Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Chen v Austral Built Pty Ltd [2022] NSWCATAP 67 Hearing dates: 17 February 2022 Date of orders: 15 March 2022 Decision date: 15 March 2022 Jurisdiction: Appeal Panel Before: The Hon D A Cowdroy, AO QC, Principal Member D Charles, Senior Member Decision: 1. The appeal is upheld in respect of order 2 made on 6 October 2021 in the Tribunal proceedings constituted by file no HB 21/26484 (the first instance proceedings). 2. Order 2 in the first instance proceedings is set aside and in substitution the Appeal Panel orders: a) Within two months of the date of publication of these orders, pursuant to s 48O(1)(c) of the Home Building Act 1989 (NSW), the respondent is to prepare, or cause to be prepared, a sewer service diagram for completion of the residential building work the subject of the appellant's application in the first instance proceedings, is to arrange with NSW Fair Trading for all necessary inspections to take place, and is also to arrange for the issue of a certificate of compliance in respect of the sewerage and plumbing works carried out by the respondent under its Building Contract with the appellant dated 14 September 2017 for the construction of a Two Bedroom Granny Flat with tiled roof attached with a single garage; b) Pursuant to Schedule 4 Clause 8 of the Civil and Administrative Tribunal Act, 2013 (NSW) the appellant has leave to renew the proceedings in the Tribunal's Consumer and Commercial Division if there is non-compliance with order 2(a) by the respondent. Catchwords: APPEAL – error of law – scope of works in contract for residential building work – obligation of builder to provide sewer service diagram – work and services order made Legislation Cited: Home Building Act 1989 (NSW) Civil and Administrative Tribunal Act 2013 (NSW) Cases Cited: Shell UK Limited v Lostock Garages Ltd [1976] 1 WLR 1187 Miller v Hancock [1893) 2 QB 177 Liverpool City Council v Irwin [1977) AC 239 Commonwealth Bank of Australia Ltd v Parker (2014) 253 CLR 169; [2014) HCA 32 Copyright Agency Ltd v New South Wales (2008) 233 CLR 279; (2008) HCA 35 Texts Cited: None cited Category: Principal judgment Parties: Jane Chen (Appellant) Austral Built Pty Ltd (Respondent) Representation: Appellant (self-represented) Respondent (no appearance) File Number(s): 2021/00311656 Publication restriction: Unrestricted Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 6 October 2021 Before: D Zeigler, Senior Member File Number(s): HB 21/26484 REASONS FOR DECISION Introduction 1. By Notice of Appeal filed on 2 November 2021, the appellant appeals the decision of the Tribunal in its Consumer and Commercial Division, delivered on 6 October 2021 in the proceedings constituted by file no HB 21/26484 (the first instance proceedings). 2. In the first instance proceedings, the appellant (as applicant) sought orders of the Tribunal under the Home Building Act 1989 (NSW) (HB Act). The appellant claimed that the respondent, a builder, had delayed the completion of residential building work, namely, the construction of a "Two Bedroom Granny Flat with tiled roof attached with a single garage" at the rear of the appellant's premises in Punchbowl NSW. The residential building work was carried out pursuant to a written contract made between the appellant as owner and the respondent as builder bearing date 14 September 2017 for a contract price of $160,000 including GST (Building Contract). 3. It was also the appellant's case against the respondent in the first instance proceedings that the respondent had failed to provide the necessary documentation for the sewerage and drainage works carried out by the respondent to enable certification by Sydney Water. 4. In its decision in the first instance proceedings delivered on 6 October 2021, the Tribunal found that the appellant was entitled to delay damages amounting to $7,830 and ordered that the respondent pay that amount to the appellant (Order 1). However, the balance of the appellant's application for orders of the Tribunal in the first instance proceedings was dismissed (Order 2). Specifically, with respect to the claim that the respondent must provide an updated sewer service diagram for the "granny" flat, the Tribunal found: [39] There is no provision of the contract between the parties which imposes an obligation on the builder to prepare or lodge an updated sewer diagram and the applicant has been unable to specify any statutory obligation on the builder to do so. [40] Accordingly I am not satisfied that there is any legal basis for the Tribunal to make an order requiring the builder to prepare or submit an updated sewer diagram and therefore this part of the application cannot succeed. 1. This appeal is confined to the issue of whether the Tribunal should have found that there was an obligation on the part of the respondent builder under the Building Contract to provide such documentation. Non-attendance of respondent 1. We observe that the respondent did not appear before the Tribunal at first instance, nor did the respondent appear at this appeal nor take any steps to oppose the appeal by the filing of a Reply and/or written submissions opposing the appeal. The Tribunal specifically commented in its decision that at that hearing it had made several attempts to contact the respondent at the telephone number provided on the application. On the first attempt a voicemail message was left for the respondent advising the respondent that if its representative did not make him or herself available by telephone for the hearing, the hearing would proceed in the respondent's absence. A second attempt was made several minutes later to no avail. 2. The Tribunal's Reasons in the first instance proceedings state: [6] There appears on the Tribunal file a copy of a notice of hearing addressed to the respondent dated 22 July 2021 advising the time and location of the hearing. A notice of hearing is addressed to the respondent's address for service and principal place of business specified for the respondent in the ASIC company extract provided for the respondent. [7] Having perused the Tribunal file I am satisfied that in accordance with the Divisional Registrar's usual practices, notice of hearing of today's proceedings was posted to the respondent, that it has been given notice of the hearing and that the hearing notice has not been returned. [8] Further, I am satisfied that the justice of the case requires the matter proceed in the absence of the respondent having regard to the following: (1) The respondent has failed to attend on this occasion and on the previous occasion without putting any explanation before the Tribunal. (2) The respondent has not complied with directions regarding the exchange of evidence. (3) The applicant has attended, prepared her case in accordance with the Tribunal's directions and is ready to proceed. (4) The applicant has made attempts to resolve this matter directly with the respondent without success. 1. In respect of this appeal, the Appeal Panel's file shows that a call over was held on 1 December 2021. Leave was given to the respondent to be represented by N Islam. The respondent was directed to file and serve a Reply to Appeal by 8 December 2021. The appellant was directed to file and serve the documents (evidence and submissions) on which she sought to rely in support of her case for orders of the Appeal Panel by 22 December 2021. The respondent was directed to file and serve the documents (evidence and submissions) on which it sought to rely in opposition to the appeal by 21 January 2022. The appellant could then file and serve any written submissions in reply by 28 January 2022. 2. In addition to the material attached to the Notice of Appeal which was lodged on 2 November 2021, the appellant filed and served her additional evidence and submissions as directed by the Appeal Panel. 3. However, as indicated, the respondent did not file and serve a Reply to Appeal. Nor did the respondent file and serve any evidence or submissions in opposition to the appeal. 4. At the appeal hearing on 17 February 2022, there was no appearance by or on behalf of the respondent at 10:15 AM. A further call was made at 10:20 AM but to no avail. No explanation for the respondent's non-attendance was provided to the Appeal Panel. 5. In all of those circumstances, we determined to continue with the hearing of the appeal, noting that the respondent had been afforded procedural fairness by reason of the earlier orders at the call over, which had given the respondent an opportunity to file and serve written material in opposition to the appeal. Internal Appeals 1. This is an internal appeal made under s 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). Internal appeals may be made as of right on a question of law: NCAT Act, s 80(2)(b). 2. Because the issue raised in the appellant's appeal is a question of law, we are satisfied that the appellant has an appeal as of right and that leave to appeal is not required. 3. In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including the setting aside of the decision under appeal and for another decision to be substituted for it: NCAT Act, s 81(1)(d). 4. Further, the Appeal Panel may exercise all the functions that are conferred or imposed by the NCAT Act and other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance: NCAT Act, s 81(2). The other legislation includes the HB Act. Consideration 1. In Schedule 1 of the Building Contract, clause 14 provides: 14. Planning and Building Approvals The builder will act as the owner's representative in order to obtain the relevant building approvals. Refer to the inclusions, exclusions and special conditions at Schedule 2, 3 & 4 for details of which fees are specifically included in and excluded from the contract price. 1. Schedule 2 of the Building Contract refers to the inclusions in the scope of works required to be undertaken by the respondent builder. Under the heading 'Site Preparation' are the following items: ● Sewer connection – 15m provision from the slab edge to existing (AUD 90/m in excess of provision) ● Stormwater – 15 m provision from slab edge to existing (AUD 90/m in excess of provision) 1. Also in Schedule 2 of the Building Contract under the heading 'Bathroom' is this item: ● Plumbing Works: All plumbing work compliant with ASNZ3500 1. While there is no express provision which requires the respondent to provide a sewer service diagram and certification for the sewerage and plumbing works undertaken by it under the Building Contract, we find that there is another issue which should have been considered in the first instance proceedings. Such issue is whether, taking into account the scope of the building works, a term of the Building Contract should be implied, namely that the builder would attend to certification of the building works which it, or its subcontractors, were to perform at the appellant's premises under the Building Contract. The scope of the works shows that the builder was required to carry out residential building work including sewerage and plumbing works. In our opinion, it was an error of law that the Tribunal in the first instance proceedings did not consider that there was an obligation incumbent upon the builder to arrange for a sewer service diagram, for the necessary inspections to occur, and for certification to be provided by the relevant regulatory authorities. We are satisfied that the builder's obligation arises by way of an implied term from the contractual obligations on the part of the respondent builder to perform residential building work under the Building Contract in accordance with the relevant statutory building requirements. 2. The basis for the implication of an implied term has been considered as arising from the nature of the contract. In Shell UK Limited v Lostock Garages Ltd [1976] 1 WLR 1187 at 1196, Lord Denning MR expressed the opinion that the recognition of the term implied by law depended on what was "just and reasonable in the circumstances" however, the term must be "a basis without which the whole transaction is futile": see Miller v Hancock [1893) 2 QB 177 at 181 per Bowen LJ. Other opinions have suggested that the test is one of "necessity" see Liverpool City Council v Irwin [1977) AC 239 at 254; Commonwealth Bank of Australia Ltd v Parker (2014) 253 CLR 169; [2014) HCA 32 at [29], [82] – (90] and [114]; Copyright Agency Ltd v New South Wales (2008) 233 CLR 279; (2008) HCA 35 at [92] – [93]. 3. Further, the statutory warranties in s 18B of the HB Act apply such that the residential building work undertaken pursuant to the Building Contract made between the parties was required to be done in accordance with and to comply with the HB Act and other relevant building law: see s 18B(1)(c). We are satisfied that one requirement of the relevant building law is for a Certificate of Compliance to be issued by NSW Fair Trading and that such Certificate cannot issue until there has been an inspection of the residential building work completed under the Building Contract and the prior preparation of a sewer service diagram. 4. The documents provided by the appellant for this appeal included an extract from the NSW Fair Trading information sheet: 'Work requiring inspections'. The NSW Fair Trading requirement is that the builder's plumber must book an audit inspection for: 5. Internal drainage, including all sanitary drainage located internal of a building; 6. External drainage including all sanitary drainage located external of a building up to the point of connection; 7. Final inspection, once all fixtures and fittings are connected and the building is ready to be occupied; 8. Final inspection recycled water, once all fixtures and fittings are connected and the building is ready to be occupied; 9. Reinspection, where work did not comply with an earlier inspection, a reinspection of that inspection type must be booked to confirm rectification. 10. The NSW Fair Trading information sheet as to 'Plumbing and Drainage Work Audit Inspection' further states that the builder's plumber must submit: 11. A Notice of Work to NSW Fair Trading before starting work; 12. A Certificate of Compliance to NSW Fair Trading and the property owner at the final inspection, and 13. A Sewer Service Diagram to NSW Fair Trading and the property owner at the completion of the drainage work. 14. We find that the respondent must arrange for the necessary inspections to take place, and provide the sewer service diagram and certification to the appellant. In substitution for order 2 made in the first instance proceedings, we make an order pursuant to s 48O(1)(c) of the HB Act for the respondent to carry out work and services as specified, together with a further order granting leave to renew the proceedings pursuant to Schedule 4 Clause 8 of the NCAT Act in the event of non-compliance with the order to carry out the specified work and services. 15. In the appellant's Notice of Appeal, there is included several other orders which the appellant now seeks. However, many of the other orders are anticipatory of a breach, or non-compliance, by the respondent in providing the certification(s) required or causing damage in the event that the respondent does attend on-site to facilitate the necessary certification(s). Such matters might be the subject of consideration by the Tribunal in any renewal proceedings, should there be non-compliance with the Appeal Panel's order for the respondent to perform specified work and services within two months of publication of these orders; but they do not arise on this appeal for the Appeal Panel's determination. Orders 1. For the reasons given, the orders of the Appeal Panel are: 1. The appeal is upheld in respect of order 2 made on 6 October 2021 in the Tribunal proceedings constituted by file no HB 21/26484 (the first instance proceedings). 2. Order 2 in the first instance proceedings is set aside and in substitution the Appeal Panel orders: 1. Within two months of the date of publication of these orders, pursuant to s 48O(1)(c) of the Home Building Act 1989 (NSW), the respondent is to prepare, or cause to be prepared, a sewer service diagram for completion of the residential building work the subject of the appellant's application in the first instance proceedings, is to arrange with NSW Fair Trading for all necessary inspections to take place, and is also to arrange for the issue of a certificate of compliance in respect of the sewerage and plumbing works carried out by the respondent under its Building Contract with the appellant dated 14 September 2017 for the construction of a Two Bedroom Granny Flat with tiled roof attached with a single garage; 2. Pursuant to Schedule 4 Clause 8 of the Civil and Administrative Tribunal Act, 2013 (NSW) the appellant has leave to renew the proceedings in the Tribunal's Consumer and Commercial Division if there is non-compliance with order 2(a) by the respondent. ********** 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 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: 15 March 2022