Reeves v Icon Group Constructions Pty Ltd and Bazzi
[2025] NSWCATCD 129
•30 October 2025
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New South Wales |
Case Name: | Reeves v Icon Group Constructions Pty Ltd and Bazzi |
Medium Neutral Citation: | [2025] NSWCATCD 129 |
Hearing Date(s): | 10 March 2025 |
Date of Orders: | 30 October 2025 |
Decision Date: | 30 October 2025 |
Jurisdiction: | Consumer and Commercial Division |
Before: | M Tyson, Senior Member |
Decision: | (1) Pursuant to s. 48O(1)(a) of the Home Building Act 1989, the first respondent Icon Group Constructions Pty Ltd and the second respondent Samer Bazzi are ordered, jointly and severally, to pay $500,000.00 by way of damages to the applicants immediately. |
Catchwords: | HOME BUILDING – meaning of “if it is constructed for use in conjunction with a dwelling” in Schedule 1 clause 3(2) of the Home Building Act - breach of statutory warranty – major defect – Design and Building Practitioners Act 2020 – section 37 duty to exercise reasonable care |
Legislation Cited: | Home Building Act 1989 (NSW) |
Cases Cited: | Bellgrove v Eldridge (1954) 90 CLR 613 |
Texts Cited: | New South Wales Government Gazette, No 122, 12 June 2020 |
Category: | Principal judgment |
Parties: | Matthew Reeves (First Applicant) |
Representation: | Counsel: G. Carolan (Applicants) |
File Number(s): | 2024/00139189 |
Publication Restriction: | Nil |
REASONS FOR DECISION
By application filed 15 April 2024 in the New South Wales Civil and Administrative Tribunal, the applicants sought damages in the sum of $491,239.00 against the respondents. The application was filed with points of claim and that “pleading” relied on statutory claims arising from the Home Building Act 1989 (“the Act”) and the Design and Building Practitioners Act 2020 (NSW), (“the DBPA”).
The applicants are the proprietors of a property at Wonga Road in the suburb of Yowie Bay, New South Wales (“the Property”). The applicants are joint tenants of the Property. The first respondent is the company which, either itself or together with the second respondent, is alleged to have performed defective residential building work for the Homeowners. The second respondent has been sued personally in his capacity as an “owner-builder” who either himself, or together with the second respondent, is alleged to have performed defective residential building work for the Homeowners. He is also the director of the first respondent and has been sued in his personal capacity as a person “otherwise having substantive control” of the first respondent, for the purposes of s. 36(d) of the DBPA.
PLEADINGS, APPLICATIONS, THE HEARING AND THE EVIDENCE
The points of claim and the points of defence
The applicants rely upon points of claim dated 15 April 2024, while the respondents rely upon points of defence dated 4 September 2024. Both of these “pleadings” had been prepared by solicitors. (This was a proceeding where the Tribunal had granted leave for the parties to be legally represented).
In the points of claim, paragraphs 5 and 6 pleaded that the first respondent and the second respondent, at all material times, carried out “residential building work” within the meaning of the Act and identify the licence numbers pertaining to each of the respondents. What the “residential building work” involved is not identified in the points of claim.
Paragraph 7 of the points of claim pleads that “a retaining wall was constructed on the Property” as “part of works under” a construction certificate dated on or about 28 June 2018. Paragraph 8 of the points of claim pleads that in May 2019 “the retaining wall was completed.” Paragraph 10 pleads that the rear south elevation retaining wall failed and collapsed.
Paragraphs 11 – 14 in the points of claim plead that the Building Work (which term is not defined in the points of claim) was “residential building work” within the meaning of s. 3 of the Act and pleads that the statutory warranties implied by the Act were breached by the respondents.
Paragraphs 15 – 30 in the points of claim set out the applicants claim under the DBPA. The claim under the DBPA is brought against “each of the Respondents and/or any combination of the Respondents”: [30] in the points of claim.
I am satisfied, having regard to [23] – [26] in the points of claim, that the applicants have, for the purposes of a claim relying upon the DBPA, adequately pleaded the specific risks the alleged builder or builders were required to manage and the precautions that should have been taken to manage those risks: The Owners – Strata Plan No 87060 v Loulach Developments Pty Ltd (No 2) [2021] NSWSC 1068 per Stevenson J at [42] and [43].
By way of summary of the points of defence, the respondents plead that the second respondent carried out residential building works as “owner builder”, plead that “the retaining wall” was not part of any approvals given by the local government authority, admit that “the rear south elevation retaining wall only” was completed, and part of it later collapsed, and as I interpret the points of defence, the respondents deny [11] in the points of claim, on the basis that “residential building work” is not defined in the points of claim: see [11] in the points of defence.
In response to the claim under the DBPA, the respondents, in broad summary, deny and do not admit parts of that claim, plead that the retaining wall was not part of any development application but otherwise rely on no affirmative matters of law or fact as to why the DBPA claim should fail.
The points of defence was signed by the solicitors then acting for the respondents.
Evidence
There was a directions hearing on 27 May 2024 where the Tribunal made directions about, amongst other things, the parties filing and serving their evidence. On 23 September 2024, the Tribunal made orders extending the times for the parties to file and serve their evidence. One of the effects of the orders made on 23 September 2024 was that the respondents had until 21 October 2024 to file and serve their evidence. A joint expert report and Scott schedule were to be filed on 11 November 2024.
The respondents did not file and serve evidence by the extended timetable and no joint expert report was ever filed.
At the hearing on 10 March 2025, Mr. Carolan of counsel appeared for the applicants. Mr. Bazzi, director of the first respondent appeared for the first respondent. Mr. Bazzi also appeared for himself in his capacity as the second respondent. Mr. Bazzi indicated at the hearing that he was no longer represented by his former solicitors.
After appearances were announced, the respondents applied for the hearing to be adjourned. The applicants opposed the adjournment application. The Tribunal received evidence on that application and heard submissions. The Tribunal refused the adjournment application and gave oral reasons for doing so.
Next, the applicants made an application for leave to rely on a supplementary report from one of their witnesses, Mr. James, which report primarily updated costs for labour and materials, claimed by the applicants for rectification work, that had been the subject of an earlier report from Mr. James. The supplementary report had been served late and not in accordance with the timetable for the parties to file and serve evidence. The report had been provided to the respondents’ then-solicitors some time before the hearing on 10 March 2025. This application was opposed by the respondents. The Tribunal heard submissions on the application, decided to grant the application and gave reasons for doing so.
On the hearing of the applicants’ substantive application, the applicants tendered the affidavit of Matthew Reeves affirmed on 15 July 2024, together with exhibit MR01 to that affidavit. The affidavit, together with its exhibit, became exhibit 1 in the proceedings.
There was no cross-examination of Mr. Reeves on behalf of the respondents.
The applicants tendered an affidavit of Rahsn Witt affirmed 9 May 2024 that included a retaining wall inspection report dated 23 April 2023. The retaining wall inspection report did not purport to be prepared in accordance with NCAT Procedural Direction 3. In the affidavit, Mr. Witt agreed to be bound by the expert witness code of conduct and annexed a copy to the affidavit of NCAT Procedural Direction 3. The respondents objected to the tender of the report. The Tribunal allowed the tender of Mr. Witt’s affidavit with the question of what weight should be attributed to the report, to be the subject of the parties’ closing submissions. The affidavit, together with the material annexed to it, including the report, became exhibit 2.
The applicants next tendered a report from Rahsn Witt dated 20 December 2024. According to the curriculum vitae annexed to the report, Mr. Witt has a bachelor of engineering (civil) and a masters degree in engineering science (geotechnical). He has twenty years of experience in geotechnical, civil and structural engineering. He has annexed NCAT Procedural Direction 3 to his report and has stated in the report that he has read, and agrees to abide by the requirements of the Direction. Having regard to that agreement and the tertiary education qualifications and professional resume annexed to the report, the Tribunal is satisfied that Mr. Witt has sufficient expertise to offer the opinions which he has made in his report. The report became exhibit 3.
Mr. Bazzi cross-examined Mr. Witt.
The applicants tendered a report dated 20 March 2024, from Gregory James, building consultant and a supplementary report dated 26 February 2025 from Mr. James. Having regard to Mr. James’ curriculum vitae (see annexure D to the report) and Mr. James’s knowledge of the expert witness code of conduct set out in NCAT Procedural Direction 3 and his agreement to be bound by the rules in that code (see [5] in the supplementary report), the Tribunal is satisfied that Mr. James has sufficient expertise to offer the opinions which he has made in his report. The report dated 20 March 2024 became exhibit 4. The report dated 26 February 2025 became exhibit 5.
The applicants tendered a NSW government trader/licence search showing that the first respondent’s building licence was cancelled on 5 February 2025 and that a contractor licence in the name of the second respondent expired on 5 February 2025.
Counsel for the applicants provided the Tribunal and Mr. Bazzi with written submissions dated 7 March 2025. The submissions are four pages in length. The Tribunal marked the submissions “MFI 2.”
The respondents tendered six photographs which were received into evidence as exhibits A, B, C, D, E and F. These photographs were put to the applicants’ expert witnesses during the cross-examination conducted by the second respondent on behalf of the respondents.
For the respondents, no witness statement or affidavit and no expert report was tendered.
During the course of hearing, the respondents handed-up to the Tribunal a quotation from Helix Projects which appeared to be a quotation for the supply and installation of 30m squared of Dincel wall and related rectification works. The quotation was dated 23 July 2023 and was addressed to the former solicitors of the respondents. The respondents also handed-up to the Tribunal a document from “abvd design consulting structural and civil engineers.” The document related to an inspection at the relevant site from an engineer that had taken place on 3 April 2024. The document itself was dated 23 September 2024 but, curiously, referred to and included appendices dated 22 October 2024. The document suggested that the primary cause of failure for the collapsed retaining wall was insufficient footings combined with excessive rainfall. Both documents, in the Tribunal’s view, purported to provide expert opinion evidence. Neither document purported to have been prepared in accordance with the code of conduct provided for in NCAT Procedural Direction 3. There was no evidence explaining why the documents had not been filed and served by 21 October 2024, which was, as mentioned, the extended date allowed by the Tribunal for the respondents to file and serve evidence. Both documents were marked for identification and did not become part of the evidence before the Tribunal. The Tribunal has not taken into account any of the contents of these documents in reaching its decision on the application before it.
The applicants provided a Court Book to the Tribunal. The Court Book includes the pleadings from both parties and the applicants’ evidence referred to above.
FACTUAL BACKGROUND
Based on the evidence referred to above, the factual background to this case is as follows.
In 2017, the second respondent was one of three registered proprietors of a parcel at land located at Wonga Road, Yowie Bay, New South Wales. There was a weatherboard building with a tiled roof constructed on that parcel of land. The weatherboard building appears from the photographs in evidence to be a residential property and the Tribunal finds that it is a “dwelling” for the purposes of the definition of that term in Schedule 1 clauses 1 and 3 of the Act.
On 30 November 2017, the second respondent submitted a development application to the local council for the subdivision of the parcel of land and the construction of an access driveway and staircase to service the proposed new lot to be created by the subdivision.
The subdivision, were it to take place, would lead to one estate being created in the north-western corner of the parcel of land part-owned by the second respondent. The Tribunal will refer in these reasons to that proposed estate as “the second respondent’s Parcel”. The dwelling referred to above in these reasons would be located entirely on the second respondent’s Parcel.
The second estate to be created by the proposed subdivision would be located on the south-western corner of the parcel of land then part-owned by the second respondent. This second estate would in due course become the Property, referred to above in these reasons. An easement providing for a right of carriageway over the second respondent’s Parcel, as the servient tenement, would provide access from Wonga Road to the Property. The easement would apply over the driveway on the second respondent’s Parcel being built as part of the proposed subdivision. The second respondent’s Parcel is positioned at a higher elevation than the Property.
The development consent sought by the second respondent was issued on 5 April 2018. The development consent (see clause 11) required an appropriately-qualified engineer to be engaged by the applicant for the subdivision and for that engineer to supervise construction of, inter alia, “[a]ll other works that form part of the subdivision.” The relevant local council also issued a construction certificate.
In accordance with the development consent, a driveway, a set of stairs alongside one of side of the driveway, and stormwater works, were constructed on the parcel of land part-owned by the second respondent. All of those works were contemplated by the construction certificate issued by the relevant local council.
A survey of the Property taken on 12 August 2019 shows that Dincel retaining walls were, by that time, also constructed on the Property. One Dincel wall runs down one side of the driveway that leads from Wonga Road into the Property. On the other side of the driveway, another Dincel retaining wall has been built adjacent to the set of stairs. The Dincel wall which is adjacent to the set of stairs, running down one side of the driveway, runs in a north to south direction. At about the point where the stairs that run along one side of the driveway ends, this Dincel retaining wall then curves and runs in an east to west direction to the western boundary of the second respondent’s Parcel. This retaining wall is referred to in the pleadings and in some of the evidence before the Tribunal as the “rear, south elevation retaining wall”. The August 2019 survey evidences the construction of this retaining wall (or more correctly, this continuation of the retaining wall that runs down one side of the driveway). The east to west line of this part of the Dincel retraining wall, as the Tribunal understands it, coincides with the boundary between the Property and the second respondent’s Parcel.
When the Tribunal considers the development application, the development consent (Court Book p. 287), and documents such as the services plan, stamped by the relevant council and identifying the construction certificate (Court Book p. 299), none of this material suggests that any of the retaining walls which are the subject of this application were contemplated by council’s development consent. The development application and consent, as the Tribunal reads them, do not identify the construction of any of the Dincel retaining walls. The respondents’ position is that the development consent did not contemplate the construction of the retaining walls: see [7] in their points of defence. The Tribunal is not satisfied that the relevant development consent and construction certificate contemplated the construction of the retaining walls the subject of this application.
As to the construction of the rear, south elevation retaining wall, it is approximately 3 metres in height. The wall has been constructed using 200mm wide Dincel panels which have been filled with concrete. The rear of the weatherboard dwelling that sits on the second respondent’s Parcel runs parallel to the line if this rear, south elevation retaining wall. The distance between the line of the rear, south elevation retaining wall and the rear of the house is not clearly identified in the evidence but the photographs in evidence (see e.g. pp. 127 and 327 in the Court Book) suggest to me, making the best estimate I can, a distance of somewhere between 3 and 5 metres.
The survey plan completed on 14 August 2019, with a 12 August 2019 date of survey, provides evidence that all of the Dincel retaining walls were constructed by the date of that survey plan. The Tribunal finds that the retaining walls running down the sides of the driveway, one of which curves and extends to include the rear, south elevation retaining wall, were all constructed by 12 August 2019.
The applicants’ submitted that May 2019 was the time when the retaining walls were constructed: see too [8] in the points of claim. There is no evidence directly supporting a finding that May 2019 was when the retaining walls were constructed. Paragraph 8 of the respondents’ defence, as the Tribunal interprets it, appears to involve an admission only that the rear south elevation retaining wall was constructed in May 2019. In circumstances where there is no evidence and no reason to infer that the Dincel retaining walls, or the different parts of them, were constructed at different times, the Tribunal is finds that May 2019 was the time when all the Dincel retaining walls were constructed.
The next factual issue to consider is which of the respondents constructed the Dincel retaining walls.
In their points of defence, there is a plea by the respondents that the second respondent “carried out residential building work as an owner builder”, however it is not clear from the points of defence what work is meant to be encompassed by that plea. That is because the applicants’ points of claim do not articulate the scope of the residential building works phrase used in the points of claim. The scope of any work falling within the second’s respondent’s work as “owner-builder” is not revealed by the pleadings.
The evidence is unclear as which of the two respondents constructed the retaining walls the subject of the application, or indeed, whether the respondents may have provided any residential building work jointly.
True it is that it was the second respondent made a development application to the local council: Court Book p. 238. However, as mentioned above, the Tribunal is not satisfied, and has not found, that the retaining walls that have been constructed were contemplated by the 2018 development consent that followed the 2017 development application.
The entity which appears to have been responsible for supplying building goods or services as part of the subdivision works was the first respondent. The engineering firm which did design and certification works for the subdivision works gave advice on the completion of inspections and compliance to “Icon Group Construction”: see 8 June 2019 and 27 August 2019 letters. The services plan for the subdivision also identifies “Icon Group” as the client: Court Book p. 299.
Then there is the 14 August 2019 survey plan which importantly provided the first evidence that the retaining walls the subject of this application were completed. The survey plan identifies as the client “Icon Group.” The Tribunal is satisfied that “Icon Group” is a reference to the first respondent. That survey plan is the evidence showing the construction of the retaining walls running down the side of the driveway, one of which curves in an east-west direction to form the rear, south elevation retaining wall. The Tribunal infers from the survey plan and the identification of the client therein, that it was the first respondent which had sought the survey plan following its completion of the construction of the retaining walls. There is evidence (exhibit 6) that the first respondent was licensed from 9 November 2015. Accordingly, the Tribunal finds that it was the first respondent who constructed the retaining walls the subject of the application.
A Colourbond fence had also been installed at the top of the rear, south elevation retaining wall. The fence was 1.8 metres in height.
It seems to the Tribunal from the survey plans in the evidence (see e.g. p. 91 in exhibit 1), and the Tribunal finds, that the function of the rear, south elevation retaining wall, is threefold. First, it marks part of the boundary between the second respondent’s Parcel and the Property. Secondly, the wall serves the function of retaining material (topsoil, gravelly clay fill, construction rubble and concrete) that forms part of the second respondent’s Parcel and thereby provides support for the “dwelling” located on the Parcel. That Parcel, as mentioned, is elevated above the Property. The material retained extends to a height of about 2.5 metres. Thirdly, the wall provides a base on which the Colourbond dividing fence between the two adjoining properties was built. Where this retaining wall then curves to run north up one side of the driveway, it demarcates one edge of the driveway/right of carriageway which leads from the Property to Wonga Road.
On or about 27 August 2019, the subdivision was finalised. The subdivision led to the creation of two new, adjoining estates in land: the second respondent’s Parcel and the Property.
On or about 25 November 2019, the applicants acquired the Property from the second respondent, Rizkallah Awdi and Zenab Awdi. Settlement of the contract by which the applicants acquired the Property took place on 2 March 2020.
On 9 February 2023, a large section of the rear, south elevation, Dincel retaining wall collapsed following heavy rain. The length of the collapsed section of the rear, south elevation wall is about 17 metres (see the evidence of Mr. James). The photographs in evidence (see e.g. Court Book p. 327) suggest most of the rear, south elevation part of the wall collapsed, save for a small section of it installed on the western boundary of the second respondent’s Parcel and the Property.
The applicants lodged an insurance claim for the collapsed retaining wall. In March 2023, the insurer informed the applicants that the claim was not accepted. On 5 June 2023, there were telephone and email communications between the first applicant and the second respondent whereby the first applicant sought for the second respondent to rectify the collapsed retaining wall.
The second respondent stated from the bar table during the hearing that there was no home warranty insurance in place for the construction for the Dincel retaining walls.
In September 2023 the applicants lodged a complaint with the NSW Building Commission against the respondents for the collapsed retaining wall. The NSW Building Commission investigation report dated 20 December 2023 recorded (at p. 5 therein) an email transmission received from the engineer who had certified some of the subdivision works. The engineer stated that he had provided no designs and had undertaken no inspections of the retaining wall between the two properties created by the subdivision. The engineer stated that he had designed retaining walls to be constructed on the edges of the driveway but that the builder of the wall had changed the engineer’s design to install instead Dincel retaining walls.
In October 2023 the NSW Building Commission issued a rectification order to the first respondent. The first respondent did not comply with the rectification order.
As mentioned above, the applicants filed these proceedings on 15 April 2024.
SUBMISSIONS
The applicants’ submissions were made orally and in the written submissions provided to the Tribunal.
The applicants rely upon the expert report of the structural engineer Mr. Witt to establish that all of the retaining walls were defectively constructed. They point to the evidence suggesting that the engineering firm which certified the approved subdivision work did not design or inspect the Dincel retaining walls. They submit that work on the retaining walls falls within the definition of “residential building work” for the purposes of the Act. They submit that the defects are “major” defects for the purposes of the Act. They submit that a money order for the cost of rectification of the Dincel wall should be made against “both respondents”: see [18] in the applicants’ written submissions. They submit that their evidence on the quantum of their loss, principally set out in Mr. James’ reports, should be accepted. The applicants acknowledge that although their evidence points to them sustaining a loss exceeding $500,000.00, the Tribunal’s monetary jurisdictional limit is $500,000.00 and that any damages award must be limited to that amount.
The applicants further submit that an order should be made against both respondents under the DBPA. They say that s. 37(2) of the Act extends the DBPA s. 37(1) duty to exercise reasonable care to the applicants as the subsequent owners of the Property. They submit that the second respondent is liable as he was the sole director of the first respondent and the company’s nominated supervisor on its building licence. They submit he supervised the relevant work or was involved in the actual construction or is liable because he was the sole director, citing The Owners Strata Plan No 84674 v Pafburn Pty Ltd [2022] NSWSC 659 at [25] – [26].
The applicants also sought an order for costs. They submit that costs should follow the event, if the Tribunal accepts their principal submissions.
The second respondent made oral submissions to the Tribunal. The second respondent submitted that he did the residential building work as one of the part-owners of the property that was sub-divided. There was no contract but it was simply work done for himself and the other owners, who were his in-laws. The respondents denied that any of the Act’s statutory warranties applied. The respondent denied that the rear, south elevation wall that had collapsed had been built without reasonable skill or care. The photographs in evidence showed that the wall had been built with vertical and horizontal bars and that in cross-examination at the hearing, Mr. Witt had accepted that bars were present. They submitted that the wall had fallen down because of a specific heavy rain event which caused the land supporting the rear, south elevation retaining wall to slip away. Before that rain event, the wall had stood in place for some years. The remaining retaining walls have steel in them and are still standing. The respondents denied that any failing in the wall was structural or major. The wall built was fit for purpose and was sound in its construction. The cost of the wall was only $50,000.00 and the amount of the damages sought by the applicants is excessive when compared to that. Mr. James was not qualified to give the opinion evidence he had given. If the respondents are found, contrary to the respondents’ primary submission, to have supplied a defective retaining wall or walls, then the brother of the second respondent should be given the opportunity to rectify the wall. On costs, the respondents submitted that there should be no order as to costs, regardless of the result of the case.
CONSIDERATION
General approach
The applicants have the onus of proof and must prove their case on the balance of probabilities. The applicants also have to prove the quantum of their loss, again, on the balance of probabilities standard. The evidence in this case about a range of matters, including matters such as when and why the retaining walls the subject of the application were constructed, is sparse. It is open to the Tribunal to draw inferences from the evidence. Those inferences can be more confidently drawn in circumstances where the respondents did not tender any witness statements disclosing details of the circumstances leading to the construction of the Dincel retaining walls or expert opinion evidence that complied with the expert witness code of conduct identified in NCAT Procedural Direction 3.
Jurisdiction on the statutory warranties claim
The issue of the Tribunal’s jurisdiction under the Act to determine the application was not an issue that was subject of detailed submissions at the hearing. During his oral submissions, counsel for the applicants pointed to “retaining walls” as a structure or improvement which is included in the definition of “dwelling.” True it is that Schedule 1 clause 3(1)(l) of the Act identifies “retaining walls” as a structure or improvement that may be included in the definition of “dwelling”. However there is also in the legislation the predicate “if it is constructed for use in conjunction with a dwelling”, that also must be established, in relation to the relevant structure or improvement: see Schedule 1 clause 3(1) of the Act. Whether or not the predicate was established by the evidence was not the subject of submissions. The Tribunal must nonetheless consider the issue as it must be satisfied that it has jurisdiction to deal with the application before it.
The ordinary, natural English language usage of the phrase “in conjunction with” is to describe a connection or combination between two different nouns. There is nothing in the statutory text of the Act or the statutory context of “dwelling”, when defined and used in Schedule 1 of the Act, suggesting any need to interpret the phrase “in conjunction with” in a way that differs from the ordinary, natural English language usage of the phrase. The structure or improvement identified in Schedule 1 clause 3(2) therefore has to have been constructed for use to connect or combine with a “dwelling.”
Schedule 1 clause 3(4) of the Act provides:
“A structure or improvement that is included in the definition of ‘dwelling’ if it is constructed for use in conjunction with a dwelling is to be regarded as a dwelling whether or not there exists any dwelling of which it could be taken to form part.”
The Tribunal will consider first the rear, south elevation Dincel retaining wall.
There is no evidence to suggest that the Dincel retaining walls had any sort of relationship in regards to any planned “dwelling” to be built later on the Property.
On the other hand, as will be recalled from the factual background set out above, there is a “dwelling”, a weatherboard residence, situated upon the second respondent’s Parcel. The rear of that residence runs parallel to the line of the rear, south elevation retaining wall. A Colourbond fence was built along the top of the rear, south elevation retaining wall. The Tribunal has found that the function of the rear, south elevation retaining wall was to mark the boundary between the second respondent’s Parcel and the Property, serve the function of retaining material (topsoil, gravelly clay fill, construction rubble and concrete) that forms part of the second respondent’s Parcel so as to provide support for the weatherboard residence, and provide a base for the Colourbond dividing fence. Based on all of those factual matters, the Tribunal is satisfied that the construction of the rear, south elevation retaining wall by August 2019 was a construction “for use in conjunction with a dwelling.” The said construction served the function of retaining material in relatively close vicinity to the rear of the dwelling on the second respondent’s Parcel and also providing a base on which to build a dividing fence, again, in relatively close vicinity to the rear of the dwelling on the second respondent’s Parcel, thereby providing privacy for the dwelling.
Given that the rear, south elevation retaining wall curves and then continues in a north-south line along one side of the driveway and stairs, the Tribunal is also satisfied that that part of the retaining wall was a construction “for use in conjunction with a dwelling”, as it is a continuation of the one retaining wall. As for the retaining wall that runs down the other side of the driveway, looking at that wall in isolation, I would have had some misgivings about whether it can be properly characterised as being constructed “for use in conjunction with a dwelling.” However, it would seem to me to be taking an artificial approach to characterise that retaining wall differently to the other retaining wall. The Tribunal does not have evidence from the respondents to suggest any differences in the times when the two retaining walls were constructed or differences in the construction methods used to build the retaining walls. The Tribunal does not have evidence from the respondents to suggest different reasons behind the construction of the two retaining walls or any sections of them. All of the retaining walls were built by 12 August 2019 (as evidenced in the survey plan dated 14 August 2019). The inference that the Tribunal draws is that all of the retaining walls considered in this case were built as parts of a single construction job and all are properly characterised as being constructed “for use in conjunction with a dwelling” and are to be regarded as a dwelling: Schedule 1 clause 3(4) of the Act.
The Tribunal is satisfied that the applicants are making a claim for the payment of a specified sum of money that arises from a supply of building goods and services whether under a contract or not (see 48K(1) and 48A(1)(a) of the Act and definition of “building claim”), supplied for or in connection with the carrying out of “residential building work”. That is because the second respondent made an alteration or addition to a “dwelling” (see the Act Schedule 1 at clause 1(1) and clause 2(1)(b)) in constructing the Dincel retaining walls, as that was a structure or improvement constructed for use in conjunction with a dwelling (see the Act Schedule 1 clause 3(1)(l) and the reasons explained above for coming to such a conclusion), and in circumstances where none of the exclusions from either the definition of “residential building work” (see the Act Schedule 1 clause 2 s. 3) or the definition of “dwelling” apply (see the Act Schedule 1 clause 3 s. 3). The Tribunal finds that the first respondent, in supplying the Dincel retaining walls the subject of this application, has carried out “residential building work” within the meaning of that term in the Act.
As also explained above in these reasons when setting out the factual background, the Tribunal has found that it was the first respondent who constructed the Dincel retaining walls. In constructing the Dincel retaining walls, the Tribunal infers that the first respondent did so for the second respondent, Rizkallah Awdi and Zenab Awdi, who were the three part-owners of the estate that was subdivided on 27 August 2019. There is no evidence from the respondents evidencing any arrangements between the first respondent and the three part-owners with respect to the construction of the Dincel retaining walls. There were submissions from the second respondent about the three part-owners being in-laws but is unclear what legal conclusions, if any, should follow from that circumstance, even if the Tribunal were to accept it. The Tribunal infers that the first respondent must have constructed the Dincel retaining walls for the three part-owners pursuant to a contract. The Tribunal is satisfied that it can draw that inference of a contract between the three part-owners and the first respondent because the estate which became the subject of the subdivision is real property, it is valuable, and the construction of the Dincel retaining walls must have been an expensive and difficult process in itself (having regard to the height of the walls, the length of the walls, the difficult terrain – see Court Book p. 239 - and the impact the walls necessarily had in demarcating the driveway on the second respondent’s Parcel and also providing a base for the Colourbond fence that operated as a rear fence to the weatherboard house located on the second respondent’s Parcel. The Tribunal more readily draws the inference given the absence of evidence from the respondents about any arrangements that gave rise to the construction of the Dincel retaining walls.
The statutory warranties that are provided for in s. 18B(1) of the Act are implied into “every contract” to do residential building work. Under s. 18D of the Act, the statutory warranties extend for the benefit of the applicants as the Tribunal is satisfied that because of the sale of the Property from the three part-owners to the applicants (see [18] in the first applicant’s affidavit), the applicants are successors in title to the three part-owners. In their points of defence, or in their submissions at hearing, the respondents raised no defence that s. 18D of the Act did not operate to extend the benefit of the Act’s s. 18B(1) statutory warranties to the applicants. The Tribunal is satisfied that the applicants are entitled to the benefit of the Act’s s. 18B(1) statutory warranties.
Defective work
The next issue which the Tribunal will consider is the design and construction of the Dincel retaining walls.
The Tribunal accepts the evidence of the applicants’ engineer Mr. Witt that there were Australian Standards applicable to the design of the retaining walls: see [1.6] in the 20 December 2024 report. There was no challenge to that evidence in cross-examination and no contradictory expert evidence tendered by the respondents.
There is no evidence before the Tribunal to suggest that an appropriately-qualified engineer had designed the Dincel retaining walls and certified that the design of the Dincel retaining walls was in accordance with the relevant Australian Standards.
The applicant’s expert, Mr. Witt has attended the site of the Dincel retaining walls and has undertaken a detailed inspection of the structure and surface of the site where the rear, south elevation retaining wall was constructed (Court Book p. 373). It is clear from his second report too (e.g. Court Book pp. 371 – 2 at [31] and [36]) that he has also inspected the Dincel retaining walls that have been built down the sides of the driveway serving the Property.
The second respondent cross-examined Mr. Witt and in the course of cross-examination, showed Mr. Witt photographs (see especially exhibits A, B and C) of the collapsed retaining wall that depicted some reinforcement bars in the collapsed wall remnants. In his oral evidence, Mr. Witt did not dispute that the photographs did depict reinforcement bars; his oral evidence was that the bars were too short, were only oriented in one direction and did not appear to be continuous throughout the part of the wall that had collapsed.
The second respondent also cross-examined Mr. Witt about the drainage system for the collapsed retaining wall, and he took Mr. Witt to photographs showing parts of the drainage system, such as the remains of drainage pipes and granular material that appears to have been used as part of the drainage system for the collapsed retaining wall. In his oral evidence, Mr. Witt did not dispute that the photographs did possibly depict some parts of a drainage system that could have been used, in effect, to prevent a buildup of water pressure behind the rear, south elevation retaining wall. Mr. Witt’s oral evidence was that the adequacy of the agricultural drainage line system that had been installed was not evidenced by what could be seen in the photographs; he pointed to matters such as a lack of evidence of use of a filter or sock for any drainage pipe and crushed metal or concrete to be used as part of the drainage system. Mr. Witt also accepted that photographs of the weatherboard house on the second respondent’s Parcel appeared to show there were no downpipes from the roof of the house but he could not draw any conclusions that the combination of the apparent lack of downpipes and a heavy rain event caused the collapse of the rear, south elevation retaining wall, as opposed to a problem with the construction of the retaining wall.
In the course of his cross-examination, Mr. Witt did not retreat from his opinions expressed in his expert reports and the Tribunal did not form any view, during the cross-examination, that Mr. Witt is a witness who was providing inaccurate or unreliable evidence to the Tribunal.
In assessing Mr. Witt’s evidence, the Tribunal also takes into account the absence of any witness statement or affidavit, tendered on behalf of the respondents, explaining exactly how the rear, south elevation retaining wall was built, what reinforcement bars were used, the size of those bars and their orientation, and what were all the components of the drainage system for the retaining walls that were constructed. In assessing Mr. Witt’s evidence, the Tribunal also takes into account the absence of any expert report, tendered on behalf of the respondents, disputing Mr. Witt’s opinion evidence, either in whole or in part.
Having reviewed Mr. Witt’s reports and taken into account the cross-examination of him, the Tribunal accepts the expert opinion evidence of Mr. Witt that (a) he did not observe any footing at the site of the failed retaining wall (Court Book p. 373), and the absence of a footing – together with matter (c) set out below in this paragraph of these reasons - means that the wall would have insufficient capacity to resist instability due to over-turning and sliding (Court Book p. 370); (b) the failed retaining wall had Dincel panels that were not observed to have regular horizontal or vertical steel reinforcement and steel reinforcement required to resist bending and shear forces and to prevent concrete cracking, with any reinforcement arrangement needing to satisfy AS3600 “Concrete Structures” (Court Book p. 372); (c) the reinforcement starter bars which he observed protruded 100 mm from the base of the Dincel panels, which is an insufficient length to transfer the required forces and does not meet the requirements of AS3600 “Concrete Structures” (Court Book p. 372).
The Tribunal is satisfied that each of the matters referred to in the preceding paragraph of these reasons is a “major defect” in the first respondent’s residential building work, within the meaning of s. 18E of the Act. The absence of the footing for the retaining wall is a “major element” (s. 18E(4) of the Act) because it is, in my assessment of Mr. Witt’s evidence, an external load bearing component of the retaining wall while matters (b) and (c) referred to in the preceding paragraph of these reasons also constitute a “major element” as they are internal load-bearing components of the retaining wall, in my assessment of Mr. Witt’s evidence. Each of those defects in a major element are attributable to defective workmanship (see s. 18E(4) “major defect”) because (a) the first respondent’s workmanship in constructing the rear, south elevation retaining wall was not in accordance with the Australian Standards identified in Mr. Witt’s second expert report and (b) the defects are, in my assessment of Mr. Witt’s evidence, likely to cause the destruction of the retaining wall or any part of it or the threat of collapse of the retaining wall or any part of it: s. 18E(4) “major defect” (a)(i) and (ii).
While Mr. Witt’s reasoning process with respect to the defects affecting the rear, south elevation retaining wall is persuasive and is accepted by the Tribunal, Mr. Witt’s reasoning process with respect to the sections of the retaining wall that run along both sides of the driveway leading from Wonga Road to the Property is not as well developed, in my view. The reasoning is very limited (see e.g. [31] at Court Book p. 371) and to large extent seems built on the assumption that the same techniques used in the constructing the collapsed rear, south elevation retaining wall were used in the balance of the retaining walls: see [36] at Court Book p. 372. Nonetheless, the assumption is a reasonable one. It is one accepted by the Tribunal because the rear, south elevation wall is an extension of the part of the retaining will that runs down from Wonga Road and then curves to form the rear, south elevation retaining wall and the Tribunal is more easily able to accept the assumption where there is no evidence from the respondents establishing any differences between the methods of construction used for any particular sections or parts of the retaining walls supplied by the first respondent. But in any event, it was the cross-examination of Mr. James by the second respondent that was additionally persuasive for the Tribunal to reach the conclusion that the parts of the retaining wall that have not collapsed also involve a “major defect” and are not safe and need to be pulled-down. In his answers during cross-examination, Mr. James gave evidence about the retaining wall still standing pushing against the stairs (on the side of the driveway where there are stairs), and the parts of it where it has gone out of plumbness and is vulnerable to movement. While not an engineer, Mr. James is an experienced building consultant and the Tribunal is satisfied that his qualifications and experience provided him with sufficient expertise to give the opinion evidence that he gave, during his cross-examination, when he explained why the Dincel retaining walls that are still in place need to be demolished.
As the Dincel retaining walls were found above by the Tribunal to have been constructed in May 2019, the filing of the application in these proceedings on 15 April 2024 means that the application was filed within the six years permitted by the Act in the case of a “major defect”: s. 18E(1)(b) of the Act.
The Tribunal finds on the basis of matters (a), (b) and (c) described in paragraph 81 above in these reasons that the first respondent’s construction of the rear, south elevation retaining wall was residential building work done in breach of the warranty that the work will be done with due care and skill: s. 18B(1)(a) of the Act. The Tribunal also finds, for the reasons explained in paragraph 83 above, that the sections of the retaining wall that have not collapsed, and run along both sides of the driveway leading from Wonga Road to the Property, also involve residential building work done in breach of the warranty that the work will be done with due care and skill: s. 18B(1)(a) of the Act.
It will also follow from the above that the applicants’ case against the second respondent (putting aside for the moment the claim under the DBPA) should be dismissed.
Remedies
The proceedings involve an allegation of defective residential building work. The Tribunal has had regard to the preferred outcome provided for in s. 48MA of the Act. In circumstances where the evidence shows that the first respondent no longer holds a licence for the purposes of the Act, the Tribunal does not find that it is appropriate to make a work order in this case. The respondents’ submission that the second respondent’s brother in law could perform any required rectification work, cannot be accepted by the Tribunal. Amongst other things, there was no evidence that the brother in law had been the “responsible party” for the construction of the Dincel retaining walls or was qualified and licensed to perform the rectification work.
An applicant who is entitled to the benefit of the s. 18B statutory warranties provided for in the Act is entitled to recover such amount as will put him or her in the same position so far as money can do, if the contract had been fulfilled: Robinson v Harman (1848) 1 Exch 850. Where there is a breach of contract resulting in defective building work, the cost to make the work conform to the contract is the usual measure of damages (Bellgrove v Eldridge (1954) 90 CLR 613) but the rectification of the defect must be necessary to achieve contractual conformity and a reasonable course to adopt or rather, that the work must not be unreasonable (Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272). If those matters are not established than other measures of damages, including the ‘diminution in value’ measure might be considered.
There is an issue whether the scope and method of rectification suggested by the applicants’ expert evidence – involving inter alia the demolition of the Dincel retaining walls that are still standing, and the stairs, excavation works, the construction of new footings, and then the reinstatement of retaining walls and the stairs, together with engineering certifications for the design and the work itself – is too drastic and is not a necessary and reasonable course to adopt. While being mindful of the principles that an applicant in a contractual damages case should not be “over compensated” and that the cost of rectification should not be out of proportion to the benefit to be obtained by the applicant, the Tribunal has to be guided by the evidence before it, if that evidence is such as to satisfy the Tribunal that the applicant has discharged his or her onus of proof in relation to each of the issues that arise.
The Tribunal has in evidence the independent, expert reports from Mr. Witt and Mr. James about what rectification work is required, and an itemised costing from Mr. James about the costs of the rectification work.
As the Tribunal understands the evidence, the site of the collapsed wall and the sites where the still-standing retaining walls are to be demolished and then reinstalled, feature difficult terrain, there are height issues and engineering challenges to construct retaining walls that can resist water pressure and shear forces that may apply on the relevant site. The retaining walls themselves that will need to be re-installed are to run over a relatively lengthy distance and there is considerable work involved in obtaining relevant approvals from the local council and then co-ordinating all of the work, all of which is set out and itemised in Mr. James’ reports. The updated labour rates, material costs, builder’s margin and all the quantities set out in Mr. James’ second report, relied upon in reaching the estimate of rectification costs, are clearly explained in the report. When the Tribunal tests the applicants’ experts’ opinion evidence against all the facts and circumstances of the case, as disclosed by the evidence, that opinion evidence is, in my view, persuasive.
The second respondent made submissions that the cost of rectification claimed by the applicants was excessive and disproportionate when compared to the cost of installing the Dincel retaining walls, but as was pointed out to him by the Tribunal during his oral submissions, there was no evidence about the cost that had been incurred in installing the Dincel retaining walls. Further, the respondents tendered into evidence no expert opinion material, which complied with NCAT Procedural Direction 3, challenging the method of rectification proposed by the applicants or offering any credible alternatives that might have involved a more modest rectification method such as, perhaps, bolstering the retaining walls that remain standing and then reinstalling footings and a new section of retaining wall where the wall has collapsed. The cross-examination did not cause either of the applicants’ experts to abandon their opinions or any parts of them.
The Tribunal is satisfied that the method of rectification proposed by the applicants is reasonable and necessary and that the applicant’s evidence, on the balance of probabilities standard, establishes the cost of rectification at $606,765.55 ($432,631.41 plus margin plus GST of 10%): Mr. James’ supplementary report at Court Book p. 553.
As the Tribunal’s jurisdiction is limited to $500,000.00, the monetary award against the first respondent must be limited to $500,000.00, notwithstanding the evidence points to damage sustained by the applicants in excess of that amount. The Tribunal considers it appropriate that it should make an order that the first respondent pay the applicants $500,000.00 by way of damages: s. 48O(1)(a) of the Act.
DBPA claim
The applicants also seek orders against both respondents for breach of the statutory duty imposed by s. 37 of the DBPA.
The Tribunal is satisfied that the way that the applicants have pleaded (see [15] – [30] in the points of claim) and developed at the hearing their claim under s. 37 of the DBPA, means that this part of their claim is properly characterised as, at least, a claim that falls within the definition of “building claim” in s. 48(1)(a) of the Act, that arises from a supply of building goods and services whether under a contract or not: Deaves v Sigma Group NSW Pty Limited [2023] NSWCATAP 94 at [78] – [81]. The Tribunal is satisfied that it has jurisdiction to determine this part of the applicants’ claim.
The claim under s. 37 of the DBPA has been pleaded adequately: see [8] above in these reasons.
Section 37 of the DBPA, which is contained in Part 4 of the DBPA, came into force on 10 June 2020: DBPA s. 2(1); New South Wales Government Gazette, No 122, 12 June 2020 at 2628. That date is of course after May 2019 when the Dincel retaining walls the subject of this application were constructed. However, the provisions of Part 4 of the DBPA were given retrospective effect for a period of up to ten years: DBPA Schedule 1, clause 5.
The applicants have standing, under s. 37(2) of the DBPA, to make a claim relying upon s. 37 of the DBPA because they are ‘subsequent owners of the land’ as they acquired the Property from the relevant part-owners: see [18] in the first applicant’s affidavit.
“Construction work” is defined by s. 36(a) of the DBPA to mean, building work, which includes “residential building work within the meaning of the Home Building Act 1989”. For the reasons explained earlier in this decision, the Tribunal is satisfied that the first respondent, in supplying the Dincel retaining walls the subject of this application, has carried out “residential building work within the meaning of the Home Building Act 1989” and has accordingly carried out “construction work”, within the meaning of s. 36(a) of the DBPA, for the purposes of s. 37(1) of the DBPA.
“Construction work” is also defined by s. 36(d) of the DBPA to mean “supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c).”
The second respondent has been the sole director of the first respondent since his appointment as director on 19 November 2013 (see ASIC search for the first respondent at Court Book p. 219) and therefore was the sole director in May 2019 when the Dincel retaining walls the subject of this application were supplied. The Tribunal is satisfied on the basis of the preceding sentence in these reasons, and in circumstances where the respondents tendered no contradictory evidence, that the second respondent was the person “otherwise having substantive control” (s. 36(d) of the DBPA) of the carrying out by the first respondent of the “building work” involved in constructing the Dincel retaining walls the subject of this application. In reaching that finding of fact, the Tribunal has considered and sought to apply the guidance on the construction of s. 36(d) of the DBPA explained by Stevenson J in The Owners Strata Plan No 84674 v Pafburn [2022] NSWSC 659 at [25] – [26].
The Tribunal does not find that the evidence establishes that the second respondent carried out the relevant “building work” (DBPA s. 36(a)), because, as explained above, the evidence pointed to the first respondent performing the work while the scope of work falling with any “owner-builder” work of the second respondent was uncertain. The Tribunal does not have evidence to support a finding that the second respondent actually supervised, coordinated or project managed the carrying-out of the first respondent’s “building work.” (DBPA s. 36(d)).
Because of the matters set out above in these reasons at [81] - [83], including in particular the risk that the Dincel retaining walls constructed by the first respondent would have insufficient capacity to resist instability due to turning and sliding (see again Mr. Witt’s report at Court Book p. 370), the Tribunal is satisfied that:
there were defects arising from the construction work carried out by the first respondent (see [99] above in these reasons) and in respect of which, the second respondent otherwise had substantive control (see [101] above in these reasons) (DBPA s. 37(1));
there has been a breach by the respondents of the duty to exercise reasonable care to avoid economic loss caused by defects; and
because of the cost of rectifying the Dincel retaining walls (see Mr. James’ supplementary report), being both the collapsed section of the wall and the still-standing parts of the walls, as explained above in these reasons;
the Tribunal is satisfied that the applicants have suffered damage as a result of the breach of the duty provided for in s. 37 of the DBPA as if the s. 37(1) duty were a duty established by the common law (DBPA s. 37(3)).
The Tribunal, based on Mr. James’ supplementary report, finds that the applicants have established damage in the sum of $606,765.55 sustained by them in breach of the s. 37 DBPA duty. The claim is established against both respondents, for the reasons explained just above when considering the applicants’ DBPA claim in these reasons. The Tribunal’s power under the Act to make an order for the payment of money is limited to $500,000.00, as mentioned above.
Thus, the Tribunal considers it appropriate that it should make an order that the respondents, jointly and severally, pay the applicants $500,000.00 by way of damages: s. 48O(1)(a) of the Act. In making such an order, it is no longer appropriate to make the order contemplated at [94] above in these reasons.
Costs
The issue of costs was the subject of submissions at the hearing.
The amount claimed in the application exceeded $30,000.00. Rule 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 provides the applicable rule to determine how costs should be awarded.
The principles guiding the exercise of the discretion to award costs under Rule 38(2)(b) are well-established. The purpose of making a costs order is not punitive but is to provide compensation for the legal costs incurred by the party in whose favour an order is made, having been put to the expense of having to initiate and prosecute the proceedings. The starting point when exercising the discretion is that the usual order for costs is that a successful party should be entitled to an order for costs in their favour: Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 per Mason CJ at 554; Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [67]. It is appropriate to make such an order in this case as the applicants have been successful in obtaining an order to pay money against the respondents and for the amount they sought at the hearing. (At no stage did the applicants suggest the Tribunal could order more than $500,000.00). The authorities make it plain that there is no absolute rule that the successful party should be entitled to an order for costs in their favour, but in the circumstances of this case, there is no disentitling conduct on the part of the applicants that mean they should not be entitled to an order for costs and nor is there any other reason, when considering the balance of justice between the parties, why such an order should not be made.
The Tribunal will accordingly make an order for the respondents to pay the applicants costs of the proceedings as agreed or assessed, on the ordinary basis.
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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
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