Hassos v Beechwood Homes (NSW) Pty Limited

[2022] NSWCATCD 121

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Hassos v Beechwood Homes (NSW) Pty Limited [2022] NSWCATCD 121

Hearing dates:

9 December 2021, 29 March 2022

Date of orders:

29 August 2022

Decision date:

29 August 2022

Jurisdiction:

Consumer and Commercial Division

Before:

D Goldstein, Senior Member

Decision:

1. Beechwood Homes (NSW) Pty Ltd must pay Polly Polixeni Hassos the sum of $485,817.00 immediately.

2. In the event that a party wishes to bring a costs application, the costs application must be lodged in the Tribunal and served on/given to the costs respondent within 14 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

3. The costs respondent will have 14 days after the date it receives the application to lodge in the Tribunal and serve on/give to the costs applicant its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

4. The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

5. Subject to the parties’ submissions, the Tribunal will determine any costs application made on the basis of the papers lodged in the Tribunal.

Catchwords:

BUILDING and CONSTRUCTION

Legislation Cited:

Home Building Act 1989

Civil and Administrative Tribunal Act 2013

Cases Cited:

Alexander and Others v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310

Browne v Dunn (1893) 6 R 67

Seltsam Pty Limited v McGuiness; James Hardie & Coy Pty Limited v McGuiness [2000] NSWCA 29 (7 March 2000)

Chappel v Hart (1998) 156 ALR 517

Category:

Principal judgment

Parties:

Polly Polixeni Hassos (Applicant)
Beechwood Homes (NSW) Pty Limited (Respondent)

Representation:

Solicitors:
Snelgroves Solicitors (Applicant)
Respondent was self-represented

File Number(s):

HB 21/08577

Publication restriction:

Nil

REASONS FOR DECISION

1. In these proceedings the applicant claims damages for building defects and consequential loss arising out of late completion of a residential dwelling.

2. In these Reasons I will refer to the applicant as the owner and to the respondent as the builder.

3. The parties agree that the Tribunal has the jurisdiction to hear and determine the owners claims under the Home Building Act 1989.

The Evidence

4. The owner relied on a two volume tender bundle which was exhibit A. The builder tendered an expert report from Mr Brincat which was exhibit 1. Exhibit B was a Scott Schedule which had been completed by the builder.

The Owner’s Claim

5. In submissions filed before the hearing the owner’s solicitor identified the contract entered into by the parties as being dated 27 November 2017. A copy of the contract is in exhibit A. A Notice of practical completion was issued on 11 March 2019. A copy of that notice is also in exhibit A.

6. The owner asserts that the dwelling constructed by the builder pursuant to the contract they entered into contained defects which the builder despite, three attempts, has not been able to remedy. The owner has had an expert report prepared which identifies defective work and provides an estimate of the rectification costs. The total amount claimed by the owner is $137,863.00.

7. The owner resists an order that the builder be permitted to rectify defects.

8. In addition the owner has a holiday letting damages claim which I will refer to later in these reasons.

9. Clause 10 of the contract contained the builder’s warranties and acknowledgements including the warranty that the builder would perform the building works in a proper and workmanlike manner in accordance with the plans and specifications.

The Builder’s Position

10. Contrary to a Tribunal order dated 9 July 2021, the builder did not file an outline of submissions. It also did not file a defence to the owner’s Points of Claim, in breach of order 4 dated 23 April 2021. In fact the builder did little to comply with Tribunal orders or to prepare its case, except to serve its expert’s report the day before the hearing on 9 December 2021.

11. In opening Mr Wilson for the builder stated that the case was a defect’s case and that the method of rectification was in issue. Mr Wilson stated that the builder pressed its right to rectify under s 48MA of the Home Building Act.

12. Mr Wilson stated that he would not cross examine the owner on her evidence which is contained in exhibit A.

The Experts

13. Mr Waddell provided a report dated 9 April 2021 on behalf of the owner. There was no objection to his status as an expert or to any part of his report. Mr Brincat provided a report dated 8 December 2021 on behalf of the builder. There was no objection to his status as an expert or to any part of his report. I accept both Mr Waddell and Mr Brincat as experts able to give opinion evidence in the Tribunal.

14. The experts met to discuss the defects reported on by Mr Waddell. The parties were ordered to file a joint report, but that was not done. The experts meeting was in lieu of a joint report. I was advised by Mr Waddell that he and Mr Brincat had agreed that the builder’s work was defective and the appropriate scope of works as being that contained in Mr Waddell’s report for Scott Schedule items 2, 3, 4, 6 and 8. I was also informed that Messrs Waddell and Brincat had agreed that Scott Schedule items 1, 10 and 11 related to defective work but there was no agreement as to the appropriate scope of rectification work.

15. Mr Waddell had costed the rectification work that he recommended. Mr Brincat offered no opinion on rectification costs or Mr Waddell’s costings.

The Scott Schedule Items

16. In order to determine the owner’s claims it will be necessary to consider each item referred to in the Scott Schedule.

Item 1 – Garage Water Leaks

17. The experts agree that this item is a result of defective work. However they do not agree on the appropriate rectification methodology.

18. Mr Waddell’s report considered this defect in a comprehensive way which included referring to three leaks which had occurred in this area and the attempts that had previously been made by the builder to rectify them.

19. Mr Waddell’s rectification methodology is to remove and replace the garage roof and to rectify internal damage to wall and ceiling plasterboard.

20. Mr Brincat’s rectification methodology is far less in scope relating to changes to a corner flashing and placing a ‘soaker’ under the flashing that is already in place.

21. Both experts agree that the builder’s work has resulted in building defects and leaking in at least two locations. The experts do not agree on the most appropriate method of rectification to remedy the agreed defect. Mr Brincat’s rectification method is not comprehensive. Whether or not it will be entirely successful will be known in the future. The owner has only one chance to obtain an order against the builder in connection with the work which both experts agree was not carried out in a proper and workmanlike manner, the full details of which have been set out in length by Mr Waddell. I find that the owner is entitled to a comprehensive repair of the defective work as described by Mr Waddell as part of a ‘once and for all’ remedy for the admitted defect.

22. I find that Mr Waddell’s rectification methodology is to be preferred.

Item 2 – Water Leak above Entrance Door

23. The experts agree that this item is a result of defective work. They also agree on the method of rectification being that stated by Mr Waddell.

Item 3 - Fence Panels

24. The experts agree that this item is a result of defective work. They also agree on the method of rectification being that stated by Mr Waddell.

Item 4 - Water Entry below Stair Windows

25. The experts agree that this item is a result of defective work. They also agree on the method of rectification being that stated by Mr Waddell.

Item 5 - Theatre Roof Ceiling Damage

26. The experts agree that this item is a result of defective work. However they do not agree on the appropriate rectification methodology.

27. While both experts agree that this item is a result of defective work, their reasons for coming to that conclusion differ. Mr Waddell’s analysis points to a wider range of defects than Mr Brincat’s. This in turn leads to a more comprehensive and wider rectification methodology advanced by Mr Waddell.

28. Mr Brincat states that there is minor water entry and that Mr Waddell’s scope of work is excessive. Mr Brincat’s opinion is that the only cause of water entry is that identified by Mr Waddell at 9.5.10 of his report.

29. I accept Mr Waddell’s wide range of defects as referred to in his report which he did not accept was excessive when being cross examined. Mr Brincat does not contradict Mr Waddell’s evidence, he has chosen one item of defective work as being the main cause of the theatre roof ceiling damage. I prefer Mr Waddell’s comprehensive analysis.

30. Because I accept Mr Waddell’s evidence about all of the defective work which is relevant to this item of the Scott Schedule, I accept his extensive rectification methodology in preference to Mr Brincat’s which relates to only one of the items of defective work identified by Mr Waddell.

Item 6 - Kitchen Pantry Infill

31. The experts agree that this item is a result of defective work. They also agree on the method of rectification being that stated by Mr Waddell.

Item 7 - Matrix Cladding Defects

32. The experts agree that this item is a result of defective work. They also agree in part on the scope of the rectification.

33. Mr Waddell has provided a comprehensive examination of what he states is defective work. Mr Brincat agrees that the work is defective. However he does not agree to all of the work that Mr Waddell states is defective.

34. Ultimately Mr Brincat while agreeing that some items of work are defective, states that the matrix panels are fit for purpose because there is no water entry, and that he does not agree that there are areas that require aesthetic and cosmetic rectification.

35. The owner has pleaded that the builder breached statutory warranties which are identical to the conditions contained in clause 10 of the contract and included warranties that the builder would perform the building works in a proper and workmanlike manner as well as the works being carried out so that they were fit for purpose. I find that if the works were not performed in a proper and workmanlike manner, it is not for Mr Brincat to say that the matrix panels were fit for purpose because there is no suggestion that they leak.

36. So far as the comment that he does not agree that there are areas that require aesthetic and cosmetic rectification, I have read Mr Waddell’s report. He makes no mention in connection with Scott Schedule item 7 that rectification is required for aesthetic and cosmetic purposes.

37. I prefer Mr Waddell’s analysis of the defective work that the builder has carried out in connection with the matrix cladding. In part it is borne out by the fact that Mr Brincat agrees with him. To the extent that Mr Brincat does not agree with Mr Waddell, I accept Mr Waddell’s evidence because of the detail and thoroughness of his analysis which is not contradicted by any detailed reasoning or analysis advanced by Mr Brincat.

38. For these reasons I accept Mr Waddell’s rectification methodology.

Item 8 - Downpipe Astragal Gapping and Mortar Finish

39. The experts agree that this item is a result of defective work. They also agree on the method of rectification being that stated by Mr Waddell.

Item 9 - Scratched glass

40. There is no agreement between the experts on this item.

41. The experts disagree whether the scratches complained of are visible from a normal viewing position.

42. Photographs have been provided by the experts which are of no assistance to me as I am unable to see the scratches complained of. The owner has not referred to scratched glass in her statement which is in exhibit A. However her correspondence with the builder concerning defects at page 338 of exhibit A, states:

‘There is a massive 12 inch (30cm) scratch upstairs front window pane.’

43. The owner’s evidence has persuaded me that there is scratched glass and that it was evident soon after practical completion when defects were being discussed between the parties.

44. The owner is successful on this item of her claim.

Item 10 - Master Bedroom Wall Sheet Cracked

45. The experts agree that this item is a result of defective work. They do not agree on the method of rectification. However their rectification methods are similar and not far apart.

46. Given that the rectification methodologies are basically the same, and the cost according to Mr Waddell is modest, I prefer Mr Waddell’s methodology for the only reason that it has a few more details than Mr Brincat’s.

Item 11 - Walls not straight

47. The experts agree that this item is a result of defective work. They do not agree on the method of rectification. However their rectification methods are similar and not far apart.

48. Mr Waddell has provided a detailed explanation of the reasoning process to support his conclusion that the walls that he has identified have not been constructed straight. Mr Brincat agrees with him and states that the bulkhead is to be adjusted. Based on his detailed analysis of where the walls are not straight and the degree to which they are not straight, Mr Waddell has prepared a rectification methodology which addresses the defective work that he has identified. I prefer his methodology to Mr Brincat’s generalised statement that the bulkhead is to be adjusted.

Item 12 - Carpet nails on stair

49. There is no agreement between the experts on this item.

50. Mr Waddell states that at the time of his inspection the owner directed his attention to the foyer carpeted stairs and he was able to feel the smooth edge tacks penetrating the carpet at the base of the risers. He states that in his opinion the carpet installation by the builder was not performed in a workmanlike manner and this will require relaying of the carpet to the stairs ensuring that it is doubled over where the tread meets the risers in order to prevent penetration by the smooth edge tacking affecting users of the stairs. Mr Brincat states that that the relaying of the standard smooth edge will not stop the edging being felt under the carpet and that in his view there is has been no defective work. When being cross examined Mr Brincat stated that he walked over the carpeted stairs without shoes and there were a few areas that were uncomfortable. He stated that the tacks should be tapped down in those areas.

51. The owner complained about this. Her comments are at page 341 of exhibit A. She states that the carpet installer was not diligent when carrying out the work.

52. Having regard to all of the evidence on this issue and Mr Brincat’s statement that there were a few areas which were uncomfortable, I accept Mr Waddell’s evidence that the work was not performed in a workmanlike manner. I find that there was a breach of the contract. I accept Mr Waddell’s rectification methodology.

Item 13 - Toilet lids won’t stay up

53. The builder conceded this item.

Item 14 - Gas cooker not LPG jetted

54. While there was no agreement on this item, the experts did agree that BBQ locations were not as shown on the drawings. The owner’s expert Mr Waddell conceded that the gas bayonets provided were compatible with LNG.

55. As a result of the agreement between the experts, I reject the work at item 9.14.21 of Mr Waddell’s report. As regards item 9.14.22 I reject the allowance of $100.00 for new bayonets. I allow 9.14.23 as this is part of moving the BBQ bayonets to the locations stated at the drawings. Item 9.14.24 is rejected by reason of the concession of Mr Waddell that the gas bayonets provided were compatible with LNG. Item 9.14.25 was agreed to by Mr Brincat. The rectification cost is therefore adjusted to $2,866.00.

Section 48MA of the Home Building Act

56. Section 48MA states:

‘A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.’

57. While the preferred outcome as referred to in s48MA is not a mandatory outcome, I am required to consider whether the principle referred to should be the subject of an order in these proceedings requiring the builder to rectify the defective work.

58. The owner does not agree to the builder carrying out any further rectification work. Her evidence is that the builder has on three separate occasions attempted to rectify defects without success.

59. The builder has not filed evidence in these proceedings. Orders were made on 23 April 2021 giving it the opportunity to file all documents on which it intended to rely upon. Despite this the only document provided by the builder was Mr Brincat’s report the day before the hearing.

60. While the builder seeks to rely on s48MA of the Home Building Act, it has not placed any material before the Tribunal which might be relied upon to make a work order secure in the knowledge that the builder will treat the rectification work seriously with appropriate resources and importantly, a high level of supervision and inspection to ensure the necessary work is carried out with due care and skill and in accordance with all applicable Codes and Australian Standards. An offer to have an expert certify that the work has been carried out in accordance with a proper rectification scope and in accordance with all applicable Codes and Australian Standards will often help provide a proper basis for the Tribunal to make a work order, with confidence that the proceedings will not be re-litigated as renewal proceedings because the original work orders were not complied with.

61. Given that the owner’s evidence, which I accept, that the builder has on three separate occasions attempted to rectify defects without success has not been contradicted, and the builder has made no proposals as to how the rectification work will be carried out in an effective way, I have decided not to make a work order.

Determination of the owner’s defects claim

62. Given that I have decided not to make a work order, it follows that I will make a money order. In that regard I accept the evidence of Mr Waddell in connection with the costs of rectification which is the only evidence there is on rectification cost.

63. Based on the findings above $104,520 has been found in the owner’s favour. A 20% builder’s margin on that amount is $20,904.00, leading to a sub total of $125,424.00. GST on that amount is $12,542.00 leading to a final amount for defects of $137,966.00 to be awarded in her favour.

Holiday letting claim

64. Orders were made at the hearing on 9 December 2021 to allow the owner to call further evidence and make submissions on her holiday rental claim and also to allow the builder to call evidence and to make submissions in response to the claim. The orders so far as relevant were:

‘4. The applicant shall provide to the respondent and the Tribunal, either in person or by post, a copy of all further documents (see note below) in connection with her 'Holiday Rental' damages claim on which she intends to rely at the hearing by 31-Jan-2022.

5. The respondent shall provide to the applicant and the Tribunal, either in person or by post, a copy of all documents (see note below), in connection with the applicant's 'Holiday Rental' damages claim on which the respondent intends to rely at the hearing by 28-Feb-2022.

9. Not later than 7 March 2022 the parties must file and serve written submissions in support of their respective positions in connection with the applicant's 'Holiday Rental' damages claim.

10. The applicants 'Holiday Rental' damages claim is by consent to be determined on the papers without the need for a hearing. If either party seeks a hearing either in person or by an audio visual link, that party must write to the Registrar of the Consumer and Commercial Division of the Tribunal seeking such a hearing in lieu of a hearing on the papers.’

65. In her statement of September 2021 the owner stated that she advised the builder’s salesman that she was building the dwelling the subject of these proceedings as a holiday let to earn some extra income for herself. This evidence has not been contradicted. She has also stated that due to the defects that were in the dwelling following practical completion and due to her lack of funds to have the defects rectified, she has been unable to rent the dwelling out as a holiday let.

66. She also stated that from her own inquiries she would have had no difficulty in letting the dwelling during the holiday periods.

67. In accordance with the directions made on 9 December 2021, on 15 February 2022 the owner filed submissions on her loss of rental income claim as well as an affidavit of Mr Anthony Kim sworn 14 February 2022.

68. The owner also filed an unsigned statement on 7 February 2022. Her solicitors stated that a signed copy had been served on the respondent.

69. All told the owner’s material was filed 14 days late. It was supposed to have been filed and served on 31 January 2022.

70. Also in accordance with the orders made on 9 December 2022, on 8 March 2022 the builder filed submissions.

71. Mr Kim is a chartered accountant and a partner in an accountancy firm. He states that he has carried out a rental valuation which he has annexed to his affidavit. His valuation has used three reports to work out an annual rental yield. The reports that he refers to are from:

1. Winnings holidays;

2. O’Meara Property; and

3. Air DNA.

72. Based on this material Mr Kim states that he has come to an annual return of $99,386.00. Mr Kim states that his calculations commence from 1 July 2019 as that was the time he considered to be the earliest that the dwelling would have been available for rent on the basis that it was handed over to the owner on 11 March 2019.

73. The owner’s Supplementary Statement stated that she has not been residing in the property, that she has been unable to let the dwelling as she had intended to, that she has been informed by her expert Mr Waddell that three months was fair and reasonable for a dedicated builder with a good team to complete the rectification works, but he suggested an allowance of four months. She states that she seeks compensation for the loss of holiday rental from 14 February 2019 being the date of practical completion until the date four months after rectification commences and that the four month period start from the date of this decision. Finally she states that she cannot afford to commence rectification until the proceedings are finalised.

74. The builder’s submissions point out that the owner did not strictly comply with the Tribunal directions in filing her documents and submissions. The builder submits that the owner’s late documents should be excluded from consideration. I reject the submission. To accept the builder’s submission would prevent the owner from pursuing this aspect of her claim.

75. To do so when any prejudice to the builder’s position is neither identified nor explained and could have been remedied by an application for an extension of time, which would have inevitably been given, would be contrary to the Guiding Principle of the Tribunal as stated in s36(1) of the Civil and Administrative Tribunal Act 2013 which is to:

‘facilitate the just, quick and cheap resolution of the real issues in the proceedings’

76. Section 38(4) is also a reason for rejecting the builder’s submission. It states:

‘The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.’

77. The respondent’s submissions raise a number of issues which it is submitted cast doubt on the holiday letting claim. They are as follows:

1. an agreement between a letting agent and the owner would need to be in place, but there is no such agreement in evidence;

2. the dwelling would need to be furnished;

3. the terms of the occupation certificate;

4. complaints about defects appear from April 2000. There is no explanation why the property was not let in the previous 12 months. There were no complaints to the builder about the presence of defects in the period between practical Completion and April 2020; and

5. the evidence shows that the applicant her partner or other family members were occupying the property at various times.

78. The builder makes no submission that the owner’s holiday letting claim is too remote to be considered by the Tribunal.

Material facts

79. In order to determine the owner’s holiday letting claim it will be necessary to make some findings of fact.

80. First, I find that the works reached practical completion on 11 March 2019 and at that time subject to payment of the final claim, the owner was entitled to take possession of the dwelling.

81. Secondly, I find that the owner obtained an Interim Occupation Certificate dated 7 March 2019. The Interim Occupation Certificate was subject to three issues:

1. Thresholds at external doors to be no greater than 230mm;

2. complete installation of plants and rain garden in accordance with Port Stephens councils rain garden drawing; and

3. provision of outstanding certification in accordance with schedule B of construction certificate – Glazing – Balustrades.

82. Thirdly, I find that the owner first started raising the issues of defects with the builder on 30 May 2019. Refer page 337 of exhibit A.

83. Fourthly, I find that the owner did furnish the premises as she states she has in her February supplementary statement.

84. As regards the occupation of the premises the builder has referred to specific items of the evidence. The first reference is to page 311 of exhibit A, a letter of 14 June 2020 which notes that the owner will be in the residence for a further 12 days to 26 June. Comments regarding defective work are made in this correspondence. I infer from this correspondence that the owner was residing in the residence for at least 12 days. At page 314 of exhibit A is another letter from the owner dated 19 June 2020 to the builder which also addresses defects. The builder points out that the owner states:

‘I actually hate coming here, as I cannot enjoy the house, as all I am doing is finding more building problems to deal with.’

85. The builder also points to page 320 of exhibit A dated 6 July 2020 which is another letter from the owner to the builder regarding defective work, namely the water tanks and the pipes connected to it. Finally the builder refers to page 330 of exhibit A which is page 2 of a letter from the owner dated 28 July 2020. This letter also addressed defective work and reminded the builder that the owner had informed it that she would be at the residence between 21 – 29 July. The builder refers to the owner stating that she had a ‘huge water bill’ seeking to infer that the water bill arose as a result of the owner’s occupation of the property. This inference is open as the owner states that the water bills should be reimbursed by the builder because of its mistake. The owner stated:

‘The water bills which part of should be reimbursed to me by Beechwood, as the water tank was never turned on by yourselves for the last 16 months. The mistake caused me to have a huge water bill.’

86. I have had regard to the evidence to which the builder has referred me to. I have also had regard to page 332 of exhibit A which is a letter dated 29 July 2020 which is also concerned with defects, but informs the builder that the owner will be in the residence on 6 August. As a fifth finding of fact, the evidence does not support a finding that the owner was in continual occupation of the residence as from practical completion. The evidence that I have been referred to and that I have mentioned, points more to the owner regularly visiting the residence and dealing with the ongoing exercise of having the builder attend to the rectification of defects. In addition the basis for the assessment of the owner’s holiday letting claim indicates that the residence would not be made available for letting 365 nights a year. Refer to the O’Mara annexure to Mr Kim’s affidavit which indicates letting on 53 nights PA. The Air DNA annexure to Mr Kim’s affidavit provides an occupancy forecast of 58%.

87. Sixthly, I accept the owner’s evidence that the due to the defects she has been unable to rent the dwelling as a holiday let as asserted in her statement of September 2021 at [27].

88. Seventhly, I accept the owner’s evidence that she lacks the means to have the defects rectified as asserted in her statement of September 2021 at [27]. Evidence was also given on this point at [8] of the owner’s supplementary statement of February 2022.

89. Eighth, I accept that the owner would have had no difficulty in letting the residence during the holiday periods.

90. The builder’s solicitor submits that a Browne v Dunn (1893) 6 R 67 inference is not appropriate in connection with the owner’s holiday rental claim. In my view the rule in Browne v Dunn does not apply here because the builder has not sought to impugne the owner’s evidence on what I have referred to as the sixth seventh or eighth material facts. The fact is that the owner was not challenged on her evidence on these issues with the result that the builder has not diminished the probative value of her evidence about these matters. The builder had the right to seek a hearing for the purposes of cross examination if it was of the view that was necessary. Refer order 10 made on 9 December 2021. There is also the fact that the builder has not called evidence to challenge or contradict the owner’s evidence that the due to the defects, the dwelling cannot be leased as a holiday let.

91. The fact that the owner was not challenged on her holiday rental evidence and the builder did not call evidence to contradict it is relevant to my acceptance of her evidence and the findings of fact in [87], [88] and [89].

92. In connection with the builder’s submissions. I do not regard the fact that the owner has not engaged an agent to handle her property to be fatal to her claim. If, as asserted, the dwelling cannot be leased for holiday letting purposes, because it has defects, the fact that the owner has not engaged an agent is, I find, not indicative of the fact that she is responsible for the loss of income because the residence was not leased for holiday lettings.

93. From the reasons that are set out above in relation to defects, I have found that the owner’s case in relation to defects has been substantially successful. Mr Brincat’s report apart from a minor number of issues, agreed with Mr Waddell about the existence of defects. The substantial difference between them was about rectification methodology, as acknowledged by Mr Wilson in his opening of the builder’s case.

94. The most significant matter to arise from the builder’s submissions is the fact that the occupation certificate was conditional on 3 issues being attended to.

Causation

95. In Alexander and Others v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310 McHugh JA stated at page 358 in connection with causation:

"...to establish a causal connection between a breach of contract and the damage which the plaintiff has suffered, he needs only to show that the breach was a cause of the loss. This is to be decided by the application of commonsense principles. In general, the application of the "but for" test will be sufficient to prove the necessary causal connection. But that test is only a guide. The ultimate question is whether, as a matter of commonsense, the relevant act or omission was a cause."

96. In Seltsam Pty Limited v McGuiness; James Hardie & Coy Pty Limited v McGuiness [2000] NSWCA 29 (7 March 2000) questions of causation were discussed albeit in context of a medical case. Nonetheless relevant principles were stated and discussed. Relevant extracts are, at [202] and [203]:

‘In Chappel v Hart (1998) 156 ALR 517 McHugh J (at 523) reiterated that the existence of the relevant causal connection is determined according to common sense ideas and not by philosophical or scientific theories of causation. He cited Mason CJ in March v E & MH Stramare Pty Limited [1991] HCA 12; (1991) 171 CLR 506 at 509 as explaining the reason for such a distinction. Mason CJ had said:

In philosophy and science, the concept of causation has been developed in the context of explaining phenomena by reference to the relationship between conditions and occurrences. In law, on the other hand, problems of causation arise in the context of ascertaining or apportioning legal responsibility for a given occurrence. [p523 para 23]

In March the Court, having rejected the `but for' test as the exclusive test of causation, preferred the common sense view of causation.’

97. Also at [204] Stein JA referred to the following extract from the High Court decision in Chappel v Hart (1998) 156 ALR 517 which bears upon making a finding of causation:

‘Also in Chappel v Hart Hayne J said:

I have said that the resolution of the question of causation will often be asserted without lengthy articulation of reasons. Since it is a question of fact resolved as a matter of common sense and experience, the conclusion is often reached intuitively. The description of the steps involved in that kind of process is difficult and is apt to mislead. Articulating the reasoning will sometimes appear to give undue emphasis to particular considerations. No doubt if policy and value judgments are made, they should be identified. But the lengthy analysis which I have made should not be taken as intending to state any qualification upon the generality of the propositions recognised in cases like March v E & M. H. Stramare Pty. Ltd. Causation is a question of fact to be resolved as a matter of common sense. I have made the extended analysis which I have in order to draw out the various considerations which I consider bear upon the resolution of a difficult and unusual case, not because I consider that a trial judge should be expected (except, perhaps, in the most unusual case) to do more than record the conclusion that he or she reaches about whether the plaintiff's damage was caused by the defendant's negligence. [p 562 para 148]’

98. Having regard to the above principles, as a matter of common sense and having found that the owner would have had no difficult in letting the residence as holiday letting during holiday periods, I find that it was the presence of defects in the residence which prevented her from putting the property to an agent for lease as a holiday let.

99. As a matter of common sense I find that it was the presence of the defects, which had not been successfully rectified by the builder, that was the most substantial cause of the residence not being made available for rent rather than her own lack of funds, or the occupation certificate conditions.

Quantification of holiday letting claim

100. I accept Mr Kim’s uncontradicted evidence that an annual return of $99,386.00 could be expected as a holiday letting income earned from the dwelling. I also accept his evidence that the income could have commenced from 1 July 2019 as that was the time he considered to be the earliest that the dwelling would have been available for rent.

101. I also accept that damages for the loss of the holiday rental should be assessed to allow a four month period as from the date of this decision to allow for the owner to engage rectification contractors to attend to the necessary rectification work.

102. On that basis the damages period will be 1 July 2019 to 31 December 2022, namely a period of 3 5 years, or $347,851.00.

Determination of the owner’s claim

103. The total to be found for the owner is $137,966.00 for defects + $347,851.00 for holiday letting = $485,817.00.

Costs

104. In the event that a party wishes to bring a costs application, the costs application must be lodged in the Tribunal and served on/given to the costs respondent within 14 days of the date of the orders in these proceedings either attaching or referring to the documents relied upon in support of the application.

105. The costs respondent will have 14 days after the date it receives the application to lodge in the Tribunal and serve on/give to the costs applicant its submissions, if any, in response to the costs application, such submissions either attaching or referring to the documents relied upon.

106. The parties must state in their submissions whether or not they consent to the costs application being determined on the basis of the parties written submissions and attached documents, if any, without the need for a hearing.

107. Subject to the parties’ submissions, the Tribunal will determine any costs application made on the basis of the papers lodged in the Tribunal.

**********

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

Registrar

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

Amendments

05 October 2023 - Formatting amendments.

Decision last updated: 05 October 2023