Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Steele Associates Pty Ltd v Downie [2020] NSWCATAP 289 Hearing dates: 30 November 2020 Date of orders: 4 February 2020 Decision date: 04 February 2020 Jurisdiction: Appeal Panel Before: T Simon, Principal Member J Lonsdale, Senior Member Decision: (1) Leave to appeal is refused (2) The appeal is dismissed (3) The respondent is to provide to the Appeal Panel and the appellant, either in person or by post, any submissions and documents in relation to any application for costs by 12 February 2021. (4) The appellant is to provide to the Appeal Panel and the costs applicant, either in person or by post, submissions and documents on costs by 19 February 2021. (5) Costs will be determined on the papers. If either party seeks to be heard in person, they should advise the Registry prior to 19 February 2021 setting out the reasons why and the Appeal Panel will advise of the decision in due course. Catchwords: HOME BUILDING - leave to appeal, s 18F defence, against the weight evidence, expert evidence, water ingress Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2013 Home Building Act 1989 Cases Cited: Collins v Urban [2014] NSWCATAP 17 Rice v JR & SD Farmer t/a Urban Bespoke Homes [2020] NSWCATAP 208 Aon Risk Services Limited v Australian National University [2009] HCA 27 Texts Cited: None Category: Principal judgment Parties: Steele Associates Pty Ltd (Appellant) Nicolas and Clare Downie (Respondents) Representation: Counsel: Mr W Marshall (Appellant) Mr B DeBuse (Respondent) Solicitors: Applicant (Self-Represented) Watson & Watson Solicitor (Respondent) File Number(s): AP 20/39773 Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 19 August 2020 Before: D Charles – Senior Member File Number(s): HB18/45686 and HB 19/13261 REASONS FOR DECISION Background 1. The appellant builder lodged an internal appeal against a decision made on 19 August 2020 in the Consumer and Commercial Division of the Tribunal. The Tribunal ordered the appellant to pay the respondent homeowners a sum of $308,275.44 in respect of a building claim and defects. Further orders were made in relation to retention monies. The Appeal 1. The appellant appeals on three grounds: 1. The appellant alleges an error of law on the basis that the Tribunal refused to accept an email relating to the asserted defence of the appellant under s 18F of the Home Building Act 1989 (Home Building Act). 2. The appellant sought leave to appeal the Tribunal's acceptance of moisture readings as they were against the weight evidence. 3. The appellant sought leave to appeal on the basis that the Tribunal incorrectly found a lack of damp course and flashings. The appellant alleges that decision was not fair and equitable and against the weight of evidence. 1. The Appeal Panel received the following submissions and documents relating to the Appeal from the parties: 1. Notice of Appeal together with documents and submissions received from the appellant on 16 September 2020. 2. Reply to Appeal, together with documents and submissions received from the respondents on 9 October 2020. 3. Three bundles of documents and submissions received from the appellant on 20 November 2020. 4. Three bundles of documents and submissions received from the appellant on 18 November 2020. 1. The appellant also filed an application for the stay of the decision pending the appeal. The stay application was dismissed by the Appeal Panel (differently constituted) on 21 October 2020. 2. The Appeal Panel also had before it a copy of the directions that were made by the Appeal Panel and a copy of the original application that was initially made by the respondent to the Tribunal. 3. The Notice of Appeal was lodged within the 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules) and is within time. Additional material filed after the appeal 1. On 30 November 2020 and following the conclusion of the appeal, the appellant filed what it described as "short closing written submissions in respect of certain issues arising from today's hearing …". Extracts from a contract were attached to these additional submissions. 2. Correspondence received from the respondents on 2 December 2020 noted that the respondents "strongly object to further documents being produced and further submissions being made after the conclusion of the Appeal". 3. The appellant did not explain the reasons why it filed additional submissions and documents after the hearing (see Aon Risk Services Limited v Australian National University [2009] HCA 27). Section 36(1) of the Civil and Administrative Tribunal Act 2013 (NCAT Act) provides that the guiding principle for, proceedings in the Tribunal is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Section 36(2) of the NCAT Act requires the Appeal Panel to give effect to the guiding principle when it exercises any power or interprets any provision of the NCAT Act or the procedural rules. These provisions require a balancing of all relevant circumstances and the need to provide procedural fairness. 4. In circumstances where the submissions and documents were filed after the conclusion of the hearing and without any explanation as to why they have been filed at such a time (and noting the objection of the respondent) the Appeal Panel determined not to allow the additional material. Applicable legal principles – internal appeals 1. Section 80(2)(b) of the NCAT Act states: Any internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance—with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance—as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds. 1. Clause 12 of Schedule 4 to the NCAT Act states with respect to decisions made in the Consumer and Commercial Division that: An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with). 1. In the present appeal the appellant's grounds relied on errors of law and sought leave to appeal on the ground that the decision was not fair and equitable and was against the weight of the evidence. 2. The principles regarding whether or not leave to appeal should be granted under cl 12, Sch 4 of the NCAT Act were set out by the Appeal Panel in Collins v Urban [2014] NSWCATAP 17 at [76]-[84]. 3. If we are satisfied that the appellant has made out one or more of the grounds for granting leave to appeal in cl 12 of Sch 4, we must then consider whether we should exercise the discretion to grant leave to appeal under s 80(2)(b). First Ground – Declining to accept the email marked MFI1 1. The appellant served points of defence in the Tribunal on 18 March 2019 and raised the defence of s 18F of the Home Building Act. 2. During cross examination on the second day of hearing, Counsel for the appellant sought to adduce the email marked "MFI1". The email was from a director of the appellant, Mr Steele, to an employee of the architect. The Tribunal made directions for the parties to provide lay evidence in relation to the email. The matter was listed for directions after the filing of the lay evidence and oral submissions were made. The Tribunal declined to allow the email into evidence. 3. The appellant relies on the decision Rice v JR & SD Farmer t/a Urban Bespoke Homes [2020] NSWCATAP 208 (Rice) and in particular paragraph 40 where the Appeal Panel stated: In deciding whether to admit evidence or not the Tribunal is exercising a procedural discretion. The provisions of s 36 and 39 should guide the Tribunal in making such decisions, as should considerations such as the need to ensure procedural fairness and to require the parties to comply with Tribunal directions. In this case, there was no breach of the Tribunal's written directions and no injustice to the builders by allowing Mr Long's statement into evidence. The Member's decision to not allow Mr Long's statement into evidence (whether it be because the statement was in the wrong form or was not filed and served in time) was based on material errors of fact assumed by the Member, and was plainly unjust to the homeowners. 1. The appellant submits that the email is an "instruction" for the purposes of s 18F(1)(a) of the Home Building Act and that the relevant test in Collins is whether or not there was a significant possibility and a chance which was fairly open of achieving a more favourable result. The appellant submits that the refusal to admit the email into evidence was an error of law. 2. We find that the refusal was not an error of law. Directions were made for the parties to provide documents prior to the hearing. Unlike the position in Rice where the material had been served on the other side prior to the hearing, the email was produced in cross examination on the second day of hearing. The respondent put to the Tribunal the following in relation to the prejudice: 1. That they had lost the opportunity to run different claims which they had abandoned to stay within the jurisdictional limit; 2. The evidence of Mr Daniels would need to be revisited in the context of understanding the effect of any of the advice; 3. The provenance of the document would need to be explored because it was produced in circumstances where the evidence was that the architect had not received any such email and the account of Mr Steele of the events was questionable given his various corrections as to timing of the receipt of documents in particular, where minutes of meetings as evidence was adduced of facts relevant to the creation and receipt of those documents; 4. The architect would need to be called for the first time to give evidence both as to its choice of design, the effect of the design, the alleged issue identified and whether it was an issue if so, why they did not do something if they received it and what they might have done; and 5. The effect of all those issues on the time and money in the continuation of the proceedings. 1. The appellant submits that the prejudice could have been cured in relation to the matter as the third day of the hearing was some 75 days after the second hearing. However, that is not the only matter that the Tribunal was entitled to weigh up in its discretion. 2. At page 35 of the transcript of the third day of hearing, the Tribunal does not accept the reasons for the delay put by Mr Steele as adequate and draws the parties' attention to the Tribunal's objectives under s 36 of the NCAT Act. Further, there was an issue as to what the evidence may have confirmed. 3. Both parties agreed that s 18F of the Home Building Act was as it had been prior to amendments to the Home Building Act 1989 that were made in 2014 and provided that: In proceedings for a breach of statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from instruction given by the person for whom the work was done contract the advice in writing of the defendant or the person who did the work. 1. The email stated the following: Hi Matt The more I think about this, the more I am concerned that the doors and windows could leak in wind-blown rain. As we discussed on site, and as per Option 1 of the diagram I sent you, I think we need a strip drain and greater step down from inside to outside at the very least to prevent this. I understand you don't want to interrupt the connection between inside and out by having sills that are higher than the internal floor levels, but seeing as the slabs were designed and poured without stepdowns at thresholds, I can't see how else to achieve a safely water tight design. We'll build to whatever you construct, but please take my concerns into consideration when finalising these details. Regards Oliver Steele Steele and Associates. 1. The appellant alleges that the email meets the requirements of the defence in 18F of the Home Building Act. The appellant submits that the architect could be regarded at the homeowners' agent and for that purpose the email addressed to the builder was an instruction to do works contrary to the builder's advice, which was in writing. The appellant could not cite any relevant caselaw for that novel proposition. 2. The email was not copied to the homeowners and there is no evidence of any subsequent instruction from the architect or homeowners to the builder to proceed contrary to any written advice. We are not satisfied that based on that email, there would have been a significant possibility of an alternative outcome. 3. In all the circumstances, we are not satisfied that there has been an error or law or a miscarriage of justice which would warrant leave to appeal and this ground of appeal fails. Second Ground of Appeal – Meter readings 1. The appellant submits that the Tribunal failed to properly consider the variations in relation to meter readings and the data produced by the readings. The appellant had put into evidence advice from the manufacturer of the operation of the 'Tramex' meter (the water moisture reader) regarding possible limitations in relation to the reading from that meter. The advice indicated the following: … if the material under test, such as a wooden floor, is on a substrate such as concrete, the MEP (Tramex Moisture Encourter Plus) readings will be affected by the substrate, often giving a false positive reading due to the density of the concrete. In this situation, the MEP is not to be considered as measuring the wood moisture content due to the effect of the substrate. 1. The appellant submits that, in the circumstances of this build, the wooden flooring was on the concrete substrate and the reading may have been a false positive. These issues were put to the Tribunal (see [38]). 2. Having considered the reasoning of the Tribunal, we are not satisfied that the decision would amount to being against the weight of evidence or unfair and unjust. In particular, we refer to the Tribunal's finding in the reasons at [68]: I find that Mr Hall's evidence on the topic of moisture meters cannot be accepted. In any event the question of whether or not water is continuing to come into the property is answered by the written and oral evidence of Mr Daniel's and Mr Downie who both have observed water coming into the Property on many occasions. I accept the evidence in this respect. 1. In those circumstances it cannot be said that there has been a decision against the weight evidence, as the Senior Member has clearly considered the totality of the evidence. At [54] to [56] the Senior Member considered the times the experts had carried out various testings and the fact that appellant's expert did not himself undertake invasive testing, rather observing what Mr Daniels had done. The Senior Member considered at [57] what Mr Hall had put the Tribunal about the reliability of moisture meters and considering the totality of the evidence including the direct evidence of the owners as identified in [68] above concluded that there was water ingress. We find no miscarriage of justice and decline leave to appeal on this ground. Ground 3 – Findings on lack of damp course and flashings 1. The appellant submits that the Tribunal failed to consider compelling evidence adduced by the appellant in the form of photographs that he submits demonstrate a damp course and flashings. 2. Page 99 of the transcript reveals that Mr Daniels was shown the photographs during cross examination which allegedly show a damp course. However, the Tribunal ultimately finds at [76]: … that the ingress of moisture is due to the failure of the method of construction of the Property and to the failure of flashing of the sills and columns at the fixed glaze wall, and that this has caused damage to the timber strip flooring and the infestation of mildew and fungal growth. 1. It is clear from this paragraph that the finding relates to the construction of the property and not, as is asserted by the appellant, an absence of a damp course or flashings. 2. In the circumstances, we find not satisfied to grant leave to appeal on this ground. Conclusion 1. For reasons identified above, we find the appeal fails on all three grounds. Costs 1. As the amount in dispute on appeal exceeds $30,000, the Tribunal may award costs in the proceedings even in the absence of special circumstances (see s 60 of the NCAT Act and rules 38 and 38A of the Rules). 2. Accordingly, the Appeal Panel has made orders in this decision for any application of costs to be made, along with submissions to assist the Tribunal. Order 1. The Appeal Panel makes the following orders: 1. Leave to appeal is refused 2. The appeal is dismissed 3. The respondent is to provide to the Appeal Panel and the appellant, either in person or by post, any submissions and documents in relation to any application for costs by 12 February 2021. 4. The appellant is to provide to the Appeal Panel and the costs applicant, either in person or by post, submissions and documents on costs by 19 February 2021. 5. Costs will be determined on the papers. If either party seeks to be heard in person, they should advise the Registry prior to 19 February 2021 setting out the reasons why and the Appeal Panel will advise of the decision in due course. I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar ********** 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 Amendments 09 February 2021 - Amended publishing date from 3 February 2021 to 4 February 2021. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 09 February 2021