranties.
4. It is not to the point that the respondents could have carried out this work at a lesser cost. They had the opportunity to do so and failed to. The homeowner does not have access to trades and wholesale rates. She was obliged to contract in the commercial market to have the rectification work done. The additional cost the respondents are now exposed to is a result of their own conduct, not anything the homeowner has done.
5. For these reasons the homeowner is entitled to an order that will require the respondents to pay her the compensation she claims, which is $14,238.50.

Costs

1. The homeowner applies for an order that would require the respondents to pay her costs of the proceeding, which she contends is $6,325.30. This is constituted by costs she has incurred in obtaining legal advice in relation to the claim in the amount of $6,217.20 and disbursements she has paid in the conduct of the proceedings (application fee, ASIC Company Search, postage, stationery) in the amount of $108.10.
2. I note that section 45 of the NCAT Act provides that in proceedings before the Tribunal each party has the conduct of its own case and is not entitled to be represented, relevantly, by a solicitor or barrister, unless the Tribunal grants leave for this to occur. No such leave was ever granted in this case. However, while that would prevent the homeowner from recovering any costs of purported solicitor/barrister representation, this is not what she claims in fact. She claims the costs of legal advice in aid of her own conduct of the proceedings. I am satisfied that this is capable of being a disbursement that falls within the scope of the definition of "legal costs" found in section 60(5) of the NCAT Act, as does the remainder of her costs claim: Profitability Consulting Pty Ltd v Thorpe [2018] NSWCATAP 4.
3. The homeowner contends that she is entitled to an order for costs because "the respondents have behaved in a manner to hinder the progress of this matter and [because] both respondents have colluded to their advantage and made false statements to delay the finalisation of the claim." The gravamen of the claim is that the respondents have delayed the finalisation of this application by falsely claiming that they did not have notice of the original hearing, or in the alternative, by failing to take reasonable steps to ascertain the date of the original hearing, which resulted in the Tribunal's original decision being set aside. Additionally, the homeowner contends that the respondents made false representations to the Registrar about her compliance with the Tribunal's directions for the filing and exchange of evidence in the original proceedings in an attempt to delay the original hearing and which resulted in her incurring additional costs in duplicating documents she had already served (paragraphs 34 to 44 of the homeowners submissions).
4. The costs regime that is applicable in the determination of this application is found in section 60 of the NCAT Act. Subsection 60(1) establishes the general rule that each party to proceedings in the Tribunal is to pay its own costs. Subsection 60(2) provides, that despite subsection 60(1), the Tribunal may award costs in relation to proceedings before it, but only if satisfied that there are special circumstances warranting an award of costs. Subsection 60(3) provides that, in determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings; (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings; (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law; (d) the nature and complexity of the proceedings; (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance; (f) whether a party has refused or failed to comply with the duty imposed by section 36(3) of the NCAT Act; and, (e) any other matter that the Tribunal considers relevant.
5. The meaning of the term "special circumstances" when used in subsection 60(2) has been considered by the Appeal Panel of the Tribunal in a number of cases. It has been held to mean circumstances that are out of the ordinary, but these circumstances to not have to be extraordinary or exceptional: Roberts v Chan & Naylor Parramatta Pty Ltd aft Chan & Naylor Parramatta Trust [2018] NSWCATAP 240 at [33]ff.
6. The homeowner presses her costs application pursued to paragraphs (a), (b) and (c) of section 60(1). Additionally, she bases it upon section 71 of the NCAT Act which provides that a person must not provide information or make a statement to the Tribunal knowing that the information or statement is false or misleading in a material respect.
7. Section 71 is a civil penalty offence carrying a maximum penalty of 50 penalty units or imprisonment for 12 months, or both. The Tribunal, as presently constituted, has no power to determine if there has been a contravention of that section by either respondents or to impose a penalty under that section. Part 5, Division 3, of the NCAT Act deals with proceedings for civil penalty offences. Such an application may only be made by an authorised person (section 75) and it is a separate proceeding. Specific rules of evidence apply in the determination of such an application (section 38(3)(a) of the NCAT Act). Any relevance section 71 would potentially have to the homeowner's costs application is therefore indirect and it would only crystalize upon the finalisation of a successful prosecution. The section can have no actual relevance in this case because there has not been a prosecution of the respondents under section 71 leading to a finding that either or both have contravened that section.
8. The homeowner submits that the setting aside of the original order she obtained has prolonged the finalisation of the proceedings and caused her disadvantage. However, that cannot be a special circumstance within the meaning of section 60. The developer and the builder were entitled to make their set aside application and that application was determined on its merits in their favour. The set aide decision has not been the subject of an appeal by the homeowner. The delay and disadvantage alleged by the homeowner therefore occurred by operation of law because the Tribunal determined that it was necessary in the interests of justice.
9. With respect to the claim that the respondents attempted to delay the original hearing by falsely claiming they had not been served with the homeowner's evidence, as a matter of fact that hearing was not delayed. Additionally, for the reasons set out above, it is not open to me in the context of these proceedings to determine that the respondents did make false representations to the Registrar about these matters in contravention of section 71.
10. There are therefore no special circumstances in this case that enliven the Tribunal's jurisdiction to make an order for costs in the homeowner's favour. The costs application must be dismissed.

Conclusion For the foregoing reasons, the builder and developer are jointly liable to pay the homeowner the sum of $14,238.50 for the cost she has incurred in rectifying the defective building work. The homeowner's costs application is dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. 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: 30 March 2022