Swan v Residential Reports Pty Ltd ACN 609 880 122 - [2021] ACAT 41

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

SWAN & ANOR v RESIDENTIAL REPORTS PTY LTD ACN 609 880 122 (Appeal) [2021] ACAT 41

AA 34/2020 (XD 912/2019)
Catchwords: APPEAL – civil dispute – dispute over a building report produced for sales of a residential property – errors of fact or law – onus of proof – role of an appeal Tribunal – compensation assessment – reclassification of defects as ‘major defects’ – reconsideration of building conditions described in building report – liability and damages under the Australian Consumer Law – the person who prepared the statement or report is liable to compensate the buyer for the loss or expense – due care and skill

Legislation cited: ACT Civil and Administrative Tribunal Act 2008 s 26, 79

Australian Consumer Law ss 60, 236, 237, 269
Civil Law (Sale of Residential Property) Act 2003 ss 9, 18, 19

Subordinate
Legislation cited: Civil Law (Sale of Residential Property) Regulation 2004 s 7

Cases cited:Alexandrou v Pacific Pest Control [2016] NSWDC 193
B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and The Owners – Units Plan 3324 [2013] ACTSC 219
Brown v Dream Homes SA Pty Ltd [2008] SASC 295
Devries v Australian National Railways Commission (1992) 177 CLR 472
Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4
House v R [1936] HCA 40
Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76

List of
Texts/Papers cited: The Australian Standard AS 4349.1

Tribunal:Presidential Member H Robinson
Member H Selby

Date of Orders:  20 May 2021
Date of Reasons for Decision:         20 May 2021
AUSTRALIAN CAPITAL TERRITORY          )
CIVIL & ADMINISTRATIVE TRIBUNAL     )          AA 34/2020

BETWEEN:
TIMOTHY LEONARD SWAN
First Appellant

JAMIE LOUISE SWAN
Second Appellant
AND:
RESIDENTIAL REPORTS PTY LTD ACN 609 880 122
Respondent

APPEAL TRIBUNAL: Presidential Member H Robinson
Member H Selby

DATE:20 May 2021

ORDER

The Tribunal orders that:

The parties are to obtain quotes for rectification of the fascia/barge boards to an acceptable standard without major defects, and the external sealing of the windows to the brick veneer. The parties are directed to ensure that those quotes:
(a)specify and justify the scope of works;
(b)identify the tasks required and the sequence to be followed;
(c)estimate the working hours required; and
(d)so far as possible provide a fixed price for the repairing the fascias and the barge boards and sealing of the windows.
The matter will be relisted for assessment of damages in light of these quotes on 6 July 2021 at 10:00am.
………………………………..
Presidential Member H Robinson
For and on behalf of the Tribunal

REASONS FOR DECISION

This is an appeal against the decision of the tribunal (original tribunal) in Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 (first instance decision).

Background

The background to this matter is set out in the first instance decision and summarised briefly here.
In late 2018 the appellants inspected a property (the property) for sale in Higgins in the Australian Capital Territory. Prior to purchasing the property they received, amongst other things, a written report on the condition of the dwelling that was prepared by the respondent (the building report).
Such a report is required by section 9(1)(h)(iii) of the Civil Law (Sale of Residential Property) Act 2003 (the Sale of Residential Property Act). It must be included with the contract of sale. The vendor arranges for the report but is then reimbursed the cost by the purchaser on settlement (as required by section 18(1)(a) of that Act).

The legislative framework

Section 9(1)(h)(iii) of the Sale of Residential Property Act provides that the vendor must include with any contract of sale:
a building and compliance inspection report from an inspection carried out not earlier than 3 months before the day the property was first advertised or offered for sale or listed by an agent (and, if the seller has obtained 2 or more reports in the 6 months before that date, each report);
The term, ‘building and compliance inspection report’ means a building and compliance inspection report prescribed by regulation.[1]
[1] Sale of Residential Property Act Dictionary (definition of ‘building and compliance report’)
The relevant regulations are the Civil Law (Sale of Residential Property) Regulation 2004 (the regulations). Regulation 7 provides, relevantly, that:
(1)     A building and compliance inspection report must be completed in accordance with AS 4349.1.
…
(5)     The report must set out the circumstances in which reliance may be placed on the report.
(6)     The report must include the following documents or statements about any structure erected on the property:
(a)a copy of any approved plans for the structure;
(b)a copy of any building approval for the structure that does not form part of approved plans included in the report under paragraph (a);
(c)a copy of any building permit for the structure;
(d)a copy of any certificate of occupancy that has been given for the structure;
(e)a statement from the person who prepared the report about whether the person believes the structure substantially complies with any approved plans for the structure;
(f)a statement from the person who prepared the report about whether the person believes any building approval is required for the structure;
(g)if the person who prepared the report believes that a building approval is not required for the structure—a statement from the person about whether the person believes development approval is required for the structure under the Planning and Development Act 2007, chapter7 (Development approvals).
(7)     For subsection(1), AS 4349.1 is taken to be modified as follows:
(a)omit section 2 (Inspection agreement);
(b)in clause C4.2 (Report content commentary), insert the following new paragraph (e):
(e)An assessment of the property in relation to cosmetic or minor maintenance matters.
Examples of cosmetic or minor maintenance matters
1leaking taps
2exposed nail heads
3peeling paint
(c)omit clause 4.2.4.2 (Minor defects);
(d)omit clause C4.2.4.2 (Minor defects commentary);
(e)in clause 4.2.8 (Conclusion), omit the following words: and an opinion regarding the incidence of minor defects, relative to the average condition of similar buildings of approximately the same age that have been reasonably well maintained.
(f)omit clause C4.2.8 (Conclusion commentary).
(8)     In this section:
AS 4349.1 means AS 4349.1 (Inspection of buildings–Pre-purchase inspections –Residential buildings), as in force from time to time.
Note AS 4349.1 may be purchased at approval means a building approval under the Building Act 2004.
building permit means a building permit issued under the Building Act 2004.
structure—see the Building Act 2004, section 8.

The Australian Standard

AS 4349.1 (the Standard) states that it:
…sets out minimum requirements for the inspection of and preparation of an associated report on a residential property carried out by a suitably qualified inspector in order to provide advice to a prospective purchaser or similar interested party. The inspections specified herein may be useful in circumstances other than where a property is subject to purchase.[2]
[2] Part 1.1 Scope, page 6
It provides at Part 2.3.1 that:
The inspection shall comprise visual assessment of the property to identify major defects and to form an opinion regarding the general condition of the property at the time of the inspection.[3]
[3] The Standard, Part 2.3.1, page 9
The original tribunal summarised the Standard as follows:
29.     The Standard referred to in the Act and the building report relevant in the case is the Australian Standard AS4349.1 – 2007 Inspection of Buildings (Pre-purchase inspections – Residential buildings). This is part of a series of standards referred to as AS4349 Inspection of Buildings that have been developed by and are available from Standards Australia.
30. The building report that is the at the centre of these proceedings was required to meet requirements set out in the Act and Regulations, including that it complies with the Standard as modified (refer to paragraphs 26-27 above). The Standard that applies is the 2007 edition, which replaced the 1995 edition. According to the Standard, the current edition made a number of changes to the 1995 edition. The Standard sets out various limits, for example it states that complying with the standard is “not intended to include a rigorous assessment of all building elements;” rather, it sets out the “minimum requirements for a visual inspection of buildings.”
31.     The inspector is required to be competent, although the appraisal is subjective. Inspection refers to a “close and careful scrutiny of a building carried out without dismantling, in order to arrive at a reliable conclusion as to the condition of the building.” The inspector must appraise the building elements, which includes the interior and the exterior as set out above, for the presence of defects and record these An inspector may choose to report only on an exceptions basis, and in the ACT the inspector must identify in the building report “each major defect observed” but not minor defects. ‘Major defect’ is defined in the Standard as:
A defect of sufficient magnitude where rectification has to be carried out in order to avoid unsafe conditions, loss of utility or further deterioration of the property.
32.     The report must identify “any observed item that may constitute a present or imminent serious safety hazard”. If an inspector cannot meet the minimum requirements summarised above, i.e. encounters a “limitation” – defined as “any factor that prevents full or proper inspection” – then the report must identify what was not inspected and the factor that prevented inspection. The inspection needs to be done safely, and is determined by the inspector and as provided for in the Standard. In addition, “the inspector shall inspect only accessible areas...within the inspector’s line of sight and close enough to enable reasonable appraisal”; for elevated areas, safe access means that which is “accessible from a 3.6m ladder placed on the ground.
33.     The Standard has commentary that the “report be clearly written.” Facts, interpretations, and conclusions should be “clearly and comprehensively presented in the report”, and the report should demonstrate a “logical and rational approach.” It notes the following about reports based on templates or ‘check box’ format:
Where reports involving standard clauses are used...care should be taken to ensure that sufficient and unambiguous detail, relevant to the particular inspection, is included.
We accept and adopt the original tribunal’s summary of the Standard.

The building report

The building report prepared by the respondent (the building report) is 22 pages in length and includes explicit disclosures across many pages.
The report states on the first page:
IMPORTANT INFORMATION RELATION TO THIS REPORT
This report is prepared with reference to Australian Standard AS 4349.0.2007 inspection of Buildings (General requirements) and AS 4349.1.2007 Inspection of Buildings) and is the result of a VISUAL INSPECTION ONLY. It is intended to be read in its entirety.
…It is important that you carefully read the complete report including the Scope of Inspection and Scope & Limitations sections prior to making any critical decisions that may be influenced by this report.
Significant structural defects or maintenance items that have a substantial cost associated with repairs, or where in our opinion may have an influence on the decision to purchase the property are documented in this report.
The “report summary” on page 3 provides that:
the dwelling… condition is commensurate with the era of construction, design, age and use… there are maintenance issues as identified in this report, please read this report carefully.
Page 4 notes the practical limitations that are placed upon inspections that are caused by restricted access. “The roof exterior is inspected when accessible from a 3.6 metre ladder, or from the ground level where there are height restrictions.”
Page 5 of the report has a section called “Property Report, Scope of Inspection” which provides:
It is our role to conduct a thorough visual inspection of the property and report only on areas of concern, identifying critical defects for an intending purchaser, insofar as an inspector can reasonably identify those defects. When reading this report, the age of the building must be taken into consideration. Some items may not have been detailed as they are considered a normal occurrence or general wear and tear for a building of this age. ...The report is not designed to quantify features of the property, generally, ongoing maintenance items, upgrading, cosmetic works and minor defects or faults will not be detailed.
…The inspection shall comprise visual assessment of the property to identify major defects and to form an opinion regarding the general condition of the property at the time of the inspection.
Further on page 5 is a definition of ‘significant defects’ as follows:
No significant defects have been identified
This overall condition is applied where inspector has not identified any defects that are considered to be significant from a structural or functional perspective. The subject area may present with minor defects. Remedial action, if required, is discretionary. Good, Fair or Poor may be used when an area has been given this condition.
Defects have been identified
This overall condition is applied where the inspector has identified defects that require remedial action or investigation. Remedial action is considered to be necessary rather than discretionary. Good, Fair or Poor may be used when an area has been given this condition.
‘Good’, ‘Fair’ and ‘Poor’ conditions are in turn defined on page 5 as:
Good: The feature subject to comment is, in the Inspector’s opinion, of sufficient standard to not require any significant remedial action. There may be imperfections in the finish or structure.
…
[T]he features and finishes considered “good” in a 50 year old building are not necessarily going to be so in a modern dwelling.
…
Fair: The feature subject to comment Is, [sic] in the Inspector’s opinion, usable but has deteriorated and would benefit from cosmetic or remedial repair work. For instance, painting may be required, render may require patching, and door fittings may require adjustments or repair.
Poor: The feature subject to comment in the Inspector’s opinion, requires remedial action. Repairs or replacement are considered necessary rather than discretionary.
Additionally, two provisions of the Standard are quoted to assist clients to “understand how we have approached the inspection and define the general focus of the report.” These are:
2.3.1 GENERAL – The inspection shall comprise visual assessment of the property to identify major defects to form an opinion regarding the general condition of the property at the time of the inspection.
4.1 GENERAL – It is necessary to inspect each of the areas and items set out in section 3; however it is not necessary to report on each one. An inspector may choose to report only on an ‘exceptions basis’, i.e. listing only defects, rather than also reporting items that are in acceptable condition.
Finally page 5 notes:
All of the above terms are used having regard for the age, quality of workmanship, style and type of construction of the building being inspected. For example, the features and finishes considered “good” in a 50 year old building are not necessarily going to be so in a modern dwelling.
An attempt to limit liability is found on page 15:
The report is only an opinion of [the respondent] and is valid for [180 days] from the date of inspection...No liability will be accepted or claims considered after the expiration of this period of liability...If it is claimed that a defect has not been documented or it is claimed that there is any other omission...[the respondent] must be notified in writing before ANY action is taken, NO LIABILITY shall be accepted where costs for remedial action or professional advice are incurred by the claimant prior to [the respondent] receiving written notification of the defect or omission, given a reasonable opportunity to re-inspect the property, identify the defect or omission, obtain professional advice and propose a resolution. Unless costs are specified and agreed in writing, no liability will be accepted...
On page 16 of the report, under the heading “What the inspector examines to prepare a property report”, the report provides:
TIMBER AND METAL WINDOWS
Putty/glazing sealant, broken glass, rotting frames (timber), rotting frames, corrosion (metal), sills, fitting/hardware, damage.
In most cases access to windows is restricted by window treatments, furniture or security locks …We are not able to guarantee that windows will operate smoothly. Sometimes window runners, sashes and balance mechanisms will require maintenance or replacement.
…
EXTERNAL ROOF COVERING, FASCIAS, GUTTER & DOWNPIPES
…eaves, fascia boards, barge ends It is important to note that a visual inspection of the roof...may not identify roof leakages. ...Repainting of timber can mask the existence of timber rot. …We cannot guarantee that all timbers are sound. A visual inspection may not, in some circumstances, detect roofing timbers affected by rot.
Another limitation is found on page 20, which states:
Purpose of This Report
The purpose of this report is to identify major defects or faults in the building for an intending purchaser, insofar as a property inspector can reasonably identify those defects or faults. The report contains a number of observations but is not intended to list every defect. Defects are common to all properties and are generally attended to during routine maintenance, redecoration or renovation.
Turning to the findings in the report, in respect to the fascias and barge boards and the “Doors and Windows External”, the report states, separately but in relation to both:
Overall condition: no significant defects.
No other information is provided. There is no additional detail in relation to either the fascias and barge boards or the windows.

The appeal grounds

In their application for appeal, the appellants identify a series of errors that they say were made in the orders. These may be summarised as follows:
(a)The original tribunal erred in law when it considered the age of the building when determining that the “the position [that the applicants] would have been in if they had not sustained the wrong” for the purpose of calculating damages for defective windows.
(b)The original tribunal erred in fact or law when it determined that gaps between the masonry and the external window frames and missing and worn sill flaps were ‘not major defects’.
(c)The original tribunal erred in fact or law when it determined that the damage and repaired fascia/barge corners were not major defects and/or did not need to be identified in the report. (Appeal issues)
The appellant sought additional compensation of $22,883 for replacement of the windows and amendment to the amount of interest awarded. The means of the assessment of damages was, by implication, an issue in the appeal.

First instance findings

In relation to that Standard to be applied by the respondent in undertaking the assessment, the original tribunal found that:
The definition of ‘significant defects’ [in the building report] falls short of what is required to be reported under the definition of ‘major defects’ [in the Standard] – in the Tribunal’s view the plain meaning of the definition of ‘major defects’ goes beyond significant structural and functional issues and includes defects that require rectification due to safety, loss of utility and further deterioration.[4]
[4] Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 at [65]

The respondent did not contest this part of the decision. We agree with the original tribunal that Standard requires the identification of defects beyond those defined as ‘significant’ in the report. The inspector was required to conduct a thorough visual inspection and identify items that require rectification due to safety, loss of utility and further deterioration.
In relation to the windows, the first issue before the original tribunal was whether respondent should have identified that they did not open correctly. The original tribunal was satisfied that the Act required that the respondent undertake limited testing of the window operations and that this was not done. The tribunal was satisfied that the inability to properly open the windows was a defect that met the definition of ‘major defect’ in the Standard because “properly opening windows” are required to avoid unsafe conditions, loss of utility or further deterioration, and therefore should have been identified in the report. The original tribunal also found that because of this defect, the report was not in compliance with the Sale of Residential Property Act and the Standard, and also breached the Australian Consumer Law (ACL).
The original tribunal determined that the appellants were entitled to compensation to repair the windows to a good, operational state, but not to replace them on a new-for-old basis.
In relation to the gaps around the windows and the damaged and missing seals and flashing, the original tribunal found that:
The Tribunal accepts the evidence and submissions of the respondent that these were appraised by the inspector, indeed the photos from the inspection capture some of these. The Tribunal has to consider if the issues raised by the applicants about the external features of the windows are ‘major defects’. The Tribunal finds that they are not major defects of “sufficient magnitude to require rectification” and therefore did not need to be identified in the building report. The strongest argument in support of them being ‘major defects’ is that they require rectification to avoid the entry of moisture, however the evidence is that even with these issues the moisture test showed no moisture problem.[5]
[5] Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 at [71]
In relation to the fascia/barge boards, the original tribunal said at first instance that:
The Tribunal accepts the evidence of the respondent that the inspector appraised the fascia and barges without dismantling them, indeed some of the photos taken at the inspection are of the corner fascias. In the Tribunal’s view this visual inspection of the fascia and barge ends is consistent with the Standard as modified. Also, the building report made it clear that the inspector was not required to find concealed rot under paint or tape. The respondent formed the view that the damage to the facias and barge ends that he observed were not major defects because some rectification had occurred. Mr Bunn was critical of the repairs that had been done:
There is choices to be made about how you repair something...A botch repair is just slap a bit of bog into it, paint over it and hope for the best which is obviously what’s been done before...the proper repair is to remove the fascias and replace them.
While a property owner might choose to take the action Mr Bunn prefers, the Tribunal accepts the evidence of the inspector that the rectification works that had been done were such that the observable damage to the fascia and barge ends at the time of the inspection were not major defects. As such, they did not need to be identified in the building report. The applicants discovered on 4 May 2020 that a fascia corner on the north-west front corner did not have filler in it, is rotting on both edges, had masking tape covered with paint on one edge. But Mr Bunn discovered this by cutting open the area, however the inspector was not required to do this.[6]

What is the role of the Appeal Tribunal?

[6] Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 at [73]-[74]

Before considering the substance of the appeal, it is necessary to make clear exactly what the role of the Appeal Tribunal is.
This appeal is brought under section 79(3) of the ACAT Act. This provision provides that a party to an original application may, by application, appeal the decision to the Appeal Tribunal “on a question of fact or law.” The distinction between questions of fact and law can be a difficult one, but for present purposes, the key point is that an appeal is about the correction of error. It is not an opportunity to have ‘another try’ before a differently constituted Tribunal. If that were so there would be no point in the original hearing.[7] Rather, an appeal is about the correction of error.
[7] Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4 at [49]
An appeal may take one of several forms, depending on the legal or statutory framework. Within the Tribunal, the usual approach is that an appeal is a ‘rehearing’ on the evidence before the original tribunal. The form such a hearing would take was discussed the Tribunal in Excel Intelligent Pty Ltd v Thomson 20180 ACAT 4 (Excel).
In Excel the Tribunal referred to the decision of Burns J of the ACT Supreme Court in B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and The Owners – Units Plan 3324 (B & T Constructions),[8] in which his Honour adopted the following passage from the judgment of the majority of the High Court in Fox v Percy[9]:
The “rehearing” does not involve a completely fresh hearing by the appellate court of all the evidence. That court proceeds on the basis of the record and any fresh evidence that, exceptionally, it admits. ...
The foregoing procedure shapes the requirements, and limitations, of such an appeal. On the one hand, the appellate court is obliged to “give the judgment which in its opinion ought to have been given in the first instance”. On the other, it must, of necessity, observe the “natural limitations” that exist in the case of any appellate court proceeding wholly or substantially on the record. These limitations include the disadvantage that the appellate court has when compared with the trial judge in respect of the evaluation of witnesses’ credibility and of the “feeling” of a case which an appellate court, reading the transcript, cannot always fully share. Furthermore, the appellate court does not typically get taken to, or read, all of the evidence taken at the trial. Commonly, the trial judge therefore has advantages that derived from the obligation at trial to receive and consider the entirety of the evidence and the opportunity, normally over a longer interval, to reflect upon that evidence and to draw conclusions from it, viewed as a whole.[10] (Citations omitted)
[8] B & T Constructions (ACT) Pty Ltd v Construction Occupations Registrar and The Owners – Units Plan 3324 [2013] ACTSC 219 at [14]
[9] [2003] HCA 22
[10] Fox v Percy [2003] HCA 22 at [22]-[23]
The Tribunal continued in Excel at [53]-[55]:
53. Burns J cited and quoted from other judgments about the nature of a rehearing. The following propositions can be drawn from those judgments:
(a)     An appeal court (or an appeal tribunal) must determine whether the decision appealed against is wrong because the court at first instance (or an original tribunal) fell into an error of law, made a finding of fact that is clearly wrong or exercised a discretion on a wrong principle or in a way that is clearly wrong.
(b)     Ordinarily, if there has been no further evidence admitted or no relevant change in law, a court in entertaining an appeal by way of rehearing (or an appeal tribunal) can exercise its appellate powers only if satisfied that there was an error on the part of the court below (or an original tribunal).
(c)     The appellate court (or an appeal tribunal) will give proper allowance to the advantage of the court of first instance (or an original tribunal) who saw and heard the witnesses, so that, ordinarily, facts found based on the assessment of witnesses will not lightly be overturned.
(d)     The appellate court (or an appeal Tribunal) is obliged to conduct a real review of the trial and the reasons of the court of first instance (or an original tribunal).
(e)     In an appeal by way of rehearing, once error below has been found (after making proper allowance for the advantages of the trial judge or original tribunal), the appellate court (or appeal tribunal) can substitute its own decision based on the facts and the law as they now stand.
54. In [Giusida Pty Limited v Commissioner for ACT Revenue][11] Refshauge J appeared to draw no distinction between the two types of appeal when he observed, in relation to the role of an appeal Tribunal, that:
the very structure of the ACAT would suggest that what is required is a proper review of the decision at first instance before the cost to the parties of having to take the proceedings to this [Supreme] Court is required to be incurred.
55. He continued:
… careful thought and a consideration of the purpose and meaning of an internal appeal strengthens my view that a wider and general power is intended and not one which restricts the original decisions from proper scrutiny.
Thus, while error needs to be shown before the ACAT on appeal will set aside the original decision on the application from which the appeal is taken, it is not required that the error be “manifest”, “obvious” or other than an error discernible by a proper assessment of the evidence and the law. …[12]
[11] [2016] ACTSC 275
[12] Excel Intelligent Pty Ltd v Thomson [2018] ACAT 4 at [47]-[55]
In other words, in undertaking an appeal, an Appeal Tribunal must undertake a fulsome review of the decision at first instance, including a review of all the evidence before that original tribunal. However, the Appeal Tribunal would not usually set aside that decision and substitute its own, or reopen proceedings, unless satisfied that the decision at first instance was wrong in law, wrong in fact, or tainted by a failure to properly exercise discretion.[13] Where there is an error, that error must be a material one. The onus is on the appellant to identify the errors and satisfy the Appeal Tribunal that the appeal should be allowed.

No cross appeal or notice of contention filed

[13] See House v R [1936] HCA 40

During the course of the hearing of the appeal, the respondent raised an argument that the original tribunal was mistaken in the manner in which it undertook the assessment of damages. In particular, the respondent argued that the original tribunal had misapplied the law when determining the damages to be awarded, and that there was no basis in law or factual evidence of loss sufficient to make a case either for ‘loss of a chance’ or for ‘reliance’.
To the extent that the respondent is seeking a variation to the orders of the original tribunal, that application required a cross appeal. This was not done. Accordingly, the Tribunal has not considered whether there was an error in the calculation of damages for the defective windows. The legal basis for the assessment of damages has, however, been considered in the context of the appellant’s argument for new for old replacement, and when calculating remedies for other unidentified major defects.

Issue one: the compensation for the defective windows

The original tribunal found that the statements as to the condition of various aluminium windows in the respondent’s report were not accurate and awarded compensation as per a quotation to render those windows to a workable condition (i.e. able to slide open and close, and to be latched and unlatched) consistent with the report.
As noted above, the respondent did not contest either the liability or the damages for the defective windows. The appellant, however, seeks a higher award of damages, including a claim for effectively new for old replacement of the window, as well as damages for pain, loss or disappointment.
The issue is whether the compensation was determined in accordance with law.
The onus is on the appellant to establish that the original tribunal made an error. The appellant has not identified any legal error in the Senior Member’s original decision, nor pointed to any authority that would justify a higher award of damages, or would support his contention that it is appropriate to award damages on a ‘new for old’ basis, disregarding the age of the property or the windows. The Appeal Tribunal has undertaken its own review of the caselaw and found no authority justifying such a conclusion or suggesting that the Senior Member was in error in rejecting it.
The Senior Member’s conclusion that damages are to be awarded can be assessed by the application of either, or both, section 19 of the Sale of Residential Property Act or the ACL as follows:
(a)Section 19 provides that the appellant having purchased the property, and the report is false or misleading in a material way or is otherwise prepared without the exercise of reasonable skill and care; and because of that, the buyer incurs loss or expense then the person who prepared the statement or report is liable to compensate the buyer for the loss or expense.
(b)The ACL provides guarantee as to due care and skill in the provision of service,[14] and liability for resultant damage.[15]
[14] Australian Consumer Law section 60
[15] Australian Consumer Law sections 236, 237, 269(2)
It is unnecessary to go beyond these two legislative provisions. There has been no argument by the appellants that they would have paid less for the property had they known of the defects and the costs to remedy them. At its highest, their damages claim may be assessed what they were induced to believe they were buying: a residential dwelling with windows that open and close and can be secured. The respondent would only be liable for the cost of replacement if they had reported as acceptable some part of the building that needed to be replaced because it was beyond repair.
As the respondent did not cross-appeal, the Appeal Tribunal need not consider whether a lesser amount is appropriate.
Hence, we see no reason by way of the facts or law to interfere with the original decision as to the repair of the inside of the windows. The external window sealing is, likewise, at its highest a matter of repair only, but this is discussed further below.

Issue 2: The tribunal erred when it determined that the external window defects were ‘not major defects’

The appellant says that the respondent should have identified defects in the sealing of the windows as ‘major defects’. The respondent says these are minor defects that did not need to be reported.
The original tribunal accepted that there were gaps in the brickwork around the windows and damaged seals, but also accepted the evidence of the inspector that these defects are not a defect of “sufficient magnitude to require rectification”.[16] The characterisation of the defects is the key issue before this Appeal Tribunal. This is a question of law.
[16] The Standard, Definitions, 1.4.10, page 8
The Standard requires that an ACT the inspector identify in the building report “each major defect observed”,[17] but not minor defects.[18]
[17] The Standard, 4.2.4.1, page 16
[18] The Standard, 4.2.4.2, page 16
‘Major defect’ is defined in the Standard as:
A defect of sufficient magnitude where rectification has to be carried out in order to avoid unsafe conditions, loss of utility or further deterioration of the property.[19]
[19] The Standard, Definitions, 1.4.10, page 8
There is no definition of ‘unsafe’ or ‘loss of utility’ nor additional explanation of when something may be said to result in ‘further deterioration of the property’. Still, the ordinary meaning of the terms is plain enough. Ultimately, assertions that the defects meet this definition requires evidence to establish relevant facts and consequences of the defect, such that conclusions could be drawn as to whether the legal test is met.
The Standard provides that when conducting an appeal an inspector must inspect “glazing seals” and “water seals” and the “flashing, moulding and sills” on external doors and windows.[20] The inspector’s evidence to the original tribunal was that he did this. The original tribunal accepted this evidence.[21]
[20] The Standard, Table C1, C2
[21] Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 at [71]
There is little doubt as to what the inspector saw when he conducted the inspection. The photographs in evidence before the Tribunal,[22] including those filed by the respondent,[23] show obvious gaps between the brick wall and the windows. The appellant’s photographs are close-ups, taken after the applicants moved into the property,[24] but the inspector did not suggest the situation was any different when he conducted the inspection or took his own photographs. The appellant’s photographs show gaps that appear to go into the wall cavity, and that the seals to the bedroom 1 and 3 windows are either missing or totally degraded.
[22] Applicants’ Second Amended Civil Dispute Application 15 April 2020, [27] Annexure 14
[23] Exhibit A1
[24] Applicants’ Second Amended Civil Dispute Application 15 April 2020, [27] Annexure 14
Did the original tribunal err in finding that these gaps and missing seals were not ‘major defects’?
We can say, on our lay observations, that gaps around the windows are visually unappealing, and are something we would certainly have wanted to be alerted to. However, the requirements of the Standard do not require the reporting of every defect, only major ones, as defined in the Standard.
Because the question as to whether these defects are ‘significant’ within the meaning of the contract or ‘major’ as per the Standard is a question of law, the Appeal Tribunal must, on review, review the factual material and conclusions reached by the original tribunal and draw its own conclusions as to the application of the law. The Appeal Tribunal must be cautious in reconsidering the factual conclusions on which that assessment is made, particularly as the credibility of the inspector was a consideration when he was giving evidence. An appeal tribunal would not usually revisit findings of credibility of a witness who appeared before the original tribunal unless contrary facts meant those findings were ‘glaringly improbable’.[25] There is no such glaring improbability here. The appellant has not pointed to any issue of credit on the part of the inspector. We have no reason to doubt his credibility.
[25] Devries v Australian National Railways Commission (1992) 177 CLR 472, page 479 (Brennan, Gaudron and McHugh JJ)
However, the inspector’s evidence about the safety risk presented by the window defects was as follows:
But it doesn’t have - from a safety perspective, it doesn’t have any flashing there?---It doesn’t have a rubber seal on the edge. It looks - - -
Correct. The weather seal - - -?---That photo looks like it has - the brick masonry has still got coverage from the aluminium reveal - or from the aluminium window.
Okay. But that’s an assumption, that’s not a visual inspection. You’re assuming what is behind the wall?---Yes. We - - -
But the visual - - -?---We don’t take off the brick walls and - - -
No, no, I understand that?---It wouldn’t be too popular with our agent …(inaudible)…
No, no, there’s no argument about that. We understand that and the standard talks about no dismantling. But what I’m getting at here is you’ve said that’s not significant, although you can see right down into the wall cavity, and you’re saying to me water wouldn’t enter into that. But if you - - -?---No significant amount.
Well, that becomes subjective. But I’ll ask you if you think of rain and then strong winds, you’re saying that water wouldn’t get into it in your opinion as a builder?---Not enough to do any damage.
How much water do you need to do damage when there’s exposed electrical – that’s the question I’m asking. It’s subjective into what you believe or what you don’t believe. The question is can water enter that wall cavity?---If you pointed a hose right at it and water went underneath that …(inaudible)…[26]
And also:
But can you just describe in some detail what do you do when you inspect a window and measure it? You come up close?‑‑‑Yes. So we - I personally - I measure all the windows onsite first for the - I do the energy rating stuff first, then I get into the property report. As I’m measuring the windows I do have a look at their condition as well. I’d say probably 95 plus per cent of all windows have gaps between the masonry and window frames. It’s very common. Like, depending on the size of the gap, if it’s over 10 mil I’d say that’s a significant defect. If not, then that’s just the standard installation really.[27] (emphasis added).
[26] Transcript of first instance proceedings 4 December 2019 pages 19-20
[27] Transcript of first instance proceedings 4 December 2019 page 72, see also pages 26-34

The original tribunal summarised the evidence as follows:
[the Inspector] stated “probably 95 plus percent of all windows have gaps between the masonry and window frames...if it’s over 10mil I’d say that’s a significant defect.” He stated that a window with a damaged rubber seal is not a significant defect. When asked about a window at the time of the inspection that had no rubber seal remaining, he stated it was not a significant defect: “the brick masonry has still got coverage from the aluminium reveal...or window”, and not enough water would enter to do damage.[28]
[28] Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 at [54]
In summary, the inspector was satisfied that despite the holes or gaps in the masonry, the interior of the building remains protected due to the aluminium reveal. This would act to prevent water intrusion. The only evidence before the original tribunal bore this conclusion out. That evidence confirmed that there was no evidence of water penetration, which was entirely consistent with the inspector’s position.
On appeal, the appellants appeared to suggest that the original tribunal was in error because it should be self-evident that defects of the nature of the windows are major defects by reason of being a safety hazard:
…missing or damaged flashing and gaps between the windows and brickwork are considered a safety hazard …due to potential for water entry.[29]
[29] Application for appeal, annexure 1, at [2.5]
This submission was made by the appellant’s representative, Mr Bunn. There was no evidence before the original tribunal that suggests that the windows were a safety hazard by reason of the gaps. There was no application to present any such evidence on appeal. There was also no evidence before us that water had, in fact, penetrated the property such as to present a risk to cabling. There is no basis upon which the Appeal Tribunal could disturb the original tribunal’s factual findings that the windows were not so defective as to have been considered a safety hazard.
However, the inspector’s evidence, quoted above, was that a gap on 10mm would be a significant defect in this sense.[30] The inspector’s further evidence was that he did not measure the windows, but rather made a ‘visual’ examination – “if it looks great enough then we’ll get a tape measure out and measure it.”[31]
[30] See also transcript of first instance proceedings 4 December 2019 page 89, lines 16-21
[31] Transcript of first instance proceedings 4 December 2019 page 90
The inspector’s evidence included that he did not actually measure the gaps in the windows. However, Mr Bunn did. The appellants filed photographs of the gaps between the windows and the masonry and the broken and missing sill flaps, along with a measuring ruler placed next to them. Most of the gaps that are measured appear less then 10mm, but the width of the gap between the window and wall in bedroom 2 (photo 2, 255) appears to be in excess of 10mm, as is the gap beneath the window in bedroom 4 (photo 1, 259-2780). On the inspector’s own evidence, these appear to be ‘significant defects’ and a major defect that required reporting as per the Standard.
It is possible that the photographs are misleading, having regard to angles or other visual distortions, but these are the best evidence available to this Appeal Tribunal as to the size of the gaps. In conducting a thorough review of the evidence before the Tribunal, we are entitled, and indeed required to have regard to them. Several gaps are clearly in excess of 10mm. Accordingly, we are satisfied that the original tribunal erred finding that the defects in the window were not significant defects.
We note that it does not appear that these individual photographs were brought to the attention of original tribunal by either party, and nor were the photographs clearly put to the inspector. The result at first instance may have been different if they were. It may be that the significance of the photographs were not apparent until after the inspector had given his evidence. This is unfortunate, but it is often the case that parties to an appeal, particularly self-represented parties, are better able to identify and articulate the issues than they were at first instance.
In any case, the relevant test also asks whether the defect is of:
sufficient magnitude …where rectification has to be carried out in order to prevent further deterioration of the property.[32]
[32] The Standard, Definitions, 1.4.10, page 8
The inspector’s obligation is to consider whether the defect is likely to get worse or require rectification not just at the time, but also in the foreseeable future, if rectification is not carried out. It is evident from the photographs before the Appeal Tribunal that there were significant gaps between the outside edges of the aluminium windows that reflected the failure of once fitted rubber seals and/or other filling materials. It is our understanding[33] that sill flashing must be installed to prevent water wetting the inner skin and entering the cavity under the window or door, and to ensure water runs off from the jamb flashing and directs it outside the building envelope. It may be in this case that there is no evidence of water entering the building so far, but there is evidence that the seals have degraded considerably, and will likely continue to do so. Rectification will need to be carried out in order to prevent further deterioration of the property
[33] The Tribunal may inform itself in any way it considers appropriate in the circumstances: section 26 of the ACAT Act.
The purpose of the report is to provide quality, reliable advice as to the condition and maintenance of a structure that prospective buyers will use as they assess the condition of the property for which they might make an offer. Whether or not the failure to note these defects breaches the narrowly worded contract, a report of this kind should identify such visually obvious defects, even if just to note them to put a purchaser on alert to what may be the cause of further deterioration.
We are satisfied that the gaps between the windows and the brickwork, coupled with the lack of seals, are significant defects that should have been identified in the report.

The fascias/barge boards

The report states that the eaves, fascias and barge boards show:
Eaves, Fascia and Barge Ends- Overall condition: no significant defects...[34]
[34] Building report, pages 6-10
The evidence of the inspector was that the observable damage to the fascia and barge ends at the time of the inspection were not major defects. The original tribunal accepted his evidence and the categorisation of the defect.
The appellant’s position is that the fascia/barge corners at the time of the inspection were self-evidentially in a sufficiently poor condition to amount to a ‘major defect’ as defined in the Standard at 1.4.10, because at least three of the corners clearly show defects identified in Table 3.3 of the Standard. That is, the appellant contends that the senior member clearly made an error of law in finding that the visible damage at the time of the inspection was not sufficient to amount to a major defect.
Again, the Appeal Tribunal has before it both photographs taken by the respondent in the preparation of the report, as well as photographs taken after by the appellants, which had been taken about a year and seven months previously and after the appellants moved into the property.
Some of the appellants’ photographs show damage identified after the appellants undertook invasive investigations of their own. They clearly show areas of damage and rot, but it does not seem to be in dispute that some of these areas may have deteriorated in the substantial time between the date of the report and the date the appellants took possession of the property. These photographs are of limited weight.
The respondent’s bundle of photographs,[35] taken for the purposes of the inspection, include a small number of photographs in which the fascia and barge boards are clearly visible. Two photographs[36] show corners where the barge boards do not meet, with a visible gap between them at the right-angle join. Another photograph shows a corner that has been the subject of repair.[37] A further picture shows an area of fascia that appears to have been filled and repaired.[38]
[35] At Exhibit A
[36] Exhibit A1, page 14 and page 20
[37] Exhibit A1 page 65
[38] Exhibit A1 page 90
Much of the original hearing appears to have been concerned with whether the repairs should have been identified as inadequate. The appellants were critical of the repairs that had been done, and their advocate suggested that because repair was visible, the appropriate course of action was to investigate that repair and advise the appellants if there were concerns that it was not of a workman-like standard:
There is choices to be made about how you repair something…A botch repair is just slap a bit of bog into it, paint over it and hope for the best which is obviously what’s been done before…the proper repair is to remove the fascias and replace them.[39]
The Senior Member did not consider the repair to be a matter that needed to be addressed by the report:
74. While a property owner might choose to take the action Mr Bunn prefers, the Tribunal accepts the evidence of the inspector that the rectification works that had been done were such that the observable damage to the fascia and barge ends at the time of the inspection were not major defects. As such, they did not need to be identified in the building report. The applicants discovered on 4 May 2020 that a fascia corner on the north-west front corner did not have filler in it, is rotting on both edges, had masking tape covered with paint on one edge. But Mr Bunn discovered this by cutting open the area, however the inspector was not required to do this.[40]
[39] Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 at [73]
[40] Swan & Anor v Residential Reports Pty Limited [2020] ACAT 76 at [74]
There is nothing in the report or the Standard that requires invasive testing. It is not reasonable to have expected the inspector to conduct investigations that go beyond what can be determined by a visual inspection. The inspector was not required to consider whether the repairs could have or should have been better done, unless any problems with them were visible at the time of the inspection.
However, during the appeal, the appellant emphasised that their concern was not just with the repairs, or the underlying damage, but with the clearly deteriorating and poor state of the fascias and barge boards more generally, suggesting that further repairs would be necessary to prevent deterioration.
The Appeal Tribunal is satisfied, on the basis of the photographic evidence, that the fascias and barge boards were in noticeably poor condition, at least at the corners, at the time of the inspection. The Appeal Tribunal is also satisfied that there was a further deterioration between the date of the inspection and when the appellant took photographs – so much is apparent from inspecting the photographs. However, from the few photographs of the fascias or barge boards as at the time of the inspection, it is apparent from ground level that the fascias and barge boards did not meet[41]. Examples of this include the gaps between the barge boards on the northwest corner[42], and the obvious repairs to the NE corner, and the photograph taken in the report.[43] It is also apparent that repairs had been undertaken in the past.
[41] Exhibit A1, page 14 and Exhibit R1
[42] 268-278
[43] Photograph from the Report, 12 October 2018, Exhibit R1
The inspector’s obligation was to identify defects that required rectification in order to prevent further deterioration of the property. That the barge boards had deteriorated, over time, and had required repair in the past was evident. That they would continue to require rectification unless treated follows. The report should have put the appellants on notice that repairs or replacement would be necessary.

Compensation

The Appeal Tribunal being satisfied that the deterioration to the fascias and barge boards and the absent window seals were major defects, the question turns to what, if any, remedy flows from this.
The first instance remedy can be described as restitution damages, to allow for rectification of defective windows to the standard that the appellants expected, having regard to the report.[44] In support of this, the appellants had filed a quotation to fix the windows of $1,694, and the original tribunal relied upon that quote to assess loss. The original tribunal declined to award compensation for a defective door, which was also identified as a major defect, both because of a lack of evidence and because the Senior Member formed the view that the cost of rectification was minimal.[45]
[44] At [78]
[45] At [79]
As noted above, the appellants appealed this order. The respondent did not.
For reasons set out above[46], the Appeal Tribunal is not satisfied that the appellants have identified an error in the original tribunal’s reasoning, nor any lawful basis for the award of damages to be reassessed on a higher basis. However, as the respondent did not file a cross-appeal (a necessary step where a party wishes to vary or discharge an order appealed from), the Appeal Tribunal has not reconsidered that order with a view to varying or discharging it in favour of the respondent.
[46] Paragraphs [39] to [46]
Nonetheless, the respondent made submissions at the appeal as to why the methodology adopted by the original tribunal at first instance was wrong.
Briefly stated, the respondent submitted that, even if additional defects were identified, no further compensation should be awarded, as there is no reasonable basis upon which the Appeal Tribunal could assess compensable loss. In particular, the respondent submitted, there is no evidence that the unidentified defects affected the value of the property or the price the appellant’s paid for it, and nor have they presented any evidence that they would not have purchased the property if alerted to them. Any defect, the respondent submitted, would have to be so significant that it would have materially impacted the purchasing price, and there is no suggestion of that. There is also, the respondent submitted, no evidence that would allow the assessment of any loss – for example, any reduction in the value of the property by reason of the defects may have been overtaken by a subsequent increase in the property price.
The respondent further argued that there are policy reasons why the Appeal Tribunal should take a cautious approach to assessing damages. The building assessor, the respondent says, should not be a “strict liability player.” They give reports according to legislative standards. They can’t offer “warranty like” guarantees. A decision finding that an inspector is liable for the costs to repair unidentified defects would, the respondent submits, have damaging consequences for the industry.
Because there is no cross-appeal, these submissions would relate only to any assessment of damages by the Appeal Tribunal where compensation was not awarded at first instance. That means that what the respondent is asking us to do is to apply a different methodology for the assessment of loss to the window seals and the fascias and barge boards than was otherwise applied to the windows, and consider whether those defects affected the value of the property.
This is a problematic assertion. Where a decision is to be partially overturned on appeal, there should still be internal consistency between the original decision and the Appeal Tribunal’s, and that would not be the case if we adopted the respondent’s submissions.
We do see merit in the respondent’s submissions as to the difficulty in calculating “loss”, and the limitations in the process based on the evidence before us. Nonetheless, we do not adopt the respondent’s approach.
In awarding rectification damages, the original tribunal relied upon the decision of the NSW District Court in Alexandrou v Pacific Pest Control [2016] NSWDC 193. That case concerned an inadequate pest report. Ultimately, the applicants were not successful in establishment liability, but Montgomery DCJ set out how he would have calculated damages if they had been. The plaintiffs claimed damages under section 60 of the ACL, guarantee under contract and for breach of contract. They characterised their financial loss suffered as in reliance damage, saying that had they been aware of the nature and extent of the termite infestation and damage, they would not have proceeded to purchase the property. His Honour concluded:
There is therefore no evidence supportive of the proposition that a report of, for instance, termites found in the roof void, would have led to an invasive investigation discovering the extensive damage including such as that to the studs and noggins behind the wall linings. Hypothetically, had termite activity only in the roof void been discovered, the plaintiffs might have completed the purchase with a determination to have the property treated for termites, not realising the extent of the damage hidden behind wall linings; but thereafter, perhaps in the course of their improvement work, have found that extensive damage. For these reasons, damages to which the plaintiffs would be entitled had they been successful in the action, would be limited to compensation for repair cost and inconvenience such as would repair them to the position they would have been in but for the defendants’ breach. In any event, closing oral submissions, counsel for the plaintiffs described the claim for damages as costs of repair and inconvenience…
In oral submissions counsel for the plaintiffs put assessment of damages in the following terms…:
“The real measure of their loss is what they’ve lost in addition to the purchase price irrespective of what they paid for the property. In other words, had they paid $1 million for the property and found that it still needed $100,000 worth of work, their loss would still be $100,000.”
I was invited to take a “broad brush” approach. The plaintiffs submitted that the cost of restoring the property to a state as if it had been termite free at purchase…
In other words, the Court in Alexandrou looked at the cost of rectification of the termite damage. Montgomery DCJ adopted a ‘broad brush’ approach, but also attempted to consider the benefit to the applicants from the improvements so as not to allow over-compensation. The original tribunal adopted this approach and the Appeal Tribunal is not persuaded as to an error of law such that a different approach should be taken in this appeal.
We are also unpersuaded by this respondent’s policy argument. The requirement for a building report is a consumer protection matter. A residential property will be the most expensive purchase most consumers will make. Hence, the policy arguments weigh just as strongly, if not more so, in ensuring that inspectors do a competent job, consistent with both the legislated standards, as set out in the Standard, and with the contract terms.
We do agree with the respondent that there is a shortage of evidence. At first instance the appellant filed quotes for the replacement of the windows,[47] quotes to undertake interior paintwork in relation to those windows,[48] and the replacement of the fascias and gutters.[49] These quotes are consistent with the appellant’s position that rectification would require replacement, on a new for old basis, of the windows and the fascias and bargeboards. But they do not go to the costs of rectification only.
[47] Annexure 23, Quote from Willfixit Carpentry, 15 July 2019, Appeal Book 12
[48] Annexure 24, Quote from Superior Painting and Annexure 25, Australia’s Premier Painting, appeal book 194,
[49] Quote from MJ Buildings and Construction Pty Ltd, 1 April, Appeal book 277

This leaves the Appeal Tribunal in something of a dilemma. Were the Appeal Tribunal to adopt the approach to the assessment of damages taken by the original tribunal, or indeed the approach to compensation provided in the ACL, it will need further evidence. This requires an adjournment, and a further hearing. As Doyle CJ observed in Brown v Dream Homes SA Pty Ltd [2008] SASC 295:
There are limits to the relief that an appeal court can give where a failure to call evidence at trial may be the cause of injustice. The power of an appeal court to receive further evidence should not be seen as providing parties with a second opportunity to make their case. The trial is not a practice run.[205] The hearing of further evidence disrupts the orderly and expeditious disposition of appeals and if the matter is remitted to the trial court it causes delays in the hearing of other matters in the trial list.
In Brown the appellant was permitted to adduce fresh evidence as to loss, but that evidence was filed with the Court and was consistent with the case as pleaded previously. That is not arguably not the case here. The appellants have maintained only that they are entitled to replacement cost, and not sought to adduce evidence of an alternative position. To do so now would mean not just fresh evidence, but an alteration to the appellants’ pleaded case.
The Appeal Tribunal must weigh is obligation to be fair and to provide procedural fairness against its obligation to be simple and inexpensive and to ensure that applications to the tribunal are resolved as quickly as is consistent with achieving justice. On balance, we are satisfied that the appellant should be given a brief opportunity to obtain quotes for rectification of the bargeboards, fascias and window seals, to a standard consistent with the age and condition of the house where there are no major defects. Replacement is not appropriate unless it is more cost effective than repair.

Summary and concluding observations

The appellants, as purchasers of the report, were entitled to rely upon the building report such that if a present, visible, significant problem with the building is not identified then the respondent must make good the cost of the repairs to give effect to resolving that problem.
Even allowing for the respondent’s disclaimer that their report reflected a ‘visual inspection only’ (i.e. there was no intrusive testing of any material), it is evident from both the photographs taken around the time of the report and those taken when the appellants took occupation that:
(a)there were significant gaps between the outside edges of the aluminium windows that reflected gaps in the brickwork and the failure of once fitted rubber seals and/or other filling materials; and
(b)the fascias and barge boards were in visibly poor condition, at least at the corners and would continue to deteriorate without rectification.
These are major defects that should have been identified in the report.
The compensation payable to the appellants is the compensation for economic loss suffered because of the defective report. The original tribunal found that is that they should be put in the same position as represented by the respondent: in this case that would be that the barge and fascia boards were in reasonable conditions, that the window frames were appropriately sealed to the outside brick veneer, with no significant gaps and that the windows would open and close. The appropriate approach would be to repair unless replacement is more cost effective. This was not subject to a cross appeal. The Appeal Tribunal is not satisfied that this approach is in error, and adopts it in relation to the additional grounds of liability identified in this decision.
There is no basis upon which the Appeal Tribunal could award damages for loss or disappointment.
We do not need to consider whether the purchaser paid too much or too little or about right for the dwelling – those considerations are irrelevant to the duty owed by the respondent to the appellants and to the ‘rectification’ damages that are limited to having the respondent give the appellants what it represented in its report. The calculation of those damages would need to take into account depreciation and other improvements.
The difficultly is that the Appeal Tribunal has before it no evidence upon which it can assess the cost of these rectifications. Accordingly, the parties are to obtain quotes for rectification of the fascia/barge boards to an acceptable standard without major defects, and the external sealing of the windows to the brick veneer. The parties are directed to ensure that those quotes:
(a) specify and justify the scope of works;
(b)identify the tasks required and the sequence to be followed;
(c)estimate the working hours required; and
(d)so far as possible provide a fixed price for repairing the fascias and the barge boards and sealing of the windows.
The matter will be relisted on 6 July 2021 at 10:00am for assessment of damages in light of these quotes.
………………………………..
Presidential Member H Robinson
For and on behalf of the Tribunal

Date(s) of hearing	18 December 2020
Applicant:	Mr P Bunn, authorised representative
Solicitors for the Respondent:	Mr R Markham, Adero Law