Lin v McIntosh

[2016] NSWCATCD 6

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Lin v McIntosh [2016] NSWCATCD 6
Hearing dates:	On the papers
Decision date:	15 January 2016
Jurisdiction:	Consumer and Commercial Division
Before:	T Simon, Senior Member
Decision:	1. The respondent is to pay the applicant the sum of $105,102.00 immediately.  2. The respondent is to pay to the applicant the costs of these proceedings as agreed or assessed.
Catchwords:	Home Building, substituted service, owner builder, scope of works, history of section 18B, completion of works
Legislation Cited:	Civil and Administrative Tribunal Rules (NSW) 2014 Home Building Act 1989 (NSW) Home Building Amendment Act 2014 (NSW) Home Building Amendment Act 2011 (NSW).
Cases Cited:	Oshlack v Richmond River Council (1998) 193 CLR 72 at [67] and at [134].
Category:	Principal judgment
Parties:	Jun Lin and Weijing Chen (aka Esther Chan) (Applicants) Owan McIntosh and Vanessa McIntosh (Respondents)
Representation:	Solicitor: Kent Attorneys for the applicant No appearance by the respondent
File Number(s):	HB 14/57055
Publication restriction:	Unrestricted

Reasons for Decision

1. The application was lodged on 26 November 2014 and involves a home building dispute. The applicants purchased the property from the respondents in December 2013.

2. In the initial application the applicant was seeking an amount of $30,000.00 for breach of statutory warranty. They allege building defects in that water is penetrating in areas where the respondents did building works, as owner builders involving an extension and alterations to the premises.

Procedural History

3. The applicants have appeared at all directions hearings. The respondents have never appeared. Below is a brief summary of the directions history:

• On 15 December 2014 the matter was adjourned for the applicants to make further enquiries relating to the whereabouts of the respondents.

• On 20 February 2015 directions were made for the exchange of documents.

• On 25 May 2015 directions were made for consideration of the matter for substituted service.

• On 24 August 2015 the Tribunal ordered substituted service on the builder and further directions were made for the applicants to provide documents and for the matter to be decided on the papers.

• On 12 October 2015 directions were made granting leave for a further applicant to be added to the application and for the orders to be amended for the applicants to seek costs.

• On 26 October 2015 the matter was adjourned to allow an opportunity for the respondents to provide documents and for the applicant to provide short submissions in relation to the matter. The matter was then listed to be determined on the papers.

Documents Provided

4. The applicants provided and were relying on the following material:

1. Affidavit of Jun Lin sworn 21 September 2015

2. Affidavit of Katherine Read sworn 24 August 2015

3. Affidavit of Katherine Read sworn 16 September 2015

4. Letter from Kent Attorneys to NCAT dated 5 June 2015

5. Expert Report of Geoff Gleeson dated 28 January 2015

6. Supplementary Update Report of Geoff Gleeson dated 17 July 2015

7. Supplementary Update Report of Geoff Gleeson dated 31 August 2015

8. Scott Schedule of defective works claimed.

Non-appearance by the Respondents

5. The applicants and their solicitors have taken numerous steps to locate the respondents. Those steps have been detailed in the affidavit of Jun Lin and the two affidavits of a paralegal for the applicant, Katherine Read.

6. The Tribunal made orders for substituted service on the builder on 24 August 2015 as follows;

…

2. The affidavit of Katharine Read was accepted as being filed in the Tribunal on 24 August 2014.

3. Pursuant to rule 15 of the Civil and Administrative Tribunal Rules (NSW) 2014, service of the application to NCAT lodged on 26 November 2014, NCAT Notice of Order dated 3 August 2015 and NCAT Notice of Directions Hearing dated 7 August 2015 are taken to have been served upon the respondents on 18 August 2015.

4. The Tribunal notes that the respondents failed to appear before the Tribunal on 24 August 2015

5. The applicant has until 9 September 2005 14 to file the Tribunal any further documents that he intends to rely upon at the hearing of these proceedings.

6. The applicant must serve a copy of this order on the respondents by sending a text message to mobile telephone number 0410 744 387 in the manner described in paragraphs 6 and & 7 of Katharine Read's affidavit sworn 24 August 2015.

7. These proceedings will be dealt with on the papers without the need for the parties to attend before the Tribunal.

7. The Tribunal is satisfied from paragraphs 3 and 4 of the affidavit of Ms Read sworn 16 September 2015, that she sent a sms text messages to the mobile number in accordance with order 6. That number was obtained from a trace agent on behalf of the applicants and is believed to belong to one of the respondents. Notices sent to the respondents last known address have not been returned, however it appears from paragraph 21 of the affidavit of Jun Lin that they respondents have probably since left that address.

8. Rule 15 of the Civil and Administrative Tribunal Rules 2014 (NSW) relevantly states:

(1) If a document that is required or permitted to be served on a person in connection with any proceedings before the Tribunal:

(a) cannot practicably be served on the person, or

(b) cannot practicably be served on the person in the manner provided by law,

the Tribunal or a registrar may direct that, instead of service, such steps be taken as are specified by the Tribunal or registrar for the purpose of bringing the document to the notice of the person concerned.

(2) The Tribunal or a registrar may direct that the document be taken to have been served on the person concerned on the happening of a specified event or on the expiry of a specified time.

(3) If steps have been taken, otherwise than under a direction under this rule, for the purpose of bringing the document to the notice of the person concerned, the Tribunal or a registrar may direct that the document be taken to have been served on that person on a date specified by the Tribunal or registrar.

9. Having considered the affidavit of Ms Read, the Tribunal is satisfied that the documents were served in accordance with the Tribunal directions when she sent the sms text message. Accordingly the Tribunal is satisfied that matter should be determined on the material provided by the applicant.

Scope and Responsibility for the Works

10. A preliminary issue arises in this matter as to whether there has been a breach of statutory warranty by the respondents and whether the respondents were responsible for the works which are alleged to be defective.

11. According to the affidavit of Jun Lin, the applicants purchased the purchased the property on 25 November 2013 and took possession some time in December 2013.

12. The Contract of Sale is attached to the affidavit and discloses the respondents as the vendors. The contract also discloses that an owner builder's permit was issued to the vendor in relation to the land and that work had been done in accordance with the permit. Attached to Mr Lin’s affidavit was a copy of the permit. The permit was issued on 18 May 2010 and refers to alterations and additions to the existing dwelling. It notes a permit number 375998P.

13. Also attached to the affidavit is a series of invoices dating over the period from 15 June 2010 to 11 November 2013 which the applicant states relate to alterations and additions works in connection with the owner builder permit and works.

14. Mr Lin also provides an owner builder inspection report, from PBA property and building assessments, dated 12 November 2013 which was completed for in order to obtain Home Warranty Insurance. It records the building permit number 375998P. That is the same number as is noted on the owners builders permit referred to in paragraph 12 above. At page 4 under the heading "description of the works covered by this report" it states;

Ground floor alterations and addition to the rear of an existing single storey dwelling comprising:

> Addition: Combined living/dining/kitchen laundry, W.C./Shower, verandah.

> Alterations: Renovation of existing bathroom

15. At page 6 of the report is a list of defects to the laundry, bathroom, W.C/Shower and External cladding which would not be covered by the indemnity provided by the insurer. It is also noted at page 7 that an architrave has not been installed adjacent to the shower screen.

16. Mr Lin has also provided a final occupation certificate which was issued to the respondents on 14 November 2013.

17. The Tribunal is satisfied that the scope of works undertaken by the respondents as owner builders is that identified in in the description of the works contained in the PBA Property report and quoted in paragraph 14 above.

Jurisdiction

18. The Tribunal is satisfied that the application involves a building claim as defined by s 48A of the Home Building Act 1989 (NSW) (the Act).

19. The Act and more particularly section 18E of the Act, has had a number of significant amendments.

20. As of 18 May 2010, which is the date of issue of the owner builders permit to the respondents, the time for bringing proceedings for breach of statutory warranty contained in section 18E of the Act was as follows:

(1)  Proceedings for a breach of a statutory warranty must be commenced within 7 years after:

(a)  the completion of the work to which it relates….

21. As of 1 February 2012, the provision was amended:

(1)  Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions:

(a)  proceedings must be commenced before the end of the warranty period for the breach,

(b)  the warranty period is 6 years for a breach that results in a structural defect (as defined in the regulations) or 2 years in any other case,

(c)  the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work),

(d)  if the work is not completed, the warranty period starts on:

(i)  the date the contract is terminated, or

….

22. The section was recently amended again by the Home Building Amendment Act 2014 (NSW) (the 2015 amendments) with some of the changes to take affect starting on 15 January 2015 and others to follow. Section 18E was again amended as follows:

(1)  Proceedings for a breach of a statutory warranty must be commenced in accordance with the following provisions:

(a)  proceedings must be commenced before the end of the warranty period for the breach,

(b)  the warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case,

(c)  the warranty period starts on completion of the work to which it relates (but this does not prevent proceedings from being commenced before completion of the work),

23. As this claim was lodged prior to the 2015 amendments taking affect, the Tribunal is satisfied that the 2015 amendments do not apply in this matter. Clause 121 of Sch 4 of the Act specifically states:

(2) However, an amendment made by the amending Act does not apply to or in respect of:

(a) proceedings commenced in a court or tribunal before the commencement of the amendment (whether or not the proceedings were finally determined before that commencement), …

24. Section 3B of the Act which relates to when completion of the works occur has also had a history of amendments. Section 3B was first inserted in the Act by Home Building Amendment Act 2011 (NSW). Having considered section 3B and the amendments, the Tribunal is satisfied that the changes do not impact on the determination of the completion date in this case.

25. The Tribunal is satisfied from the sub-contractors work invoices that the building works were ongoing until at least 11 November 2013, when the second invoice was issued from City Renovations Sydney. The invoice is addressed to Vanessa McIntosh and the description of the works in the invoice is as follows:

Timber frame

Supply and Install timber frame to architectural drawings and timber framing code.

26. In Mr Lin’s affidavit at paragraph 14, he states that when he contacted Vanessa McIntosh in September 2014 about the water damage and defects and she advised him to contact City Renovations. The Owner Builder’s inspection report is dated 12 November 2013 and the Occupation Certificate was issued on 14 November 2013. Having considered all that evidence the Tribunal is satisfied that the works were practically completed on 11 November 2013 at the time the second invoice was issued by City Renovations Sydney and certainly by the time of the building inspection on 12 November 2013 and the issuing of the occupation certificate on 14 November 2014.

27. What is difficult to determine precisely in this case is when the alterations and extension works actually commenced. A contract and an invoice are provided for works in 2010. The contract related to plumbing works by John Ghadie and the invoice related to work on the roof and gutters from D.J Daisely & Sons Pty Ltd. The Tribunal can’t determine precisely if those works related to the alterations and additions works referred to in the description of works contained in the PBA building inspection report of 12 November 2013. In effect determining precisely when the works commenced is not significant. If the works commenced in 2010 then then the applicants have the benefit of 7 years to bring a claim for breach of statutory warranty from when the works were completed. If works commenced in 2013 then the applicants have the benefit of 6 years to bring a claim for breach of statutory warranty. In either case the claim for breach of statutory warranty is within time.

The Application

28. While in the initial application the applicant was seeking an amount of $30,000.00 for the rectification of defects, it is clear from the Scott Schedule and the submissions that the applicant now seeks an amount of $105,102.00 for rectification of the defects and is also seeking costs. The amounts claimed are clear from the applicants’ documents and submissions and the Tribunal grants leave for the amending of the claim.

The Defects

29. To support the claim in relation to the defects the applicant has relied on the following:

1. Expert Report of Geoff Gleeson dated 28 January 2015

2. Supplementary Update Report of Geoff Gleeson dated 17 July 2015

3. Supplementary Update Report of Geoff Gleeson dated 31 August 2015

4. Scott Schedule of defective works claimed.

30. 30.    Mr Gleeson has provided his Curriculum Vitae and is an engineer with 30 years’ experience in the engineering, building and construction industry. The reports comply with the Tribunal expert Code of Conduct. In coming to his conclusions Mr Gleeson has been provided with and has included in his report the Home Warranty Insurance inspection report, the occupation certificate, the architectural plans and the engineering plans. He has considered the cause of water penetration and has undertaken core hole drilling. He has concluded that in constructing the extension to the rear of the premises there has been an inadequate “waterproofing barrier from the subsoil of the existing house to the rear extension” (pg 2 of the supplementary report dated 31 August 2015). He further concludes at page 3:

The problem is insufficient waterproofing to the junction of the extension to the existing house as highlighted.

31. In that regard photographs are also included. The applicants have also provided a Scott Schedule with details in relation to the rectification works. Having considered the scope of the respondents building work as owner builder, the applicants expert report in relation to the defects and the method of rectification and calculations to rectify the defects as contained in the Scott Schedule, the Tribunal is satisfied that the defects alleged by the applicant arise from the works done by the respondents as owner builders, in particular a failure to properly waterproof the works. The Tribunal has considered the sum being claimed for rectification which includes damaged walls, kitchen joinery and timber flooring as a result of the water penetration. Significant work also needs to be done to waterproof the area. The Tribunal is satisfied that there has been a breach of statutory warranty and that the work was not performed by the respondents as owners builders in a proper and workmanlike manner. The Tribunal is satisfied as to the method and cost of rectification as outlined in the Scott Schedule and accordingly finds that an amount of $105,102.00 should be awarded to the applicant.

Costs

32. The applicant has also applied for costs. Section 60 of the Civil and Administrative Tribunal Act 2013 (the ‘Act’) states that:

(1) Each party to proceedings in the Tribunal is to pay the party’s own costs.

(2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.

(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following:

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d) the nature and complexity of the proceedings,

(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(f) whether a party has refused or failed to comply with the duty imposed by section 36 (3),

(g) any other matter that the Tribunal considers relevant.

(4) If costs are to be awarded by the Tribunal, the Tribunal may:

(a) determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.

(5) In this section:

costs includes:

(a) the costs of, or incidental to, proceedings in the Tribunal, and

(b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.

33. Rule 38 of the Civil and Administrative Tribunal Rules 2014 states:

(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:

(a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10 (2) of Schedule 4 to the Act in relation to the proceedings, or

(b) the amount claimed or in dispute in the proceedings is more than $30,000.’

34. The amount claimed in this matter was more than $30,000 and so the Tribunal has the discretion to award costs in this matter. The amount ultimately claimed was $105,102 and the applicant was wholly successful.

35. The general law position is that a successful party has a “reasonable expectation” of being awarded costs against the unsuccessful party. Oshlack v Richmond River Council (1998) 193 CLR 72 at [67] and at [134].

36. At paragraph 67 of the judgement, Gaudron and Gummow J.J. stated

The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party[96]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.

37. At paragraph 134(2) of the judgement, Kirby J. stated:

2. Notwithstanding the width of the statutory language by which the discretion was conferred on the trial court, it came to be said in civil non-jury trials that a successful party, in the absence of special circumstances, had a reasonable expectation of obtaining an order for costs in its favour unless "for some reason connected with the case" a different order was specially warranted[199]. Any departure from this expectation would require that there should be material upon which the adverse discretion could be properly exercised[200]. It could not be exercised by reference to idiosyncratic notions or to facts and circumstances irrelevant to the case. Yet, until the discretion had been exercised and a costs order made in favour of a successful party, that party had no right to the order of costs, notwithstanding its success in the litigation[201]

38. The applicants have made submissions that the respondents have completely failed to participate in these proceedings or respond to requests to rectify the defects.

39. In accordance with the principles set out in the paragraphs 32 to 37 quoted above, the applicant is entitled to costs in this matter.

40. The orders are made accordingly.

T Simon

Senior Member

Civil and Administrative Tribunal of New South Wales

15 January 2016

**********

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: 07 April 2016