Kelly v Southern Pacific Builders Pty Ltd - [2025] NSWCATCD 7

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation: Kelly v Southern Pacific Builders Pty Ltd [2025] NSWCATCD 7
Hearing dates: 27 September 2024 (last submissions on 2 December 2024)
Date of orders: 11 February 2025
Decision date: 11 February 2025
Jurisdiction: Consumer and Commercial Division
Before: G Blake AM SC, Principal Member
Decision:
(1)   The respondent is to carry out the rectification works in accordance with the Schedule on condition that the applicants provide access to the dwelling as provided in the Schedule.
(2)   If the respondent fails to carry out the rectification works in accordance with the Schedule, leave is granted to the applicants to renew the proceedings.
(3)   The respondent is to pay the costs of the applicants of the proceedings on the ordinary basis.
(4)   If any party wishes to make an application to vary order (3) above, the applicant (the costs applicant) is to file and serve a costs application, including submissions limited to three pages and any evidence in support, by 25 February 2025.
(5)   The respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in response by 11 March 2025.
(6)   The costs applicant is to file any submissions limited to two pages in reply by 18 March 2025.
(7)   The parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs application, and if they do not consent, submissions of no more than one page as to why an oral hearing should be conducted rather than the application being determined on the papers. If a hearing is not dispensed with, the parties will be advised of a date for the hearing of the application.

Catchwords:
BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — Building dispute – where the builder breached express and implied warranties – work order made against the builder

Legislation Cited:
Civil and Administrative Tribunal Act 2013 (NSW), ss 28, 29, 60, Sch 4, cll 3, 8
Civil and Administrative Tribunal Rules 2014 (NSW), r 38
Evidence Act 1995 (NSW), s 79
Fair Trading Act 1987 (NSW), ss 79R, 79T, 79U, 79V
Home Building Act 1989 (NSW), ss 3B, 18B, 18E, 48A, 48K, 48O, Sch 1, cll 1, 2, 3
Trade Practices Act 1974 (Cth) s 74 (repealed)

Cases Cited:
Blacktown City Council v Hocking [2008] NSWCA 144; (2008) Aust Torts Reports 81-956
Catapult Constructions Pty Ltd v Denison [2018] NSWCATAP 158
Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185
Forster v Hunter New England Area Health Service (2010) 77 NSWLR 495; [2010] NSWCA 106
Goode v Angland (2017) 96 NSWLR 503; [2017] NSWCA 311
Hancock v East Coast Timber Products Pty Ltd (2011) 80 NSWLR 43; [2011] NSWCA 11
Indico Holdings Pty Ltd v TNT Australia Ply Ltd (1990) 41 NSWLR 281
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305
Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust v Lipari [2024] NSWSC 566
Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114
Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17
Shakiri v Holland [2024] NSWCATAP 28
Southwestern Sydney Area Health Service v Edmonds [2007] NSWCA 16
The Owners – Strata Plan No 66375 v King [2018] NSWCA 170
Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998)192 CLR 603; [1998] HCA 38
Vella v Mir (No 3) [2020] NSWCATAP 17
X-Build Construction Services Pty Ltd v O’Rourke [2020] NSWCATAP 181

Texts Cited:
NCAT Procedural Direction 3 - Expert Evidence

Category: Principal judgment
Parties: Nathan Kelly and Abby Kelly (Applicants)
Southern Pacific Builders Pty Ltd (Respondent)
Representation:
Counsel:
P Lonergan (Applicants)
I Chatterjee (Respondent)
Solicitors:
Swaab (Applicants)
Chapman Solicitors (Respondent)

File Number(s): 2023/00393759 (formerly HB 23/24802)
Publication restriction: Nil

REASONS FOR DECISION

Overview

In these proceedings the applicants, Nathan Kelly (Mr Kelly) and Abby Kelly (Mrs Kelly) (Mr and Mrs Kelly where referred to together), are claiming relief against the respondent, Southern Pacific Builders Pty Ltd (SPB), arising out of the contract for the construction of a new dwelling at their property at Korora in New South Wales (the Building Contract, the dwelling and the property according to the context).
I have decided that SPB breached express and implied warranties under s 18B(1)(a) and (c) of the Home Building Act 1989 (NSW) (HB Act) and the Building Contract, and a work order should be made in favour of Mr and Mrs Kelly. I have also decided that SPB should pay the costs of Mr and Mrs Kelly of the proceedings on the ordinary basis and that either party may apply to vary this costs order.

The factual background

Since 31 March 2012, Jason Werrett (Mr Werrett) has been the sole Director of SPB which carries on business under the business name Inspire Homes. Since 2016, Mr Werrett’s wife, Sonia Werrett (Mr Werrett), has been the office manager of SPB.
On or about 18 May 2020, Mr and Mrs Kelly and SPB entered into the Building Contract.
A dispute arose between Mr and Mrs Kelly and SPB as to the quality of the works carried out under the Building Contract (the building works).

The history of the proceedings

On 26 May 2023, Mr and Mrs Kelly as the applicant commenced proceedings HB 23/24802 (which were subsequently renumbered 2023/00393759) against SPB as the respondent by lodging a Home building application (the Kelly application) and points of claim in which they claimed a work order or alternatively a money order for defective building works.
On 3 August 2023, Mr and Mrs Kelly lodged amended points of claim (the amended Kelly claim) in which they claimed a work order or alternatively a money order for defective building works.
On 27 May 2024, SPB lodged its points of defence to the amended Kelly claim.
On 29 May 2024, the Tribunal constituted by Senior Member Ross made procedural orders for the hearing of the Kelly application including an order granting leave for each of the parties to be represented by an Australian legal practitioner.

The hearing

On 27 September 2024, the hearing took place. Mr and Mrs Kelly were represented by Mr P Lonergan, a barrister. SPB was represented by Mr I Chatterjee, a barrister.
Mr and Mrs Kelly relied on the following documents which were admitted into evidence without objection and marked as specified:

the Statement of Mr Kelly dated 26 November 2023 (exhibit A1) (the 26 November 2023 Kelly Statement);

the Report of Mr Barry (Mr Barry) dated 6 December 2023 (exhibit A2) (the 6 December 2023 Barry Report);

the Report of Mr Barry dated 17 September 2024 (exhibit A3) (the 17 September 2024 Barry Report);

the Joint Report of Mr Barry and Adam Baker (Mr Baker) dated 20 August 2024 with comments of Mr Barry (exhibit A4) (the Joint Kelly Report).

Mr and Mrs Kelly sought to rely on the following documents which I refused to admit into evidence, and marked as specified and gave oral reasons for my decision:

the four-page document with the heading “Schedule of Defects” recording the defects, scope of works and comments of Mr Barry dated 5 May 2023 and response of Craig Nowlin (the Nowlin Response) dated 4 December 2023 (MFI1);

the email of Mrs Werrett sent to Nicholas Hufton on 8 December 2023 at 10.46 am attaching the Nowlin Response and two photographs (MFI2).

SPB relied on the following documents which were admitted into evidence without objection and marked as specified:

the Affidavit of Mr Werrett sworn on 28 May 2024 (exhibit R1) (the 28 May 2024 Mr Werrett Affidavit);

the Affidavit of Mrs Werrett sworn on 28 May 2024 (exhibit R2) (the 28 May 2024 Mrs Werrett Affidavit);

the Report of Mr Baker dated 25 July 2024 (exhibit R3) (the 25 July 2024 Baker Report);

the Joint Report of Mr Barry and Mr Baker dated 20 August 2024 without comments of Mr Barry (exhibit R4) (the SPB Joint Report);

the Affidavit of Mr Werrett sworn on 26 September 2024 (exhibit R5);

the Report of Mr Baker dated 26 September 2024 (exhibit R6) (the 26 September 2024 Baker Report);

enlarged photographs of photographs 2, 20, 23 and 37 in exhibit R3 (exhibit R7).

Mr Barry and Mr Baker gave concurrent oral evidence.
Mr and Mrs Kelly relied on their opening submissions dated 25 September 2024 (the Kelly opening submissions).
SPB relied on its opening submissions dated 26 September 2024 (the SPB opening submissions).
At the conclusion of the hearing, I reserved my decision and made procedural orders for the provision of written submissions of the parties which were subsequently varied by extensions of time on 4 October 2024 and 19 November 2024.
On 4 October 2024, Mr and Mrs Kelly lodged the transcript of the hearing.
On 11 November 2024, Mr and Mrs Kelly lodged their undated closing submissions (the Kelly closing submissions) including a proposed rectification work order (the Kelly work order).
On 27 November 2024, SPB lodged its submissions dated 27 November 2024 (the SPB closing submissions) including a proposed rectification work order (the SPB work order).
On 2 December 2024, Mr and Mrs Kelly lodged their closing submissions in reply dated 2 December 2024 (the Kelly closing submissions in reply).
On 12 December 2024, SPB’s solicitors sent a letter to the Consumer and Commercial Division in Sydney, which was copied to Mr and Mrs Kelly’s solicitors.

The issues

The following issues arise for determination in the proceedings:

issue 1: whether the Tribunal has jurisdiction to hear and determine the proceedings;

issue 2: whether SPB breached warranties under s 18B of the HB Act and the Building Contract, and if so whether a work order should be made in favour of Mr and Mrs Kelly;

issue 3: whether SPB breached a warranty under s 18B of the HB Act and the Building Contract by its failure to obtain a construction certificate for the construction of retaining works;

issue 4: the costs of the proceedings.

Before considering these issues in turn, I have set out the undisputed documentary evidence in the 26 November 2023 Kelly Statement and the 28 May 2024 Mrs Werrett Affidavit relevant to the determination of the disputes between the parties with respect to the building works.

The undisputed documentary evidence

On 11 May 2020, Coffs Harbour City Council (the Council) issued a Notice of Determination of Development Application consenting to development Application No 0654/20DA of SPB for the proposed development of a “Dwelling and Retaining walls” subject to conditions (the Development Consent) including:

a condition providing that development consent is granted only to the carrying out the described development:

“Dwelling and Retaining walls”

a condition requiring the development to be in accordance with approved plans and referring to Plans No 1-6 of Inspire Homes dated 11 May 2020 (the 11 May 2020 Drawings) (condition 3):

a condition in respect of the commencement of building work (condition 4):

“Construction Certificate:
4. No building work is to commence on site until a Construction Certificate has been issued for the work and Council has been notified that a Principal Certifier has been appointed.

a condition in respect of retaining works (condition 5):

“Retaining Works:
5. A construction certificate is required for retaining walls exceeding 600m in height. Timber retaining walls exceeding 600 mm in height are not to be permitted within 1 metre of the boundary.”

a condition in respect of sanitary plumbing and draining (condition 8):

“Sanitary Plumbing and Draining:
8. A separate application is to be made to Council by the licensed plumber and drainer prior to the commencement of any sanitary plumbing and drainage work on site.”

On or about 18 May 2020, Mr and Mrs Kelly and SPB entered into the Building Contract utilising the Master Builders Association standard form entitled “Head Contract Residential Building (BC4)”, whereby SPB agreed to carry out the building works for $821,000.00 inclusive of GST:

relevantly comprising the following provisions:

clause 1(a) whereby SPB agreed to subject to the conditions of contract and work particulars in Schedule 3 to execute and complete the works required by the Contract. Schedule 3 under the heading “Documents identifying the Builder’s work” recorded the Construction Drawings and the Specification;

clause 1(b)(i) to (vi) whereby SPB gives warranties in the same terms as s 18B(1) of the HB Act;

clause 1(c)(i) whereby all plans and specifications are taken to be part of the Contract;

clause 1(c)(ii) whereby any agreement to vary the Contract, or plans and specifications, must be in writing and signed by or on behalf of each party;

clause 1(d)(i)(a) whereby all work done under the Contract will comply with the Building Code of Australia;

clause 1(d)(i)(b) whereby all work done under the Contract will comply with all other codes, standards and specifications that the work is required to comply with under any law;

clause 1(d)(i)(c) whereby all work done under the Contract will comply with the conditions of any relevant development consent;

clause 4 dealing with discrepancies and ambiguities including a mechanism for SPB to obtain instructions from Mr and Mrs Kelly on how to resolve any discrepancy or ambiguity;

Schedule 3 referring to “Council plans” dated 19 May 2020 (version V8) prepared by “Owner” (the 19 May 2020 Drawings) and “Specification” dated 18 May 2020 prepared by SPB (the 18 May 2020 Specification);

incorporating the 19 May 2020 Drawings which comprise 10 drawings, and relevantly provide:

the Upper Floor Plan and the Lower/Mid Floor Plan do not depict any floor wastes in Ensuite 2 (Upper Floor) and Bath 2 (Upper Floor), and Ensuite 1 (Lower/Mid Floor) and Bath 2 (Lower/Mid Floor) respectively;

the Site Plan depicts two marked lines at the rear of the property as follows:

the one closest to the dwelling running from close to one boundary in a straight line across most of the property with the notation in capital letters “rock retaining wall approx height @ 1700 toe r.l.56.205”;

the one furthest to the dwelling in a semi-circle running from one boundary to the other boundary with the notation in capital letters “rock retaining wall approx height @ 2000 toe r.l.54.205”;

incorporating the 18 May 2020 Specification which relevantly:

does not specify any floor wastes in each of Ensuite 2 (Upper Floor), Bath 2 (Upper Floor), Ensuite 1 (Lower/Mid Floor) and Bath 2 (Lower/Mid Floor);

specifies “2 Blue Stone Boulders retaining wall tiered at back of property as per plan …”.

On 16 June 2020, SPB lodged with the Council a Modification Application for “Dwelling height amended as per RL on plan” to which was attached various documents including Constructions drawings dated 11 June 2020 (version V15) (the 11 June 2020 Drawings or the Modification Application according to the context). The Site Plan of the 11 June 2020 Drawings depicts two marked lines at the rear of the property with the notations in capital letters “fence …” and a “soil garden batter with rock edge for soil erosion (batter to be determined on site)”.
On 23 June 2020, the Council issued a Notice of Determination of an Application to modify the Development Consent by deleting condition 3 and substituting a condition requiring the development to be in accordance with approved plans and referring to the 11 May 2020 Drawings and Modification Plan 1-7 of Inspire Homes stamped 23 June 2020 (which are the 11 June 2020 Drawings) (the Modified Development Consent). Other than condition 3, the conditions were identical to the conditions of the Development Consent.
On 25 June 2020, the Council issued Construction Certificate No 0673/20CC for the dwelling on the basis of the 11 June 2020 Drawings (the Construction Certificate) subject to conditions including condition 9:

“Wet area waterproofing requirements:
9. The floor of the laundry, bathroom and water closet is to be impervious, properly graded and drained in accordance with the Health and Amenity Provisions of the National Construction Code BCA V2.”

On 3 July 2020, SPB lodged a Building Information Certificate Application for a “retaining/battered wall”.
On 7 July 2020 at 2.39 PM, Joseph Kane (Mr Kane), Compliance Officer of the Council, sent an email to Mrs Werrett attaching the letter dated 7 July 2020 of the Council to Mr and Mrs Kelly in respect of their application for a building certificate giving them the opportunity to explain why it should not take proceedings for not obtaining a construction certificate prior to the construction of the “Retaining/Battered Wall”, and requiring a development application for “the unauthorised building work” and a certificate from a practising structural engineer as to the structural adequacy of the “Retaining/Battered Wall” (the 7 July 2020 Council letter).
On 14 July 2020 at 5.37 PM, Mrs Werrett sent an email to Mr Kane attaching the letter dated 14 July 2020 of SPB addressed “To whom it may concern” (the 14 July 2020 SPB letter) in which Mrs Werrett relevantly stated:

“…
The work undertaken was the building of a battered wall. As a battered wall is not structural, we did not believe that a construction certificate was required.
…”

On 16 July 2020 at 2.46 PM, Mr Kane sent an email to Mrs Werrett, which was copied to Mr Werrett, in which he stated:

“In response to your email, it is Councils opinion that the constructed rock wall is a retained wall and Condition 5 of Development Consent 0654/2ODA specifically requires a Construction Certificate for all retaining walls above 600mm.
As agreed on site, the approved plans do not reflect the wall that has been constructed which is why Councils certifier (Andrew Knott) asked you to submit a Building Certificate as he did not believe the current CC included this structure.
As detailed in my correspondence dated 7 July 2020, please lodge a Development Application for the Continual Use of Retaining! Battered Wall and supply a Certificate from a practicing structural engineer certifying the structural adequacy of the Retaining! Battered Wall.
With the approval of this DA and the issue of a BC, this matter will be concluded.”

On 14 August 2020, RJ de Groot (Mr de Groot), the Director of de Groot & Benson Pty Ltd (DGB), in its letter to the Council provided his comment on “the constructed retaining walls” at the property (the 14 August 2020 DGB letter) which includes the following:

he relied on a photograph, the Site Plan of the 19 May 2020 Drawings, and a survey titled “Retaining Wall As-Built Plan”;

under the section headed “Construction”:

“Based on the photos and WAE survey, a two large level pads have been constructed on the property. The lower pad is about 5m wide at about RL 53.5m is supported by a rock faced 1:1 batter. The upper pad is at about RL 58.5m and is again supported by a 1:1 batter. (Refer Annexure D for a cross section).
The fill material appears to be a shaley clay material typical of the Coffs Harbour area. Our understanding is that the material was track rolled into place. There are no compaction records(of) the fill placed.
The batters have been stabilised by large rocks placed directly against the sloped batter. The rocks are nominally 600mm dia. Because of the slope of the wall, the rock lining acts more as a batter stabilisation than a retaining wall. There appears to be no filter fabric placed between the rocks and the fill material.
No information is available as to whether the earthworks have been keyed into the existing surface profile.”

under the section headed “Design Certification”:

“…
We advise that in our opinion that the walls are appears structurally stable to retain the fill embankments should they be well maintained.
…
Because we have not seen any of the construction process of the wall, we would recommend:
All stormwater runoff from the pads be directed away from the face of the rock wall

The pads be stabilised with turf.
The rock face include plantings to help bind the front face of the wall
a detailed monitoring program be undertaken to ensure the long term stability of the filled embankments, particularly in the next 3 years, including
-   regular inspections after significant rainfall events (ie more than 50mm over three days) to check for any scour of material from behind the wall
-   check survey to confirm that there is no movement in the walls
-   any significant scouring or settlement will require immediate remediation”

On 18 August 2020, Mrs Werrett lodged with the Council a Development Application for a “Battered/retaining wall” at the property (the 18 August 2020 Development Application).
On 11 November 2020, Mr Kane sent an email to Mr Werrett, in which he stated:

“I have been in discussions with the Planning Assessment Team who are looking to determine the Proposed DA for the Retailing Walls constructed without development consent at [address omitted]. Concerns have been raised with me about the validity of the Engineering Report prepared by de Groot & Benson Pty Ltd dated 14 August 2020 and the statements made within the report.
Primary DGB states “A 1:1 face of the wall should in normal circumstances be stable if the material making up the fill pads has been well compacted” however prior to this they outline “Our understanding is that the material was track rolled into place. There are no compaction records of the filI placed”. This confirms that the engineer does not know what level of compaction was applied to the fill prior to the placement of the rock onto the retaining wall. Was the fill well compacted to create the normal circumstances?
DGB also state “No information is available as to whether the earthworks have been keyed into the existing surface profile” adding a further unknown to the adequacy of the existing unapproved retaining wall.
While DGB states “We advise that in our opinion that the walls are appears structurally stable to retain the filI embankments should they be well maintained” and recommends a monitoring program.
Enforcing the proposed monitoring program is a concern for Council as placing a condition on the development consent to ensure the actions take place is problematic and difficult to ensure the maintenance works are undertaken as proposed.
These concerns make the issuing of a Building Certificate unlikely when relying on the current Engineering Report as a supporting document.
Please seek a revised report certifying the structural adequacy of the current retaining wall. If this cannot be achieved works may need to be undertaken to the wall to satisfy the structural engineer.”

On 17 November 2020 at 2.25 PM, Matthew Davies (Mr Davies), Compliance Officer of the Council, sent an email to Mrs Werrett in the following terms:

“Please see email below sent to Jason on Wednesday 11/11/20 from Joseph Kane in Council’s Compliance section. From a Development Assessment perspective, given the two applications are in conjunction with one another, Council will not be providing continued use Development Consent until such time as the additional information requested by the Compliance Team is resolved and Council is satisfied there is adequate engineering certification of the retaining walls to be able to issue both the Building Information Certificate and Continued Use Development approvals.”

On 24 January 2022 at 4.27 PM, Mr Davies sent an email to Mrs Werrett in the following terms:

“Thanks for your email. As you are aware various departments within Council including the Compliance and Development Engineering sections have spent a considerable amount of time reviewing your development application for Continued Use of the retaining wall, in an attempt to get a satisfactory resolution to the matter. Unfortunately the various reports submitted in response to Councils requests for additional information don’t provide the level of certification required by Council in relation to the ongoing structural adequacy of the retaining wall. Therefore you are advised that Council is not prepared to issue a Building Information Certificate for the development and consequently, the Development Application for the continued use of the retaining wall cannot be supported and if not withdrawn, will be refused.”

On 4 June 2021, the Council issued an Occupation Certificate for the dwelling (the 4 June 2021 Occupation Certificate).
On 25 January 2022, Mrs Werrett withdrew the 18 August 2020 Development Application.
On 2 February 2024, Matt Rowbotham (Mr Rowbotham), Principal Engineering Geologist of Regional Geotechnical Solutions Pty Ltd (RGS), in its letter to SPB provided a Revised Slope Risk Assessment in relation to the “rockfill slope” at the rear of the property (the 2 February 2024 RGS letter) which includes the following:

under section 2 headed “Surface Conditions”:

“The retained slope below the house is approximately 7m high. It comprises a 4.5ni high upper batter and a smaller downslope batter, 2.5rn high. The slopes comprise earthfilI with rockfill facing. The batter angles of the rock facing are approximately 38° with the natural hill slope formed at 20° below the batters. Stormwater surface pits have also been installed above the rockfill batters.”

under section 4 headed “Information Provided”:

“A sketch showing the details of the construction works as executed were provided by Inspire Homes following the site visit arid are provided in Diagram 1 and summarised below.
The following is noted from the information provided:
●   The house is supported on weathered rock front bf house and piers (along the back of house) extending to 4.2rn depth with no structural load being imposed on the rockfill and earthfill batter below;
●   The rockfill batter is understood to be keyed at least 1.0m into the natural residual clay.
●   The clay backfill (within 2m to 3m behind the wall) has been compacted in layers by mechanical means. The clay behind this area may not have been compacted in the same method. No test results were provided to indicate the degree of compaction.”

On 18 March 2024, the Council issued Building Information Certificate No. 0062/24BC to SPB for “two rockfill batters at rear of property” in which it stated it used the 2 February 2024 RGS letter in deciding to issue the Certificate (the Building Information Certificate).

Issue 1: whether the Tribunal has jurisdiction to hear and determine the proceedings

I am satisfied that the Tribunal has jurisdiction to hear and determine the proceedings by reason that ss 28(1) and (2)(a) and 29(1)(a) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) pick up ss 48A, 48K and 48O of the HB Act. The Kelly application is a “building claim” within the meaning of that expression in s 48A of the HB Act when read with the definitions of “building services” and “supply” in s 48A and the definitions of “residential building work” and “dwelling” (namely “a building that is designed, constructed or adapted for use as a residence”) in cll 2(1) and 3(1) of Sch 1 of the HB Act. As the proceedings were commenced within two years of the 4 June 2021 Occupation Certificate the Tribunal has jurisdiction pursuant to ss 3B(3)(c) and 18E(1)(a) to (c) of the HB Act. Further, as Mr Barry in the 17 September 2024 Barry Report estimated the cost of rectification of the disputed defective building works as being $174,191.06 the Tribunal has jurisdiction because the claim of Mr and Mrs Kelly is below the jurisdictional ceiling of $500,000 specified in s 48K(1) of the HB Act. Pursuant to cl 3(1) and (2)(b) of Sch 4 of the NCAT Act this jurisdiction is allocated to the Consumer and Commercial Division of the Tribunal.

Issue 2: whether SPB breached warranties under s 18B of the HB Act and the Building Contract, and if so whether a work order should be made in favour of Mr and Mrs Kelly

Introduction

The Joint Kelly Report and the SPB Joint Report are identical except that in the column headed “Conclave experts Comments” in the Joint Kelly Report Mr Barry has added some comments in respect of some items. They each specify 38 items. Except where it is necessary to distinguish between them, I have referred to these two Reports as the Joint Reports.
During the hearing the parties expressed the following position with respect to the defective building works specified in the Joint Reports:

Mr and Mrs Kelly only pressed items 1 to 10, 29, 34 and 38 and are seeking a work order under s 48O(1)(c)(i) of the HB Act for these items;

SPB conceded items 1 to 5 and 29 were defective, but the parties disagreed as to the scope of the remedial works;

while SPB disputed items 6 to 9 were defective, the parties agreed as to the scope of the remedial works if these items were found to be defective;

SPB conceded items 10, 34 and 38 were defective, and the parties agreed as to the scope of the remedial works.

As Mr and Mrs Kelly are seeking a work order under s 48O(1)(c)(i) of the HB Act for the defective building works, it has been unnecessary to consider the 17 September 2024 Barry Report, the 25 July 2024 Baker Report and the 26 September 2024 Baker Report to the extent that they deal with the reasonable cost of rectifying any such works.
Before considering this issue in respect of the disputed items, it is appropriate to set out the applicable statutory provisions and legal principles, and to consider the threshold question is whether the 25 July 2024 Baker Report should be given little to no weight.
I have considered disputed items 1 to 5 and 29 together, and 6 to 9 together. In each case I set out the evidence of the parties and their submissions before considering the issues arising for determination.
I note that some references by the parties in their written submissions to the transcript of the hearing on 27 September 2024 are incorrect in relation to the version of the transcript provided to the Tribunal. I have attempted to identify the references by their subject matter and identified and recorded the transcript references with respect to the version provided to the Tribunal. Where I have quoted the transcript, I have made some corrections by recording the correct word or words in square brackets.

The applicable statutory provisions

HB Act

Part 2C (ss 18A-18G) contains provisions dealing with statutory warranties. Section 18B deals with warranties as to residential building work, and relevantly provides:

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—
…
(c) a warranty that the work will be done in accordance with, and will comply with, this or any other law,
…

Part 3A Division 5 (ss 48N-48N) contains provisions dealing with the powers of the Tribunal in relation to building claims. Section 48O deals with the orders which the Tribunal may make, and relevantly provides:

48O Powers of Tribunal
(1)   In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate—
(a)   an order that one party to the proceedings pay money to another party or to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person,
…
(c)   an order that a party to the proceedings—
(i)   do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or

…
(3) Sections 79R and 79T–79V of the Fair Trading Act 1987 apply, with any necessary modifications, to and in respect of the determination of a building claim.

NCAT PD3

The version of NCAT Procedural Direction 3 - Expert Evidence (NCAT PD3) which was effective as at 25 July 2024 relevantly provided:

“…
Compliance and Other Matters
…
7.   In non-Evidence Rules Proceedings, a failure to comply with the code of conduct does not render any expert report or evidence inadmissible but it may, depending on the circumstances, adversely affect the weight to be attributed to that report or evidence.
…
Experts’ Code of Conduct
…
General duty to the Tribunal
14.   An expert witness has an overriding duty to assist the Tribunal impartially on matters relevant to the expert witness’s area of expertise.
…
16.   An expert witness is not an advocate for a party.
…
Experts’ reports
19.   An expert’s report must, either in the body of the report or in an annexure, include the following:
(e)   the material facts, and assumptions of fact, on which the opinions in the report are based (a letter of instructions may be annexed);
(f)   the expert’s reasons for each opinion expressed;

EPA Act

Part 4 Div 4.1 (ss 4.9-4.20) of the Environmental Planning and Assessment Act 1979 (EPA Act) contains provisions dealing with the carrying out of a development. Section 4.2 deals with development that needs consent, and relevantly provides:

4.2 Development that needs consent (cf previous s 76A)
(1) General If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless—
(a) such a consent has been obtained and is in force, and
(b) the development is carried out in accordance with the consent and the instrument.
…

Part 4 Div 4.3 (ss 4.9-4.20) contains provisions dealing with a development that needs consent (except a complying development). Section 4.16 deals with the determination of development applications, and relevantly provides:

4.16 Determination (cf previous s 80)
…
(12) Effect of issuing construction certificate If a consent authority or an accredited certifier issues a construction certificate, the construction certificate and any approved plans and specifications issued with respect to that construction certificate, together with any variations to the construction certificate or plans and specifications that are effected in accordance with this Act or the regulations, are taken to form part of the relevant development consent (other than for the purposes of section 4.55).

Section 4.17 deals with the imposition of conditions, and relevantly provides:

4.17 Imposition of conditions (cf previous s 80A)
…
(11) Prescribed conditions A development consent is subject to such conditions as may be prescribed by the regulations.

Part 6 Div 6.3 (ss 6.6-6.11) contains provisions dealing with building work and certificates relating to building. Section 6.7 deals with the requirement for a construction certificate, and relevantly provides:

6.7 Requirement for construction certificate (cf previous s 81A)
(1) A construction certificate is required for the erection of a building in accordance with a development consent.
…

EPA Regulation

Part 1 (cll 1-8) of the Environmental Planning and Assessment Regulation 2000 (NSW) (EPA Regulation) as in force at the time of the development consent contained preliminary provisions. Clause 7 contained a definition of “Building Code of Australia” (BCA) which relevantly specified the document including all amendments made from time to time by the Australian Building Codes Board (ABCB) from the date of publication.
Part 6 Div 8A (cll 98-98E) contained provisions dealing with the prescribed conditions of a development consent. Clause 98 dealt with matters including compliance with the BCA, and relevantly provided:

98 Compliance with Building Code of Australia and insurance requirements under the Home Building Act 1989 (cf clauses 78 and 78A of EP&A Regulation 1994)
(1) For the purposes of section 4.17(11) of the Act, the following conditions are prescribed in relation to a development consent for development that involves any building work—
(a) that the work must be carried out in accordance with the requirements of the Building Code of Australia,
…

NCC 2019

The National Construction Code relevant to these proceedings was released by the ABCB in May 2019 (NCC 2019) and included the BCA in Volumes One and Two with the latter Volume primarily covering the design and construction of smaller scale buildings including houses, small sheds, carports and some associated structures.
Section 1 was entitled “Governing Requirements”. Part A2 was entitled “Compliance with the NCC” and relevantly provided:

“A2.0 Compliance
Compliance with the NCC is achieved by complying with—
(1) the Governing Requirements of the NCC; and
(2) the Performance Requirements.
A2.1 Compliance with the Performance Requirements
Performance Requirements are satisfied by one of the following, as shown in Figure 1:
(1) A Performance Solution.
(2) A Deemed-to-Satisfy Solution.
(3) A combination of (1) and (2).
…
A2.3 Deemed-to-Satisfy Solution
(1) A solution that complies with the Deemed-to-Satisfy Provisions is deemed to have met the Performance Requirements.
…

Section 2 was entitled “Performance Provisions”. Part 2.4 was entitled “Health and amenity”, and relevantly provided with respect to wet areas:

Explanatory information:
Objective
O2.4.1 Wet areas
The Objective is to safeguard the occupants from illness or injury and protect the building from damage caused by the accumulation of internal moisture arising from the use of wet areas in a building.
…
Functional statements
F2.4.1 Wet areas
A building is to be constructed to avoid the likelihood of—
(a) the creation of any unhealthy or dangerous conditions; or
(b) damage to building elements,
caused by dampness or water overflow from bathrooms, laundries and the like.
…
Performance Requirements
P2.4.1 Wet areas
To protect the structure of the building and to maintain the amenity of the occupants, water must be prevented from penetrating—
(a) behind fittings and linings; or
(b) into concealed spaces,
of sanitary facilities, bathrooms, laundries and the like.

Section 3 was entitled “Acceptable Construction”. Part 3.8 was entitled “Health and amenity”, and relevantly:

provided with respect to wet areas:

Acceptable Construction Practice
3.8.1.1 Application
Compliance with this acceptable construction practice satisfies Performance Requirements P2.2.2 for external waterproofing and P2.4.1 for wet areas.
3.8.1.2 Wet Areas
Building elements in wet areas within a building must—
(a) be waterproof or water resistant in accordance with Table 3.8.1.1; and
(b) comply with AS 3740.

in Table 3.8.1.1 which was headed “Waterproofing and water resistance requirements for building elements in wet areas” did not include any provision dealing with falls in floor finishes.

Schedule 3 contained definitions and relevantly provided:

Definitions
…
In the NCC unless the contrary intention appears—
…
Deemed-to-Satisfy Provisions means provisions which are deemed to satisfy the Performance Requirements.
…
Wet area means an area within a building supplied with water from a water supply system, which includes bathrooms, showers, laundries and sanitary compartments and excludes kitchens, bar areas, kitchenettes or domestic food and beverage preparation areas.

NCC 2022

NCC 2019 was replaced by the version of the National Construction Code 2022 which came into force on 1 May 2023 (NCC 2022) and included the BCA in Volumes One and Two with the latter Volume primarily covering the design and construction of smaller scale buildings including houses, small sheds, carports and some associated structures.
The Objectives, Functional statements and Performance Requirements with respect to wet areas are identical to those in NCC 2019 apart from having different numbers (H4O1; H4F1; H4P1). The definition of “Wet area” in Sch 1 is identical to the definition in NCC 2019.
The Deemed-to-Satisfy Provisions differ from Part 3.8.1.1 and 3.8.1.2 in NCC 2019 and relevantly provide:

H4D1 Deemed-to-Satisfy Provisions [New for 2022]
(1) Where a Deemed-to-Satisfy Solution is proposed, Performance Requirements H4P1 to H4P7 are satisfied by complying with H4D2 to H4D9.

…
H4D2 Wet areas [2019: 3.8.1.1, 3.8.1.2]
Compliance with AS 3740 or Part 10.2 of the ABCB Housing Provisions satisfies Performance Requirement H4P1 for wet areas provided the wet areas are protected in accordance with the appropriate requirements of 10.2.1 to 10.2.6 and 10.2.12 of the ABCB Housing Provisions.

Housing Provisions Standard 2022

The ABCB Housing Provisions Standard 2022 which came into force on 1 May 2023 contains Deemed-to-Satisfy Provisions that are considered to be acceptable forms of construction that meet the requirements for complying with Parts H1 to H8 of NCC Volume Two.
Part 10 is entitled “Health and amenity”. Part 10.2.12 deals with falls in the Construction of wet area floors and provides:

10.2.12 Construction of wet area floors — falls
Where a floor waste is installed—
the minimum continuous fall of a floor plane to the waste must be 1:80; and
the maximum continuous fall of a floor plane to the waste must be 1:50.

Schedule 1 is headed “Dictionary and relevantly includes the following definition:

…
Floor waste: A grated inlet within a graded floor intended to drain the floor surface.
…

AS 3740

Australian Standard 3740—2010 which was published by Standards Australia Limited was headed “Waterproofing of domestic wet areas” (AS 3740). Section 1.4 contained definitions and relevantly provides:

1.4 DEFINITIONS
For the purpose of this Standard, the definitions below apply
…
1.4.8 Floor waste
A grated inlet within a graded floor intended to drain the floor surface (see Clause 3.14.2).
…
1.4.28 Wet area
An area within a building supplied with water from a water supply system, which includes bathrooms, showers, laundries and sanitary compartments and excludes kitchens, bar areas, kitchenettes or domestic food and beverage preparation areas.
…

Section 3.3 deals with falls in floor finishes and relevantly provides:

3.3 FALLS IN FLOOR FINISHES
Where required, falls in floor finishes shall allow all surface water to drain without ponding except for residual water remaining due to surface tension.
For general bathroom floor area, the minimum fall to the waste shall be 1:100.
…

Section 3.11 deals with required floor wastes for wet area floors and relevantly provides:

3.11 REQUIRED FLOOR WASTES FOR WET AREA FLOORS
Where a floor waste is required, the floor finish shall be constructed so that water flows to the waste without water being retained on the finished surface with the exception of residual water remaining due to surface tension.
…

The applicable legal principles

Expert evidence in the Tribunal

In Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 (Makita) at [85], Heydon JA relevantly set out the requirements for expert evidence to be admissible under s 79 of the Evidence Act 1995 (NSW):

“[85] In short, if evidence tendered as expert opinion evidence is to be admissible, it must be agreed or demonstrated that there is a field of “specialised knowledge”; there must be an identified aspect of that field in which the witness demonstrates that by reason of specified training, study or experience, the witness has become an expert; the opinion proffered must be “wholly or substantially based on the witness’s expert knowledge”; so far as the opinion is based on facts “observed” by the expert, they must be identified and admissibly proved by the expert, and so far as the opinion is based on “assumed” or “accepted” facts, they must be identified and proved in some other way; it must be established that the facts on which the opinion is based form a proper foundation for it; … the expert’s evidence must explain how the field of “specialised knowledge” in which the witness is expert by reason of “training, study or experience”, and on which the opinion is “wholly or substantially based”, applies to the facts assumed or observed so as to produce the opinion propounded. …”

The New South Wales Court of Appeal has further explained the requirements and application of s 79 of the Evidence Act in Makita, Forster v Hunter New England Area Health Service (2010) 77 NSWLR 495; [2010] NSWCA 106 (Forster), and Hancock v East Coast Timber Products Pty Ltd (2011) 80 NSWLR 43; [2011] NSWCA 11 (Hancock):

the court is not obliged to take the opinion of an expert as conclusive even though no other expert is called to contradict it: Makita at [87] (Heydon JA);

for an expert report to be useful it is necessary for it to comply with a prime duty of experts in giving opinion evidence: to furnish the trier of fact with criteria enabling evaluation of the validity of the expert’s conclusions: Forster at [30] (Macfarlan JA); Hancock at [77]-[78] (Beazley JA with Giles and Tobias JJA agreeing);

the principle in Makita does not require that there be an exact correspondence between the assumed facts upon which an expert opinion is based and the facts proved in the case. The extent of correspondence between the assumed facts and the facts proved is relevant to the assessment of the weight to be given to the reports: Hancock at [74], [88] (Beazley JA with Giles and Tobias JJA agreeing).

The New South Wales Court of Appeal has considered expert evidence in appeals from the Workers Compensation Commission where the rules of evidence do not apply in Southwestern Sydney Area Health Service v Edmonds [2007] NSWCA 16 (Edmonds) and Hancock.
In Edmonds at [130]-[131], McColl JA (with Giles and Tobias JJA agreeing) explained:

“[130] In Hevi Lift (PNG) Ltd v Etherington at [84] I said (Mason P and Beazley JA agreeing) that “[a] court should not act upon an expert opinion the basis for which is not explained by the witness expressing it”. In so saying, I referred with approval (inter alia) to Heydon JA’s analysis of the admissibility of expert evidence in Makita (Australia) Pty Limited v Sprowles (at [59]-[82]). In that case (at [59]) Heydon JA cited with apparent approval Lord President Cooper’s statement in Davie v The Lord Provost, Magistrates and Councillors of the City of Edinburgh (1953) SC 34 at 39-40 that:
“… the bare ipse dixit of a scientist, however eminent, upon the issue in controversy, will normally carry little weight, for it cannot be tested by cross-examination nor independently appraised, and the parties have invoked the decision of a judicial tribunal and not an oracular pronouncement by an expert.”

[131] This statement is apposite in the context of Commission hearings, and, indeed, is implicitly recognised in r 70. … the fact that cross-examination of an expert witness may be permitted indicates the desirability of expert reports conforming as far as possible to common law standards of admissibility designed to ensure they have probative value. …”

In Hancock at [82]-[83], Beazley JA (with Giles and Tobias JJA agreeing) observed:

“[82] Although not bound by the rules of evidence, there can be no doubt that the Commission is required to be satisfied that expert evidence provides a satisfactory basis upon which the Commission can make its findings. For that reason, an expert’s report will need to conform, in a sufficiently satisfactory way, with the usual requirements for expert evidence. As the authorities make plain, even in evidence-based jurisdictions, that does not require strict compliance with each and every feature referred to by Heydon JA in Makita to be set out in each and every report. In many cases, certain aspects to which his Honour referred will not be in dispute. A report ought not be rejected for that reason alone.
[83] In the case of a non-evidence-based jurisdiction such as here, the question of the acceptability of expert evidence will not be one of admissibility but of weight. …”

In Shakiri v Holland [2024] NSWCATAP 28 (Shakiri), the Appeal Panel at [88]-[97] set out passages in Forster, Makita, Edmonds and Hancock, and at [98] concluded:

“[98] It is evident that the legal principles to be applied when considering the admissibility of expert evidence under s 79 of the Evidence Act are similar to those to be applied in non-Evidence proceedings before this Tribunal, where the question is not the admissibility of an expert opinion, but the weight to be given to it. The content of an expert report, its form, the relevance and sufficiency of the expert’s demonstrated expertise, the adequacy of the report’s explanation of the facts (both demonstrated and assumed), and the clarity of the reasoning leading to its conclusions, will all be central to the ultimate weight given to it by the Tribunal.”

Photographs

Photographs can be deceptive, particularly in relation to perspective and distance. Great care must be taken in interpreting photographic evidence. This is particularly the case where there is no evidence as to the precise position of the camera when the photographs were taken: Goode v Angland (2017) 96 NSWLR 503; [2017] NSWCA 311 (Goode) at [93]-[96] (Beazley P with Meagher JA at [179] and Leeming JA at [212] agreeing). These principles are applied in the Tribunal: X-Build Construction Services Pty Ltd v O’Rourke [2020] NSWCATAP 181 at [64].

Section 18B of the HB Act

In The Owners – Strata Plan No 66375 v King [2018] NSWCA 170 (OSP66375 v King) at [399] White JA made the following observations about the statutory warranties in s 18B:

“[399] The warranties in s 18B (set out in the judgment of Ward JA at [240]) are cumulative; each can be considered independently and without reference to precedence. …”

In a building contract to which the HB Act applies, the reference in s 18B(1)(c) to “any other law” includes the EPA Act and associated regulations which give legal effect to the Building Code of Australia: Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114 at [20] (Gleeson JA with White JA at [115] and Brereton JA at [116] agreeing).
In Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 (Deacon) at [46], the Appeal Panel considered the evidence required to establish a breach of the statutory warranties under s 18B of the HB Act:

“[46] Although objective standards such as Australian Standards, the Building Code of Australia and the Guide are of significant relevance in establishing whether work has been performed in a proper and workmanlike manner (Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61 at [10]), the absence of such evidence does not automatically mean a homeowner has failed to establish breach of statutory warranty. In our view, the relevant principle was succinctly stated by Senior Member Goldstein in G MacFayden and Anor v G Tadrosse [2014] NSWCATCD 194 at [46] as follows:
…[E]vidence that work does not comply with the Building Code of Australia would establish a basis for a finding that sub section 18B(c) of the Act has been breached. Evidence of the details in which work does not comply with the contractual plans and specifications would form the basis for a finding that sub section 18B(a) of the Act has been breached. Evidence of work not being carried out in a proper and workmanlike manner would in my view involve identification of the work in question, a statement of how the expert would expect it to be carried out in in a proper and workmanlike manner and then identification of the factors which establish that the way in which the work has been carried out falls short of it being carried out in a proper and workmanlike manner. Evidence of this nature, if accepted, would form the basis for a finding that sub section 18B(a) of the Act has been breached.”

The measure of damages for defective building work

In Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust v Lipari [2024] NSWSC 566 (Metricon Homes) at [173]-[184], Nixon J set out the principles applicable to the measure of damages for defective building work, including:

“[173] In Bellgrove v Eldridge (1954) 90 CLR 613 at 617; [1954] HCA 36, the High Court held that the respondent was entitled to have a building erected upon her land “in accordance with the contract and the plans and specifications which formed part of it, and her damage is the loss which she has sustained by the failure of the appellant to perform his obligation to her”. The Court continued as follows (at 617-618):
“This loss cannot be measured by comparing the value of the building which has been erected with the value it would have borne if erected in accordance with the contract; her loss can, prima facie, be measured only by ascertaining the amount required to rectify the defects complained of and so give to her the equivalent of a building on her land which is substantially in accordance with the contract. ... Subject to a qualification to which we shall refer presently the rule is, we think, correctly stated in Hudson on Building Contracts, 7th ed. (1946), p 343. ‘The measure of the damages recoverable by the building owner for the breach of a building contract is, it is submitted, the difference between the contract price of the work or building contracted for and the cost of making the work or building conform to the contract, with the addition, in most cases, of the amount of profits or earnings lost by the breach’. … there may well be cases where the only practicable method of producing conformity with plans and specifications is by demolishing the whole of the building and erecting another in its place. In none of these cases is anything more done than that work which is required to achieve conformity and the cost of the work, whether it be necessary to replace only a small part, or a substantial part, or, indeed, the whole of the building is, subject to the qualification which we have already mentioned and to which we shall refer, together with any appropriate consequential damages, the extent of the building owner’s loss.
The qualification, however, to which this rule is subject is that, not only must the work undertaken be necessary to produce conformity, but that also, it must be a reasonable course to adopt.”

[174] The qualification that the work undertaken “must be a reasonable course to adopt” was considered by the High Court in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8. The Court referred (at [17]) to the qualification as to reasonableness in Bellgrove v Eldridge, and the example given in that case of the situation in which that qualification might apply, namely:
“No one would doubt that where pursuant to a building contract calling for the erection of a house with cement rendered external walls of second-hand bricks, the builder has constructed the walls of new bricks of first quality the owner would not be entitled to the cost of demolishing the walls and re-erecting them in second-hand bricks.”

[175] The High Court observed (at [17]) that:
“That tends to indicate that the test of ‘unreasonableness’ is only to be satisfied by fairly exceptional circumstances. The example given by the Court aligns closely with what Oliver J said in Radford v De Froberville, that is, that the diminution in value measure of damages will only apply where the innocent party is ‘merely using a technical breach to secure an uncovenanted profit.’ It is also important to note that the ‘reasonableness’ exception was not found to exist in Bellgrove v Eldridge. Nothing in the reasoning in that case suggested that where the reasoning is applied to the present circumstances, the course which the Landlord proposed is unnecessary or unreasonable.”

[176] In The Owners of Strata Plan No 97315 v Icon Co (NSW) Pty Ltd [2023] NSWCA 303 at [12], Bell CJ (with whom Meagher and Adamson JJA agreed) observed that the qualification as to reasonableness is not confined to the situation described in Tabcorp v Bowen Investments, stating that:
“While it is accepted that the qualification will only apply in ‘fairly exceptional circumstances’, it is not confined to where a plaintiff is seeking to rely upon a technical breach to secure an uncovenanted profit.”

[177] In that regard, his Honour quoted a passage from the decision of Gleeson JA (with whom White JA and Basten AJA agreed) in Owners SP 92450 v JKN Para 1 Pty Ltd [2023] NSWCA 114 at [67]-[70], which included, relevantly, the following observations at [70]:
“Tabcorp at [16] referred by way of an example of unreasonableness to the situation where the innocent party was ‘merely using a technical breach to secure an uncovenanted profit’, citing Oliver J in Radford v De Froberville [1977] 1 WLR 1262. Other examples include where the cost of the ‘proposed rectification is out of all proportion to the benefit to be obtained’: Brewarrina Shire Council v Beckhouse Civil Pty Ltd [2006] NSWCA 361 at [87]-[88], citing South Parklands Hockey & Tennis Centre Inc v Brown Falconer Group Pty Ltd [2004] SASC 81 at 90 (Debelle J); and Scott Carver Pty Ltd v SAS Trustee Corporation [2005] NSWCA 462 at [120] (Ipp JA); see also Wheeler v Ecroplot Pty Ltd [2010] NSWCA 61 at [81] (Macfarlan JA, McColl and Basten JJA agreeing). For a recent application of this principle in this Court, see Renown Corporation Pty Ltd v SEMF Pty Ltd [2022] NSWCA 233.”

[178] In Brewarrina Shire Council v Beckhaus Civil Pty Ltd [2006] NSWCA 361 at [89], Tobias JA (with whom Giles and McColl JJA agreed) observed that:
“In summary, the authorities to which I have referred stand for the proposition that whether the rectification work is a reasonable course to adopt is dependant upon a finding of fact that the proposed work was reasonable in order to achieve the contractual objective. The rectification work would be unreasonable if it was out of all proportion to the achievement of that objective or to the benefit to be obtained therefrom.”

[179] In Roberts v Goodwin Street Developments Pty Ltd [2023] NSWCA 5 at [119], Kirk JA and Griffiths AJA summarised the principles which emerge from the case law as follows:
“(1) A claimant suing for damage to real property – caused by a breach of contract or a tort – has some choice as to how their claim for damages is quantified. The two leading possibilities, at least when a property owner has possession or shortly is to resume possession of the land, are seeking the costs of rectification of the consequences of breach or seeking the diminution in value of the property. There may be other possibilities, reflecting the fact that it is the compensatory principle which ultimately governs, and that adjusts to all the circumstances of the case.
(2) Rectification/ reinstatement damages are not merely a proxy for loss of capital value of the property. Being awarded the cost of rectification is prima facie reasonable. It is not generally necessary for the claimant to put on evidence that the cost of rectification is not disproportionate to any diminution in value, in the absence of the issue having been raised with evidentiary support by the defendant. Nor is it generally necessary for the claimant positively to establish an intent to reinstate. Such an intention is implicit in the making of the claim.
(3) Because there is an overall limitation that the damages awarded must be reasonable in all the circumstances, it is open for a defendant to seek to persuade the court that the costs of reinstatement should not be awarded. In the context outlined there is at least an evidentiary onus on the defendant to make out that such costs are unreasonable. The costs might be unreasonable because there is no actual intent to reinstate, or in some cases it may be that there is such a disproportionality to the diminution of capital value that to award rectification costs would be unreasonable.”

[180] In Owners SP 92450 v JKN at [71]-[72], Gleeson JA said that the “party in breach of contract has the onus of displacing the prima facie rule for assessing damages as the cost of reinstatement” and that the “onus is at least an evidentiary onus in the sense referred to by Barwick CJ, Kitto and Taylor JJ in Purkess v Crittenden (1965) 114 CLR 164 at 168; [1965] HCA 34 when speaking of the ‘burden of proof in the secondary sense’ of introducing evidence”. However, the legal onus remains with the plaintiff: Roberts v Goodwin Street Developments at [115].

[181] In assessing whether rectification is necessary and reasonable, it is relevant to have regard to whether the plaintiff intends or does not intend to carry out the rectification work. In Westpoint Management Ltd v Chocolate Factory Apartments Ltd [2007] NSWCA 253 at [61], Giles JA (with whom McColl and Campbell JJA agreed) observed that:
“An intention not to carry out the rectification work will not of itself make carrying out the work unreasonable, but it may be evidentiary of unreasonableness; if the reason for the intention is that the property is perfectly functional and aesthetically pleasing despite the non-complying work, for example, it may well be found that rectification is out of all proportion to achievement of the contractual objective or to the benefit to be thereby obtained.”

[182] For example, in Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184 at [230], Bathurst CJ (with whom Macfarlan and Meagher JJA agreed) referred, among other matters, to the “lack of intention to carry out the rectification work” as well as the “absence of any evidence that the defects were affecting the use and occupation” of the property in concluding “that it would be unreasonable to carry out the work and that damages for the cost of rectification should therefore not be awarded”.”

Section 48O(1)(c)(i) of the HB Act

The principles with respect to the making of a work order under s 48O(1)(c) of the HB Act were explained by the Appeal Panel in Catapult Constructions Pty Ltd v Denison [2018] NSWCATAP 158 (Catapult Constructions) at [46]-[61] including:

“…
[53] The Appeal Panel recognises that there has been no decision of which it has been made aware requiring a builder, under an order pursuant to section 48O(1)(c)(i) or (ii) of the Act, to engage engineers to investigate and advise as to the work required, let alone an order requiring the builder to, in effect, have the responsibility of determining what rectification work is required or how it is to be performed.
[54] The Appeal Panel does not consider that the terms of the Orders, insofar as the builder is required to engage geotechnical and structural engineers to provide advice as to the means by which the rectification of the water penetration and structural instability should be undertaken, are appropriate.
[55] Subsection 48O(1)(c)(i) refers to an order to “do specified work” or “perform any specified service” or “any obligation”. The subsection also limits the subject matter of an order to one which arises “under this Act or the terms of any agreement”.
[56] The engagement of engineers to advise as to the means of providing “effective waterproofing” and the “prevention of water ingress” to the walls does not readily fall under the definition of any “work, service or obligation” arising under the Act of the contract.”
…
[59] If it is considering such an order, rather than making an alternative order such as adjourning the proceedings so that the homeowner can obtain evidence regarding a scope of works to rectify the breach by the builder, the Tribunal must be very cautious to avoid any perception that the homeowner in Tribunal proceedings only has to prove that defective work by the builder has occurred, and that it then becomes the responsibility of the builder to establish how to rectify the defect, including the builder engaging expert evidence in that regard. The evidentiary onus remains on the homeowner to prove both breach (i.e. what is the defective work) and the method of rectification (so that the Tribunal can make an appropriate work order for rectification of the defective work; or if a work order is not the preferred outcome, assess damages according to the principles set out in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613). However, in the circumstances of this matter, there was some evidence (as discussed below) before the Tribunal regarding an appropriate scope of works to rectify the defect.
[60] The discretion to make work orders under section 48O of the Act is required, under subsection (3), to have regard to the provisions of the Fair Trading Act 1987 which require that the exercise of discretion is fair and equitable to both parties, see Leung and Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23.
[61] The Appeal Panel considers that the discretion to make a work order is also subject to requirements of certainty, practicality and enforceability. The terms of the orders made by the Appeal Panel in Leung, see [46] are an example of such an approach.”

The principles with respect to the making of a work order under s 48O(1)(c) of the HB Act were recently explained by the Appeal Panel in Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17 (Selkirk) at [39]-[40]:

“[39] The requirements in Glenquarry find complementary support in the requirements for work orders under the Home Building Act 1989 (NSW) (HBA). Under HBA s 48O(1)(c) an owner is required to specify action by the builder that is grounded in proof by the owner of, not only the defect, but also the manner of remediation and a work order must focus on the particular defect to be rectified and must be certain, practical and enforceable: Catapult Constructions PL v Denison [2018] NSWCATAP 158 at [46]-[61] and the authority there cited. The evidentiary onus is on the homeowner to set out the appropriate method of rectification: ibid, at [59]. In Bellgrove v Eldridge (1954) 90 CLR 613, [1954] HCA 36, the High Court said that the scope of remedial works must not be disproportionate to the defect. The High Court has also stated that there is a high bar for unreasonableness or disproportion once a breach is established: Tabcorp Holdings Ltd v Bowen Investments PL (2009) 236 CLR 272, [2009] HCA 8 at [13]-[20]; see also Walker Group Constructions PL v Tzaneros Investments PL [2017] NSWCA 27 at [186]; Barwick v Shetab [2017] NSWCATAP 127 at [87]-[88]. The analysis in the paragraphs in the Tabcorp decision, and the authority there reviewed, also makes it clear in these passages that reinstatement, provided it is not extravagantly disproportionate, is the appropriate measure of relief. Reinstatement means works with a certain standard of amenity and presentation which includes not being at risk of emergent problems returning or growing which in form and finish produces an outcome that matches other components in form and finish and makes the works of the originally-intended quality and integrity.
[40] An expert report may be integral to formulation of the precise scope of work required to assist the owners corporation to fulfil its strict duty or as an incident of the relief granted to require the owners corporation to fulfil its strict duty: Carli at [53]; cp in a home building context Marr v JCK Building Solutions PL [2018] NCATCD, unreported, 4 December 2018, HB 16/43946 at [46]-[54], where an element of the manner of remediation in certain circumstances may inherently require inspection, properly defined so as to be sufficiently specific, to establish the need for and required scope of remediation.”

Whether the 25 July 2024 Baker Report should be given little to no weight

In the Kelly opening submissions, Mr and Mrs Kelly relevantly have submitted that the 25 July 2024 Baker Report should be given no weight for the following reasons:

Mr Baker has used the wrong version of the National Construction Code (NCC);

Mr Baker has not complied with the requirements of Makita at [85], but merely provides some photos and comments in response to the Scott Schedule presented to him with respect to the following defects:

the leaking from the deck into the alfresco area below;

the fall to the floor wastes in the bathrooms;

Mr Baker has violated the Experts Code of Conduct general duty to act impartially and to not be an advocate for a party.

In the SPB opening submissions, SPB made the following submissions:

to the extent that Mr Baker relies on the wrong version of the NCC, there does not appear to be any material difference between the two with respect to the specific defects in issue, and Mr and Mrs Kelly do not point to any specific aspect of wrong version that results in the formation of an incorrect opinion;

Mr Baker’s opinion that water ingress at the upper balcony is limited to the penetrations of timber posts and associated water ponding in this area is supported by the photographs in the 25 July 2024 Baker Report;

Mr Baker’s opinion that the NCC does not require falls to floor wastes, where such wastes are not mandated but installed nonetheless, is responsive to Mr Barry’s contrary opinion in the 6 December 2023 Barry Report that such falls are mandated, which tums on the proper construction of the NCC and to the extent that Mr Baker is criticised for expressing an opinion on the issue, that applies with equal force to Mr Barry;

Mr Baker’s criticisms of the 6 December 2023 Barry Report are warranted and must be understood in context.

In the Kelly closing submissions, Mr and Mrs Kelly have submitted that the 25 July 2024 Baker Report should be given little to no weight for the reasons in the Kelly opening submissions.
In the SPB closing submissions, SPB has submitted that that the Tribunal should consider the opinions expressed by the experts on each of the issues, rather than making some overarching finding on weight or credibility. Both experts gave honest opinion evidence, and are suitably qualified.
I do not accept the submissions of Mr and Mrs Kelly that the 25 July 2024 Baker Report as a whole should be given little to no weight for the following reasons:

while Mr Baker relies on the wrong version of the NCC this error is of no consequence unless there has been a material change between the earlier and later versions that relate to the defective items remaining in dispute;

having regard to principles in Hancock at [82], the failure of Mr Baker to comply with the requirements of Makita at [85] does not necessarily mean that there is an unsatisfactory basis for his opinions in the 25 July 2024 Baker Report;

the disagreement of Mr Baker in the 25 July 2024 Baker Report with the opinions of Mr Barry in the 6 December 2023 Barry Report does not establish a lack of impartially or impermissible advocacy on his part for SPB in breach of cll 14 and 16 of NCAT PD3;

as Mr Baker gave oral evidence it will be necessary to consider the totality of his evidence in determining what weight should be given to his opinions.

Items 1 to 5: Upper rear deck – cracked floor tile, no movement control joints and inadequate surface falls in floor tiles, failed waterproof membrane, inadequate surface falls, mould growth on ceiling below, and bubbling and peeling paint on outside walls below

The essential difference between the parties

The essential difference between the parties is as to the scope of works to rectify the inadequate surface falls on the upper deck. Mr Barry is of the opinion that the required falls should be achieved by adjustment of the joists on which the deck rests. Mr Baker is of the opinion that the required falls can be achieved by using screed.
The Kelly work order specifies the following scope of works for the rectification of the inadequate surface falls:

“Deck Rectification Scope of Works
8.   Prior to the commencement of the Works, the Homeowners will appoint a qualified structural engineer to supervise the part of the Works related to the Deck (Structural Engineer) and notify the Builder of this person;
9.   Any part of the Works related to the Deck will be done to the satisfaction of the Structural Engineer;
10.   All elements on the Deck, including the balustrade, tiles and compressed fibre cement (CFC) sheets required to be removed, to allow for the survey and modification of the existing joists as required under these orders, will be removed by the Builder;
11.   The Builder will undertake a survey of the existing joists and the joists will be modified, added to or replaced by the Builder as required so as to provide for the required surface fall on the Deck finished surface via the joists;
12.   Ensure all existing wall cladding and sliding door is removed and reinstated so that adequate membrane upturns can be achieved in accordance with AS 4654.3
13.   The Builder will restore the Deck to its required state specified in the building contract between the parties, including ensuring that any modifications from the first build comply with the relevant Australian Standards and any manufacturer specifications.
Scott Schedule Items 4, 5. Alfresco Area Under Deck
14.   Any part of the ceiling below the deck (Alfresco Ceiling) that is not fibre cement or is mould or water damaged in any way will be removed and replaced by the Builder with an appropriate fibre cement sheet(s);
15.   The Alfresco Ceiling and the walls in the alfresco area below the Deck will be painted by the Builder with an appropriate exterior grade paint in the colour(s) specified by the Homeowners.”

The SPB work order specifies the following scope of works for the rectification of the inadequate surface falls:

“Deck Rectification Scope of Works
7.   The Builder will remove all components of the balustrade, and the sliding door and place in safe keeping for reinstalling later.
8.   The Builder will remove all tiles from the Deck.
9.   The Builder will ensure that a sill flashing is installed to the sliding door in accordance with the requirements of AS4654, and in accordance with any other relevant standards or codes.
10.   The Builder will ensure that the substrate is suitably prepared for the application of a waterproofing membrane, and then apply a waterproofing membrane to the Deck, with the correct upturn against the existing cladding and to the sill flashing under the sliding door, in accordance with the relevant standards and! or codes.
11.   The Builder will apply a screed to the Deck that ensures a fall of 1:100 across the Deck. If this creates a change in the last riser height of the external deck stair, then a spine will be created in the tile screed starting from the sliding door across on an angle towards the stair to prevent any height change to the landing of the staircase.
12.   The Builder will apply a further another waterproofing membrane to meet AS 4654.2 on the newly laid screed.
13.   Once complete the Builder will retile the entire deck area, using tiles of equivalent quality and value to those set out in the contract, and install expansion joins as per requirement under the NCC and any manufacturers specifications.
14.   The Builder is to reinstall the original balustrade and complete the deck to its correct state specified in the contract between the parties making sure it complies with any relevant Australian standards.
15.   The builder will remove any damaged ceiling material to the ceiling below the deck areas and replace with Aqua check as per original contract between the parties and repaint the entire surface with the correct paint as per manufactures specifications.
16.   The Builder will, within 28 days of the conclusion of the Deck rectification at its own cost, obtain a certificate from a suitably qualified structural engineer as to the structural integrity of the Deck, and supply same to the Homeowners.”

Whether the Kelly work order satisfies the requirements for a work order under s 48O(1)(c)(i) of the HB Act

The evidence of the parties

Mr Barry in the 6 December 2023 Barry Report at [6.05] has given the following evidence:

“I acknowledge that further assessment of the construction detailing of the Upper Floor Deck is required ...”

Mr Barry in the Joint Reports has given the following evidence:

“The configuration of the existing deck joists, substrate and cladding will also need to be reviewed with respect to achieving adequate surface falls and membrane upturns, both to the perimeter of the deck and at the sliding door opening.”

Mr Baker in the 26 September 2024 Baker Report at [6.1.6] has given the following evidence:

“Cutting 20mm off of one end and tapering back to 0mm would reduce the strength of the balcony, which Mr Barry has alluded to by including an option to add more structure if required by an engineer, further increasing the cost of rectification for the same result. Adding 20mm of fall would also not make the finished tile surface [compliant] as this would only equate to 33mm over 4.5m of span, below the required 1:100. Although Mr Barry’s rectification scope is overly complicated and expensive it still leaves a non-complaint balcony.”

Mr Barry in his oral evidence gave the following evidence:

in response to my request that he summarise his position on the falls to the balcony (Tcpt, 27 September 2024, p 52, ll 16-21):

“… all I have scoped is to improve what should have been done the first time and that’s to ensure the top edge of the joists have adequate fall so that every layer applied to the top of that provides the adequate surface fall”

in cross-examination (Tcpt, 27 September 2024, p 61, ll 16-18, 23-25):

“In my scope of work, I’ve basically said let’s survey the top of those joists and determine the fall that’s required there, and I’ve actually suggested planing the top edge of those joists, don’t need to cut, effectively a tenon needs to be created on the top of that.
…
So I’m not saying it’s easy, I’m not saying it’s an everyday detail, but it’s definitely achievable (indistinct) certainly a considerably more complex solution than the application of the sand and cement screed.”

Mr Baker in his oral evidence gave the following evidence in response to my question as he why he thought the works proposed by Mr Barry are unnecessary, as being requiring more to be done than is reasonably required (Tcpt, 27 September 2024, p 55, ll 1-6):

“The unnecessary work would be the removal of the sliding door and the removal of the cladding.”

The submissions of the parties

Mr and Mrs Kelly in the Kelly closing submissions have made the following submissions with respect to the Kelly work order with respect to the rectification of the inadequate surface falls:

it does not change the level of the finished floor level (FFL), does not require different tiling systems on the same deck, and does not create further issues in relation to the levels of the sliding door and the stairs onto the deck;

the FFL is unchanged to what is set out in “Left Elevation (East)” and “Right Elevation (West)” in the 11 June 2020 Drawings, namely RL 61.385;

it complies with the relevant NCC requirements.

SPB in the SPB closing submissions have made the following submissions with respect to the Kelly work order with respect to the rectification of the inadequate surface falls:

the “Left Elevation (East)” and “Right Elevation (West)” in the 11 June 2020 Drawings specify the FFL of RL 61.385 for the interior of the dwelling but does not specify the FFL of the upper deck. Further, as the experts agree that there has to be a step down from the internal FFL to the deck, the deck’s FFL is necessarily different from that of the internal FFL;

it involves significantly more cost and work than the SPB work order. It carries with it the risk that it will cause structural damage, which risk Mr Barry implicitly acknowledges by inclusion of the requirement for a structural engineer to be engaged;

paragraph [11] is vague;

the modifications required are to the joists which are the structural supports of the upper deck. It cannot undertake alteration works to structural members without an amended structural design - to do so would be in breach of the plans and amount to defective works in and of itself. No such amended structural design is proposed by Mr and Mrs Kelly. Rather they require the engagement of a structural engineer (though the Kelly work order does not identify who is to bear the costs of this engagement), with the result that the scope of remedial works cannot be known until an engineer is engaged;

it is fundamentally too uncertain to be the subject of a remedial works order. It is also not the minimum necessary to produce conformity with the building contract.

SPB in the SPB closing submissions has made the following submissions with respect to the inadequate surface falls in the four bathrooms:

there is no evidence that water ponds in any of the bathrooms in any situations except where the bathroom has been intentionally flooded for the purposes of a water test. That is, there is no lay evidence at all that ponding has been observed in any of the bathrooms as a consequence of day-to-day use, or that there has been any safety hazards or loss of amenity as a result;

as to the submission of Mr and Mrs Kelly that the surface falls fail to comply with NCC 2019:

it did not require waste in the areas of a bathroom outside the shower area;

no evidence was led from them that any unhealthy or dangerous conditions have arisen. The only evidence relied upon appears to be one photo from Mr Barry (the 6 December 2023 Barry Report, annex D, item 243). As to the opinion of Mr Barry in the 6 December 2023 Barry Report at [7.5.9.1], [7.6.6.1], [7.7.71] and [7.8.5.1]:

there is no evidence of “undue deterioration of the grout and tile adhesive”;

there is no evidence that there has ever been “intermittent water ponding”;

neither the photo of Mr Barry (the 6 December 2023 Barry Report, annex D, item 243) nor any of the other photos on that page have mould discernible and there is no evidence as to the extent or detail of any such mould nor can Mr Barry infer from the fact that there might have been mould in a bathroom (presumably in regular use) when inspected by him two years after it was constructed, that the construction of that bathroom is defective. That evidence is certainly not sufficiently probative to warrant the effective reconstruction of all four bathrooms;

as to the submission of Mr and Mrs Kelly that the surface falls fail to comply with AS 3470:

the only part of AS 3470 they identify (see the 6 December 2023 Barry Report at [6.7.6]) as requiring falls in the general bathroom area is s 3.11. That clause relevantly specifies that falls are required “where a floor waste is required”, which they use to extrapolate to mean that even if wastes are not required, their installation means that s 3.11 has effect. That does not follow, and also proceeds on the fallacy that the only purpose of the installation of floor wastes is to drain water from the floor but as Mr Baker identifies, the floor waste was installed for the purposes of “servicing drainage trap” located below in each of the bathrooms (the 25 July 2024 Baker Report, App A; see also Tcpt, 27 September 2024, p 70, ll 16-28). His evidence on this issue is unchallenged;

the 22 November 2017 ABCB newsletter is relevant in construing AS 3470 where any ambiguity exists, though it is its position that no part of AS3470 (including s 3.11) requires falls in the general bathroom area, that is, outside the shower area;

that construction of AS 3470 is further reinforced by the November 2023 ABCB commentary;

as to the submission of Mr and Mrs Kelly that the surface falls fail to comply with s 18B(1)(a) of the HB Act:

as Mr Baker observed in cross-examination (Tcpt, 27 September 2024, pp 70, l 34-71, l 14), there is no source for water in that area, except in circumstances such as a toilet overflow, and in those circumstances the water would have to be dealt with “mechanically” dealt with (that is mopped up);

it cannot be suggested that a builder has a duty nonetheless to take steps to negate unlikely eventualities, and common experience would tell the Tribunal that the general bathroom floor area would ordinarily be wet after use of the shower, but that does not mean that the bathroom is defective.

SPB in the SPB closing submissions have made the following submissions with respect to the SPB work order with respect to the rectification of the inadequate surface falls in the four bathrooms:

Mr Barry’s scope of remedial works is unnecessary given his acceptance that the works could be undertaken without damaging the membrane. Indeed, he expressly opined that the tiles could be removed without damaging the membrane if they were removed “appropriately” (Tcpt, 27 September 2024, pp 70, ll 25-28), and on that basis opined that removal of one row of wall tiles would not lead to further damage. Localised repair, with the requirement for an inspection following removal of the tiles, is therefore an appropriate scope of remedial works.

Mr and Mrs Kelly in the Kelly closing submissions in reply disputed some of the SPB closing submissions.

Consideration

Having regard to the principles in OSP66375 v King at [399] and Deacon at [46], it is appropriate to consider the claims for breach of the warranties under ss 18B(1)(a) and (c) of the HB Act and cll 1(b)(i) and (iii) of the Building Contract separately, and the claim for breach of the warranty under s 18B(1)(c) of the HB Act and cl 1(b)(iii) of the Building Contract prior to the claim for breach of the warranty under s 18B(1)(a) and cl 1(b)(i).

Whether SPB breached the warranty under s 18B(1)(c) of the HB Act and cl 1(b)(iii) of the Building Contract

I have had no regard to the opinions of Mr Barry and Mr Baker as to the proper construction of NCC 2019 as their subjective beliefs are not relevant to ascertaining its meaning.
I am satisfied that on its proper construction the definition of “Wet area” in Sch 3 of NCC 2019 may apply to a bathroom as a whole, as well as to a shower within a bathroom. The definition is expressed to include both “bathrooms” and “showers”.
I am satisfied that each of Ensuite 2 (Upper Floor), Bath 2 (Upper Floor), Ensuite 1 (Lower/Mid Floor) and Bath 2 (Lower/Mid Floor) as a whole is a wet area within NCC 2019. The Objective in Part O2.4.1, the Functional statement in Part F2.4.1, and the Performance Requirements in Part P2.4.1 applies to each of them. In circumstances where there was no evidence that SPB constructed these rooms in accordance with a Performance Solution, SPB was required to satisfy the Performance Requirements by the Deemed-To-Satisfy Solution, being compliance with the relevant Deemed-to-Satisfy Provision, namely AS 3740 pursuant to Part 3.8.1.2(b) of NCC 2019, in respect of these rooms.
I am satisfied that on its proper construction the definition of “Wet area” in s 1.4.28 of AS 3740 may apply to a bathroom as a whole, as well as to a shower within a bathroom. The definition is expressed to include “bathrooms” and “showers”.
Mr and Mrs Kelly in their submissions did not identify the source of the requirement of compliance with ss 3.3 and 3.11 of AS 3740. SPB contended that there was no requirement in NCC 2019.
I am satisfied that SPB was required to comply with s 3.3 of AS 3740 in respect of each of these four rooms by virtue of condition 9 of the Construction Certificate which pursuant to s 4.16 of the EPA Act is taken to be part of the Modified Development Consent. Pursuant to s 4.2(b) of the EPA Act and cl 1(d)(i)(c) of the Building Contract SPB was required to comply with the conditions of the Modified Development Consent.
I am not satisfied that SPB was required to satisfy s 3.11 of AS 3740 as there is no evidence that a floor waste is required in the general areas of each of these rooms. There is no evidence that the Building Contract was varied pursuant to cl 1(c)(ii) to provide for a floor waste in the general areas of each of these rooms, or the mechanism in cl 4 of the Building Contract to resolve discrepancies and ambiguities was utilised by SPB and instructions were given by Mr and Mrs Kelly in relation the installation of a floor waste in the general areas of each of these rooms. Further, the evidence did not include a sanitary plumbing and draining application and accompanying diagram required by condition 8 of the Modified Development Consent.
Having regard to the principles in Edmonds at [130]-[131], Hancock at [82]-[83] and Shakiri at [98], I accept the evidence of Mr Barry in the 6 December 2023 Barry Report as to the surface falls in each of the four bathrooms not meeting the minimum fall to the waste of 1:100 in so far as it is based on his own observations and testing. Having regard to the principles in Goode at [93]-[96], I have not given any weight to the evidence of Mr Barry so far as it is based on photographs and videos of Mr and Mrs Kelly in relation to Ensuite 1 (Lower/Mid Floor). Further, there is no direct evidence of Mr Kelly or Mrs Kelly as to carrying out a flood test and the duration of ponding in Ensuite 1 (Lower/Mid Floor). The methodology and opinions of Mr Barry as to the range of surface falls was not challenged in cross-examination.
It follows that I am satisfied that SPB breached the warranty under s 18B(1)(c) of the HB Act and cl 1(b)(iii) of the Building Contract by reason of its failure to comply with s 3.3 of AS 3740 in respect of each of the four bathrooms.

Whether SPB breached the warranty under s 18B(1)(c) of the HB Act and cl 1(b)(i) of the Building Contract

On its proper construction compliance with the warranty under s 18B(1)(a) of the HB Act and cl 1(b)(i) of the Building Contract requires the work:

will be done with due care and skill (the first limb); and

in accordance with the plans and specifications set out in the contract (the second limb).

On the evidence adduced by the parties, I am satisfied that SPB breached the second limb of the warranty under s 18B(1)(a) of the HB Act and cl 1(b)(i) of the Building Contract by not constructing each of Ensuite 2 (Upper Floor), Bath 2 (Upper Floor), Ensuite 1 (Lower/Mid Floor) and Bath 2 (Lower/Mid Floor) in accordance with the plans and specifications set out in the Building Contract. SPB installed a floor waste in the general areas of each of these rooms when such a floor waste not recorded in either the 11 June 2020 Drawings or the 18 May 2020 Specification. There is no evidence that the Building Contract was varied pursuant to cl 1(c)(ii) to provide for a floor waste in the general areas of each of these rooms, or the mechanism in cl 4 of the Building Contract to resolve discrepancies and ambiguities was utilised by SPB and instructions were given by Mr and Mrs Kelly in relation the installation of a floor waste in the general areas of each of these rooms.
As the builder is required to comply with both limbs of the warranty under s 18B(1)(a) of the HB Act and any equivalent term of the contract, having found the SPB breached the second limb, it is unnecessary to consider whether SPB undertook the work in each of these rooms with due care and skill.
If it had been necessary to consider whether SPB breached the first limb, I would not found have Indico Holdings at 285 to be of any assistance in determining this question. The issues in Indico Holdings included whether the supplier breached the implied warranty under s 74(1) of the Trade Practices Act 1974 (Cth) that services will be rendered with due care and skill. I would have applied the established principles in Deacon at [46] to determine whether the work was be done with due care and skill.

Whether a work order under s 48O(1)(c)(i) of the HB Act should be made

Having regard to the principles in Edmonds at [130]-[131], Hancock at [82]-[83] and Shakiri at [98], I do not accept the evidence of Mr Barry that there has been intermittent water ponding on the surface of each of Ensuite 2 (Upper Floor), Bath 2 (Upper Floor), Ensuite 1 (Lower/Mid Floor) and Bath 2 (Lower/Mid Floor). There was no evidence of water ponding observed by Mr Barry other than following a water test or flood test conducted by Mr Barry on 12 September 2023 in the shower of Ensuite 2 (Upper Floor), and in Bath 2 (Upper Floor). Having regard to the principles in Goode at [93]-[96], I have not given any weight to the evidence of Mr Barry so far as it is based on photographs and videos of Mr and Mrs Kelly in relation to Ensuite 1 (Lower/Mid Floor). Further, there is no direct evidence of Mr Kelly or Mrs Kelly as to carrying out a flood test. In the absence of evidence of Mr Kelly or Mrs Kelly as to the use of these four bathrooms, this evidence was speculation.
Mr and Mrs Kelly did not address any submissions as to whether the discretion under s 48O(1)(c)(i) of the HB Act should be the exercised to make a work order. SPB draw attention to the lack of evidence that ponding has been observed in any of the bathrooms as a consequence of day-to-day use, or that there has been any resulting safety hazards or loss of amenity.
The Appeal Panel in Selkirk at [39] held that the principles applicable to the measure of damages for defective building work were relevant to the exercise of the discretion under s 48O(1)(c)(i) of the HB Act. These principles, as explained in Metricon Homes at [173]-[184], make clear that not only must the rectification work to be undertaken be necessary to produce conformity with the contract, but also it must be a reasonable course to adopt. On the second aspect, the absence of any evidence that the defects were affecting the use and occupation will be a relevant factor.
The difficulty with each of the Kelly work order and the SPB work order is that neither is designed to produce conformity with the Building Contract, but is predicated on the floor waste in the general area of the four bathrooms remaining in place. The applicable works in each of the Kelly work order and the SPB work order are not necessary to produce conformity with the contract. Further, there is no evidence that the inadequate surface falls in each of the four bathrooms have affected the use and occupation of the dwelling by Mr and Mrs Kelly.
However, I am satisfied that it is appropriate to exercise the discretion under s 48O(1)(c)(i) of the HB Act to make a work order. There is no point in having a floor waste that cannot function to remove any surface water due to inadequate surface falls in the general areas of these four bathrooms. While the ordinary use of the four bathrooms would not generally result in water ponding in the general areas of these rooms as water will not ordinarily overflow from the shower, bath, vanity or toilet as the case may be, such an occurrence cannot be dismissed as a remote possibility.
The terms of the Kelly work order at [16]-[19] and the SPB work order at [17]-[24] so far as the appointment of an expert to determine if the waterproofing membrane is damaged in the course of the rectification works are substantially the same. The main difference is that under the Kelly work order SPB is required to remove all floor tiles, whereas under the SPB work order SPB is required to remove tiles as necessary to enable the floor to be graded to the installed floor waste.
I am not satisfied that it is appropriate to make a work order in terms of the Kelly work order at [16]-[19] as I am not persuaded that it is necessary to remove all floor tiles to enable the floor to be graded to the installed floor waste. The terms of the SPB work order at [17]-[24] provide sufficient protection to Mr and Mrs Kelly if the waterproofing membrane is damaged in the course of the rectification works.

Conclusion

I have decided in the exercise of the discretion under s 48O(1)(c)(i) of the HB Act to make a work order in terms of SPB work order at [7]-[24]. The parties did not address any submissions as to whether there is any material difference between the Kelly work order at [14] and [15] and the SPB work order at [15]. I have been unable to discern any material difference between these paragraphs and decided to make this part of the work order in terms of the SPB work order at [15].
The parties were otherwise agreed as to the terms of a work order except as to the date for completion of the rectification works. During the hearing I suggested 12 weeks would be a reasonable time for completion of the rectification works. As the parties did not address this question in their submissions, I have decided that 12 weeks is a reasonable time for completion of the rectification works. I have decided in the exercise of the discretion under s 48O(1)(c)(i) of the HB Act to make a work order in the terms otherwise agreed between the parties with the rectification works to be completed within the period of 12 weeks conditional on Mr and Mrs Kelly providing reasonable access to the dwelling to enable SPB to carry out the rectification works. I have also made an order under cl 8(1) of Sch 4 of the NCAT Act granting leave to Mr and Mrs Kelly to renew the proceedings if SPB does not comply with the work order within the specified time.
I have had regard to ss 79R and 79T to 79V of the Fair Trading Act 1987 (NSW) (FT Act) as required by s 48O(3) of the HB Act and am satisfied that this exercise of discretion is fair and equitable to both parties.

Issue 3: whether SPB breached a warranty under s 18B of the HB Act and the Building Contract by its failure to obtain a construction certificate for the construction of retaining works

The essential difference between the parties

The essential difference between the parties is whether SPB breached the warranties under s 18B(1)(c) of the HB Act and cl 1(d)(i)(c) of the Building Contract by not complying with condition 5 of the Modified Development Consent. It is common ground between the parties that SPB did not obtain a construction certificate before constructing the retaining works at the rear of the property. Mr and Mrs Kelly contend that SPB constructed retaining walls. SPB contends that it did not construct retaining walls. As the parties differ in their characterisation of the works carried out at the property, I have used the neutral expression “retaining works” to refer to these works.
If Mr and Mrs Kelly establish that SPB breached the warranties under s 18B(1)(c) of the HB Act and cl 1(d)(i)(c) of the Building Contract by its failure to obtain a construction certificate for the construction of retaining works, then they seek an order for costs of the proceedings with respect to this issue. SPB indicated it would address the question of the costs of the proceedings following my decision on whether it breached the Building Contract.

The evidence relevant to this issue

There is no dispute between the parties that the documentary evidence relevant to this issue is contained in undisputed documentary evidence set out above.
Mr Werrett in the 28 May 2024 Affidavit set out the circumstances that led to the issue of the Modified Development Consent and relevantly gave the following evidence:

Mrs Kelly did not want a very steep driveway ([6]);

he agreed with Mr and Mrs Kelly to raise the height of the dwelling and to install a “rock battered wall” ([8]);

consequently, SPB lodged the Modification Application with the Council ([10]).

The submissions of the parties

Mr and Mrs Kelly in the Kelly closing submissions, after setting out most, but not all, of the chronology of events with respect to the for the construction of retaining works, made the following submissions with respect to the retaining works:

the retaining works is a “structural wall”;

SPB should be held liable for their costs incurred in bringing the Kelly claim in relation to the retaining works.

SPB in the SPB closing submissions has made the following submissions with respect to the retaining works:

the 2 February 2024 RGS letter clearly identifies that there is “no structural load being imposed on the rockfill and earthfill batter”;

whereas the Council in the 7 July 2020 Council letter referred to “Retaining/Battered Wall”, the Council in the Building Information Certificate referred to “two rockfill batters at rear of property”;

the description of the Council in its correspondence is not probative that the retaining works are “retaining walls” within condition 5 of the Modified Development Consent;

it is relevant that neither Mr Werrett nor Mr Baker were cross-examined on the issue, and Mr Barry did not opined on the issue;

the evidence of Mr Kelly in in the 26 November 2023 Kelly Statement included the 14 August 2020 DGB letter, but not the 2 February 2024 RGS letter;

the Tribunal should not find that the retaining works are “retaining walls”.

Mr and Mrs Kelly in the Kelly closing submissions in reply disputed some of the SPB closing submissions.

Conclusion

I accept that on the proper construction of the Modified Development Consent SPB was required to construct the “dwelling and retaining walls” in accordance with the 11 June 2020 Drawings rather than the 11 May 2020 Drawings.
I am satisfied that on the proper construction of the Modified Development Consent SPB was required to obtain a construction certificate for the construction of retaining works. The expression “retaining walls” in condition 5 is sufficiently wide to encompass a soil garden batter with rock edge for soil erosion as required in the Site Plan of the approved 11 June 2020 Drawings. The undisputed evidence of Mr Rowbotham in the 2 February 2024 RGS letter is that the retaining works are approximately 7m high, comprising a 4.5m upper batter and a smaller 2.5m downslope batter.
As it is common ground that SPB did not obtain a construction certificate for the construction of retaining works, it breached the warranties under s 18B(1)(c) of the HB Act and cl 1(d)(i)(c) of the Building Contract by its failure to do so.
I have not found that the correspondence between SPB and the Council and the evidence as to whether the retaining works bore a structural load to be of any relevance in determining this issue, as it depends on the proper construction of the Modified Development Consent.
If, contrary to my finding, this evidence is relevant to the determination of this issue, then I would not have found that SPB had discharged its evidentiary onus of establishing that the retaining works do not bear a structural load. Contrary to the submissions of SPB, the evidence of Mr Rowbotham in the 2 February 2024 RGS letter does not clearly identify that there is “no structural load being imposed on the rockfill and earthfill batter”. This evidence is a part of the record of information provided by SPB. There was no probative evidence demonstrating that the retaining works do not bear a structural load. Mr de Groot in the 14 August 2020 DGB letter did not address this question. I would have given no weight to the assertion of Mrs Werrett in the 14 July 2020 SPB letter that the retaining works were not structural in view of the absence of evidence that she had the qualifications and experience to express this opinion.

Issue 4: the costs of the proceedings

At the conclusion of the hearing, I discussed with the parties whether I should determine the costs of the proceedings and make procedural directions permitting the parties to apply to vary the costs order, or determine the costs of the proceedings separately after my decision on issues 1 to 3. Counsel for the parties were content with the first approach.
Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) deals with costs in costs in Consumer and Commercial Division of the Tribunal, and relevantly provides:

38 Costs in Consumer and Commercial Division of the Tribunal
(1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal.
(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if—
…
(b) the amount claimed or in dispute in the proceedings is more than $30,000.

The general principles concerning the awarding of costs were considered by the Appeal Panel in Vella v Mir (No 3) [2020] NSWCATAP 17 (Vella (No 3)) at [28]-[33]:

“[28] Clause 38 gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal must take into account in exercising the discretion, although the discretion to make such an order must be exercised judicially: see, for example, Ruddock v Vadarlis [2001] FCA 1865 at [9].
[29] Where an application has been heard and determined on the merits and Clause 38 applies, the appropriate starting point for the exercise of the discretion is not that the parties are to pay their own costs. Rather, it is the well-established position at common law; that is, that the purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party: Latoudis v Casey [1990] 170 CLR 534; Oshlak v Richmond River Council [1998] HCA 11.
[30] In BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 the Appeal Panel, having set aside a costs order made in the Consumer and Commercial Division, decided to re-exercise the costs discretion. Clause 38 was the applicable costs provision in that case. At [67] the Appeal Panel noted the following principles relevant to the exercise of the discretion:
(1) the starting point is that a successful party should be entitled to an order for costs in his favour;
(2) an award of costs is by way of an indemnity and not as punishment;
(3) there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party;
(4) the factors to be considered are not to be confined as to do so would constrain the general discretion;
(5) the relative success of the parties on different issues and the time taken to determine them may be relevant;
(6) the nature of the proceedings is relevant;
(7) the proper exercise of the discretion requires a decision maker to do justice between the parties and to exercise the discretion having regard to relevant considerations and in a manner which is not arbitrary and capricious.
[31] Generally, costs are awarded in favour of the successful party based on the outcome of the proceedings as a whole, without differentiating between particular issues on which the party may not have been successful. That said, a different costs order may be made if the losing party succeeds on significant issues: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [31]–[36]; Sydney Ferries v Morton (No 2) [2010] NSWCA 238 at [10]–[12]. The dollar amount of a particular claim does not determine its dominance in the proceedings. Rather, regard must be had to all of the work involved in prosecuting and defending the parties’ various claims, including but not limited to the time taken up at the hearing.
[32] In Tomanovic v Global Mortgage Equity Corporation Pty Ltd (No 2) (2011) 288 ALR 385, Campbell JA (with Macfarlan JA and Young JA agreeing) held at [107] that an issue or group of issues is “clearly dominant” when it is clearly dominant in the proceedings as a whole. In that case, the approach by counsel to analysing the percentage of costs between the parties - counting the proportion of paragraphs and pages devoted to each factual topic - was held at [84] to be “a highly artificial way of proceeding” which gave “a false air of mathematical precision”.
[33] In relation to separable issues, a successful party’s entitlement to the whole of the costs of the proceedings should not be discounted to allow for another party’s success in a separate issue that played a very minor part in the proceedings as a whole: Macourt v Clark (No 2) [2012] NSWCA 411 at [7]. Further, in Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30 at [14], the Court of Appeal held that the severability of one issue on which the successful party failed is not, without more, sufficient to warrant departure from the general approach. The exercise of discretion will often depend upon matters of impression and evaluation: Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [11].”

I am satisfied that r 38(2)(b) of the NCAT Rules is applicable to the proceedings because the amount claimed by Mr and Mrs Kelly in the 17 September 2024 Barry Report is more than $30,000. It follows that the position of each party paying their own costs specified in s 60(1) of the NCAT Act does not apply to the proceedings.
Having regard to the principles in Vella (No 3) at [28]-[33], SPB should pay the costs of Mr and Mrs Kelly for the following reasons:

Mr and Mrs Kelly were successful in establishing SPB breached the Building Contract as alleged in the amended Kelly claim;

while there was a substantial issue was whether a work order should be made in terms of the Kelly work order or the SPB work order upon which I have found in favour of SPB, the SPB work order was not produced until the SPB closing submissions.

Orders

I make the following orders:

The respondent is to carry out the rectification works in accordance with the Schedule on condition that the applicants provide access to the dwelling as provided in the Schedule.

If the respondent fails to carry out the rectification works in accordance with the Schedule, leave is granted to the applicants to renew the proceedings.

The respondent is to pay the costs of the applicants of the proceedings on the ordinary basis.

If any party wishes to make an application to vary order (3) above, the applicant (the costs applicant) is to file and serve a costs application, including submissions limited to three pages and any evidence in support, by 25 February 2025.

The respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in response by 11 March 2025.

The costs applicant is to file any submissions limited to two pages in reply by 18 March 2025.

The parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs application, and if they do not consent, submissions of no more than one page as to why an oral hearing should be conducted rather than the application being determined on the papers. If a hearing is not dispensed with, the parties will be advised of a date for the hearing of the application.

Schedule

General Orders for Works to be Performed

The works as set out below (Works), are to be performed by the respondent at the residence of the applicants using suitably licensed tradespersons and with due care and skill.
The Works are to be completed on or before 6 May 2025 (Date) unless altered by agreement in writing by the applicants, and if such agreement occurs, the agreed date becomes the Date.
The applicants are to provide reasonable access to their dwelling at the property between the date of these orders being made and the Date for the purpose of the Works being completed.
All property preparation reasonably required to be undertaken for the Works to be completed in accordance with SafeWork NSW and the relevant Australian Standards will be done so by the respondent at its expense, including a dilapidation report prior to the undertaking of the Works.
During the period in which the Works are undertaken, the respondent will take all reasonable steps to ensure that the property is tidy, all waste material and debris is promptly removed at the respondent’s expense, and the undertaking of the Works is done in a manner that minimises the loss of amenity to the applicants.
At the conclusion of the Works and at the respondent’s expense
(a).   all debris will be removed from the property;
(b).   all amenities decommissioned or interfered with during the undertaking of the Works will be recommissioned;
(c).   any damage caused to the property whilst undertaking the Works will be made good; and
(d).   the property will be left in a clean and tidy condition.

Deck Rectification Scope of Works

The respondent will remove all components of the balustrade, and the sliding door and place in safe keeping for reinstalling later.
The respondent will remove all tiles from the Deck.
The respondent will ensure that a sill flashing is installed to the sliding door in accordance with the requirements of AS 4654, and in accordance with any other relevant standards or codes.
The respondent will ensure that the substrate is suitably prepared for the application of a waterproofing membrane, and then apply a waterproofing membrane to the Deck, with the correct upturn against the existing cladding and to the sill flashing under the sliding door, in accordance with the relevant standards and/or codes.
The respondent will apply a screed to the Deck that ensures a fall of 1:100 across the Deck. If this creates a change in the last riser height of the external deck stair, then a spine will be created in the tile screed starting from the sliding door across on an angle towards the stair to prevent any height change to the landing of the staircase.
The respondent will apply a further another waterproofing membrane to meet AS 4654.2 on the newly laid screed.
Once complete the respondent will retile the entire deck area, using tiles of equivalent quality and value to those set out in the Building Contract, and install expansion joins as per requirement under the NCC and any manufacturers specifications.
The respondent is to reinstall the original balustrade and complete the deck to its correct state specified in the Building Contract making sure it complies with any relevant Australian standards.
The respondent will remove any damaged ceiling material to the ceiling below the deck areas and replace with Aqua check as per the Building Contract and repaint the entire surface with the correct paint as per manufacturers specifications.
The respondent will, within 28 days of the conclusion of the Deck rectification at its own cost, obtain a certificate from a suitably qualified structural engineer as to the structural integrity of the Deck, and supply the certificate to the applicants.

Scott Schedule Items 7-10: Bathrooms Rectification Scope of Works

For the purposes of assessing the waterproof membrane at the holdpoint (as defined below), the applicants will, 7 days after the making of these orders, nominate to the respondent three building consultants who are suitably qualified in assessing the integrity of a waterproofing membrane.
The respondent will, within 7 days of receiving the names as identified in [17] above, select one of the building consultants (“the Inspector”) and identify the selected building consultant to the applicants, to inspect the waterproofing membrane at the holdpoint (as defined below).
For Ensuite 1, Ensuite 2, Bath 1 and Bath 2, the respondent will remove tiles as necessary to enable the floor to be graded to the installed floor waste.
Once all such tiles are removed (“the hold point”), the respondent will arrange for the waterproofing membrane to be inspected by the Inspector, and will not undertake further works until such time as the Inspector informs the respondent that the integrity of the membrane is intact.
The Inspector is to inform both the applicants and the respondent as to whether, in his or her opinion, the waterproofing membrane integrity has been impaired by the tile removal works.
The costs of the Inspector are to be borne by the respondent.
The respondent, following confirmation by the Inspector that the integrity of the waterproofing membrane remains intact, is to apply or otherwise alter the screed so as to enable the floor to be graded to the installed floor waste.
The respondent is to then reinstall tiles, ensuring any replacement tiles are as closely matched to the existing tiles as is reasonably possible.
For ensuite 2 (Scott Schedule item 10) the respondent will:
(a). install a sliding glass door that overlaps with the existing fixed panel and ensure compliance with AS 3740; and
(b). raise the height of the shower rose so that a discharge from the rose is at least 2100mm above the finished floor level.

Remaining Scott Schedule Items

Scott Schedule Item 29 - the respondent is to survey and rectify any defective mortar to the brickwork on the east elevation of the property. All work to be done in accordance with AS 3700: Masonry Structures: and AS 4773: Masonry in Small Buildings.
Scott Schedule Item 34 - clean the open joint in the brickwork and seal in accordance with a suitable flexible sealant.
Scott Schedule Item 38 - clean the existing steel at the base of the stairs and coat in accordance with AS/NZS 2312 so that it can be encapsulated with a cementitious structural grout. Prepare and prime the existing pebble-crete at the base of stairs and install a cementitious structural grout with a splayed finished, ensuring it does not impede on the use of the stairs.

**********

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

Decision last updated: 19 May 2025

Medium Neutral Citation:	Kelly v Southern Pacific Builders Pty Ltd [2025] NSWCATCD 7
Hearing dates:	27 September 2024 (last submissions on 2 December 2024)
Date of orders:	11 February 2025
Decision date:	11 February 2025
Jurisdiction:	Consumer and Commercial Division
Before:	G Blake AM SC, Principal Member
Decision:	(1) The respondent is to carry out the rectification works in accordance with the Schedule on condition that the applicants provide access to the dwelling as provided in the Schedule. (2) If the respondent fails to carry out the rectification works in accordance with the Schedule, leave is granted to the applicants to renew the proceedings. (3) The respondent is to pay the costs of the applicants of the proceedings on the ordinary basis. (4) If any party wishes to make an application to vary order (3) above, the applicant (the costs applicant) is to file and serve a costs application, including submissions limited to three pages and any evidence in support, by 25 February 2025. (5) The respondent to the costs application is to file and serve any submissions limited to three pages and any evidence in response by 11 March 2025. (6) The costs applicant is to file any submissions limited to two pages in reply by 18 March 2025. (7) The parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs application, and if they do not consent, submissions of no more than one page as to why an oral hearing should be conducted rather than the application being determined on the papers. If a hearing is not dispensed with, the parties will be advised of a date for the hearing of the application.
Catchwords:	BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — Building dispute – where the builder breached express and implied warranties – work order made against the builder
Legislation Cited:	Civil and Administrative Tribunal Act 2013 (NSW), ss 28, 29, 60, Sch 4, cll 3, 8 Civil and Administrative Tribunal Rules 2014 (NSW), r 38 Evidence Act 1995 (NSW), s 79 Fair Trading Act 1987 (NSW), ss 79R, 79T, 79U, 79V Home Building Act 1989 (NSW), ss 3B, 18B, 18E, 48A, 48K, 48O, Sch 1, cll 1, 2, 3 Trade Practices Act 1974 (Cth) s 74 (repealed)
Cases Cited:	Blacktown City Council v Hocking [2008] NSWCA 144; (2008) Aust Torts Reports 81-956 Catapult Constructions Pty Ltd v Denison [2018] NSWCATAP 158 Deacon v National Strategic Constructions Pty Ltd; National Strategic Constructions Pty Ltd v Deacon [2017] NSWCATAP 185 Forster v Hunter New England Area Health Service (2010) 77 NSWLR 495; [2010] NSWCA 106 Goode v Angland (2017) 96 NSWLR 503; [2017] NSWCA 311 Hancock v East Coast Timber Products Pty Ltd (2011) 80 NSWLR 43; [2011] NSWCA 11 Indico Holdings Pty Ltd v TNT Australia Ply Ltd (1990) 41 NSWLR 281 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 Metricon Homes Pty Ltd as trustee for Metricon Homes Unit Trust v Lipari [2024] NSWSC 566 Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114 Selkirk v The Owners - Strata Plan No 2661 [2024] NSWCATAP 17 Shakiri v Holland [2024] NSWCATAP 28 Southwestern Sydney Area Health Service v Edmonds [2007] NSWCA 16 The Owners – Strata Plan No 66375 v King [2018] NSWCA 170 Unity Insurance Brokers Pty Ltd v Rocco Pezzano Pty Ltd (1998)192 CLR 603; [1998] HCA 38 Vella v Mir (No 3) [2020] NSWCATAP 17 X-Build Construction Services Pty Ltd v O’Rourke [2020] NSWCATAP 181
Texts Cited:	NCAT Procedural Direction 3 - Expert Evidence
Category:	Principal judgment
Parties:	Nathan Kelly and Abby Kelly (Applicants) Southern Pacific Builders Pty Ltd (Respondent)
Representation:	Counsel: P Lonergan (Applicants) I Chatterjee (Respondent) Solicitors: Swaab (Applicants) Chapman Solicitors (Respondent)
File Number(s):	2023/00393759 (formerly HB 23/24802)
Publication restriction:	Nil