Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Noel v Intelpools Pty Ltd [2021] NSWCATAP 199 Hearing dates: 24 May 2021 Date of orders: 30 June 2021 Decision date: 30 June 2021 Jurisdiction: Appeal Panel Before: D Cowdroy AO QC ADCJ, Principal Member D Robertson, Senior Member Decision: (1) Appeal allowed. (2) Orders 1 to 4 made in proceedings GEN 20/03844 on 1 March 2021 are set aside. (3) The proceedings are remitted to the Consumer and Commercial Division of the Tribunal, differently constituted, for determination according to law. Catchwords: CONSUMER LAW — consumer guarantees — supply of services — when cause of action arises Legislation Cited: Australian Consumer Law (Cth) Civil and Administrative Tribunal Act 2013 (NSW) Fair Trading Act 1987 (NSW) Home Building Act 1989 (NSW) Cases Cited: Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 Cyril Smith & Associates Pty Ltd v The Owners ‑ Strata Plan No 64970 [2011] NSWCA 181 Owen v Kim [2017] NSWCATAP 26 Pullen v Gutteridge Haskins and Davey Pty Ltd [1993] 1 VR 27 Sacks v Hammoud [2016] NSWCATAP 225 Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 Texts Cited: Nil Category: Principal judgment Parties: Michael Wayne Noel (Appellant) Intelpools Pty Ltd (Respondent) Representation: Solicitors: Ardent Lawyers (Appellant) Maguire and McInerney Lawyers (Respondent) File Number(s): 2021/00085354 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not reported Date of Decision: 26 February 2021 Before: L Wilson, Senior Member File Number(s): GEN 20/03844 REASONS FOR DECISION Background 1. The appellant appeals a decision of the Tribunal delivered on 26 February 2021 in proceedings GEN 20/03844 ("the proceedings"). 2. The appellant instituted the proceedings against the respondent ("Intelpools") alleging that Intelpools had breached consumer guarantees provided by the Australian Consumer Law ("ACL") in respect of the supply and installation by Intelpools of a fibreglass swimming pool pursuant to a contract dated 11 September 2013. 3. The Tribunal found that the appellant's claim was instituted more than three years after the cause of action first arose, which the Tribunal identified as "when the cause of action is first discoverable or ascertainable, that is when it could have become known with reasonable diligence". The Tribunal found that "the applicant could have discovered the alleged damage he now claims the respondent caused, had he employed reasonable diligence, in October 2015, when he expressed to the respondent his view that the pool needed to be lifted and reinstalled, among other things". 4. The Tribunal held that, in consequence, the limitation provisions contained in section 79L of the Fair Trading Act 1987 (NSW) operated as a bar to the appellant succeeding in his claim which the Tribunal accordingly dismissed. It is from that decision that the appellant now appeals. Facts 1. By a contract in writing entitled "The Pool and Spa Contract" made between the appellant and the respondent dated 11 September 2013, Intelpools, for consideration of $20,000, agreed to supply and install a fibreglass swimming pool at the home of the appellant. The pool installation was completed on about 2 December 2013, however, issues with the pool arose almost immediately. 2. By email dated 18 February 2014 the appellant emailed Intelpools stating, inter alia: "However I am becoming extremely concerned in regard to the delay in completing the installation of the pool. As supported by the attached photos, the pool structure is sagging around the internal stairs. Unless the pool is adequately backfilled and supported, the fibreglass will develop stress fractures which will compromise the integrity of the pool structure itself. You will notice in the pictures that the waterline is lower in spots which highlights that the fibreglass is sagging due to the lack of backfill." 1. By email dated 31 July 2014 the appellant again emailed the respondent pointing out that "the top edge of the steps sits lower on one side than the other". The email continued: "Thirdly, the backfill under the steps appears to have settled (possibly enhanced by the leak) and when you step on the fibreglass edge of the pool, there is an audible crunch as the fibreglass scrapes against the concrete bond beam. I would like these issues dealt with and resolved before the warranty expires". 1. By email dated 5 February 2015 the appellant wrote: "Unfortunately the pool is still leaking and the water level drops by 2cm – 3cm a day. … I [feel] that the pool being out of level may have something to do with a leak. I realise that the pool is now out of warranty, however, these issues were raised months and months beforehand." 1. By email dated 15 September 2015 Intelpools offered to refund the amount of $1,800 on the basis that Intelpools: "… will then not accept any further comeback on the fact that the shell is out of level… However, the shell and all the equipment etc is still covered under warranty and we obviously will stand by that, as per contract". 1. The appellant declined to accept that offer and by email dated 22 October 2015 stated, inter alia, that the internal stairs had sunk and were not horizontal; that the internal stairs sloped backwards; and that there were hollow spots under the stairs "where the soil continues to settle". The appellant continued: "For these two reasons, I am not prepared to accept the pool being out of level. I am not confident that the level of the pool will not continue to sink. I am therefore requesting the level of the pool be fixed together with the backfilling around the pool and in particular under the internal steps. I know Steve previously said he did not want to pull the pool shell out and 'reinstall' it. However the pool as it stands has not been installed as per contract." Subsequent events 1. There is no evidence of further communications between the parties between the email of 22 October 2015 and September 2018. In evidence to the Tribunal the appellant claimed that in September 2018 the pool "cracked" causing the water level to drop and the pool to rise above the ground. Notification was said to have been provided to Intelpools by telephone. The appellant also asserted that a second telephone call was made by the appellant to Intelpools in October 2018. There is no evidence of further communications until October 2019 when the appellant informed the respondent that he had repaired the crack himself and requested Intelpools to return to reset the pool to avoid future problems. No further action was taken by the appellant to pursue his claim that the pool was installed incorrectly causing it to fail and crack, until proceedings were commenced in the Tribunal on 24 January 2020. Finding of Tribunal 1. The Tribunal found that the appellant's cause of action accrued by October 2015 at the latest. The Tribunal rejected the contention that the pool "popped" or cracked in September 2018, finding it most unlikely that, if that had occurred, the appellant would not have expressed his concern in writing to Intelpools, yet no follow-up had occurred until October 2019. The Tribunal recorded that the witnesses called by Intelpools, whom the Tribunal found to be "very thorough and forthright in their evidence", had no recollection of any contact from the appellant between October 2015 and 10 December 2019 and the Tribunal accepted their evidence in this respect. 2. As the Tribunal found that the cause of action arose at least by 22 October 2015, it followed that the period of three years in which the appellant was entitled to bring his action in the Tribunal expired in October 2018 and the Tribunal had no jurisdiction in respect of the claim. Issue for determination by Tribunal 1. The sole issue determined by the Tribunal, as a threshold question, was whether the appellant's claim had been instituted within three years of his cause of action arising. Section 79L of the Fair Trading Act limits the jurisdiction of the Tribunal with respect to consumer claims as follows: 79L Limitation periods (1) The Tribunal does not have jurisdiction to hear and determine a consumer claim if any of the following apply— (a) The cause of action giving rise to the claim first accrued more than three years before the date on which the claim is lodged, (b) The goods or services to which the claim relates were supplied (or, if made in instalments, were last supplied) to the claimant more than 10 years before the date on which the claim is lodged. (2) Nothing in this section affects any period of limitation under the Limitation Act 1969. Submissions of the appellant 1. The appellant, in summary, submits that the Tribunal ought to have found that the limitation period did not commence until the "real" issues with the pool became manifest in September 2018, when there was a "major failure"; that the Tribunal erred in finding that the issues reported in October 2015 were "the same breach and the same remedy" as that which occurred in September 2018; and that the appellant could not reasonably have been expected to have known that Intelpools' failure to action the appellant's concern expressed in his email of 22 October 2015 would or could result in the pool being rendered completely inoperable. 2. The appellant submits that it was not until the pool cracked "and water spilled out of the pool underneath the pool causing the pool to lift, enabling the appellant to see for himself and identify that the capping of the pool and the pool itself is not supported by sufficient backfilling of the pool" that the true defect was identified. 3. In support of this submission, the appellant refers to an expert opinion of Habitat Building Consultancy dated 13 July 2020 which, with reference to the cracking of the pool, stated: 1. "… The backfill does not have sufficient cement content and/or has not [been] adequately mixed as part of mixing process and/or during the course of being backfill". 2. "The "remedial works" carried out by Autumn Solar of adding the concrete beneath the steps leading down into the pool, is likely to have exacerbated the issue by [creating] a localised 'hard spot' i.e. at the steps"; and 3. "The coping detail is not supported on natural ground or stabilised fill material." 1. The appellant referred the Appeal Panel to the decision of the High Court of Australia in Wardley Australia Ltd v The State of Western Australia (1992) 175 CLR 514; [1992] HCA 55 ("Wardley") which, in summary, determined that a cause of action for breach of the Trade Practices Act 1974 (Cth) does not accrue until loss and damage arising from the contravention is sustained. The appellant also relied upon the decision in Sacks v Hammoud [2016] NSWCATAP 225 at [56] in which the Appeal Panel observed that a cause of action under section 267(4) of the ACL: "… has two discrete elements: a failure to comply with a guarantee under Subdivs of Div 1 of Pt 3-2 of the ACL NSW… and suffering loss or damage as a result of such failure. It follows that the cause of action under s 267(4) does not accrue until loss or damage is sustained as a result of the alleged failure to comply…" 1. The appellant submits that the Tribunal erred in finding that the pool did not "pop" in September 2018. The appellant submitted that the respondent's manager, Ms Amanda Merrett, admitted, in the course of cross-examination, that the appellant telephoned the respondent's office in September 2018 informing the respondent of the pool "popping", and also submitted that Ms Merrett agreed that the appellant telephoned again in October 2018 as a result of the respondent's inaction and acknowledged that it was "possible" that the appellant telephoned again. 2. We note that the transcript of the hearing provided by the parties discloses that Ms Merrett recalled a conversation with the appellant in September 2018 in which she informed the appellant that the file had been archived and that she would recall the file and get back to him. She did not recall other details of the call but would have passed the service call on to whoever was handling the service works at the time. 3. Ms Merrett also accepted that it was possible that the appellant called again in October 2018. 4. The appellant seeks leave to refer to an affidavit of Janelle Marie Noel Swan dated 30 April 2020 which it is claims provides additional support to confirm "the timeframe in which the major failure took place". That affidavit is fresh evidence that was not before the Tribunal at first instance. As this appeal is an internal appeal from the Consumer and Commercial Division under section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) ("the Act"), the Appeal Panel may grant leave to appeal on the basis of evidence that was not before the Tribunal at first instance, only if the evidence constitutes "significant new evidence" that "was not reasonably available at the time the proceedings under appeal were being deal with" (see clause 12(1)(c) of Schedule 4 to the Act). 5. The fresh evidence seeks to confirm that the pool "popped" and water escaped from it on a date in 2018. Evidence was given to this effect by the appellant. It was rejected by the Tribunal, the Tribunal finding at [41] of its reasons: "… There is no evidence from his family who were apparently in the pool at that time and apparently heard the 'pop'." 1. The fresh evidence is obviously sought to be relied upon to address that finding of the Tribunal. However, it was evidence that could have been called at the time of the first hearing. There is no explanation why such evidence was not called at that time. We are not persuaded that the evidence was not reasonably available at the time of the hearing at first instance: see Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 at [19]‑[29] and Owen v Kim [2017] NSWCATAP 26 at [37]‑[39]. 2. The evidence before the Tribunal suggested that the appellant could not determine what was causing the pool to not be level and appearing to be lifting out of the ground. The appellant had called an expert from Aqua Pools to inspect the pool and the advice which the appellant received was to the effect that the "only way you're going to find out what's gone on is to pull the pool out. Once you've got the pool out you'll see everything". The evidence indicates that the appellant knew there was an issue with backfilling. 3. It is clear from the evidence that at least by 11 February 2015 it was apparent that there was some difficulty with the pool, and that there were ongoing discussions with the respondent at the conclusion of which an offer of $1,800 was made by the respondent. However, the defects apparent at that stage, namely 22 October 2015, as found by the Tribunal at [27], were the fact that the pool was "out of level" and the appellant's concern that the pool was sinking and that it needed to "be fixed together with the backfilling around the pool and in particular under the internal steps". As the Tribunal recorded: "In closing the email, the applicant [appellant] wrote 'I know Steve previously said he did not want to pull the pool shell out and 'reinstall' it. However the pool as it stands has not been installed as per contract'." 1. It is not clear on the evidence before the Tribunal, and the Tribunal did not expressly find, that at this stage, that is October 2015, the appellant knew the nature of the defects (if any) which ultimately led to the cracking of the pool. Such defects may not have been limited to insufficient backfill. It is possible that other defects existed in the construction. It is also possible that there were causes unrelated to construction, such as a geological fault beneath the pool. Applicable principles 1. In Wardley it was made plain that a cause of action for breach of section 52 of the Trade Practices Act required two distinct elements to exist: a breach of the statute, and damages which are capable of being quantified. In that decision the majority (Mason CJ, Dawson, Gaudron and McHugh JJ) considered the question when such damage existed. Their Honours said (at 527): "When a plaintiff is induced by a misrepresentation to enter into an agreement which is, or proves to be, to his or her disadvantage, the plaintiff sustains a detriment in a general sense on entry into the agreement. That is because the agreement subjects the plaintiff to obligations and liabilities which exceed the value or worth of the rights and benefits which it confers upon the plaintiff. But… detriment in this general sense has not universally been equated with the legal concept of "loss or damage". And that is just as well. In many instances the disadvantageous character or effect of the agreement cannot be ascertained until some future date when its impact upon events as they unfold becomes known or apparent and, by then, the relevant limitation period may have expired. To compel a plaintiff to institute proceedings before the existence of his or her loss is ascertained or ascertainable would be unjust. Moreover, it would increase the possibility that the courts would be forced to estimate damages on the basis of likelihood or probability instead of assessing damages by reference to established events." 1. Their Honours later said (at 533): "The conclusion which we have reached is reinforced by the general considerations to which we referred earlier. It is unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. .… In such cases it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled." 1. Deane J made observations concerning the purpose of section 82(1) of the Trade Practices Act, stating (at 543): "In so far as context is concerned, the context provided by the fact that an action under s 82(1) is to recover "the amount of the loss or damage" and by other provisions of the Act lends some support for the conclusion that loss or damage has not been suffered for the purposes of s 82 at a stage where all that is involved is an isolated contingent liability to make a future payment in the event that some possible or even likely, but nonetheless uncertain, future state of affairs comes about. In particular, s 87 of the Act expressly distinguishes between the actual suffering of loss or damage and the likelihood (or contingency) that loss and damage will be suffered in the future." 1. Deane J also observed that if a claim were instituted in the absence of quantification of loss, the result would be speculation. His Honour said (at 545): "The result would be to require the institution of proceedings before it was known whether any concrete loss or damage would ever come home, in order to avoid the possible injustice of a legitimate claim being barred if action was not instituted until it could be seen whether the contingent liability would result in ultimate loss." 1. Toohey J stated (at 551): "There can be no "action" under sub-s (1) unless the plaintiff has suffered loss or damage. Until that time no cause of action has accrued. Does that mean when the plaintiff has suffered any loss or damage whatsoever? Or does it mean the loss or damage for which the plaintiff claims damages? Or does it mean something else? One thing is clear. A person may not bring an action under s 82 (1) unless he or she has actually suffered loss or damage." 1. In the present circumstances, whilst the appellant believed, in October 2015, that the respondent had breached its warranty, and was aware of some issue with the backfilling (at least around the stairs), the pool was being used. Not until the expert's report obtained by the appellant came into existence was the full extent of the defective installation apparent. The report of Aqua Pools dated 6 April 2020 records as follows: "As you can plainly see from the images, the pool shell itself was not only insufficiently packed, but stabilised sand was not used at all. Especially in and around the seat. Therefore, there was no support provided to the pool shell therefore causing fractures and eventual failure of the pool structure. It was also noted, that the return water PVC piping joint was not glued. As this plumbing is actually pumping water under pressure. This would have caused constant excessive water loss beneath the pool which would have exacerbated the pool shell lifting as a water level dropped." 1. As an Appeal Panel recognised in Barbour v Autosports Five Dock Pty Ltd [2020] NSWCATAP 141 at [49]‑[54], in order to determine whether an application brought in the Tribunal is within the time limits laid down in s 79L of the Fair Trading Act, it is necessary to identify the cause or causes of action relied upon. Only once the causes of action are identified can the elements of each cause of action be ascertained and the question when each cause of action was complete be addressed. 2. In this case it was always clear that the appellant's claim related to the alleged failure of the respondent to comply with one or more of the consumer guarantees arising pursuant to Division 1 of Part 3-2 of the ACL. 3. The Tribunal observed, at [7], that the application was brought as a consumer claim, that is a claim brought in the Tribunal pursuant to s 79I of the Fair Trading Act, falling within the definition of "consumer claim" in s 79E of the Fair Trading Act, that is, relevantly, "a claim by a consumer for the payment of a specified sum of money that arises from a supply of goods or services by a supplier to the consumer". The Tribunal noted that the claim was not brought under the Home Building Act 1989 (NSW) because "it is well outside the statutory warranty period for a home building claim". The Tribunal did not undertake any further analysis of the nature of the claim. 4. Although the appellant's submissions suggested that the claim arose in respect of a breach of the consumer guarantees applicable to the supply of goods (ss 54 and 55 of the ACL), it is clear in our view that the claim relates to the supply of services (that is the installation of the pool) and not the supply of goods, in that it was not suggested that the problems experienced by the appellant arose from any defect or shortcoming of the pool shell itself. 5. As such, the appellant's claim was for breach of one or other of the consumer guarantees in ss 60 and 61 of the ACL. Those sections provide: 60 Guarantee as to due care and skill If a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill. 61 Guarantees as to fitness for a particular purpose etc. (1) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer; there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose. (2) If: (a) a person (the supplier) supplies, in trade or commerce, services to a consumer; and (b) the consumer makes known, expressly or by implication, to: (i) the supplier; or (ii) a person by whom any prior negotiations or arrangements in relation to the acquisition of the services were conducted or made; the result that the consumer wishes the services to achieve; there is a guarantee that the services, and any product resulting from the services, will be of such a nature, and quality, state or condition, that they might reasonably be expected to achieve that result. (3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier. (4) This section does not apply to a supply of services of a professional nature by a qualified architect or engineer. 1. The remedies for a breach of ss 60 or 61 arise pursuant to s 267 of the ACL which provides: 267 Action against suppliers of services (1) A consumer may take action under this section if: (a) a person (the supplier) supplies, in trade or commerce, services to the consumer; and (b) a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3‑2 is not complied with; and (c) unless the guarantee is the guarantee under section 60—the failure to comply with the guarantee did not occur only because of: (i) an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or (ii) a cause independent of human control that occurred after the services were supplied. (2) If the failure to comply with the guarantee can be remedied and is not a major failure: (a) the consumer may require the supplier to remedy the failure within a reasonable time; or (b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time—the consumer may: (i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or (ii) terminate the contract for the supply of the services. (3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may: (a) terminate the contract for the supply of the services; or (b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services. (4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure. (5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3). 1. The appellant submitted that the defects in the pool constituted a "major failure". However, in respect of that submission, the appellant's written submissions referred to s 260 of the ACL, which is applicable to the supply of goods, not the supply of services. 2. Section 267 of the ACL provides three distinct causes of action in respect of a failure to comply with a consumer guarantee in respect of the supply of services. Sub-sections (2) and (3) provide alternative causes of action depending upon whether the failure to comply with the guarantee can be remedied and whether it is a major failure. The causes of action arising under s 267(2) and (3) are not dependent upon loss or damage. 3. It does not appear that either cause of action was relied upon in this case. 4. There is no suggestion the appellant had had the defect remedied (so s 267(2)(b)(i) is not applicable) and it is not apparent that the appellant sought to recover compensation for any reduction in the value of the services below the price paid (pursuant to s 267(3)(b)). 5. Sub-section 267(4) provides a separate and additional cause of action which, consistently with the principles outlined in Wardley, Sacks v Hammoud and Barbour v Autosports Five Dock Pty Ltd, arises when a consumer suffers loss or damage by reason of a breach of a consumer guarantee relating to the supply of services. 6. The Tribunal determined at [49] that the cause of action arose when it was "first discoverable or ascertainable, that is, when it could have become known with reasonable diligence". 7. The Tribunal further determined at [50] that the appellant "could have discovered the alleged damage he now claims the respondent caused, had he employed reasonable diligence, in October 2015, when he expressed to the respondent his view that the pool needed to be lifted and reinstalled". 8. In our view the question when loss or damage first arises from a latent defect in a building or construction is not necessarily answered by the "discoverable with reasonable diligence" test applied by the Tribunal. 9. In Pullen v Gutteridge Haskins and Davey Pty Ltd [1993] 1 VR 27 ("Pullen") the question of damage centred on a swimming pool constructed in Melbourne. Damage to the pool was apparent more than six years before the commencement of the proceedings but the underlying defect which was the cause of the damage could not be ascertained until less than six years before commencement. 10. The Appeal Division of the Victorian Supreme Court identified the question as follows (at 65): "… The cause of action being for negligence, it is not complete until damage not negligible is sustained by the plaintiff. The question is when in contemplation of law damage is first sustained in a case like the present. The respondent says that damage is sustained as soon as physical damage is done to the structure.... The appellant contends that in a case like the present damage is not sustained, and so time does not begin to run, until either the latent defect in the building is actually discovered or it becomes manifest in the sense of becoming discoverable by reasonable diligence. The judge accepted the appellant's submission here but found that the appellant had in fact discovered 'the defects and damages flowing therefrom' more than six years before the commencement of the first action." 1. The Appeal Division accepted the appellant's submissions, holding (at 70): "The present respondent fails in its attempt to distinguish the present case as one of physical damage by reason of the damage to the structure consequential upon the latent defect." And (at 71): "Time began to run in the present case when the latent defect first became known or manifest. The latent defect was the inadequacy or unsuitability of the footings…" 1. Pullen was considered by the New South Wales Court of Appeal in Cyril Smith & Associates Pty Ltd v The Owners ‑ Strata Plan No 64970 [2011] NSWCA 181 ("Cyril Smith") 2. In Cyril Smith (at [17]) Basten JA, delivering the judgment of the Court, said: … Pullen is authority for the proposition that even where actual damage caused by the latent defect in the building has been suffered more than six years before the commencement of litigation, the cause of action does not accrue until the link between the physical manifestation and the underlying defect is known or ought to be known. …" 1. His Honour held (at [19]): "… it is necessary for this Court to follow the decision of the Appeal Division in Pullen , unless satisfied that it was clearly wrong. Not only is it not clearly wrong, but it is not necessarily wrong in any sense: all that can be said is that it appears to involve a development of the general law which may not find unequivocal support in the authorities upon which it relied." 1. Nevertheless, in the Cyril Smith case the Court of Appeal concluded the extension of principle accepted in Pullen was not applicable on the facts. Cyril Smith concerned issues of water penetration into units in a strata scheme. Proceedings were brought against the architect alleging that the water penetration was a consequence of faulty design of the windows. 2. Basten J held (at [24]): "The primary judge stated that 'the physical defect, the cracking in the walls and ingress of water was observable, but the latent defects, the faulty design of the windows ...' were not. This approach takes the test one step further than Sutherland Shire Council, as explained in Hawkins, and Pullen . Those cases are authority, at most, for the proposition that it is the physical defect which must be known or manifest, not that the cause of the defect must be identifiable. The relevant defect in the building was not the design, installation or inspection of the windows, but the windows themselves. Once it was appreciated that the windows themselves were defective (in that they were not adequately watertight) the defect was known. The physical consequence of the defect, namely the ingress of water, was not itself the defect, although it might well have been sufficient to lead a reasonable person to make inquiry and thus discover the defect. In this respect, there is an important distinction between a case of water penetration into a room, where the point ingress can readily be investigated, and the adequacy of footings or foundations to a building, which can often only be inspected with difficulty..." 1. In our view the Tribunal in this case failed to consider whether the alleged defect in the installation of the pool, as opposed to consequential damage caused by the faulty installation, could have been discovered with reasonable diligence in October 2015. In that respect the Tribunal failed to apply the correct legal test to determine whether the alleged defect in the installation of the pool was reasonably discoverable, and thereby made an error on a question of law. 2. Accordingly, the appeal must be allowed and the proceedings remitted for rehearing. As the decision under appeal contains adverse findings with respect to the credibility of the appellant, the proceedings should be remitted to the Consumer and Commercial Division of the Tribunal, differently constituted. 3. We note that the appellant's Notice of Appeal raised challenges to the Tribunal's factual findings, in particular in relation to whether the pool "popped" in September 2018 and whether the appellant telephoned the respondent at that time. 4. Because of our conclusion that the decision should be set aside, we have not determined those grounds of appeal. To the extent those factual disputes are relevant to the determination of the proceedings, the Member conducting the further hearing will need to determine those disputes afresh, on such evidence as the parties may see fit to adduce. 5. Nothing we have said should be taken to be confirmation or rejection of any factual finding made by the Tribunal. 6. We further note that these proceedings are an illustration of the proposition stated in Wardley at 533‑534: "We should, however, state in the plainest of terms that we regard it as undesirable that limitation questions of the kind under consideration should be decided in interlocutory proceedings in advance of the hearing of the action, except in the clearest of cases. Generally speaking, in such proceedings, insufficient is known of the damage sustained by the plaintiff and of the circumstances in which it was sustained to justify a confident answer to the question." 1. The determination of whether any defect in the installation of the pool was ascertainable with reasonable diligence at any point of time will require consideration of precisely what the defect was and the extent to which that defect should have been apparent from the physical phenomena observed by the appellant. 2. Although we do not make any direction limiting the Consumer and Commercial Division in this regard, we are of the view that the question whether the proceedings were brought within time should not be determined as a threshold question, but rather as part of the determination of, and after a hearing of evidence in respect of, all issues arising in the proceedings. Orders 1. Appeal allowed. 2. Orders 1 to 4 made in proceedings GEN 20/03844 on 1 March 2021 are set aside. 3. The proceedings are remitted to the Consumer and Commercial Division of the Tribunal, differently constituted, for determination according to law. ********** 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 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: 30 June 2021