The Owners-Strata Plan 89023 v At Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust; Jayanthi and Shikaram v At Building Pty Limited and Mowbray Road Pty Limited as trustee for..

[2018] NSWCATCD 33

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

The Owners-Strata Plan 89023 v AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust; Jayanthi and Shikaram v AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust [2018] NSWCATCD 33

Hearing dates:

5 September 2017; 6 September 2017

Date of orders:

02 August 2018

Decision date:

02 August 2018

Jurisdiction:

Consumer and Commercial Division

Before:

P Boyce, Senior Member

Decision:

Pursuant to Section 63 of the Civil and Administrative Tribunal Act 2013, orders published on 2 August 2018 are amended on 13 August 2018 to read as follows:

In HB 15/61825

(1) The Builders, AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust, must carry out the works identified in the Joint Scott Schedule dated 1 May 2018 in accordance with the column headed “Recommended Rectification Works” and identified as Items 58.2, 58.3, C1.7 and all Items from page 71- 87 inclusive.

Costs in HB 15/61825

(2) Any application for costs by The Owners-Strata Plan 89023 is to be supported by evidence and submissions of no more than 3 pages in length and is to be filed with the Tribunal and served on the Builders, AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust,  on or before 15 August 2018.

(3) Any evidence and submissions in response to the application for costs from the Builders, AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust, opposing the application for costs, of no more than 3 pages in length, is to be filed with the Tribunal and served on the Owners on or before 7 September 2018

(4) If there is no application made for costs by 15 August 2018 there will be no order as to costs.

In application HB 15/61109

(5) The application is dismissed.

 Costs in HB 15/61109

(6) Any application for costs by the Builders, AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust, against the Lot Owners, Subhadra Jayanthi and Karunakar Shikaram, is to be supported by evidence and submissions of no more than 3 pages in length and is to be filed with the Tribunal and served on the Lot Owners, Subhadra Jayanthi and Karunakar Shikaram, on or before 15 August 2018.

(7) If there is no application made for costs by 15 August 2018 there will be no order as to costs.

(8) Any evidence and submissions in response to the application for costs from the Lot Owners, Subhadra Jayanthi and Karunakar Shikaram, opposing the application for costs, of no more than 3 pages in length, is to be filed with the Tribunal and served on the Builders, AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust, on or before 7 September 2018.

In both applications:

(9) The parties in both proceedings are to advise the Tribunal in their respective submissions as to costs if they consent to the issue of costs being determined on the papers without a hearing.

(10) Alternatively the parties are to make submissions as to why such an order should not be made pursuant to section 50 of the Civil and Administrative Tribunal Act 2013

Catchwords:

HOME BUILDING-individual components of a fire safety system a major defect, completion of residential building work on issue of interim occupation certificate, limitation period for bringing claim for breach of statutory warranty in respect of other defects, preferred outcome

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)
Civil and Administrative Tribunal Rules 2014 (NSW)
Environmental Planning and Assessment Act 1979 (NSW)
Environmental Planning and Assessment Regulation 2000
Home Building Act 1989 (NSW)
Home Building Amendment Act 2014 (NSW)
Strata Schemes Management Act 1996 (NSW)
Strata Schemes Management Act 2015 (NSW)

Cases Cited:

Bankstown City Council v Ramahi (No 2) [2016] NSWLEC 34
BNT Constructions v Allen [2017] NSWCATAP 186
Brooks v Gannon Constructions Pty Ltd [2017] NSWCATCD 12
Cessnock City Council v Laila Investments Pty Ltd [2012] NSWLEC 206
Cuaresma v Delta Constructions Australia Pty Ltd [2017] NSWCATCD 67
Galdona v Peacock [2017] NSWCATAP 64
Johnson v Lukeman [2016] NSWCATAP 272
Maiolo v Frank Chiarelli and Anor [2016] NSWCATAP 81

Category:

Principal judgment

Parties:

In application HB 15/61109
Applicants: The Owners-Strata Plan 89023
Respondents: AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust

In application HB 15/61825
Applicants: Subhadra JAYANTHI and Karunakar SHIKARAM
Respondents: AT Building Pty Limited and Mowbray Road Pty Limited as trustee for Mowbray Unit Trust

Representation:

In application HB 15/61109
Counsel:
Applicants: C Mobellan
Respondents: D Priestly SC
Solicitors:
Applicant : Sparke Helmore
Respondent: Mayweathers

In application HB 15/61825
Counsel:
Respondents: D Priestly SC
Solicitors:
Applicant: Self represented litigants in person
Respondents: Mayweathers

File Number(s):

HB 15/61109 & HB 15/61825

REASONS FOR DECISION

Application

1. These are two applications heard together.

2. The first application (HB 15/61109) was filed on 6 November 2015. The applicant is the registered proprietor of common property in a strata scheme constituted under the Strata Schemes Management Act 1996 (NSW) (“SSMA”) under the name, The Owners- Strata Plan 89023 (“Owners”). The First Respondent is AT Building Pty Limited, was the developer of land at 554-560 Mowbray Road Lane Cove (“Land”), and the Second Respondent, Mowbray Road Pty Limited as trustee for Mowbray Unit Trust, was the builder contracted by the First Respondent to carry out the construction of the residential building erected on the Land which now constitutes the common property of the Applicant. The First and Second Respondents, unless otherwise stated, will be referred to in this judgment as the “Builder”.

3. In HB 15/61109 the Owners seek orders against the Builder that:

1. The Builder rectifies defects and non-complying building works in the common property;

2. The Builder pays the Owners damages;

3. The Builder pays the Owners costs of the proceedings;

4. The Tribunal makes such further orders as it thinks fit.

4. The second application (HB 15/616825) was filed on 15 November 2015. The Applicants are the registered proprietors of Lot 2 in Strata Scheme 89023 (“Lot Owners”). The Respondents are the same respondents as in the first application and will be called in this judgement by the same reference, the Builder.

5. In HB 15/61825 the Lot Owners sought orders against the Builder that the Builder pays to the Lot Owners an amount of between $30,000 to $40,000 for rectification of alleged defects in the Lot Owners’ Lot 2.

Legislative and jurisdictional considerations

6. Section 28 of the Civil and Administrative Tribunal Act 2013 provides that:

(1) The Tribunal has such jurisdiction and functions as may be conferred or imposed on it by or under this Act or any other legislation.

(2) In particular, the jurisdiction of the Tribunal consists of the following kinds of jurisdiction:

(a) the general jurisdiction of the Tribunal,

(b) the administrative review jurisdiction of the Tribunal,

(c) the appeal jurisdiction of the Tribunal (comprising its external and internal appeal jurisdiction),

(d) the enforcement jurisdiction of the Tribunal.

(3) Subject to this Act and enabling legislation, the Tribunal has jurisdiction in respect of matters arising before or after the establishment of the Tribunal.

7. Pursuant to s 48K(1) of the Home Building Act 1989 (NSW) (“HBA”) the Tribunal has jurisdiction to hear and determine any building claim brought before it in which the amount is less than $500,000.00.

8. S48KI (1) of the HBA provides that any person may apply to the Tribunal for determination of a building claim.

9. The provisions of the section 18E (1) (a) and (b) of the HBA relevant at the time the contract was entered into provided that proceedings for a breach of statutory warranty must be commenced before the end of the warranty period.

10. The Tribunal is satisfied that the Owners’ and Lot Owners’ claims are each less than $500,000.

11. In the course of this judgement the Tribunal will determine which statutory warranty applies to the claims.

Procedural

12. Both applications together have been the subject of not less than 12 direction hearings.

13. The applications were heard together on 5 and 6 September 2017. On the last day of the hearing the decision was reserved and directions were made for the parties to make submissions.

14. The Owners, the Builders and the Lot Owners complied with the direction to file and serve their respective submissions.

15. By further directions of the Tribunal on 18 January 2018 the Tribunal directed that the Owners, Builders and Lot Owners were to agree on defects alleged as major defects or other defects on the joint Scott schedule on or before 16 February 2018.

16. By further directions of the Tribunal on 21 March 2018, the Tribunal directed the Owners and Builders Experts to again agree on major defects and other defects in consideration of the qualifications of s18E(4)(a)(i)-(iii) of the HBA by 30 April 2018.

17. On 30 April 2018 the Owners sought to extend the time for compliance with the direction made on 21 March 2018 until 4 May 2018.

18. The joint expert report was filed on 1 May 2018.

19. The Owners consent to the issue of distinguishing major defects and other defects on the papers without the need for a further hearing.

20. The Tribunal is satisfied that the issue can be determined on the submissions made by the parties and that a further hearing on that issue is dispensed with.

Evidence

21. The evidence is contained in:

1. The four volumes of the tender bundle;

2. The Affidavit of Simon Rees sworn 23 December 2016;

3. The Affidavit of Suhadra Jayanthi sworn 30 June 2017;

4. The Affidavit of Elias Traisier sworn 23 December 2016 and 4 September 2017 and his cross examination;

5. The Expert Fire Engineers Reports of Alan Harriman of BCA Logic for the Builder and Nathan Halstead for the Owners;

6. The Expert Building Reports of David Evans for the Builders dated 22 December 2016 and Curtis Payne for the Owners dated 9 June 2016 ;

7. The Expert Quantity Survey Report of Joshua Heymann of Donald Cant Watts Corke dated 15 August 2017.

22. The Tribunal has considered all of the evidence adduced in the proceedings.

23. The Tribunal has also considered all oral and written submissions made by the parties.

Issues

Statutory Warranty period to be applied

24. Before making findings, while there are no submissions from the parties, there was no dispute that the claim against the Builders is brought by the Owners as successors in title.

25. The Tribunal must determine when practical completion of the building works were achieved so that a determination can be made as to relevant statutory warranty period is to apply.

26. S 3B of the HBA provides that:

(1A) This section does not apply to residential building work to which section 3C applies.

Note.

Section 3C provides for the date of completion of new buildings in strata schemes.

(1) The completion of residential building work occurs on the date that the work is complete within the meaning of the contract under which the work was done.

(2) If the contract does not provide for when work is complete (or there is no contract), the completion of residential building work occurs on practical completion of the work, which is when the work is completed except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose.

(3) It is to be presumed (unless an earlier date for practical completion can be established) that practical completion of residential building work occurred on the earliest of whichever of the following dates can be established for the work:

(a) the date on which the contractor handed over possession of the work to the owner,

(b) the date on which the contractor last attended the site to carry out work (other than work to remedy any defect that does not affect practical completion),

(c) the date of issue of an occupation certificate under the Environmental Planning and Assessment Act 1979 that authorises commencement of the use or occupation of the work,

(d) (in the case of owner-builder work) the date that is 18 months after the issue of the owner-builder permit for the work.

(4) If residential building work comprises the construction of 2 or more buildings each of which is reasonably capable of being used and occupied separately, practical completion of the individual buildings can occur at different times (so that practical completion of any one building does not require practical completion of all the buildings).

(5) This section applies for the purposes of determining when completion of residential building work occurs for the purposes of any provision of this Act, the regulations or a contract of insurance under Part 6.

27. S 3C of the HBA provides:

(1) This section applies to residential building work comprising the construction of a new building in a strata scheme (within the meaning of the Strata Schemes Management Act 2015) where the issue of an occupation certificate is required to authorise commencement of the use or occupation of the building.

Note.

Section 3B provides for the date of completion of other residential building work.

(2) The completion of residential building work to which this section applies occurs on:

(a) the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building, unless paragraph (b) applies, or

(b) the occurrence of some other event that is prescribed by the regulations as constituting completion of the work.

(3) If a contract to do residential building work (the primary contract) comprises the construction of 2 or more separate buildings, the date of completion of that work is to be determined as if there were a separate contract for each separate building (with each contract on the same terms as the primary contract) so that the work for each building will have a separate completion date. For the purposes of this section, a building is separate if it is reasonably capable of being used and occupied separately from any other building.

Note.

Separate buildings can still have the same completion date if they are completed at the same time.

(4) This section applies for the purpose of determining when completion of residential building work occurs for the purposes of any provision of this Act, the regulations or a contract of insurance under Part 6.

(5) In this section:

building means any structure that, as a new building, requires the issue of an occupation certificate to authorise its use and occupation.

occupation certificate means an occupation certificate under the Environmental Planning and Assessment Act 1979.

Note.

A swimming pool, tennis court or detached garage can be a building for the purposes of this section if an occupation certificate is required to authorise its use and occupation. If a structure in a strata scheme does not require an occupation certificate, section 3B will apply to it instead of section 3C.

28. The evidence is that for the building works:

1. the Construction Certificates were issued on 5 July 2012 and 17 September 2013 (check);

2. The application for the Occupation Certificate was dated 21 October 2013;

3. The Interim Occupation Certificate was issued on 4 November 2013 (“IOC”);

4. The Strata Plan was registered on 13 November 2013.

5. The Final Occupation Certificate was issued on 5 February 2014 (“OC”).

29. The application in HB 15/61109 was filed on 6 November 2015. The application in HB 15/61825 was filed on 15 November 2015.

30. The relevant provisions for statutory warranty period for a breach of warranty s18B for building contracts entered into after 1 February 2012 is set out in S18E(1):

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

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

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

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

31. The Builders contend that the date for the completion of the building works is the date when the Owners were entitled the use of the whole of the building works pursuant to s3C of the HBA

32. The Owners contend that the correct date to determine the completion of the building works is 5 November 2013 as the certifier amended the IOC he had dated 4 November 2013 on 5 November 2013 without changing the date of the IOC.

33. S 3C of the HBA was introduced in the amendments made by the Home Building Amendment Act 2014 (NSW) and is retrospective.

34. To determine when the date of issue of an occupation certificate that authorises the occupation and use of the whole of the building the provisions of the Environmental Planning and Assessment Act 1979 (NSW) (the EPA Act) must be considered. An occupation certificate is one of four types of certificates that may be issued under Part 4A of the EPA Act and authorises the occupation and use of a new building: s109C(1)(d). The requirements for the determination and issue of an occupation certificate are provided in the regulations, pursuant to the power conferred by s109Q of the EPA Act. Part 8 Div 3 of the Environmental Planning and Assessment Regulation 2000 (the EPAR) makes provision for occupation certificates. Clause 151 provides the procedure for determining an application for an occupation certificate. Clause 155 provides for the form of an occupation certificate as follows:

(1) An occupation certificate must contain the following:

(a) the identity of the certifying authority that issued it, including, in a case where the certifying authority is an accredited body corporate, the identity of the individual who issued the certificate on behalf of the body corporate,

(b) if the certifying authority is an accredited certifier, the accreditation number of the certifying authority, including, in a case where the certifying authority is an accredited body corporate, the accreditation number of the individual who issued the certificate on behalf of the body corporate,

(b1) if the certifying authority is an accredited certifier who is an individual, the signature of the accredited certifier,

(b2) if an individual issued the certificate on behalf of the certifying authority, the signature of the individual who issued the certificate,

(c) the date of the certificate,

(d) indicate the type of certificate being issued (that is, interim or final),

(e) a statement to the effect that:

(i) the health and safety of the occupants of the building have been taken into consideration where an interim occupation certificate is being issued, and

(ii) a current development consent or complying development certificate is in force for the building, and

(iii) if any building work has been carried out, a current construction certificate (or complying development certificate) has been issued with respect to the plans and specifications for the building, and

(iv) the building is suitable for occupation or use in accordance with its classification under the Building Code of Australia , and

(v) a fire safety certificate has been issued for the building (if a fire safety schedule is required under Part 9), and

(vi) a report from the Fire Commissioner has been considered (if required).

(f) the following details of any alternative solution report about the building work involved that is required for the purposes of either clause 130 (2A) or 144A (1):

(i) the title of the report,

(ii) the date on which the report was made,

(iii) the reference number and version number of the report,

(iv) the name of the competent fire safety practitioner who prepared the report or on whose behalf the report was prepared,

(v) if the competent fire safety practitioner who prepared the report or on whose behalf the report was prepared is an accredited certifier--the accreditation number of that practitioner.

(2) The occupation certificate must be accompanied by a fire safety certificate and afire safety schedule for the building (if a fire safety schedule is required under Part 9).

35. The IOC dated 4 November 2013 states the information required to comply with s109H(5) of the EPA Act and the information required by cl154(1)(a), (b), (c), (d) and (e) of the EPAR. There was no issue taken by either party that Building Certificates Australia Pty Ltd was the principal certifying authority.

36. The Owners contend that the IOC should have been dated 5 November 2013 as the certifier amended the IOC by correcting the name of the owner of the land as Mowbray Road Pty Ltd as trustee for Mowbray Unit Trust.

37. There has been some limited judicial consideration of the question of the circumstances in which an occupation certificate will be found invalid. Where an occupation certificate was issued in circumstances where several conditions of development consent had not been complied with the certificate was found to be invalid: Pain J in Cessnock City Council v Laila Investments Pty Ltd [2012] NSWLEC 206; where an occupation certificate issued where consistency between with the development consent had not been met as required as a precondition of issue by cl 154(1B) of the EPAR: Craig J in Bankstown City Council v Ramahi (No 2) [2016] NSWLEC 34. The Land and Environment Court in both cases determined that an occupation certificate was invalid, in that there had been a failure to comply with the substantive precondition of consistency and compliance with the relevant development consent. Neither of the decisions would require a conclusion that a failure with a requirement as to form of an occupation certificate would necessarily mean that such a document could be regarded as an occupation certificate under the EPA Act.

38. In circumstances where the IOC states compliance with the substantive statutory requirements and preconditions, provides the information as to relevant consents and certificates, provides sufficient information to identify the person issuing the certificate and certifies that the building is suitable for occupation or use without conditions, the Tribunal is satisfied that the document dated 4 November 2013 is an occupation certificate provided by the principal certifying authority that complies with Clause 151 of the EPAR.

39. The Tribunal is satisfied that the IOC was issued on 4 November 2013, as it complied with the EPA Act and the EPAR, despite its amendment on 5 November 2013 of a non-mandatory particular.

40. S109H(10(b) of the EPA Act states the effect of an occupation certificate, that it authorises a person to commence occupation or use the new building

41. That is, if the date of the IOC is 4 November 2013 the building was authorised to be occupied, whether S3B(3)(c) or S3C(2)(a) applies. That being 2 years and 2 days before the Owners application was filed. If the Tribunal is wrong and the IOC was issued on 5 November 2013, then the Owners’ application was filed 2 years and 1 day after the issue of the IOC.

42. In either case, the Home Building Amendment Act 2014 applies to contracts entered into after 1 February 2012 and the current s18E applies to the application. The warranty period is 6 years for a breach that results in a major defect in residential building work or 2 years in any other case: S18E(1)(b) of the HBA. The Owners application is filed in time for the warranties in respect of major defects and out of time for defects in any other case.

Claim for Defects

43. The Owners and the Builders have filed with the Tribunal a Joint Scott Schedule dated on its footer 1 May 2018 (“JSS”). In it the experts have identified those items that are major defects and other defects. As the Tribunal has found that the claim for breach of warranty for other defects has been filed outside the warranty period under the HBA, the Tribunal dismisses that part of the application.

44. In compliance with the Tribunal’s directions the JSS identifies those defects that are major defects and whether liability for those defects remains in dispute or they have been agreed between the parties.

45. The Tribunal is satisfied that those items identified as major defects, and where liability is agreed, are defects that require rectification or damages paid in compensation The Tribunal will make a determination as to whether an order for rectification is appropriate or whether damages should be payable in this judgment after determining the Builders’ liability.

46. By reference to the JSS the major building defects the subject of the claim are set out for ease of reference:

Item Number	Description	Agreed or disputed	Major defect	Owners quantum
11.1	Evidence of efflorescence staining occurring to north eastern wall-failing to waterproof retaining wall	Agreed	Owner-Major Builder- other	$940
58.2	Water penetration in south western corner, mould, stained carpet, blistering paint. Unit 58 Bed 1	Agreed	Major	$2,880
58.3	Water penetration in south western corner, mould, stained carpet, blistering paint. Unit 58 Bed 2	Agreed	Major	$2,785
C1.7	Exposed penetration between ground slab and garage chute Eastern block upper ground level garbage room	agreed	Major	$290
11.1	Evidence of efflorescence staining occurring to north eastern wall-failing to waterproof retaining wall	Agreed	Owner-Major Builder- other	$940

47. In the submission of the Owners dated 4 May 2018 the building experts have prepared a supplementary Joint Report dated 3 May 2018. Both Expert Payne and Expert Evans now agree that Item 11.1 is not a major defect.

48. The Joint Scott schedule fire defects report also dated 1 May 2018 (JSS Fire Report). In the JSS Fire Report the fire experts identify 3 items on which they disagree of the 63 items listed as fire compliance defects plus items 1-45 in their joint report. The fire experts disagree on the cost of rectification, but otherwise there is agreement as to the defects. There is no agreement on whether the defects listed are major defects or other defects.

49. The three items not agreed upon are:

Item number	Description	Work to rectify	Owners cost to rectify	Builders cost to rectify
4.4.1	Sole Occupancy unit doors, numerous fire door frames to unit entry doorways appear to be hollow and may not comply with AS 1905.1	Agreed that hollow door frames are acceptable subject to compliance with a test report	$1000
CP 1	Vertical separation to Girraween Street, Elevation does not comply with BCA Clause C2.6 in that compliant vertical separation has not been provided between the ground level and level 1	Provide vertical separation to the external façade, as required by BCA Clause C2.6, or obtain a fire engineering solution to demonstrate compliance with the Performance Requirements of the BCA namely CP2; Agreed that:-spandrel panels are required;-a balcony is a compliant form of a spandrel;-the hot water system that requires ventilation to open air is located on the balcony
$5100.00	Nil
CP25	Unit 3
The fire entry door frame does not have a solid core required by AS1905.1-2005, which does not comply with BCA Clause C3.1	The entry fire door should have a solid core frame, as required by Clause 5.5.2 of AS 1905.1-2005.Fire doors frame must be filled as required by AS 1905.1-2005	$2000	Nil

50. In their submissions the Owners and the Builders address the issue of whether fire safety items in dispute satisfy the requirement that they cause or are likely to cause the circumstances set out in s18E(4)(a)(i)-(iii) of the HBA. The Owners refer to these circumstances as “qualifiers”.

51. The Tribunal has considered the submissions of both the Owners and the Builders.

52. In particular the Tribunal takes note of the Builders’ submission filed on 3 May 2018.

53. The Builders submit that the issue of whether fire safety defects are major turns simply on whether they have been established to fit within the part of s18E of the HBA :

and that causes, or is likely to cause:

(i) the inability to inhabit or use the building (or part of the building) for (ii) its intended purpose, or

(iii) the destruction of the building or any aprt of the building, or

a threat of collapse of the building or any part of the building.

54. The Owners submission is that as there were a number of defects, “the Tribunal can draw the appropriate inference that the fire safety system as a whole was sufficiently defective as to satisfy the qualifiers in s18E”.

55. The Builders submit that the Owners position has difficulties in that:

1. Although that there were a number of defects, does not give rise to any inference about habitability, use, destruction or collapse;

2. The Owners concede that there is no evidence at all upon which the Tribunal can conclude that the defects in combination or individually are causing or likely to cause any particular outcome;

3. Generally it would be inappropriate to draw inferences about matters which could have been the subject of evidence;

4. On the contrary, any conclusion without evidence, could only be that habitability, use, destruction or collapse have not been and are not likely to be affected or caused. The only evidence the Tribunal can be satisfied of is that the building has for some years and continues to be inhabited and used.

5. There is no basis to conclude that the defects cause or are likely to cause the building to be uninhabitable, unusable, destroyed or collapse.

6. The Owners position that the components of the fire safety system are “critical”, “integral” or “important” is a contention without telling anything about what they cause or will cause.

7. The Builders submission of 16 February 2018 sought to adduce further evidence from their fire safety expert in the categorisation of the fire defects as major defects.

56. By the Owners and the Builders fire safety experts being given the opportunity to make further submissions in respect of the fire safety defects classification as major or other defects the Builders were given an opportunity to adduce further evidence as to the fire safety defects categorisation.

57. The Tribunal is satisfied that the parties have been given the opportunity to make submissions about the Tribunals intention to dispense with a hearing on issue of whether the fire safety defects are major or other defects. The Owners agree that the issue can be determined on the papers. The Builders submission in their submissions of 16 February 2018 seeking to adduce further fire safety evidence has been allowed by the directions of 21 March 2018. The Tribunal makes an under s50(2) of the CATA that a hearing of that issue is dispensed with. The Tribunal is satisfied that the issue can be adequately determined in the absence of the parties by considering the written submissions, other documents and material provided to the Tribunal.

58. The Owners submit that the relevant element in “Major Element” in s18E of the HBA is a “fire safety system” and that invites an analysis of the system as a whole, rather than individual components, of that system. With the substantial number of fire safety defects that are conceded by the Builders, together with the intent of the BCA and Australian Standards, the Tribunal can draw the appropriate inference that the fire safety system as a whole was sufficiently defective as to satisfy the qualifiers in s18E.

59. S18E(4) of the HBA provides that:

(4) In this section:

major defect means:

(a) a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause:

(i) the inability to inhabit or use the building (or part of the building) for its intended purpose, or

(ii) the destruction of the building or any part of the building, or

(iii) a threat of collapse of the building or any part of the building, or

(b) a defect of a kind that is prescribed by the regulations as a major defect, or

(c) the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act.

Note.

The definition of major defect also applies for the purposes of section 103B (Period of cover).

major element of a building means:

(a) an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams), or

(b) a fire safety system, or

(c) waterproofing, or

(d) any other element that is prescribed by the regulations as a major element of a building.

60. “A fire safety system” is a “Major element” for the purposes of a “major defect” in s18E.

61. The Tribunal has considered the submissions of the Owners and the Builders. The Builders submit that the defects should not be characterised as major as the Builders fire safety expert disagrees with the Owners fire safety expert in that they identify the fire safety defects. Although the Owners fire safety expert classifies the defects as major, the Builders fire safety expert does not.

62. A component of waterproofing that fails or a failure of a load bearing component essential to the stability of a building that is likely to cause the destruction of a building, while only one component is nevertheless a part of the whole matrix to provide waterproofing or support for a building. The fire safety experts have identified and agreed on the items classified as fire safety defects. The Builders argument that they should be looked at, not as part of a fire safety system, but individually and as classified as other defects, cannot be sustained in the face of the provisions of s18E(4). An individual fire safety defect must be part of a fire safety system. It could not otherwise be classified.

63. The Tribunal is satisfied that a fire safety system is made up of individual components that need to be complied with in order to provide a fire safety system, any one of which could cause a failure of the fire safety system. The individual defects identified as involving fire safety are major defects for the purpose of the HBA as they together form the fire safety system.

Rectification of defects as the preferred outcome

64. In the Owners application they sought orders that the Builders rectify defects in the building work(“work order”).

65. In their written submissions filed on 5 October 2017 the Owners withdrew their application for work orders and sought an order for damages as compensation to carry out rectification work (“money order”).

66. The Owners submit that the principles that should be applied by the Tribunal in determining whether to grant a money order instead of a work order are as follows:

1. The question of the appropriateness of a work order turns on the facts of each case: see Brooks v Gannon Constructions Pty Ltd [2017] NSWCATCD 12 at [64];

2. The assessment about whether the preferred outcome should be ordered is an objective one: Brooks at [64];

3. NCAT is obliged to consider the operation of s48MA of the HBA in determining a building claim involving an allegation of defective residential building work, work orders are not the mandatory outcome (see Galdona v Peacock [2017] NSWCATAP 64 at [50] and [65]);

4. It is relevant to consider the reasonableness of an Owners opposition to work orders where there has been a previous refusal to attend to rectify (see BNT Constructions v Allen [2017] NSWCATAP 186 at [33]-[35]);

5. A failure to acknowledge that works have been defective is a consideration against making a work order (see Cuaresma v Delta Constructions Australia Pty Ltd [2017] NSWCATCD 67 at[95]);

6. Other relevant factors include the extensiveness of the defects and whether the relationship between the parties has broken down (see Brooks at [65]);

7. The making of a rectification order need not be an all or nothing proposition and it may be appropriate to make a money order in relation to some portion of the defective works the subject of the claim (see Johnson v Lukeman [2016] NSWCATAP 272 at[43]);

8. NCAT can consider the resources that a respondent might be able to put to completing work orders (see Brooks at [70]).

67. The Owners contend that the evidence shows:

1. That the Owners brought to the Builders attention the urgency of fire safety works in a period between 13 October 2016 to 27 March 2017, without the Builders response;

2. At no time during the proceedings did the Builders avail themselves of the opportunity to put forward evidence to support a work order;

3. It was not until the evidence of Mr Tressieh at the hearing on 5 September 2017 that the Builders supported the making of a work order;

4. The Owners urge the Tribunal to carefully consider the veracity of Mr Tressieh evidence having regard to his demeanour suggesting that the Builders position in regard to any work order is at best half hearted.

68. The Builder submits that a number of defects have been accepted by the Builders as existing and requiring rectification and that a work order is the appropriate order because:

1. The Builder is willing and able to attend to their rectification in a timely fashion;

2. The Builders capacity to carry out the rectification is evident from:

1. The fact they carried out the development in the first place;

2. Mr Tressieh’s evidence was that AT Building Pty Limited, the builder, is:

1. Still licensed for building work;

2. Not in any immediate prospect of losing its licence;

3. Still trading and is engaged in significant other building developments;

4. Willing to attend to the necessary rectification works.

69. The Builder further submits that while the Owners summary of principles as to work orders or money orders is not contentious, there are further statements made in other Tribunal proceedings applying to s48MA (see Brooks v Gannon Constuctions Pty Limited [2017] NSWCATCD; Galdona v Paecock [2017] NSWCATAP 64; BNT Constructions PTY LTD v Allen [2017] NSWCATAP 186: Maiolo v Frank Chiarelli and Anor [2016] NSWCATAP 81). They are whether in deciding a work order may not be appropriate, despite the statutory guideline principle, should be:

1. Whether the builder is still licensed, and is likely to remain licensed, to do the necessary work;

2. Whether there are any other doubts about the capacity of the builder to do the necessary work in terms of available manpower, resources or access to materials;

3. Where the passage of time since the original work was done is so great that real doubts arise as to the suitability of the particular builder to attend to work that it was previously responsible for; and /or,

4. Whether there is evidence of such animosity between the parties or otherwise a history of dispute such that it is undesirable for the builder or its representatives to attend to the site to undertake the necessary works.

70. As the Builders understand the Owners submissions, the reason for declining a works order as the appropriate order, is an alleged failure to attend to rectification works. Contrary to that reliance, the Builder says:

1. Mr Tressieh’s affidavit sworn on 4 September 2017 demonstrates a history of the Builder recording building issues and defects and returning to the property to rectify building issues and defects;

2. The builders’ solicitors letter of 26 October 2016 confirms the Builders agreement to rectify fire defects;

3. Urgent rectification works were not undertaken because the Owners did not provide a proposed method of rectification methodology (leave being granted to tender the email of 29 March 2017 from Builders’ solicitors to Owners solicitor).

71. In further submissions the Builder says that:

1. Failure by the Builders to put forward evidence in support of a works order until the hearing should not count against the Builders;

2. It is not accurate to say that Mr Tressieh’s evidence was “half hearted”. The Owners withdrew their claim for a works order at the hearing, without evidence on the point, such as a relationship breakdown, and only relied on correspondence already in the tender bundle. There is nothing that raises doubt about the capacity or preparedness of the Builders to carry out the rectification works.

72. S48O of the HBA provides:

(1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate:

(a) an order that one party to the proceedings pay money to another party or to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person,

(b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings,

(c) an order that a party to the proceedings:

(i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or

(ii) do or perform, or refrain from doing or performing, any specified act, matter or thing.

(2) The Tribunal can make an order even if it is not the order that the applicant asked for.

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

73. S48MA of the HBA provides:

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

74. The principles to be applied in the application of s48MA have been the subject of determinations by the Tribunal and the Appeal Panel in the cases cited by both the Owners and the Builders. The Builders do not quibble with principles cited by the Owners and also add further principles from the cited cases. The Tribunal is satisfied that the principles to be applied are as set out in the cited cases.

75. In Brooks v Gannon Constructions Pty Ltd Senior Member Simon at [64] said:

“The Tribunal accepts that it does not have to order the preferred outcome, however it is up to the homeowner to rebut the presumption. The assessment about whether the preferred outcome should be ordered is an objective one and the Tribunal must weigh up the factors in each case and make the decision accordingly”.

76. If the Owners are to rebut the presumption against the preferred outcome they must satisfy the Tribunal that principles enunciated in the cited cases are in favour of the Owners not obtaining a work order or the Builders not being ordered to pay a money order.

77. On the evidence before the Tribunal it is satisfied that:

1. At the commencement of the proceedings the Owners sought a rectification order. Only at and following the hearing did the Owners seek to change the orders they sought by then only seeking a money order for compensation for the alleged defects. The onus is on the Owners to rebut the presumption that a rectification order is the preferred outcome;

2. The Tribunal has considered whether it is reasonable for the Owners to oppose the making of rectification orders in light of the Owners alleged refusal to attend to rectify. The Tribunal is not satisfied that the Owners opposition to the making of rectification orders is reasonable in light of the evidence that the proposals for carrying out rectification work after the proceedings had been commenced failed as a result of no scope of works being agreed, despite an invitation by the Builders to do so.

3. After the commencement of the proceedings (and before) there was an acceptance by the Builders that there were defects that required rectification.

4. The defects identified are significant in number, but that should be seen from the perspective that those defects relate to a 64 lot strata scheme development. Although the parties are in dispute, there is not sufficient evidence to show that the parties relationship is so damaged that the Tribunal should consider that relationship would act as a barrier to the rectification works being carried out by the Builders;

5. The only evidence before the Tribunal as to the Builder’s current capacity to carry out the work is from Mr Tressieh. Mr Tressieh was the Builders principle lay witness. He is a senior employee of AT Building Pty Ltd. The Tribunal finds that Mr Tressieh evidence can be relied upon as to the company’s ability to complete the rectification worksThe Tribunal is satisfied that the Builder has the resources to completing all the rectification work in any work order and remains licensed for residential building work, not in any immediate prospect of losing its licence, is still trading and is engaged in significant other building developments and is willing to attend to the necessary rectification works.

78. The Tribunal is not satisfied that Owners have satisfied the onus of displacing the presumption of a rectification order for the defective works.

Scope of fire safety defects rectification

79. Except for the three items referred above, the JSS Fire Safety Report records the agreement of Expert Harriman and Expert Halstead that the defects identified require rectification.

80. The Tribunal will be making a rectification order for the fire safety defects and accordingly does not make a determination in regard to the disparity of the quantum of the cost of rectification between the fire safety experts opinions.

81. The Tribunal is satisfied that the proposed scope of rectification of fire safety works must include the items 4.4.1, CP 1 and CP 25, together with all other items identified as agreed in the JSS Fire Safety Report.

82. The Tribunal is also satisfied that the Builder is to be ordered to carry out rectification work to items 58.2, 58.3 and C1.7 in accordance with the JSS.

83. The parties have not made submissions as to the time to carry out rectification works. The Tribunal is concerned that the works necessary to rectify the fire safety defects should be carried out without delay to ensure the safety of the occupants of the strata scheme. The Tribunal regards a period of four months to carry out the rectification works as reasonable to allow access to all areas where works are to be carried out. It is incumbent on the occupiers of the premises to facilitate access for the Builders to carry out the rectification works so that effect can be given to the rectification order.

Application HB 15/61825

84. The Lot Owners application was heard with the Owners application.

85. The Lot Owners are the registered proprietors of Lot 2 in Strata Plan 89023.

86. The Lot Owners application was filed on 15 November 2015.

87. On 21 April 2016 the Tribunal dismissed an application by the Builders to summarily dismiss the application on the grounds that the application was time barred.

88. On 28 June 2016 the Appeal Panel allowed an appeal against the decision made on 21 April 2016 in part and quashed the dismissal of the application to summarily dismiss the application. The Appeal Panel directed that there be no hearings of separate questions or summary dismissal applications and that the matter proceeds to a final hearing on all issues.

89. At the hearing the Tribunal noted that the Lot Owner had not adduced expert evidence and sought to rely on bundles of documents including:

1. A bundle filed on 1 February 2016, which included:

1. A Scott Schedule prepared by the Lot Owners identifying 11 alleged defects with Lot 2;

2. A statement prepared by the Lot Owners providing a commentary about the alleged defects;

3. A front page of a contract for the purchase of Lot 2 by the Lot Owners dated 17 February 2013;

4. Numerous emails

2. A bundle of documents filed on 18 February 2016 being a “revised Scott schedule and quotes”.

90. The Lot Owners have also made submissions filed on 10 November 2017 after the hearing and in accordance with the directions of the Tribunal of 6 October 2017.

91. At the hearing on 5 and 6 October 2017 the Lot Owners submitted that their claim was limited to incomplete fencing work and non-compliant steps to the sunken courtyard of Lot 2. In the submissions made by the Lot Owners on 10 November 2017, the defects are referred to as Item 1, 3, 4 and 6 of the Lot Owners Scott schedule.

92. Item 1 is that in the Main bathroom the fall of the floor to the floor waste allows water to pool and efflorescence occurs around the floor waste.

93. Item 3 is that the fence in the courtyard does not have capping (as in a lapped and capped paling fence), Courtyard gate does not close properly, the fence is not painted on the inside, there is an unknown pipe in the corner of the courtyard, the door from the lot into the courtyard has no steps and there is a drop that does not comply with the BCA.

94. Item 4 is that landscaping in the courtyard is very poor, in some places the courtyard wall does not have render, the courtyard is not completely tiled, there is a defective irrigation pipe leaving the courtyard constantly wet and a tap does not have a drain outlet.

95. Item 6 is that there are no cupboards provided to the laundry or in the linen area between the bathroom and the laundry.

96. Although the Lot Owners have not provided expert evidence they rely on quotes from contractors to support their claim. They are firstly, a letter from Anthony Farac Plumbing Pty Ltd for work on the drainage to the area outside the living area, advising that work should be carried out by a tiler, resealing of the bath and removal of an acid stain on the floor waste grate does not give a quote for the works. Secondly two quotes dated 1 February 2016 and another undated from Collins Building Services to carry out works for $11,250 and $8700 respectively. Thirdly a quote dated 9 July 2016 from AUSGroup Waterproofing for waterproofing the bathroom in the amount of $8,910. It was the Lot Owners submission at the hearing that the bathroom waterproofing had been carried out.

97. Notwithstanding the deficiencies in regard to the probative evidence to prove the Lot Owners case, the Tribunal has found that the date of the completion of the building works was 4 November 2013. The statutory warranty is for 6 years for major defects and 2 years for other defects (S18E). The application was filed on 15 November 2015.

98. The defects complained of by the Lot Owners are either common property defects, in which case the Lot Owners have no standing to bring the application, or they are other defects. In any case the application is time barred as none of the defects complained about by the Lot Owners are major defects and the application was filed more than 2 years after the IOC issued which determined the completion date of the building contract.

99. The Lot Owners application is dismissed.

Costs

HB 15/61825

100. In the determination of the claim now made by the Tribunal, the Tribunal would normally consider that costs should follow the event and an order would be made in the Owners favour against the Builders pursuant to Rule 38 of the Civil and Administrative Rules 2014. However, the parties need to be given the opportunity to make submissions in respect of a costs order.

101. Any application for costs by the Owners is to be supported by evidence and submissions of no more than 3 pages in length and is to be filed with the Tribunal and served on the Builder on or before 15 August 2018.

102. Any evidence and submissions in response to the application for costs from the Builders opposing the application for costs, of no more than 3 pages in length, is to be filed with the Tribunal and served on the Owners on or before 7 September 2018

103. If there is no application made for costs by 15 August 2018 there will be no order as to costs.

HB 15/61109

104. Any application for costs by the Builder against the Lot Owners is to be supported by evidence and submissions of no more than 3 pages in length and is to be filed with the Tribunal and served on the Lot Owners on or before 15 August 2018.

105. If there is no application made for costs by 15 August 2018 there will be no order as to costs.

106. Any evidence and submissions in response to the application for costs from the Lot Owners opposing the application for costs, of no more than 3 pages in length, is to be filed with the Tribunal and served on the Builders on or before 7 September 2018.

Opportunity to make submissions about proposed order to dispense with costs hearing

107. The parties in both proceedings are to advise the Tribunal in their respective submissions as to costs if they consent to the issue of costs being determined on the papers without a hearing.

108. Alternatively the parties are to make submissions as to why such an order should not be made pursuant to section 50 of the Civil and Administrative Tribunal Act 2013.

Philip Boyce

Senior Member

Civil and Administrative Tribunal of New South Wales

2 August 2018

Amended 13 August 2018

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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

Decision last updated: 18 October 2018