Farrelly v Construction Occupations Registrar; Kelly v Construction Occupations Registrar (Administrative Review)

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

FARRELLY & ORS v CONSTRUCTION OCCUPATIONS REGISTRAR; KELLY & ORS v CONSTRUCTION OCCUPATIONS REGISTRAR (Administrative Review) [2025] ACAT 46

AT 141/2024 and AT 99/2024
Catchwords: ADMINSTRATIVE REVIEW – merits review of part of registrar’s decision to make a rectification order against the nominee and former directors of Lifestyle Homes (ACT) No 1 Pty Ltd (in liquidation) – requirement for the registrar to give a reasons statement considered – where the registrar’s notice of decision failed to inform the applicants they could apply for a reasons statement, contrary to the prescribed requirements in s 7 of the ACT Civil and Administrative Tribunal Regulation 2009 – where the notice of decision failed to include the information that a reasons statement should contain – where the registrar failed to serve a reasons statement in accordance r 129 of the ACT Civil and Administrative Tribunal Procedures Rules 2024 – where understanding the registrar’s reasons for making a rectification order (including findings made in relation to material questions of fact and the evidence on which the findings are based) is essential for the ACAT to properly discharge its functions in a merits review of the decision in accordance with the tribunal principles in s 7 of the ACT Civil and Administrative Tribunal Act 2008, including to afford the parties natural justice and procedural fairness – where water ingress issues allegedly involved systemic breaches of performance provisions FP1.2, FP1.4 and FP1.5 of NCC 2016 (Vol 1 Amendment 1) in relation to class 7 basement carparks and P2.2.3 of NCC 2016 (Vol 2) in relation to class 10a garages – where onus lay on the applicants to satisfy the registrar that in the particular case there was no necessity for compliance with the performance provisions – decision remitted to the registrar for reconsideration
Legislation cited: ACT Civil and Administrative Tribunal Act 2008, ss 7, 10, 22B, 22C, 22D, 67A, 68(3)
Building Act 2004, s 42(1)
Construction Occupations (Licensing) Act 2006, ss 34, 38, 123A
Legislation Act 2001, s 179

Subordinate

Legislation cited: ACT Civil and Administrative Tribunal Procedures Rules 2024, rr 38, 129(1)
ACT Civil and Administrative Tribunal Regulation 2009, s 7
Building (General) Regulation 2008, ss 31, 32
Construction Occupations (Licensing) Regulation 2004, schedule 4

Tribunal:Senior Member M. Orlov

Date of Orders:  23 June 2025
Date of Reasons for Decision:      23 June 2025
Date of Publication:  23 June 2025
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          AT 141/2024

BETWEEN:

JAIME FARRELLY
Applicant

AND:

CONSTRUCTION OCCUPATIONS REGISTRAR
Respondent

TRIBUNAL:Senior Member M. Orlov
DATE:23 June 2025

ORDER

The Tribunal orders:

The decision under review be remitted to the respondent for reconsideration in accordance with the reasons of the Tribunal.
………………………………..

Senior Member M. Orlov

AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AT 99/2024

BETWEEN:

GARY KELLY
First applicant

JAIME FARRELLY
Second applicant

JASON HARWOOD
Third applicant

AND:

CONSTRUCTION OCCUPATIONS REGISTRAR

Respondent

TRIBUNAL:Senior Member M. Orlov
DATE:23 June 2025

ORDER

The Tribunal orders:

The decision under review be remitted to the respondent for reconsideration in accordance with the reasons of the Tribunal.
………………………………..

Senior Member M. Orlov

REASONS FOR DECISION

Introduction

On 3 September 2024, the registrar made orders against Jaime Farrelly, Gary Kelly and Jason Harwood requiring them to rectify building work done by Lifestyle Homes (ACT) No 1 Pty Ltd (ACN 168 332 429) (Lifestyle Homes) in relation to the erection of a mixed class 1a townhouse and class 2 unit development on Block 5 Section 13 Greenway. Lifestyle Homes has gone into liquidation. Messrs Farrelly and Kelly are the former directors of the company. Mr Harwood was the nominee.
Messrs Farrelly, Kelly and Harwood sought merits review of the registrar’s decision in application AT 99/2024. For reasons that are not presently material, Mr Farrelly became the applicant in AT 141/2024 while Messrs Kelly and Harwood remained the applicants in AT 99/2024. The applications involved common issues and orders were made for them to be heard together with evidence in one to be evidence in the other.
The rectification orders are in identical terms and require the applicants to take stated action to rectify five categories of defects.[1] Defect 2 is described compendiously as water ingress and non-compliant hydraulic systems. The applicants seek merits review of the decision only in relation to part of the non-compliant work covered by defect category 2 involving water ingress into class 10a garages and class 7 basement carparks.
[1] defect 1a – non-compliant separating walls between adjoining class 1aii townhouses; defect 1b – non-compliant bounding walls between adjoining class 2 units; defect 1c – non-compliant passive fire treatment in class 7a basement carparks; defect 2a – water ingress into class 1aii townhouses and associated class 10a garages; defect 2b – water ingress into class 2 units and associated class 7a basement carparks
The stated action requires the applicants to “rectify the defects set out in Section 3 in a manner that meets or exceeds the requirements of the…(Building Act) and the…(NCC) and other relevant mandatory codes and standards in force at the time the Building Approval Notice was issued on 10 January 2019”.[2]
[2] T Docs pp 7, 8
Section 3 commences with:
Below is a list of alleged defects at the Premises, the relevant performance provisions for the area of work, and the basis on which I have determined that the alleged defects constitute a breach of the building code applicable at the time of the Building Approval Notice being Volume 1 of the NCC 2016 Amendment 1 and Volume 2 of the NCC 2016 (the Code).
Section 3 says in relation to water ingress and non-compliant hydraulic systems:
2a, Water ingress into Class 1aii townhouses and associated Class 10a garages
Water ingress is evident in multiple class 1aii units and associated 10a garages. Areas affected include but are not limited to:
·     Water ingress into habitable areas. Affected units include: 1, 6, 7, 10, 12, 13, 14, 16, 21, 24, 25, 26, 28, 73 & 80.
·    Water ingress into associated garages. Affected units include: 1, 56, 57, 73 & 80.
Defective and non-compliant building work contributing to water ingress has been observed. Key defects include:
·     Non-compliant installation of valley/valley trays. Affected units include: 6, 13, 14, 16 & 21.
·     Missing and defect window and cladding flashings. Affected units include: 14, 73 & 80.
·     Ineffective downpipe spreaders concentrating the flow of water. Affected units include: 12 & 14.
·     Ponding and flooding in courtyards, causing water ingress into habitable areas. Affected units include 24 & 26.
·     Stormwater drainage systems in the enclosed courtyard is not provided with emergency overflow. Affected units include: 24 & 26.
·     Leakages through concrete, causing water ingress into garage area. Affected units include: 57,73 & 80.
·     Defective roof flashings. Affected units include: 12, 13 & 14.
·    Ineffective damp course, causing moisture ingress and deterioration of building elements. Affected units include: 24.
This is determined to be in breach of:
·     Building Act, section 42(1)(b) and (c)
·     Performance Provision P2.2.1, P2.2.2 & P2.2.3 of Volume 2 of NCC 2026
·     Part 3.1.2.0, 3.5.1.0, 3.5.1.3, 3.5.2.0, 3.5.2.3, 3.5.2.4, 3.5.3.6 of Volume 2 of the NCC 2016
·     AS/NZS 3500.3 – 2015
·    AS 1562.1 – 1992
It is considered likely that the defects above are indicative of systemic issues across the Premises. In complying with this Rectification Order, you are required to conduct further investigation into these issues.
2b, Water ingress into Class 2 units and associated Class 7A basement carpark
Water ingress is evident in multiple Class 2 units and the associated 7a basement car park. Areas affected include but are not limited to:
·     Water ingress into habitable areas. Affected units include: 104, 107, 108, 109, 114, 117, 119 & 124.
·    Water ingress into associated basement garages. Affected units include: 104, 105, 108, 109, 114, 117, 119 & 125.
Defective and non-compliant building work contributing to water ingress has been observed. Key defects include:
·     Non-compliant and effective installation of box gutters. Affected units include: 104 & 108.
·     Missing and defective window and cladding flashings. Affected units include: 104, 107, 108 & 125.
·     Ineffective downpipe spreaders concentrating water flow of water. Affected units include: 104.
·     Defective roof flashings. Affected units include: 108.
·     Insufficient overflows for box gutters and rainwater heads. Affected units include: 104, 108.
·     Defective roof flashings. Affected units include: 108.
·     Leakages through concrete, causing water ingress into basement car park. Affected units include: 104, 117 & 125.
·    Water ingress into the basement garages has been observed. The Dincel walls used in the construction of the basement have not been constructed in accordance with the approved plans. Affected areas include: Basement walls beneath units 96 – 107 and beneath units 108 – 125.
This is determined to be in breach of:
·     Building Act, section 42(1)(b) and (c)
·     Performance Provision FP1.2, FP1.3, FP1.4 & FP1.5 of Volume 1 of the NCC 2016 Amendment 1
·     Part F1.1 & F1.5 of Volume 1 of the NCC 2016 Amendment 1
·     AS/NZS 3500.3 – 2015
·    AS 1562.1 – 1992
It is considered likely that the defects above are indicative of systemic issues throughout Blocks 5 & 6. In complying with this Rectification Order, you are required to conduct further investigation into these issues.
Evidence considered by the Registrar:
·     Attachment C – 20240520 – Sellick Consultants – Hydraulic engineer’s report on water ingress Revision B – dated 20 May 2024
·    Attachment D – 20240130 – B5 S13 Greenway, Defects list issued by Strata – dated 30 January 2024
The applicants seek a review of the decision only insofar as it is premised on a finding that water ingress into class 10a garages associated with class 1aii townhouses and class 7a basement carparks associated with class 2 units is a defect and that the defects are systemic. The grounds of review state:
4. The applicants dispute that the following alleged defects are contraventions of the Building Act 2004 (ACT):
2a, Water ingress into Class 1aii townhouses and associated Class 10a garages. This allegation is understood to be that there is water ingress into units 1, 56, 57, 73 and 80. Units 57, 73 and 80 are said to have water leaking into the garage areas and that there are leaks through the concrete,. In response, the applicants say that:
A.     The Registrar has failed to apply the correct code, citing NCC 2016.1 Vol 1. Section F, as opposed to NCC 2016 Vol 2. Section 2.
B.     The performance requirement clearly excludes class 10 structures of this kind, except where it contributes to the class 1 structure’s waterproofing.
C.     The applicant says that the basement walls and surrounding elements are not defective, so the rectification order is inappropriate.
2b, Water ingress into Class 2 units and associated Class 7a basement Carpark. This allegation is understood to be that there is water ingress into multiple class 2 units and the associated 7a basement car park. The affected units are said to be 104, 117 and 125 with alleged leakages through concrete in units 96 – 107 and 108 – 125 with water ingress into the basement garages. The applicants say:
A.     The Registrar has failed to consider the full performance requirement in NCC 2016 Vol. 1 which excludes class 7 structures.
B. The applicants say that the elements surrounding the basement are not defective and have been constructed in accordance with the Building Act 2004 (ACT) and the approved plans.
5.     The remaining defects are not in issue.

The decision under review

The decision under review may be described as the decision of the registrar to make an order requiring the applicants to rectify water ingress into:
(a)multiple class 10a garages associated with certain class 1aii townhouses that “include” units 1, 56, 57, 73 and 80 on the grounds that water ingress is, or is the result of, a breach of one or more of s 42(1)(b) and (c) of the Building Act, clauses P.2.2.1 to P.2.2.3 and parts 3.1.2.0, 3.5.1.0, 3.5.1.3, 3.5.2.0, 3.5.2.3, 3.5.2.4 and 3.5.3.6 of NCC 2016 (Vol. 2) and unspecified provisions of AS/NZS 3500.3 – 2015 and AS 1562.1 – 1992 and is indicative of systemic issues across the premises; and
(b)multiple class 7 basement garages associated with class 2 units that “include but are not limited to” units 104, 108, 108, 109, 114, 117, 119 and 125 on the grounds that water ingress is, or is the result of, a breach of one or more of s 42(1)(b) and (c) of the Building Act, clauses FP1.2 to FP1.5 and parts F1.1 and F1.5 of NCC 2016 Amendment 1 (Vol. 1) and unspecified provisions of AS/NZS 3500.3 – 2015 and AS 1562.1 – 1992 and is indicative of systemic issues throughout blocks 5 and 6.

The grounds on which the decision under review was made

As the registrar must be satisfied there has been a contravention of the COLA or an operational Act as a pre-condition to making a rectification order, the decision under review depends on the registrar having found:
(a)water ingress into class 10a garages is occurring across the premises;
(b)water ingress into class 7 basement carparks is occurring throughout blocks 5 and 6;
(c)this is, or is the result of, a systemic breach of one or more of:
(i)section 42(1)(b) of the Building Act;
(ii)section 42(1)(c) of the Building Act;
(iii)each provision of the NCC 2016 mentioned in the order;
(iv)unspecified provisions of AS/NZS 3500.3 – 2015;
(v)unspecified provisions of AS 1562.1 – 1992.
A finding that the water ingress is, or is the result of, a systemic breach of s 42(1)(b), depends on the registrar being satisfied the way building materials were used in the building work did not comply with their acceptable use under the building code for a class 10a or class 7 building.
A finding that the water ingress is, or is the result of, a systemic breach of s 42(1)(c), depends on the registrar being satisfied work was not carried out in a proper and skilful way having regard to mandatory considerations prescribed by ss 31 and 32 of the Building (General) Regulation 2008.
A finding that the water ingress is, or is the result of, a systemic breach of provisions of the NCC 2016 mentioned in the order, depends on the registrar being satisfied first, that each provision applies and second, the work does not comply with the provision in a material respect, bearing in mind performance provisions of the NCC often include multiple limbs, not all of which may be relevant to the particular case.
A finding that the water ingress is, or is the result of, a systemic breach of AS/NZS 3500.3 – 2015 and/or AS 1562.1 – 1992, depends on the registrar being satisfied first, that the standard applies and second, the work does not comply with the standard in a material respect.

The obligation to give reasons

The registrar is required to give a statement of reasons for a decision to make a rectification order. The duty to do so arises under provisions of the Construction Occupation (Licensing) Act 2004 (COLA), ACT Civil and Administrative Tribunal Act 2008 (ACAT Act) and the Legislation Act 2001.
A decision to make a rectification order against an entity is a ‘reviewable decision’ within the meaning of s 123A of the COLA and pursuant to item 13, column 1 in schedule 4 of the Construction Occupation (Licensing) Regulation 2004. Pursuant to s 123B, the registrar must give a ‘reviewable decision notice’ to the person or entity against whom the rectification order is made.
The dictionary for the Legislation Act 2001 defines a ‘reviewable decision notice’ as a notice given under s 67A of the ACAT Act.
Section 67A(1) of the ACAT Act provides for a person who makes a reviewable decision to take reasonable steps to give written notice of the decision (defined as a ‘reviewable decision notice’) to any person whose interests are affected by the decision. Subsection (3) provides for the time within which a reviewable decision notice must be given, what the notice must contain, any document or thing that must accompany a notice and anything else in relation to the notice to be prescribed by regulation. Subsection (4) provides for the validity of a decision to be unaffected by a failure to comply with the section.
Relevantly to a decision to make a rectification order, s 7 of the ACT Civil and Administrative Tribunal Regulation 2009 (ACAT Regulation) provides,:
A reviewable decision notice given to a person in relation to a decision under and authorising law must –
(a)     state the decision; and
(b)     …; and
(c)     state that the person may apply for a reasons statement in relation to the decision under the Act, section 22B; and
(d)     state that the person may apply to the ACAT for review of the decision; and
(e)     state how to make the application; and
(f)      state the other options available under ACT laws to have the decision reviewed.
Section 22B of the ACAT Act states:
(1)     This section applies if –
(a)a decision-maker makes a reviewable decision; and
(b)within 28 days after the day the decision is made, a person (the applicant) who may apply for review of the decision asks the decision-maker in writing for a statement of reasons for the decision (a reasons statement).
Note    The rules may prescribe a longer period for asking for a statement of reasons (see s 25(1)(e) and (2))
(2)     The decision-maker must give the applicant a written reasons statement for the decision within 28 days after the day the applicant asks for the statement unless –
(a)the decision contains the matters that a reasons statement would contain; or
(b)a document that contains the matters the reasons statement would contain has already been given to the applicant; or
(c)section 22E (Certain material not required to be disclosed) applies in relation to the decision.
Note For what must be included in a statement of reasons, see the Legislation Act, s 179.
Section 179 of the Legislation Act 2001 provides:
(1)     This section applies if a law requires a tribunal or other entity making a decision to give written reasons for the decision, whether the term ‘reasons’, ‘grounds’ or any other term is used.
(2)     The document giving the reasons must also set out the findings on material questions of fact and refer to the evidence or other material on which the findings were based.
(3)     This section is a determinative provision.
Section 22C(1) of the ACAT Act provides for a person to whom a reasons statement has been given to apply to the ACAT for a declaration under subsection (2) that the reasons statement is insufficient. Subsection (3) states the declaration must explain why the reasons statement is not sufficient. The following examples of why a reasons statement is insufficient are given under subsection (2):
1    insufficient particulars of findings on material questions of fact
2    insufficient reference to evidence or other material on which findings based
3    insufficient particulars of reasons for decision
If the ACAT makes a declaration under s 22C, s 22D requires the decision-maker to give the applicant an additional statement containing the information, evidence, material or anything else required to make the reasons statement sufficient within 28 days.
These provisions inform the Tribunal’s procedural rules providing for the time to be extended for an applicant to file an application for review of an administrative decision. Section 10(2) of the ACAT Act requires an application for review of a decision to be made within 28 days after the day the decision is made, subject to exceptions in subsection (3) that may cause the commencement date of the 28 day period to be extended. Rule 38(4) of the ACT Civil and Administrative Tribunal Procedures Rules 2024 (ACAT Rules) allows the ACAT to extend the time for making an application for administrative review of a decision by up to 56 days, starting on the day after the time for making the application ends.

The evident purpose of these provisions is to enable a person or entity affected by an administrative decision to obtain a reasons statement, giving sufficient particulars of the decision-maker’s findings on material questions of fact, sufficient references to the evidence or other material on which the findings are based and sufficient particulars of the reasons for the decision for the affected person or entity, to enable them to decide whether to file an application for review of the decision and, if so, to specify the reasons for applying for review and why the ACAT should determine that the correct or preferable decision is different to the one made.
Once an application for review is filed, r 129(1) of the ACAT Rules requires the respondent, within 14 days of receiving the application, to serve on the applicant and the tribunal a statement of reasons for the reviewable decision which (a) sets out the findings on material questions of fact; (b) refers to the evidence or other material on which those findings are based; (c) identifies the relevant law; and (d) gives reasons for the decision.
It is self-evident that the provision of a sufficient statement of reasons, whether contained in the decision itself or provided pursuant to a request made under s 22B of the ACAT Act or pursuant to r 129(1) of the ACAT Rules, is fundamental to the ACAT being able to exercise its functions in relation to the review of an administrative decision in accordance with the principles stated in s 7 of the ACAT Act, including to afford natural justice and procedural fairness to the parties.

The failure to give reasons for the decision under review

The notice of decision to make a rectification order (NOD)[3] issued to each applicant includes a page titled ‘Important Information’, said to be provided in accordance with s 7 of the ACAT Regulation. The NOD does not include a statement that the person or entity against whom the order is made may apply for a reasons statement under s 22B of the ACAT Act and therefore does not comply with the prescribed requirements for a valid reviewable decision notice. As already mentioned, this does not invalidate the decision.[4]
[3] T Docs pp 439, 452, 465
[4] ACAT Act, s 67(4)
None of the applicants requested a reasons statement under s 22B.
The registrar failed to serve a statement of reasons on the applicants and the Tribunal as required by r 129(1) of the ACAT Rules. It is unclear why not. The omission was not noticed before the applications were listed for final hearing.
In the absence of a reasons statement it is necessary to look to the NOD, the first paragraph of which says, “This Notice of Decision sets out my reasons for making the RO. This document is to be read in conjunction with the RO”. [5] This is followed by a brief section headed ‘Facts’ and another headed ‘The Complaint’.
[5] T Docs p 419
The latter provides basic background information about the sequence of events leading up to the making of the decision, including inspections by Access Canberra building inspectors who observed non-compliant fire separation between residential units and water ingress issues, the commissioning of reports from a fire engineer and hydraulic consultant by unit owners and the commissioning of further reports in relation to fire separation issues by the registrar. There is a list of attachments comprising document and reports to which the registrar gave “due regard … being produced by a professional with sufficient knowledge and experience to form such conclusions” and which the registrar “found…relevant in making my decision”.[6]
[6] T Docs p 420
The five main areas of alleged defective work are listed under the heading ‘Defects Identified’.
The balance of the NOD states:
REASONING
18. Upon review of the complaint particulars and the evidence in relation to those alleged defects provided to the Registrar, I was satisfied that you provided a construction service that was in breach of s42 of the Act.
19. On 08 July 2024, a Notice of Intention to issue a Rectification Order (NOI) under section 34 of COLA was given to you. A response was provided to the defect allegations contained in that NOI.
20. Under Section 38(1)(a) of COLA the Registrar, or his delegate, may make a Rectification Order requiring an entity, ‘to take stated action to rectify work done as part of a construction service’.
21. Under Section 38(2) of COLA a Rectification Order may require an entity, ‘to give the registrar written information about a thing required to be done under the order’.
22. Section 35 of COLA allows me to make a rectification order if:
(a)the Registrar (or delegate) has given a licensee or former licensee notice under section 34 of COLA;
(b)the licensee or former licensee provided the construction service, or part of the construction service, to which the notice relates;
(c)after considering any submissions made within the time mentioned in the notice, I am satisfied:
(i) the licensee or former licensee is contravening, or has contravened COLA or an operational Act (as defined in section 16 of COLA); and
(ii) it is appropriate to make a rectification order in relation to the licensee or former licensee; and
(d)if I have accepted a rectification undertaking from the licensee or former licensee in response to the notice – the licensee or former licensee has failed to comply with, or has withdrawn, the undertaking.
23. In deciding whether it was still reasonable and appropriate to issue a Rectification Order, I kept in mind the loss and damage caused by the contravention and how a proposed rectification order may affect people who have suffered because of the contravention.
CONCLUSION
24. Under section 35 of COLA, I formed the view that it was appropriate to issue a Rectification Order against you.
This is boilerplate that fails to meet even the minimum requirements of a reasons statement under s 22B of the ACAT Act – i.e., the provision of sufficient particulars of (a) findings on material questions of fact, (b) references to the evidence and other material on which the findings are based and (c) reasons for decision.
The parts of the rectification order relevant to the decision under review are reproduced in [6]. It is self-evident that it does not state the findings on material questions of fact the registrar must be taken to have made as outlined in [9] – [13].
The evidence “considered” by the registrar does not take the matter further. This consists of a report by Sellick Consultants dated 20 May 2024 (Sellick report) and a list of defects prepared by the strata manager dated 30 January 2024 (defects list) both of which are attachments to the rectification order.
Simply listing evidence “considered” by the registrar, particular where the evidence comprises expert reports about a range of issues, is not a substitute for the registrar making findings on material questions of fact and giving sufficient particulars of the findings supported by references to the evidence and other materials on which the findings are based.
The Sellick report concerns water ingress and non-compliant hydraulic systems issues affecting the complex as a whole. For present purposes it is necessary to focus on what the report says on about water ingress into garages and basement carparks. In a section titled ‘Inspection Summary’, the report states units 57, 73, 80, 104, 105, 107, 108, 117 and 125 were inspected and water leaks were found in the garages for units 57, 73, 104 and 125. An old leak was noted in unit 80 that “had been siliconed and has been working for the past 3 years or so”.[7] The extent of water leakage into garages is not discussed specifically, although related issues are mentioned – e.g.,
The expose (sic) slab penetrations appear as though they have been cored through the slab rather than casting into the slab during the concrete pour. There appears to be no evidence of any water proofing membrane and associated flexible tape around the penetrations to prevent water ingress into the basement garages. Silicone has been used and is only short-term fix that will continue to fail.[8]
Review of the structural documentation has revealed that basement wall detail is a simple “retaining wall” design which provides no ground water seepage protection to prevent water ingress into the basements.[9]
There are no structural details showing how the level 1 slabs should be integrated into the Dincel (basement) walls. It is understood from our inspections that water ingress is occurring at the back of most of the basement garages where the slab above ties into the Dincel walls. We suspect that the water is seeping in between the top of the Dincel wall and underside of the level 1 slab via capillary action during heavy rain events, this could have been prevented had the builder installed Bridgeman tape or equivalent.[10]
[7] T Docs pp 192-3
[8] T Docs p 195
[9] T Docs p 199
[10] T Docs p 202
An appendix to the report titled ‘Water Ingress Issues’ includes photographs said to be of water ingress into the garages of units 57, 73, 104, 108, 117 and 125.
The report mentions damp and weatherproofing performance requirements applying to class 1 and class 10 buildings – P2.2.1 (Surface water), P2.2.2 (Weatherproofing) and P2.2.3 (Dampness) of NCC 2016 (Vol 2) – and class 2 and class 7 buildings – FP1.1 to FP1.4 of NCC 2016 (Vol 1 Amendment 1) – and assumes but does not explain why the requirements apply to the class 10a and class 7 garages in the particular case.
The conclusions at the end of the report do not address water penetration into garages or the basement carparks directly, although the following conclusions appear to relate:
5.       The structural basement wall details in our opinion are not in line with acceptable industry practice.
6.       …
7.        Slab penetrations are poorly treated from a water proofing perspective and not considered acceptable industry practice.
The defects list references reports of water ingress into garages affecting units 37, 40, 47, 101, 105, 109, 110 and 114.
If the applicants had requested a reasons statement under s 22B of the ACAT Act, it would not have been open to the registrar to refuse to do so on the grounds the NOD contains the matters a reason statement given under the section would contain.

The practical consequence of not knowing the registrar’s reasons for decision

Under s 68(3) of the ACAT Act, the tribunal is required to confirm, vary or set aside the decision under review and, if the decision is set aside, either make a substitute decision or remit the matter for reconsideration in accordance with any direction or recommendation of the tribunal. The principles governing merits review are well understood. The tribunal’s task is to decide what is the correct or preferable decision in the circumstances based on the evidence and submissions at the hearing, regardless whether these were available to the original decision-maker. It is axiomatic that it is not necessary to establish, or even enquire into, whether the original decision was correct. Thus it is often said the tribunal ‘stands in the shoes’ of the original decision-maker and, in deciding what is the correct or preferable decision, decides the matter afresh.
However, statements of that kind should not be allowed to obscure the fact that the tribunal’s statutory function is to review an administrative decision and, in doing so, to decide whether the decision should be confirmed, varied or set aside. The starting point for the exercise of the tribunal’s jurisdiction must always be to understand the reasons for the decision under review. This explains the requirement in rule 129(1) of the ACAT Rules that the decision-maker must serve a statement of reasons on the applicant and provide copies to the tribunal within 14 days of receiving an application for review. The rule applies regardless whether a reasons statement has been given previously.
The practical effect of the registrar’s failure to provide a statement of reasons in this case is that the Tribunal is required to review a decision the reasons for which can only be guessed at. This is inefficient, costly and time-consuming and creates significant challenges for the Tribunal in affording natural justice and procedural fairness to the parties.

The issues

Performance provisions applying to class 10a garages

The registrar submitted water penetration into class 10a garages associated with class 1 townhouses is, is the result of, a breach of performance provisions P2.2.2 and P2.2.3 of NCC 1966 (Vol 2).
Performance provision P2.2.2 Weatherproofing provides:
A roof and external wall (including openings around windows and doors) must prevent the penetration of water that could cause –
(a) unhealthy or dangerous conditions, or loss of amenity for occupants; and
(b) undue dampness or deterioration of building elements.
Limitation:
P2.2.2(a) does not apply to a Class 10 building except where its construction contributes to the weatherproofing of the Class 1 building.
Performance provision P2.2.3 Dampness provides:
Moisture from the ground must be prevented from causing –
(a) unhealthy or dangerous conditions, or loss of amenity for occupants; and
(b) undue dampness or deterioration of building elements.
Limitation:
P2.2.3 does not apply to a Class 10 building where in the particular case there is no necessity for compliance.
The applicant submitted the limitations mean neither provision applies.
Whether building work does not comply with P2.2.2 depends on:
(a)whether the construction of the class 10a building contributes to the weatherproofing of the class 1 building;
(b)if (a) is answered ‘yes’, whether a roof or external wall prevents water penetration that could cause loss of amenity for occupants;
(c)regardless how (a) is answered, whether a roof or external wall prevents water penetration that could cause:
(i)undue dampness; or
(ii)deterioration of building elements.
Whether building work does not comply with P2.2.3 depends on:
(a)whether, in the particular case, there is no necessity for the class 10 building to comply with P2.2.3;
(b)if the exception does not apply, whether moisture from the ground is prevented from causing:
(i)loss of amenity for occupants;
(ii)undue dampness; or
(iii)deterioration of building elements.
As a garage is not a habitable space, the question whether water penetration or moisture from the ground may cause unhealthy or dangerous conditions does not appear to arise.
Performance provisions applying to class 7 basement carparks
The registrar submitted water penetration into class 7 basement carparks associated with class 2 units is, or is the result of, a breach of performance provisions FP1.2, FP1.4 and FP1.5 of NCC 2016 (Vol 1 Amendment 1).
Performance provision FP1.2 provides:
Surface water, resulting from a storm having an average recurrence interval of 100 years must not enter the building.
Limitation:
FP1.2 does not apply to –
(a) a Class 7…building where in the particular case there is no necessity for compliance; or…
Performance provision FP1.4 provides:
A roof and external wall (including openings around windows and doors) must prevent the penetration of water that could cause –
(a)     unhealthy or dangerous conditions, or loss of amenity for occupants; and
(b)     undue dampness or deterioration of building elements.
Limitation:
FP1.4 does not apply to –
(a)     a Class 7…building where in the particular case there is no necessity for compliance; or…
Performance provision FP1.5 provides:
Moisture from the ground must be prevented from causing –
(a)     unhealthy or dangerous conditions, or loss of amenity for occupants; and
(b)     undue dampness or deterioration of building elements.
Limitation:
FP1.4 does not apply to –
(a)     a Class 7…building where in the particular case there is no necessity for compliance; or…
The applicant submitted the limitations mean none of the provision apply.
Whether FP1.2, FP1.3 and FP1.4 apply depends on whether in the particular case there is no necessity for compliance – in other words, whether the exceptions apply.
If the exceptions do not apply, whether building work is non-compliant depends:
(a)for FP1.2, on whether surface water resulting from a storm having an average recurrence interval of 100 years (or less) is entering the building;
(b)for FP1.4, on whether water penetration through a roof or external wall prevents water penetration that could cause:
(i)loss of amenity for occupants;
(ii)undue dampness; or
(iii)deterioration of building elements.
(c)for FP1.5, on whether moisture from the ground is prevented from causing:
(i)loss of amenity for occupants;
(ii)undue dampness; or
(iii)deterioration of building elements.
As with the garages, because basement carparks are not habitable spaces, the question whether water penetration or moisture from the ground may cause unhealthy or dangerous conditions does not appear to arise.
Whether the defects, if established, are systemic
The registrar submitted the rectification order should include all the garages and basement carparks in blocks 1, 4a, 4b, 5 and 6 because the breaches resulting in water penetration are systemic.
The applicant submitted any rectification order should be limited to units mentioned specifically in the rectification order. If any defects are established, the evidence does not support a finding the breaches are systemic.

The hearing

I heard the evidence over two days on 14 and 15 April and submissions on 16 April 2025. The respondent relied on further reports by the author of the original Sellick report and called him to give supplementary oral evidence. The cross-examination exposed significant problems with his evidence. The parties accepted my indication that the evidence could not support an order to confirm or vary the decision under review and that it was preferable to remit the matter to the registrar for reconsideration. As a consequence, the applicants did not call their witnesses to give evidence, although statements were filed and served in accordance with earlier procedural directions.
The parties confined their submissions to the issue whether the performance provisions of NCC 2016 referenced in the rectification order apply.

Consideration

Does P2.2.2 apply to the class 10a garages?

The exception, if established, means that clause P2.2.2(a) does not apply. P2.2.2(b) applies regardless.
P2.2.2(a) applies if the construction of the class 10 building contributes to the weatherproofing of the class 1 building.
The drawings given building approval on 10 January 2019 are in evidence as exhibit R8.
Section G – G (Unit Type G) on drawing A402 is a section though a typical class 1 townhouse constructed on top of a class 10a garage. Units 56 and 57 are Type G units. The detail shows the top of the Dincel wall at the rear of the garage finishing above ground level and in line with the finished floor level of the habitable space on the first floor of the class 1 building. The Dincel wall provides a physical barrier to water entry and therefore contributes to the waterproofing of the class 1 building.
I am satisfied P2.2.2(a) applies.
The applicant accepts the construction of the Dincel walls was not carried out in accordance with the approved drawings. This is a breach of s 42(1)(d)(i) of the Building Act. The onus lies on the applicant to satisfy the registrar that the breach is not causally material – that is, it has played no part in allowing water ingress into the class 10a garages.
Does P2.2.3 apply to the class 10a garages?
The exception depends on whether in the particular case there is no necessity for compliance.
In other words, P2.2.3 applies unless it is established there is no need for compliance in the particular case. The onus to satisfy the registrar there is no need for compliance lies with the applicant.

Although the applicant submitted there was no need for compliance, the evidence was not sufficient to enable a finding one way or the other.
Does FP1.2, FP1.4 and FP1.5 apply to class basement carparks?
As with P2.2.3, these provisions apply unless the applicant satisfies the registrar there is no need for compliance in the particular case. The evidence was not sufficient to enable a finding one way or the other.

The preferable decision

The evidence satisfied me there is a water penetration issue affecting some class 10a garages and class 7 basement carparks meriting further investigation. The preferable decision in those circumstances is to remit the decision under review to the registrar for reconsideration in light of the matters discussed in these reasons.
………………………………..

Senior Member M. Orlov

[2025] ACAT 46

23 June 2025

Key Legal Topics

Areas of Law

Administrative Law

Legal Concepts

Judicial Review

Reconsideration

Remittal