Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Payne v Keene [2022] NSWCATAP 236 Hearing dates: 20 June 2022 Date of orders: 18 July 2022 Decision date: 18 July 2022 Jurisdiction: Appeal Panel Before: G Blake AM SC, Senior Member D Fairlie, Senior Member Decision: 1. Leave to appeal refused. 2. Appeal dismissed. 3 (a) Aaron Payne is to remove the front deck the subject of these proceedings and reinstate it in accordance with the James Hardie Installation Guide and all other relevant guidelines and regulations. (b) The works the subject of the above order are to commence by 1 August 2022 and be completed by 9 September 2022. (c) Upon compliance with orders 3(a) and 3(b) above and by no later than 16 September 2022, Phillip Keene and Leanne Keene are to pay Aaron Payne the amount of $8,862.70. Catchwords: APPEALS – what constitutes significant new evidence APPEALS – whether decision against the weight of evidence APPEALS – circumstances where appropriate to make a work order under the Home Building Act CONTRACTS - circumstances where appropriate to imply terms into a home building contract Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), s 80, Sch 4, cl 12 Home Building Act 1989 (NSW), ss 18B, 48MA, 48O Cases Cited: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 Texts Cited: Nil Category: Principal judgment Parties: Aaron Payne (Appellant) Phillip Keene and Leanne Keene (Respondents) Representation: Appellant (Self-represented) Respondents (Self-represented) File Number(s): 2022/00118390 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Consumer and Commercial Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 01 April 2022 Before: C Paull, Senior Member File Number(s): HB 21/39769; HB 21/47043 REASONS FOR DECISION OVERVIEW 1. This is an internal appeal by a builder against orders made in favour of homeowners in the Consumer and Commercial Division of this Tribunal that he remove and reinstate a deck which he had constructed on their residence at Northwood. 2. For the reasons that follow, the appeal is dismissed. BACKGROUND 1. Early in 2021 Mr and Mrs Keene (the Owners) approached the builder (Mr Payne), to provide a quotation to construct a front deck for their house. On 8 March 2021 Mr Payne provided a quotation in the following terms: "H4 stetted pine posts in ground supporting a h3 treated pine frame and scyon sheets to be tiled in the future screwed down with stainless screws and glued with 11fc sika 10.8 x2.4 m" 1. The amount quoted for the works was $8,866, inclusive of GST. The Owners accepted the quote and Mr Payne built the deck during April 2021. On 3 May 2021 Mr Payne invoiced the Owners $8,862.70 for the work. 2. The reference to "scyon sheets" in the quotation is a reference to the Scyon "Secura" exterior flooring product manufactured by James Hardie Limited. James Hardie provided very detailed installation guidelines for the laying of these sheets (the James Hardie Installation Guide). This was in effect a kit for the construction of this aspect of the deck. 3. The Owners were not happy with many aspects of Mr Payne's work. Their principal concerns were that the "step down" from the door sill to the deck level was not adequate and less than the measurement specified in the James Hardie Installation Guide. Secondly, they were concerned that Mr Payne had laid the Scyon sheeting in a staggered pattern, with the result that tiles could only be laid onto a mortar bed and not directly onto the sheeting. The Owners refused to pay Mr Payne until these defects and others were rectified. 4. Mr Payne said that the step down was adequate and that he had advice from James Hardie that small cuts could be made in the Scyon sheeting so that tiles could be glued directly to that surface. Mr Payne also said that he had been denied access to the site to remedy these, and other defects identified by the Owners. 5. The parties were unable to resolve their differences and on 12 September 2021 Mr Payne commenced proceedings in the Tribunal for the payment of the invoiced amount of $8862.70, or alternatively, payment of this amount on a quantum meruit basis. 6. The Owners responded with a cross application, submitting that the deck should be dismantled and rebuilt according to the James Hardie Installation Guide. They also made a claim for the removal of asbestos said to have been disturbed by Mr Payne and for alternative accommodation costs. 7. Both parties engaged independent experts who provided written reports. The experts also participated in an enclave and prepared a "Scott Schedule", though there was dispute as to what was agreed following the enclave. THE DECISION APPEALED FROM 1. The proceedings were heard on 1 April 2022. The Member found that Mr Payne had failed to supply and install a compliant deck (the Decision) and made the following orders: "1 Aaron Payne is to remove the front deck the subject of these proceedings and reinstate it in compliance with all relevant guidelines and regulations in particular the James Hardie Guidelines as to the requirements for a step down. 2 The above order is to commence by 1 May 2022 and be completed by 12 June 2022. 3 Upon compliance with orders 1 and 2 above and by no later than 19 June 2022 Philip Keene and Leanne Keene are to pay to Aaron Payne $8866." 1. The Member dismissed the claims by the Owners for the asbestos removal and alternative accommodation costs. 2. In relation to the deck step down, the Member noted that the James Hardie Installation Guide specified a drop down of at least 50 mm, but preferably 150 mm from the door sill level to the finished surface of the deck. She referred to the evidence of Mr Payne's expert, who measured this drop down at 70mm and then the evidence of the owner's expert who measured this to be between 54 and 57mm. 3. The Member concluded that she preferred the evidence from the Owners' expert on the basis that "by taking two separate measurements at 2 different points, his measurements are more representative of the constructed height". She added that the tiling of the deck "needed to be factored into the constructed height when considering the guidelines", and taking this into consideration, the step down would then be less than 50 mm. This led her to the conclusion that Mr Payne had failed to supply and install a compliant deck. 4. She did not refer specifically to the Owners' complaint that the Scyon sheeting had been laid incorrectly, presumably because, having found that the step down was inadequate, and that this required the deck to be removed and reinstated, it was not necessary to determine the other issue. 5. The Member also said that because the Owners' expert "had not costed the process of removing, lowering and then reinstating the deck at the correct height", it was more appropriate to make a work order under section 48O(1)(c) of the Home Building Act 1989 (NSW) (the "Home Building Act"), rather than a money order, noting that the Owners' expert had conceded that some of the materials could be reused. THE APPEAL 1. The appeal was heard on the afternoon of 20 June 2022 and the parties appeared by audio visual link. Mr Payne's submissions 1. In his Notice of Appeal Mr Payne said firstly that the Decision was not fair and equitable, because: "1 The homeowner had refused him access to the property and had continually placed roadblocks in his way to not allow him to rectify the defects identified. 2 The homeowner had called the police about him being on the property when he had attended to serve Tribunal documents. 3 The breakdown in the relationship between the parties was such that the parties can no longer work together. 4 The deck had been partially demolished by the homeowner so that the deck was no longer the structure built by Mr Payne. 5 The homeowner had had not asked for an order that the defects be rectified but had asked for monetary orders." 1. Mr Payne also said that his expert had taken photographs which were not considered by the Member and should be treated as new evidence not available during the hearing. 2. Thirdly Mr Payne submitted that the decision of the Tribunal was against the weight of evidence, specifically in relation to the step down and the laying of the Scyon sheeting. 3. Section 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the "NCAT Act") provides that an internal appeal may be made "as of right on a question of law and with the leave of the Appeal Panel on any other grounds". Cl 12 of Schedule 4 of the NCAT Act sets out the circumstances in which leave may be granted. The clause provides that: 12 Limitations on internal appeals against Division decisions (1) 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. None of the grounds relied on by Mr Payne involve a question of law, so that the leave of the Appeal Panel is required for him to proceed. Mr Payne appeared to accept that this was the case. In his appeal submissions he also alleged the Member on a number of occasions had not permitted him to submit all his evidence, or to fully examine all his evidence. He took us to some exchanges that he had extracted from the transcript of the hearing which he said supported that submission. 2. This submission might, arguably, have constituted a ground of appeal which involved a question of law. The point was not raised by Mr Payne in his Notice of Appeal and we do not think that he intended it to be considered as a separate ground, but rather as evidence in support of his other grounds. Further, the difficulty with this material, as we pointed out to Mr Payne, is that it not possible for the Appeal Panel to make a determination of this kind on the basis of one or two short extracts from the transcript. We would need to review the entirety of the transcript which we were not asked to do. The Owners' submissions 1. The Owners said that leave to appeal should not be granted. They said that the Decision was both fair and reasonable and "in keeping the weight of evidence", particularly in relation to the Member preferring the evidence of their expert rather than Mr Payne's expert. They added that Mr Payne's own expert conceded that there were significant defects in his workmanship. 2. They said that they remained willing for Mr Payne to enter their property to carry out the works specified by the Member in the Decision. The incident to which Mr Payne referred, when they asked him to leave their property, occurred when he came onto the property not to carry out building work, but to take photographs. 3. They also said that they have not "partially demolished" the deck, but in any event that is not relevant as the Member's order requires the deck to removed and reinstated. Further the photographs to which Mr Payne referred did not constitute new evidence as they had been available at the time of the hearing. 4. Lastly, they said that they had always been willing to accept a rectification order rather than a monetary order in relation to the deck reconstruction. Their monetary order claim was in relation to the cost of the asbestos removal and alternative accommodation which the Member rejected. The Owners did not appeal those findings. OUR DECISION Does the James Hardie Installation Guide form part of the contract? 1. As we had set out above, Mr Payne provided an initial quotation which was accepted by the Owners. This constitutes the basic contract between the parties. However, Mr Payne's quotation contained only a brief description of the work proposed and in particular the inclusion of the words "scyon sheets to be tiled". The Owners are entitled to the statutory warranties contained in section 18B of the Home Building Act but the warranties are expressed in general terms and do not assist in identifying what was intended by these words. Without further detail the contract is susceptible to a challenge that it is void for uncertainty. 2. Both experts referred to the James Hardie Installation Guide in their reports (though in his appeal submissions Mr Payne did suggest that he should not be required to comply with it). The language used by the Member in framing her Orders appears to indicate that she accepted that the Installation Guide formed part of the contract, although she did not make a specific finding to that effect. 3. It is our view that it should be implied as a term in the contract between the parties. The Installation Guide is a comprehensive summary, containing both text and diagrams of how the Scyon product should be installed. The Guide also contains information about waterproofing and tiling the deck. It makes it clear what work Mr Payne had agreed to carry out for the Owners and the manner in which it should be undertaken. 4. The Installation Guide thus satisfies each of the criteria referred to in the Privy Council's decision in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 for a term to be implied into a contract: "for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract." 1. Also included in Mr Payne's bundle of documents tendered in the proceedings before the Member, was a one page document headed "Contract conditions". This document was placed behind the same tab in the bundle as the James Hardie Installation Guide. Mr Payne appears to have considered that this page formed part of the James Hardie Installation Guide. However as there is no reference in the document to the Installation Guide, or to the Scyon product, nor to James Hardie as a corporate entity, we are not able to accept that it is part of the James Hardie Installation Guide. The first ground of appeal that the decision was not fair and reasonable 1. This ground of appeal can be disposed of fairly shortly. None of the reasons put forward by Mr Payne in support of the ground has any merit. The Owners have said that they are willing for Mr Payne to return to their property to carry out the works ordered by the Member. 2. Next the claim that the deck had been partially demolished by the Owners appears to be a new allegation and was not raised in the proceedings before the Member. It was not referred to in Mr Payne's Points of Claim. In his appeal submissions, Mr Payne attached two photographs which he said confirmed that the deck had been partially demolished, but without further explanation it is not clear to the Appeal Panel that these photographs show this to be the case. Mr Payne also did not clarify whether these photographs were taken before or after the hearing. In any event, as the Owners submitted, the issue is not relevant if the deck is to removed and reinstated. The second ground of appeal that Mr Payne should be able to rely on new evidence 1. Mr Payne submitted that he had additional photographs taken by his expert which showed the measurement of the step down from the door sill to the deck level, and that these photographs should be as treated as new evidence which was not reasonably available at the time of the hearing. This ground must also be rejected. These photographs were taken prior to the hearing, but apparently were not able to be located by Mr Payne or his expert during the hearing. They were however included in his bundle of documents lodged with Tribunal for the hearing. Thus, the photographs are not "significant new evidence" of the kind specified in clause 12(1)(c) of Schedule 4 of the NCAT Act. The third ground of appeal that the decision was against the weight of evidence 1. This ground raises more complex and contentious issues. Mr Payne focussed in considerable detail on this ground in his written and oral submissions. 2. The first issue is the actual measurement of the step down from the door sill to the deck surface. The relevant provision in the James Hardie Installation Guide is in the following terms: "Step Down There must be a step down (at least 50mm but preferably150mm) from the door sill level to the finished surface of the deck to adequately weatherproof the entry door, particularly if it is subject to rain and wind. Refer to relevant building regulations and codes which may specify a larger step down." 1. Mr Payne's submission was that the "door sill level", as that expression is used in the James Hardie Installation Guide, must be a level which is measured from the bottom of the exterior door frame. He referred to photographs which were in the evidence before the Member which, in his view, showed that this level was above the level of the exterior tiling adjacent to the deck which the Owners and their expert had taken to be the door sill level. 2. The difficulty with Mr Payne's submission is that there is no door sill at the level of the exterior door, or at least a sill has not yet been installed and would not be likely to be installed until the deck work and other renovations to the property have completed. Thus the only observable level is the exterior tiling and for this reason it was adopted as the measuring point by the Owners' expert. 3. However Mr Payne made the further point that it must have been the intention of the Owners to install a door sill at the bottom of the door frame when the other works were completed, otherwise the construction would not have complied with the relevant Australian Building Code and Australian Standard. He referred us to an attachment to the report prepared by the Owners' expert, again in evidence before the Member, which included a diagram showing where the sill would need to be constructed to ensure compliance with the Code and Standard. 4. Mr Payne's argument that the step down should be measured from the bottom of the exterior door to the deck level is quite persuasive. Properly understood it means there was no conflict between the two experts. They had taken their measurements from different positions – Mr Payne's expert took his measurements from the bottom of the exterior door frame and recorded a step down to the surface of the deck of 70mm, whereas the Owners' expert took his measurements from the exterior tiling to record a step down of between 54 and 57mm. It follows that had each expert taken his measurements from the starting point adopted by the other, their results would have been the same. 5. However, we have come to the view that the Appeal Panel does not need to determine this issue to dispose of the appeal. This is because the evidence in relation to the laying of the Scyon sheeting, which we will now deal with, leads to the conclusion that the step down is inadequate, whichever measuring point is adopted. 6. As we have noted, Mr Payne accepted that he had laid the sheeting in a staggered pattern. The Owners said that the consequence was that tiles could not be laid directly on top of the Scyon sheets as had been proposed in Mr Payne's original quotation. The Owners referred again to the James Hardie Installation Guide which set out what remedial steps were required when sheets had been laid in this way. These were to "apply a waterproof system, a dual layer of slip sheet and a 40mm minimum reinforced mortar bed" before laying tiles. 7. Mr Payne said that he is not obliged to implement these measures. He referred to an exchange of emails on 23 April 2021 with the James Hardie technical team which he said entitled him to proceed simply by making some cuts in the sheeting. These emails were also in evidence and were in the following terms: "Mr Payne Hey guys I have laid a deck that's meant to be direct stick in brick pattern and expansion joints havnt (sic) been allowed for. Just confirming I can manually install these and cut at every 2.7 which will turn it into a square pattern and also allow for expansion. Also do the joints have to be painted after cutting or is the joint sealer sufficient to seal the cuts?" and the response: "Hi Aaron You can manually introduce a 5mm cut along the joint at a maximum of 2.7m to form the control joint detail. Ensure all edges are sealed with Wattyl Kill rust. Kevin, James Hardie Technical" 1. There are two difficulties with Mr Payne's argument. First the email from James Hardie Technical does not say explicitly that if these 5mm cuts are made, the 40mm mortar bed is no longer necessary, nor whether the cuts, if made, will void the James Hardie 10-year product warranty on the Scyon sheeting (a further email from the James Hardie Technical Team put into evidence by the Owners suggests that this may be the case). 2. Secondly and more fundamentally, this email exchange, if it is to have the effect contended by Mr Payne, must be construed as variation of the James Hardie Installation Guide and thus a variation of the contract between Mr Payne and the Owners. Mr Payne's reliance on the emails is a purported unilateral variation of the contract and as such can have no legal effect. 3. Furthermore, if the Contact conditions document to which we referred above, does form part of the James Hardie Installation Guide, Paragraph 4 Variations to Work relevantly says that: "The work including materials may be varied by written agreement between the owner and the contractor. A notice describing the variation, the cost of the variation, the cost of the additional or omitted work and any change to the Completion Period must be provided to the owner, and the notice must then be signed and dated by both parties to constitute acceptance." and Mr Payne did not make any attempt to comply with this provision. 1. Thus a 40mm mortar bed, in accordance with the James Hardie Installation Guide, must be laid down before the deck is to be tiled. This means that the finished surface of the deck will be 40mm higher than the current level. It then follows that even if we were to accept Mr Payne's argument that the step down should be measured from the level of the notional door sill yet to be constructed, the difference will not be 70mm, as found by Mr Payne's expert, but nearer to 30 mm (and only 10mm if the Owners' measuring point is adopted). Clearly on either basis the distance will not comply with the step down provisions in the James Hardie Installation Guide. 2. This ground of appeal must therefore also be dismissed. The Member's finding that Mr Payne had failed to supply and install a compliant deck was not made against the weight of the evidence. We have been able to come to this conclusion after a more detailed and, perhaps, a more nuanced assessment of the evidence than the Member was able to undertake during the hearing, but her decision was the correct one and should not be disturbed. The fourth ground of appeal that the Member should not have made a work order 1. We propose to treat this submission as a separate ground of appeal although Mr Payne had included it in his first ground that the Decision was not fair and reasonable. The Member did not make a monetary order to compensate the Owners for the reinstatement of the deck because she said in her Decision that: "Regrettably (the Owners' expert) has not costed this process." and "The difficulty I have is that (the Owners' expert) has not costed his recommended form of rectification, namely to remove and reinstall the deck as per the manufacturer's specification, conceding that some components could be reused." 1. However, there was a Scott Schedule in evidence before the Member. This document appears to have been signed by both experts. Under item 8, headed "Scyon sheeting" the following comments were recorded: "To remove and reinstall the decking at a lower level Experts agree to the following if found ……. 2 x Carpenter x 3 8 hr days x $70 = $3360 ….. Other timber members can be reused." 1. This provides some evidence of the experts' agreed position, at least in relation to the labour cost of removing and reinstalling the deck in compliance with Member's first order, although it does not refer to the cost of the labour and materials involved in the laying of the reinforced mortar bed. 2. There was perhaps sufficient material before the Member to have enabled her to have made a monetary order if she had thought that to be more appropriate. However the Tribunal is empowered to make any one or more of the orders contained in section 48O of the Home Building Act, including an order that a party do any specified work or perform any specified service as set out in section 48O(c)(i) of the Act. In the circumstances we do not think it appropriate for the Appeal Panel to question her discretion even we might have come to a different decision. 3. We also note that section 48MA of the Home Building Act provides that in a claim involving an allegation of defective building work, the court or tribunal should have regard to the principle that rectification is the preferred outcome. Costs 1. Mr Payne said the Owners should pay the costs he incurred in retaining his expert. The Owners said Mr Payne should pay the costs of their expert. These claims cannot be sustained. Neither party made an application for their costs in the proceedings before the Member. There have been no findings in relation to costs which can be the subject of an appeal. Conclusion 1. Mr Payne has not succeeded in any of his grounds of appeal. There is thus no basis for granting him leave to appeal under Cl 12 in Schedule 4 of the NCAT Act. The appeal should be dismissed. 2. We add this final observation. Throughout these proceedings the parties have adopted an adversarial approach towards each other and have not appeared to be able to agree on many, if any, of the issues in dispute. We were initially concerned that further disputes may arise during the course of the rectification work. However, the Owners have indicated that they are willing to have Mr Payne return to their property and Mr Payne said to us that he was in a position to carry out the relevant works if so ordered. We have taken those statements to be an indication that the parties have put their differences behind them, and will cooperate with each other in good faith, so that the contract works can now be completed without further dispute and then paid for in full promptly thereafter. ORDERS 1. We need to vary the dates specified in the orders made by the Member. We also propose to amend slightly the wording of the first order to better reflect our Reasons for Decision. In the third order we have also substituted the amount of $8,862.70, being the amount invoiced by Mr Payne, for the amount of $8,866 being the sum referred to in his original quotation. 2. We make the following orders: 1. Leave to appeal refused. 2. Appeal dismissed. 1. Aaron Payne is to remove the front deck the subject of these proceedings and reinstate it in compliance with the James Hardie Installation Guide and all other relevant guidelines and regulations. 2. The works the subject of the above order are to commence by 1 August 2022 and be completed by 9 September 2022. 3. Upon compliance with orders 3(a) and 3(b) above and by no later than 16 September 2022, Phillip Keene and Leanne Keene are to pay to Aaron Payne the amount of $8862.70. ********** 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 28 July 2022 - Amended Paragraph 59,2c orders to be reflect coversheet numbering 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: 28 July 2022