Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Samchris Pty Ltd v Keogh [2024] NSWCATAP 125 Hearing dates: 17 June 2024 Date of orders: 28 June 2024 Decision date: 28 June 2024 Jurisdiction: Appeal Panel Before: G Blake AM SC, Senior Member P H Molony, Senior Member Decision: (1) Leave to appeal is refused. (2) The appeal is otherwise dismissed. (3) Order 1(a) made on 8 March 2024 is varied to substitute "the orders in appeal proceedings 2024/00126894" for "these orders". (4) The appellant is to pay the respondents' costs of the appeal as agreed or assessed under the applicable costs legislation. Catchwords: APPEALS — Appeal on question of law – Scope of question of law – No material error of law – Appeal dismissed APPEALS — Leave to appeal — Principles governing – Leave to appeal refused BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — Building dispute – Where the builder breached statutory warranties – Work order made against the builder Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 80, 81, Sch 4, cl 12 Civil and Administrative Tribunal Rules 2014, r 25 Electronic Transactions Act 2000 (NSW) Environmental Planning and Assessment Act 1979 (NSW), s 4 Environmental Planning and Assessment Regulation 2000 (NSW), cl 98 (repealed) Home Building Act 1989 (NSW), ss 18B, 18E, 18F, Sch 2, cl 1 Cases Cited: Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165 Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 Collins v Urban [2014] NSWCATAP 17 Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 Morley & Ors v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140 Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114 Paraiso v CBS Build Pty Ltd [2020] NSWSC 190 Redmyre Group Pty Ltd v Stockman [2023] NSWCATAP 305 The Owners – Strata Plan No 66375 v King [2018] NSWCA 170 Wollondilly Shire Council v Styles [2024] NSWCATAP 104 Yuen v Thom [2016] NSWCATAP 243 Texts Cited: National Construction Code, 2016 Category: Principal judgment Parties: Samchris Pty Ltd (Appellant) Steven John Keogh and Jacqueline Mary Keogh (Respondents) Representation: Counsel: J Pearson (Appellant) M Klooster (Respondents) Solicitors: Lawandi Lawyers (Appellant) Michael Atkinson & Associates (Respondents) File Number(s): 2024/00126894 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 8 March 2024 Before: L Wilson, Senior Member File Number(s): 2022/00410158 (previously HB 22/39599) REASONS FOR DECISION Overview 1. This is an internal appeal from part of a decision of the Consumer and Commercial Division of the Tribunal made on 8 March 2024 in proceedings under the Home Building Act 1989 (NSW) (HB Act) concerning a dispute between the respondents, Steven John Keogh (Mr Keogh) and Jacqueline Mary Keogh (the owners), who are the owners of a property at Baulkham Hills in New South Wales (the property), and the appellant, Samchris Pty Ltd (the builder), which is the builder that carried out residential building works at the property (the works) under the building contract between them (the building contract). In the decision the Tribunal relevantly ordered the builder to rectify certain defects described as the master bedroom water leak. On 17 April 2024, that work order was stayed. 2. The works included a two-storey extension to the existing dwelling (the dwelling) erected on the property. The basement of the extension in which the master bedroom is located is lower than the sub-floor of the dwelling. During heavy rainfall there was an ingress of surface water into the master bedroom. 3. The substantial issues in the appeal are whether the builder had responsibility under the building contract to prevent the ingress of surface water into the basement extension and has defences to the owners' claims under cl 40.2 of the building contract and s 18F(1)(b) of the HB Act. 4. We have decided that the Tribunal did not make any error of law or other error in finding that the builder had responsibility under the builder contract to prevent the ingress of surface water into the basement extension and did not establish defences to the owners' claims under cl 40.2 of the building contract and s 18F(1)(b) of the HB Act. 5. It follows that we have decided to refuse leave to appeal, otherwise dismiss the appeal and order the builder to pay the owners' costs of the appeal. We have also varied the date for compliance with the applicable part of the work order. The factual background 1. There is a grassed area at the front of the property which slopes downwards from the road to the dwelling. 2. On 18 January 2018, the builder and the owners entered into the building contract which was in the standard form HIA NSW Residential Building Contract for Renovations and Additions in the amount of $431,778.00 inclusive of GST for the construction of the works which comprised: 1. an extension to the ground floor including a new kitchen and deck; 2. an extension to the basement including a new master bedroom, laundry and storage area; 3. the construction of a new retaining wall. 1. On 2 February 2018, an accredited certifier issued a complying development certificate for the works which relevantly referred to the following documents accompanying the application: 1. architectural plans prepared by Inspired Spaces (the IS drawings); 2. engineering plans prepared by SDA Structures Pty Ltd (SDA), being Revision A, dated 17 December 2015 (the SDA drawings). 1. On 20 February 2018, the builder commenced the works. 2. On 9 March 2018, Jake Fugar (Mr Fugar), who was an engineer at SDA, provided a drawing of a "Concrete Retaining Wall" labelled "Option B – no drainage" (Option B) to John Hanna (Mr Hanna), the director of the builder. 3. By about October 2018, the works reached practical completion. 4. On 15 May 2019, an accredited certifier issued a final occupation certificate for the works. 5. Between 16 and 19 January 2020, there was water ingress into the master bedroom. 6. Between 7 and 10 February 2020, there was further water ingress into the master bedroom during heavy rain. 7. In March 2021, there was further water ingress into the master bedroom during heavy rain. 8. In February and March 2022, there was further water ingress into the master bedroom during heavy rain. At this time the owners moved upstairs as they could no longer use the master bedroom. The proceedings between the parties in the Tribunal 1. On 31 August 2022, the owners as the applicants commenced proceedings HB 22/39599 (which were subsequently renumbered 2022/00410158) against the builder as the respondent by filing a home building application relevantly claiming a money order for breach of the building contract by reason of defective and incomplete work. 2. On 22 and 24 August 2023, the hearing took place. 3. On 8 March 2024, the Tribunal relevantly made the following order (the work order), and published reasons for its decision (the Decision): "1. The respondent must, within six months of these orders: (a) rectify Items 1 – 3, 28, 31, 73 (master bedroom water leak) in accordance with the agreed scope of work plus the additional work set out by the homeowners' expert at CB1755 to 1757." The Decision 1. In the Decision, the Tribunal relevantly: 1. summarised the nature of the proceedings ([1]-[2]); 2. set out the five issues to be resolved ([3]); 3. set out the evidence adduced and submissions received ([4]-[10]). The documentary evidence was contained in a joint tender bundle. Oral evidence was given by Mr Keogh, an engineering expert Tony Dockrill (Mr Dockrill) and a building expert Matthew Crosby on behalf of the owners; and Mr Hanna, an engineering expert Alexander Kameas and a building expert Steven Nakhla on behalf of the builder; 4. set out the agreed facts ([11]-[28]) including that there was no dispute that surface water that runs over the front grassed area seeps into "the subfloor zone" and that there is excessive groundwater and moisture throughout "the subfloor area" [27]; 5. dealt with issue 1, being the existence and extent of each alleged defect, and whether each is a major defect ([29]-[67]) including noting the Joint Scott Schedule signed by both building experts and dated 21 August 2023 (the building experts' joint report) ([29]). In particular, it dealt with "Items 1 – 3, 28, 31, 73: Master bedroom water leak" ([33]-[43]) in the following manner: 1. it noted that the building experts agreed these items were defects ([33]); 2. it noted that the submissions of the builder relied on but did not give any references to the "evidence of the engineers" ([34]); 3. it referred to the submissions of the builder that the masonry walls are pre-existing, "sub floor drainage" is a pre-existing issue, there was evidence of rising damp prior to the builder commencing the works, no works were undertaken in "the subfloor area", and there was no evidence that any works undertaken by the builder had any effect on the flow of water in "the sub floor" ([35]); 4. it referred to the submissions of the builder that the works did not include stormwater management, that during the design phase the owners raised concerns about water control and raising damp and held a meeting with Robyn Hawke to discuss drainage issues in the garage, and that the owners did not obtain a stormwater or hydraulic design or consult a hydraulic engineer ([36]); 5. it found that it did not know how the matters referred to in the submissions of the builder provide a defence to the agreed defect, accepted by both engineers and both building experts ([37]); 6. it found that it could not accept that the builder is not responsible for the entry of stormwater into "the sub-floor area" because there were issues with water control, rising damp and drainage before the building works ([38]); 7. it found that it also cannot accept that the builder is not liable because it did not perform works to "the subfloor" ([39]): "39 …. The construction work performed by the builder has caused excessive uncontrolled stormwater to enter the sub-floor. This has been caused or exacerbated by the builder's work which was not done in accordance with Part 1.2, 2.2 or 3.1.2.5 of the NCC (CB1755-1756) or AS2870, AS/NZ 3500 or AS4678 (CB494-498)." 1. it noted that it agrees with the owners' submissions ([40]); 2. it set out its findings on issue 2 ([41]); 3. it noted that the Court of Appeal considered the interaction between the warranties in s 18B(1)(a) and (c) of the HB Act in The Owners – Strata Plan No 66375 v King [2018] NSWCA 170 and explained the party responsible for the building works, here the builder, is responsible for defect arising from the work even if the work was built according to (faulty) plans ([42]); 4. it found that these items are major defects as defined in s 18E of the HB Act. The water ingress issues are such that the owners have been unable to use the master bedroom since about March 2022 ([43]); 1. dealt with issue 2, being whether the builder has a valid defence under s 18F of the HB Act or because the defect results from a design defect ([68]-[110]) in the following manner: 1. it set out the text of s 18F of the HB Act, the builder's defence under s 18F(1)(b) of the HB Act and the onus of the builder to establish this defence ([68]-[70]); 2. it noted that the parties accepted that Mr Fugar is a "relevant professional" as defined in s 18F(4)(a) of the HB Act and instructions were given in writing before the work was done by the issue of Option B by Mr Fugar to Mr Hanna in an email sent on 9 March 2018 (the 9 March 2018 Fugar email) ([71]-[77]); 3. it noted that the sticking points between the parties were whether Mr Fugar is independent of the builder and the constructed work was in accordance with Option B ([78]); 4. on the sticking point of whether Mr Fugar is independent of the builder and acting for the owners, it set out: 1. the requirements to establish the defence under s 18F(1)(b) of the HB Act ([79]); 2. its finding that the owners engaged SDA to prepare the SDA plans in August 2015 by acceptance of its fee proposal (the 2015 SDA agreement) and paid for them in September 2015 ([80]); 3. its finding that revised drawings including that Option B were prepared between 9 February and 9 March 2018 and were not contemplated in the 2015 SDA agreement ([81]); 4. the evidence of Mr Hanna of contacting Mr Fugar by telephone to address the problem of exposed footings without any involvement of the owners ([82]-[87]); 5. its finding that Mr Fugar sent Option B to Mr Hanna by email which was not copied to Mr Keogh ([88]); 6. its finding that Mr Keogh gave evidence which was consistent with Mr Hanna's evidence ([89]); 7. its findings that on 29 March 2018 SDA issued a tax invoice for the revised drawings to Mr Keogh (the 29 March 2018 SDA invoice), the evidence of Mr Keogh as to his conversation with Mr Hanna as to its payment, its payment by the builder, and its conclusion that Mr Fugar was acting for the builder ([90]-[93]); 8. the submissions of the builder and its finding that the 2015 SDA agreement did not cover the revised drawings ([94]-[97]); 9. its rejection of the submissions of the builder that Mr Keogh resiled from his evidence about not engaging Mr Fugar to prepare the revised drawings ([98]); 10. its rejection of the submissions of the builder that it ought draw a Jones v Dunkel inference from the owners' failure to call Mr Fugar as a witness ([99]-[101]); 1. on the sticking point of whether the constructed work was in accordance with Option B, it set out: 1. clause 40.2 of the building contract and the onus of the builder to establish the defence under this clause ([102]-[103]); 2. its finding that the builder did not construct in accordance with Option B ([104]-[105]); 3. its finding that it is not satisfied that the only reason the work is defective is because the builder relied on the defective drawings in Option B, and so, was not satisfied that cl 40.2 of the building contract absolved the builder of liability for the defective works ([106]-[108]); 4. its finding that, even if the builder could rely on cl 40.2 of the building contract, it is only a defence to liability with respect to matters listed in cl 40.1. It would not prevent a finding the builder breached the statutory warranty in s 18B(1)(e) of the HB Act ([109]); 1. it concluded that neither the s 18F of the HB Act nor the defective design defences apply ([110]); 1. dealt with issue 3, being for each agreed or found defect, the reasonable and necessary rectification method ([111]-[115]); 2. dealt with issue 4, being whether a work order or money order ought be made ([116]-[125]); 3. dealt with issue 5, being whether the owners are entitled to refund for variations they have paid, including whether their claim is within time ([126]-[154]); 4. set out the orders it made ([155]-[157]); 5. set out its proposed order and procedural orders as to the costs of the proceedings ([158]-[165]). The history of the appeal 1. On 5 April 2024, the builder as the appellant commenced proceedings 2024/00126894 against the owners as the respondents by filing a notice of appeal (together with an application for a stay of the work order) in which it relevantly: 1. in section 5A challenges the work order; 2. in section 5B sets out grounds of appeal; 3. in section 5C relevantly seeks an order that the work order be set aside; 4. in section 5D ticks the box "Yes" in answer to the question "Will you be applying for a stay of the original decision?" 5. in section 6B ticks the box "Yes" in answer to the question "Are you asking for leave (to appeal)?"; 6. in section 6Bi dealing with the ground that the Decision was not fair and equitable sets out a description as to why; 7. in section 6Biii dealing with the ground that the Decision was against the weight of evidence identifies and explains why the Tribunal should have given more weight to particular evidence. 1. On 17 April 2024, the Appeal Panel constituted by a Principal Member granted the parties leave to be legally represented, made an order staying the work order until the earlier of a further order of the Tribunal or the finalisation of the appeal, and made procedural directions for the hearing of the appeal. 2. On 10 May 2024, the owners filed their reply to appeal in which they relevantly: 1. in section 3A support the work order; 2. in section 3B reply to the grounds of appeal; 3. in section 4 tick the box "Yes" in answer to the questions "Do you say the Appellant requires leave to appeal?" and "If yes, do you oppose leave being granted?" and reply to the reasons for leave to appeal. 1. On 23 May 2024, the builder filed a three volume appeal book (which is referred to by the abbreviation "AB") that included the evidence before the Tribunal and an amended notice of appeal. The hearing of the appeal 1. On 17 June 2024, we heard the appeal. The builder was represented by Mr J Pearson, a barrister. The owners were represented by Mr M Klooster, a barrister. 2. At the commencement of the hearing, we made a consent order granting leave to the builder to file an amended notice of appeal in the form filed with the Tribunal on 23 May 2024 on condition that it pays the costs of the owners thrown away by virtue of the amendment. 3. We drew to the attention of counsel for the builder the observations of the Appeal Panel in Wollondilly Shire Council v Styles [2024] NSWCATAP 104 (Wollondilly) at [23]-[24], and invited him to formulate the questions of law raised in the appeal. 4. Counsel for the builder in response formulated questions which it submitted were questions of law in relation to grounds 2, 3, 3A, 3B and 6 of the amended notice of appeal. We invited counsel for the owners to make submissions as to whether the identified questions were questions of law and advised that we would deal with this issue in our decision. 5. The builder relied on its submissions dated 22 May 2024 (the builder's appeal submissions) together with the evidence referred in these submissions. 6. The owners relied on their submissions dated 10 June 2024 (the owners' appeal submissions) together with the evidence referred in these submissions. 7. Counsel for each of the builder and the owners made oral submissions in which they substantially repeated their written submissions. 8. At the conclusion of the hearing, we reserved our decision. The scope and nature of internal appeals 1. Internal appeals against an internally appealable decision may be made in the case of an interlocutory decision with leave of the Appeal Panel, and in the case of any other kind of decision (including an ancillary decision) as of right on a question of law, or with the leave of the Appeal Panel, on any other grounds: s 80(1) and (2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). 2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are where it is satisfied that the appellant may have suffered a substantial miscarriage of justice because the decision of the Tribunal under appeal was not fair and equitable, or the decision of the Tribunal under appeal was against the weight of evidence, or significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with): cl 12(1)(a), (b) and (c) of Sch 4 of the NCAT Act. 3. In Collins v Urban [2014] NSWCATAP 17 (Collins), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 of the NCAT Act may have been suffered where: "… there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance." (emphasis in original) 1. In Collins, the Appeal Panel at [77], without seeking to be exhaustive in any way, stated the authorities establish that: 1. if there has been a denial of procedural fairness the decision under appeal can be said to have been "not fair and equitable" within cl 12(1)(a) of Sch 4 of the NCAT Act; 2. the decision under appeal can be said to be "against the weight of evidence" within cl 12(1)(b) of Sch 4 of the NCAT Act where the evidence in its totality preponderates so strongly against the conclusion found by the Tribunal at first instance that it can be said that the conclusion was not one that a reasonable Tribunal member could reach. 1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4 of the NCAT Act, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b) of the NCAT Act. 2. In Collins, the Appeal Panel at [84] relevantly summarised the general principles which govern the granting of leave to appeal: "[84] The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed, BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [20] and the authorities cited there, SAB v SEM [2013] NSWSC 253 at [8] and [9] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; …." 1. The Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including but not limited to any one or more of orders that the appeal is to be dismissed: s 81(1)(a) of the NCAT Act. The preliminary matters 1. We are satisfied that the appeal was commenced within the time of 28 days prescribed under r 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW). 2. The following preliminary matters arise for determination in this appeal: 1. whether the amended notice of appeal raises questions of law; 2. the nature of an appeal under s 80(2)(b) of the NCAT Act. Whether the notice of appeal raises questions of law Introduction 1. The builder formulated the following questions as constituting questions of law in relation to grounds 2, 3, 3A, 3B and 6 of the amended notice of appeal: "2. Whether there was evidence before the Tribunal to support the findings at [38] and [39] of the Decision, namely that building work performed by the builder: (a) caused excessive uncontrolled stormwater to enter the sub-floor; and (b) caused or exacerbated the flow of stormwater into the sub-floor. 3. Whether s 18B(1)(a) of the HB Act on its proper construction applied to works not undertaken or required to be undertaken (being stormwater management and sub-floor drainage works). 3A. Whether the Tribunal failed to determine a material issue in the case, namely the issue of whether liability under s 18B(1)(c) of the HB Act was excluded by clauses 40.1 and 40.2 of the contract. 3B. Whether the Tribunal failed to consider evidence material to an issue in the case, namely whether Mr Fugar was acting for the builder, being paragraphs [6] to [8] of the statement of Mr Hanna dated 9 August 2023. 6. Whether s 18B(1)(e) of the HB Act on its proper construction applied to works not carried out by the builder or otherwise not required to be carried out by the contract." 1. Counsel for each of the builder and the owners did not make any submissions as to whether these questions constitute questions of law. Conclusion 1. In Wollondilly at [23]-[24], the Appeal Panel explained the meaning of a question of law in the context of s 80(2)(b) of the NCAT Act: "What is a question of law? [23] Following a body of decisions of the Supreme Court and Court of Appeal, the Appeal Panel has recently confirmed that a question of law in the context of s 80(2)(b) of the NCAT Act should be interpreted similarly to "a question of law alone" or a "pure question of law." It excludes questions of mixed fact and law and, of course, questions of fact: see for example Soulis v R & A Henry Auto Repairs Pty Ltd [2021] NSWCATAP 338; Jain v Dr N Kalokerinos Pty Ltd [2023] NSWCATAP 141; Crystele Designer Homes Pty Ltd v Wood [2023] NSWCATAP 242; Hermes Nominees Pty Ltd v Shepherd [2024] NSWCATAP 36; Commissioner of Police, NSW Police Force v Hogan [2024] NSWCATAP 77, citing, variously, Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223; Orr v Cobar Management Pty Ltd [2020] NSWCCA 220; Thomas and Naaz Pty Ltd v Chief Commissioner of State Revenue [2023] NSWCA 40 (Thomas and Naaz). [24] The most recent support for that proposition in an analogous context comes from the decision of Kunc J in AW v WW (No 2) [2024] NSWSC 146. Whilst his Honour was interpreting cl 14(1)(b) of Sch 6 to the NCAT Act, the form and function of that clause, which provides for appeals from decisions of this Tribunal's Guardianship Division to the Court, is substantially the same as s 80(2)(b). In respect of his Honour's reasoning, the only factor which may differentiate the process of interpretation engaged in by his Honour was that an appeal under cl 14(1)(b) to the Court was from a "specialist division of the Tribunal" (at [53]) but we see no reason why the absence of that consideration should lead to a different conclusion when interpreting s 80(2)(b) of the NCAT Act." 1. Whether there was no evidence to support a factual finding is a question of law, not a question of fact: Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 (Kostas) at [91] (Hayne, Heydon, Crennan and Kiefel JJ). 2. In Rogers v Vinoly [2016] NSWCATAP 2 (Rogers) at [11]-[14], the Appeal Panel relevantly explained when a question of law will arise in the context of the construction or application of a statutory provision: "[11] The question whether the undisputed facts necessarily fall or do not fall within the provision of a statutory enactment properly construed is generally a question of law. Hope v Bathurst City Council (1980) 144 CLR 1 at 7; Collector of Customs v Agfa-Gevaert (1996) 186 CLR 389 at 395. 21. [12] The Federal Court in Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280 at 287 (Pozzolanic) identified five general propositions in relation to the distinction between questions of law and fact. These were extracted by the High Court in Collector of Customs v Agfa-Gevaert (1996) 186 CLR 389 at 395 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ) (Agfa-Gevaert): … 5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law." (26) Hope v Bathurst City Council (1980) 144 CLR 1 at 7, per Mason J with whom Gibbs, Stephen, Murphy and Aickin JJ agreed; Australian National Railways Commission v Collector of Customs (SA) (1985) 8 FCR 264 at 277, per Sheppard and Burchett JJ. In Pozzolanic, the Full Court qualified the fifth proposition. The Court said that, when a statute uses words according to their ordinary meaning and it is reasonably open to hold that the facts of the case fall within those words, the question as to whether they do or do not is one of fact. (27) Pozzolanic (1993) 43 FCR 280 at 288, citing Hope (1980) 144 CLR 1 at 8. [13] In relation to the fifth proposition, in Sharp Corporation of Australia Pty Ltd v Collector of Customs (1995) 59 FCR 6 Hill J noted at 16 as follows: The rule that a question of fact is involved in determining whether facts fall within the meaning of a word once that meaning is ascertained, may cause confusion. The confusion comes about because there are actually two related rules, the distinction between which is not always readily apparent. The first of these rules is generally expressed as being that where the facts have been fully found or there is no dispute as to the facts and the question is whether those facts necessarily fall within the description of a word or phrase in a statute, that will be a question of law. This is the sixth proposition enunciated by [Jordan] CJ in the Australian Gas Light Co case. The rationale for this principle is clear enough. If only one meaning is open but a tribunal arrives at a different meaning, underlying the Tribunal's conclusion must be an error of principle, that is to say, an error of law. The second related principle is that where the facts found are capable of falling within or without the description used in the statute, the decision which side of the line they fall on will be a decision of fact and not law. Such a decision will generally involve weight being given to one or other element of the facts and so involve matters of degree. [14] The Full Federal Court in Commissioner of Taxation v Crown Insurance Services Limited (2012) 207 FCR 247 said at [39]: When the statute under consideration has no technical meaning, but is understood in its plain ordinary meaning, a question of law will arise if the facts found must necessarily have come within the statutory description, but only a question of fact will arise if the facts found are capable of coming within the statutory description. In that second case, no question of law arises because, as Hill J said at 16 in Sharp Corporation of Australia Pty Ltd v Collector of Customs, the decision "will generally involve weight being given to one or other element of the facts and so involve matters of degree". To put it another way, a choice between two conclusions open on a consideration of the facts is a question of fact." 1. In Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165 (Alexandria Landfill), the members of the New South Wales Court of Appeal (Basten JA, Macfarlan JA and Leeming JA) in separate judgments gave an extensive explanation of the principles applicable to the constructive failure to exercise jurisdiction and the related failure to give adequate reasons. 2. At [6]-[7], Basten JA explained the notion of a constructive failure to exercise jurisdiction: "[6] The premise underlying a "constructive" failure to exercise jurisdiction is that there has been an apparent exercise of the jurisdiction of the court, but one that has failed in a way which can only be teased out by reference to the underlying issues and the materials presented to the court. It may then be demonstrated that a material issue presented for determination has not been resolved. By contrast, a failure to give adequate reasons implies that the relevant issues have been identified, addressed and resolved, but the reasons for reaching the conclusion have not been adequately expressed. [7] Despite the conceptual difference between the two complaints, they are related in a practical way. Because there is no means of interrogating a judge as to his or her intellectual processes, evidence that issues were not addressed can usually only be demonstrated by reference to the reasons. Thus, on the assumption that the judge addressed in the reasons all material matters, the absence of reference to a particular matter may allow the inference that it was not addressed and determined." (footnote omitted) 1. At [8]-[34], Basten JA set out the principles with respect to a constructive failure to exercise jurisdiction and adequacy of reasons including at [20]-[23]: "[20] On an appeal limited to questions of law, it does not provide a basis for reviewing the judge's determination of what factual matters are in issue, or the manner in which the judge has determined them. This point was addressed in Resource Pacific Pty Ltd v Wilkinson in the following terms: "[9] The adoption, on an appeal limited to errors in point of law, of language derived from the supervisory jurisdiction of the court must be undertaken with caution. It is, no doubt, an error of law for the trial court to fail to exercise its constitutional function, which is to resolve a dispute presented to it by the parties by applying the law in accordance with proper procedure. In the present case, that function was almost entirely satisfied by the resolution of disputed factual issues. The term 'constructive failure to exercise jurisdiction' is used to describe a situation where the court has purported to resolve the parties' dispute but has not in fact done so. Thus, particularly with a court or tribunal required to provide reasons for its decision, it may become apparent from those reasons that a material issue has simply not been addressed or that material evidence has been overlooked. Examples of circumstances which may properly give rise to a concern on this kind were referred to by Gummow ACJ and Kiefel J in Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; 240 CLR 611 at [23]. On occasion, the function of the decision-maker (which should include a court) has been identified as being to 'give proper, genuine and realistic consideration to the merits of the case': Kahn v Minister for Immigration and Ethnic Affairs (1987) 14 ALD 291 (Gummow J). (The language probably derived from its use in equity to describe the proper exercise by a trustee of a discretionary power in relation to the trust.) Although the nature of the exercise, particularly with respect to discretionary powers, involves no bright-line boundary, care must be taken that the statutory mandate of the appellate court, limited to errors of law, is not breached by adopting as a standard inherently value laden language: see Minister for Immigration and Citizenship v SZJSS [2010] HCA 48; 243 CLR 164 at [30]." [21] As further explained in Boele v Rinbac Pty Ltd: "[54] This approach, followed in Goodwin v Commissioner of Police [2012] NSWCA 379 at [19]-[25], is, perhaps, a preferable conceptual framework than the reference in Dranichnikov to a failure to accord natural justice. The word constructive may not be entirely apt, but it is understood as meaning 'purported', in the sense of there being the appearance of an exercise of jurisdiction, but one which does not conform to the requirements of the law. Whatever language is used, such a failure will generally involve jurisdictional error, analogous to a legally erroneous refusal to exercise an available power: cf Public Service Association of South Australia Incorporated v Industrial Relations Commission of South Australia [2012] HCA 25; 249 CLR 398 at [34] (French CJ) and [65] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). It means that the process of decision-making in the tribunal, being the very function vested in the tribunal by statute, has miscarried." [22] It follows that the relevant grounds in a case alleging error of law are not expanded by reference to a constructive failure to exercise jurisdiction. If there has been jurisdictional error (including with respect to the determination of jurisdictional facts) there will have been error of law which can be addressed on an appeal limited to a question of law. In a case where a court has set out the competing material (thus engaging with an issue) and decides in favour of a particular result, without explaining why, the reasons will fail to meet the criterion of transparency required of judicial decision-makers. Where some reasons are given, expressly or implicitly the element of transparency may well be met, even if an appellate court considering an appeal by way of rehearing would find the reasons flawed. [23] To the extent that the appellant is not able to demonstrate that the trial judge failed to consider any essential element of the claim for compensation, a separate question will arise as to whether the reasons given for the outcome were sufficient in law." (citations omitted) 1. At [294]-[314], Macfarlan JA set out the principles with respect to a constructive failure to exercise jurisdiction and adequacy of reasons including at [308]: "[308] In Whisprun Pty Ltd v Dixon [2003] HCA 48; (2003) 77 ALJR 1598 this Court had ordered the new trial of a personal injury damages claim, finding that the primary judge had in effect overlooked relevant parts of the evidence. By a majority in the High Court, this Court's decision was reversed. In the course of its judgment, the majority said: "[62] … it should not be accepted that [the primary judge] failed, at least in a general way, to consider the matters to which the Court of Appeal referred. The fact that his Honour did not refer to these matters in his judgment is not decisive. A judge's reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge's failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party's case. [63] … To suggest that a trial judge has not properly considered a party's case is a serious charge. Such a suggestion should be accepted only when the record of the trial or other evidence persuasively suggests that the judge failed to discharge that paramount judicial duty. …" 1. At [400]-[410], Leeming JA set out the principles with respect to a constructive failure to exercise jurisdiction and adequacy of reasons including at [400], [403]: "[400] It is perhaps unfortunate that part of the debate focussed about the meaning of "grappled" in this context. The expression is not uncommonly used in determining appeals from the District Court …, or from a Division of the Supreme Court …. However, as has been explained …. what is being inferred in such cases is a failure in the process of fact finding. …" "[403] Where an appeal is confined to questions of law, the considerations summarised above – which are directed to the resolution of competing issues of fact – do not directly arise. While I accept that some errors in the fact finding process may amount to errors of law (actual bias is an example), I also think that one cannot safely transplant the principles applicable to an appeal by way of rehearing to appeals confined to questions of law." (authorities omitted) 1. At [411]-[412], Leeming JA expressed the following conclusion on the grounds of appeal relating to a constructive failure to exercise jurisdiction and adequacy of reasons: "[411] It follows that the appellant's submissions insofar as they complain of failing to engage with the evidence and submissions are outside the scope of an appeal confined to questions of law. In reaching that conclusion, I am conscious that the fact/law distinction is scarcely a crisp one. The High Court's statement in Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394; [1996] HCA 36 that "no satisfactory test of universal application has yet been formulated" is to be understood not merely of the failure hitherto to do so, but as an acknowledgement of the impossibility of the task. Even so, the limitation imposed by s 57 of the Land and Environment Court Act must be given work to do, and I am satisfied that on its proper construction, the complaints advanced by the appellant do not give rise to legal error. [412] Ultimately the appellant's submissions, faced with the task of falling within an appeal limited to questions of law, sought to transmute deficiencies in factual findings into deficiencies in the process of making findings or recording reasons. I am unpersuaded that the appellant can in that fashion make out legal error, as opposed to factual error." 1. We are satisfied that each of questions 2 and 3A raise a question of law and accordingly the builder has an appeal as of right under s 80(2)(b) of the NCAT Act in respect of these questions for the following reasons: 1. as to question 2, this is a question of law within the principles of Kostas at [91] because it raises the question of whether there was evidence to support a factual finding; 2. as to question 3A, this is a question of law within the principles of Alexandria Landfill at [6], [20]-[22] and [63] because it involves consideration of whether the Tribunal constructively failed to exercise its jurisdiction. 1. We are not satisfied that each of questions 3, 3B and 6 raise a question of law and accordingly the builder does not have an appeal as of right under s 80(2)(b) of the NCAT Act in respect of these questions for the following reasons: 1. as to questions 3 and 6, these are not questions of law within the principles of Rogers at [11]-[14] because there is a dispute between the parties as to whether the builder was required under the building contract to undertake stormwater management and sub-floor drainage works; 2. as to question 3B, this is not question of law as the principles of Alexandria Landfill at [411]-[412] make clear that the question raised is one of deficiencies in factual findings. The nature of an appeal under s 80(2)(b) of the NCAT Act 1. In Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 (Bimson) at [40]-[41], Beech-Jones J made the following observations when considering an appeal under a statute which conferred a right of appeal "on a ground that involves a question of law alone": "[40] This leads to the second proposition, namely that, ultimately it is incumbent on the parties contending that a question of law was decided erroneously, to identify the question and to do so in abstract terms. Thus in Williams v R [1986] HCA 88; 161 CLR 278 at 287 ("Williams"), Gibbs CJ stated: "... there is 'a question of law alone' if the question of law can be stated and considered separately from the facts which it may be connected in a given case." (see also 314 per Wilson and Dawson JJ.) [41] If that task is undertaken, then the consequential questions that will arise are whether the lower court or tribunal either answered that question or proceeded on an assumption concerning that answer, whether its answer or assumption was correct or incorrect, and whether that answer or assumption was material to the outcome, in the sense that it could have affected the outcome (see Australian Broadcasting Tribunal v Bond [1990] HCA 33; 170 CLR 321 per Mason CJ; Mark Aronson and Matthew Groves Judicial Review of Administrative Action (Thomson Reuters, 5th ed, 2013, at [4.270]))." 1. The Appeal Panel has determined that, except when it conducts a new hearing under s 80(3), an appeal under s 80(1) of the NCAT Act involves a rehearing in the sense of conducting a rehearing on the materials before the Tribunal to determine whether the order that is the subject of the appeal is the result of some legal, factual or discretionary error and, in some cases, has power to receive additional evidence. Although the appeal is described as being "by way of rehearing", it does not call for a fresh hearing and the Appeal Panel does not hear the witnesses again": Yuen v Thom [2016] NSWCATAP 243 at [14]-[22]. 2. We consider that the approach in Bimson at [40]-[41] should be applied in determining whether the Tribunal made an error on a question of law under s 80(2)(b) of the NCAT Act. If we are satisfied that the Tribunal made one or more material errors of law, then it will be necessary to determine whether to undertake a rehearing on the material before the Appeal Panel or remit the proceedings for further consideration by the Tribunal. 3. We consider that the approach in Collins at [76], [77] and [84] should be followed in determining whether leave to appeal against the work order should be granted. If leave to appeal should be granted and we are satisfied that the Tribunal made one or more material errors, then it will be necessary to determine whether to undertake a rehearing on the material before the Appeal Panel or remit the proceedings for further consideration by the Tribunal. The issues for determination in the appeal 1. The following issues arise for determination in this appeal: 1. issue 1: whether the Tribunal made an error of law because there was no evidence to support its factual findings that building work performed by the builder caused excessive uncontrolled stormwater to enter the sub-floor, and caused or exacerbated the flow of stormwater into the sub-floor, and if so whether any such error was material to the making of the work order; 2. issue 2: whether the Tribunal made an error of law because it failed to determine a material issue in the case, namely the issue of whether liability under s 18B(1)(c) of the HB Act was excluded by clauses 40.1 and 40.2 of the contract, and if so whether any such error was material to the making of the work order; 3. issue 3: whether the builder should be granted leave to appeal against the work order, and if so whether the appeal should be allowed and that order should be set aside; 4. issue 4: the costs of the appeal. 1. As the amended grounds of appeal and reasons for leave raise the construction and application of s 18B and 18F of the HB Act, we have set out these provisions before considering these issues. The applicable provisions of the HB Act 1. Section 18B deals with warranties as to residential building work and relevantly provides: 18B Warranties as to residential building work (1) The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work— (a) a warranty that the work will be done with due care and skill and in accordance with the plans and specifications set out in the contract, … (c) a warranty that the work will be done in accordance with, and will comply with, this or any other law, … (e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling, … 1. Section 18F deals with defences and relevantly provides: 18F Defences (1) In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from— … (b) reasonable reliance by the defendant on instructions given by a person who is a relevant professional acting for the person for whom the work was contracted to be done and who is independent of the defendant, being instructions given in writing before the work was done or confirmed in writing after the work was done. … (4) In this section, relevant professional means a person who— (a) represents himself or herself to be an architect, registered design practitioner or registered principal design practitioner (within the meaning of the Design and Building Practitioners Act 2020), engineer or surveyor, or … Issue 1: whether the Tribunal made an error of law because there was no evidence to support its factual findings that building work performed by the builder caused excessive uncontrolled stormwater to enter the sub-floor, and caused or exacerbated the flow of stormwater into the sub-floor, and if so whether any such error was material to the making of the work order Introduction 1. The builder in the builder's appeal submissions submitted that there was no evidence supporting these findings. 2. The owners in the owners' appeal submissions relevantly drew attention to the evidence of Mr Dockrill in his expert report dated 10 November 2022 (the Dockrill report) (AB 543-545). Conclusion 1. This issue contains an ambiguity as to the meaning of the expressions "the sub-floor area" and "the subfloor" at [38] and [39] respectively of the Decision. The parties understood these expressions to refer to different parts of the property. The builder understood these expressions to refer to the area below the dwelling. The owners understood these expressions to refer to the area below the works. 2. The building experts in the building experts' joint report (AB 1678-1689) in relation to items 1 to 3 refer to the "Subfloor area accessed by the laundry door" and the "Subfloor area accessed under rear deck section". 3. In view of the reference by the Tribunal to the building experts' joint report at [29] of the Decision, we are satisfied that the expressions "the sub-floor area" and "the subfloor" at [38] and [39] respectively of the Decision are properly to be understood as in the manner described in the building experts' joint report. It is clear from Figure 1 in the Dockrill report (AB 540) that the "Subfloor area accessed by the laundry door" is the area below the dwelling and the "Subfloor area accessed under rear deck section" is the area below the works. 4. Further, inherent in this issue is a dispute between the parties as to the scope of the works under the building contract. The builder's position is that the building contract did not require any stormwater management works beneath the dwelling, while the owners' position is the building contract did require stormwater management works beneath the dwelling. 5. We are satisfied that the building contract did require stormwater management works beneath the dwelling for the following reasons: 1. in a building contract to which the HB Act applies, the reference in s 18B(1)(c) to "any other law" includes the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) and associated regulations which give legal effect to the Building Code of Australia: Owners SP 92450 v JKN Para 1 Pty Limited [2023] NSWCA 114 at [20] (Gleeson JA with White JA at [115] and Brereton JA at [116] agreeing); 2. the EPA Act and associated regulations at the relevant time included the following provisions: 1. the definition of "development consent" in s 4(1) of the EPA Act includes, unless expressly excluded, a complying development certificate; 2. clause 98(1)(a) of the Environmental Planning and Assessment Regulation 2000 (NSW) when read with the definition of "development consent" in s 4(1) of the EPA Act provided that any building work performed pursuant to a complying development certificate must be carried out in accordance with the requirements of the Building Code of Australia; 1. the Building Code of Australia at the relevant time (which was called the National Construction Code 2016) relevantly provided: 1. in relation to suitability of materials: "1.2.1 Suitability of materials Every part of a building must be constructed in an appropriate manner to achieve the requirements of the Housing Provisions, using materials that are fit for the purpose for which they are intended." 1. in relation to surface water "P2.2.1 Surface water … (b) Surface water, resulting from a storm having an average recurrence interval of 100 years must not enter the building. Limitation: P2.2.1(b) does not apply to a Class 10 building where in the particular case there is no necessity for compliance. (c) A drainage system for the disposal of surface water resulting from a storm having an average recurrence interval of— (i) 20 years must— (A) convey surface water to an appropriate outfall; and (B) avoid surface water damaging the building; and (ii) 100 years must avoid the entry of surface water into a building." 1. in relation to drainage: "3.1.2.2 Drainage requirements Drainage systems must be installed as follows— (a) areas adjoining and under buildings — surface water drainage in accordance with 3.1.2.3; and (b) where site conditions exist that create a need for subsoil water to be diverted away from footings, basements, retaining walls etc — sub-soil drainage in accordance with 3.1.2.4; and … 3.1.2.3 Surface water drainage Surface water must be diverted away from Class 1 buildings as follows: … (c) The ground beneath suspended floors must be graded so that the area beneath the building is above the adjacent external finished ground level and surface water is prevented from ponding under the building (see Figure 3.1.2.3) [Figure 3.1.2.3 omitted] 3.1.2.4 Subsoil drainage Where a subsoil drainage system is installed to divert subsurface water away from the area beneath a building, the subsoil drain must— (a) be graded with a uniform fall of not less than 1:300; and (b) discharge into an external silt pit or sump with— (i) the level of discharge from the silt pit or sump into an impervious drainage line not less than 50 mm below the invert level of the inlet (see Figure 3.1.2.4); and (ii) provision for cleaning and maintenance. [Figure 3.1.2.4 omitted] Explanatory information: Subsoil drainage systems may need to be installed where subsurface water movement could damage buildings or cause loss of amenity through the build up of excessive moisture or lateral water pressure. Typical locations of subsoil drainage systems are on the uphill side of cut and fill sites, adjacent to deep footings, behind retaining walls and adjacent to basement walls. …" 1. these requirements of National Construction Code 2016 were engaged by reason of the topography of the property and that the IS drawings and the SDA drawings required the works to be constructed at a level lower than the surrounding sub floor of the dwelling. 1. We are satisfied that section 2.3 of the Dockrill report (AB 532-554) contained evidence supporting the impugned findings. It is unnecessary to set out this evidence in its entirety. We have set out [66] to [68] of the Dockrill report (omitting Photos 7 to 9) which are directly relevant to the impugned findings: "66. I inspected the subfloor area underneath the enclosed deck at the rear of the house, near the bedroom and laundry, and noted excessive groundwater/moisture throughout the subfloor area. 67. I noted a stormwater pit within the subfloor, near the laundry door. The surface level of this pit is above surrounding ground level. The ground surrounding the pit is damp, indicating the pit is not directly collecting surface water. I understand there is a subsoil drain connected into the pit however it is running upwards to the pit. 68. I have observed that the bedroom which is adjacent to the sub-floor area and adjacent to the laundry is approx. 150mm below the laundry floor. See photo 27. I also note that the sub floor soil area as shown in photos 7 to 9 is at least level with the laundry floor if not higher than the laundry floor. This being the case, if was evident to me during my inspections that any surface stormwater from the front of the property which enters the sub-floor space, can flow into the lowest habitable space being the bedroom which is positions approx. 150mm lower than the laundry." 1. As we are not satisfied that the Tribunal made any error of law, it follows that the materiality of any such error does not arise for consideration. 2. For these reasons we reject amended ground of appeal 2. Issue 2: whether the Tribunal made an error of law because it failed to determine a material issue in the case, namely the issue of whether liability under s 18B(1)(c) of the HB Act was excluded by clauses 40.1 and 40.2 of the contract, and if so whether any such error was material to the making of the work order Introduction 1. The builder in the builder's appeal submissions relevantly submitted that the Tribunal failed to consider whether the absence of stormwater management or sub-floor drainage provisions was a defect that related solely to the IS drawings and the SDA drawings prepared on behalf of the owners. It plainly was; these drawings did not provide for any such work to be carried out. By failing to consider this argument, the Tribunal failed to decide a material issue in the case. 2. The owners in the owners' appeal submissions referred to [102] to [104] and [106] to [108] of the Decision and relevantly made the following submissions: 1. the builder cannot establish that the Tribunal failed to consider an argument that the sole reason for the water ingress to the basement of the works was the defective IS drawings and SDA drawings for the following reasons: 1. first, the Tribunal identified the correct legal principle in that the builder had to prove that the sole cause of the breach was due to the defective IS drawings and SDA drawings; 2. second, the builder bore the onus to establish the above; 3. third, the builder cannot discharge this onus in circumstances where: 1. the builder did not construct as per the defective IS drawings and SDA drawings; 2. the builder relied on Option B and attempted (but failed) to build to Option B, and for this reason alone, to the extent that there was a design deficiency in the defective IS drawings and SDA drawings, the builder cannot establish that such a deficiency was the sole cause of the breach; 1. fourth, as a matter of logic and common sense the builder's attempt to construct as per Option B must have had some impact on the alleged breach and accordingly cl 40.2 has no work to do; 1. any error of law by the Tribunal was not material in any event. 1. In the course of his oral submissions counsel for the owners submitted that Option B was a variation of the building contract. Consideration 1. The building contract relevantly provides: "Clause 1. Interpretation 1.1 In this contract: … 'building works' means the building works to be carried out, completed and handed over to the owner in accordance with this contract as shown in the contract documents and includes variations; … 'variation' means: (a) an omission, addition or change to the building works; or …" Clause 18. Variations 18.1 A variation must be in writing and signed by the builder and the owner. …" "Clause 40. Mandatory Conditions 40.1 To the extent required by the Home Building Act and subject to sub-clause 40.2, the building works will comply with: (a) the Building Code of Australia (to the extent required under the Environmental Planning arid Assessment Act 1979, including any regulation or other instrument made under that Act); … 40.2 The builder is not liable if the building works do not comply with the requirements of sub-clause 40.1 if the failure relates solely to: (a) a design or specification prepared by or on behalf of the owner (but not by or on behalf of the builder); or … 40.3 To the extent required by the Home Building Act: … (b) any agreement to vary this contract, or to vary the plans and specifications for the building works, must be in writing and signed by the parties. …" 1. We are not satisfied that the Tribunal failed to determine the issue of whether the liability of the builder under s 18(1)(c) of the HB Act was excluded by cll 40.1 and 40.2 of the building contract for the following reasons: 1. the Tribunal implicitly proceeded on the basis that the work done by the builder in performance of Option B was part of "the building works" referred to in cll 40.1 and 40.2. However, the Tribunal did not consider whether the expression "the building works" in cll 40.1 and 40.2 when read with the definitions of "building works" and "variation" in cl 1.1 of the building contract included the work in Option B. In particular, the Tribunal did not consider whether Option B was signed by and binding on the builder (notwithstanding the absence of the signatures of the parties required by cll 18.1 and 40.3(b) of the building contract and cl 1(2) of Sch 2 of the HB Act) pursuant to the provisions of the Electronic Transactions Act 2000 (NSW) and the principles in Paraiso v CBS Build Pty Ltd [2020] NSWSC 190 at [40] by reason of having been attached to the 9 March 2018 Fugar email. On the assumption that Option B is properly to be characterised as a variation of the building contract, then the builder's appeal submissions are misconceived in limiting consideration of the effect of cl 40.2 of the building contract to the IS drawings and the SDA drawings A further impediment to the builder's reliance on cl 40.2 of the building contract is the unchallenged finding at [107] of the Decision that the builder had failed to discharge its onus that reliance on Option B, had construction been in accordance with Option B, was the sole cause of the defects identified by the building and engineering experts; 2. even if the Tribunal was in error in proceeding on the basis that the work done by the builder in performance of Option B was part of "the building works" referred to in cll 40.1 and 40.2, then this error was not material because the builder failed to establish that reliance on the IS drawings and the SDA drawings was the sole cause of water ingress to the basement of the works. This failure of proof occurred because the builder failed to construct the retaining wall in accordance with Option B and there was no evidence that the builder's defective construction of the retaining wall specified in Option B did not in any way contribute to the water ingress. 1. For these reasons we reject amended ground of appeal 3A. Issue 3: whether the builder should be granted leave to appeal against the work order, and if so whether the appeal should be allowed and that order should be set aside Introduction 1. The amended notice of appeal contains the following reasons for seeking leave to appeal: "C. LEAVE TO APPEAL 1. Insofar as the appeal challenges findings of fact, the Appellant seeks leave to appeal on the basis that the findings are against the weight of the evidence and were not fair and equitable, because: (a) the following evidence was unchallenged: i. stormwater management was not included in the Contract scope of works; ii. drainage issues pre-existed the building works undertaken by the Appellant; iii. SDA was retained by the Respondents pursuant to a letter of engagement dated 6 August 2015; iv. both SDA invoices relating to Option B were sent to the Respondents; and v. the Appellant paid the SDA invoices because of a concern that construction would stall if they were not paid; (b) both engineering experts agreed that water ingress through the Basement Retaining Wall was attributable to the lack of drainage provisions in the "Option B" design; (c) both engineering experts agreed that the pre-existing drainage issues were the underlying cause of water entry into the Master Bedroom; (d) the evidence included email correspondence between SDA and the Respondents which made clear that SDA was in the Respondents' camp, such that they would have been expected to call Mr Fugar as a witness; (e) the fact that the Appellant liaised directly with SDA was unremarkable given the SDA letter of engagement provided for "Liaison with Builder and Architect during the construction phase." 1. As we have found that amended grounds of appeal 3, 3B and 6 do not raise a question of law, it is appropriate to consider whether leave to appeal should be granted on any one or more of these grounds in addition to the grounds relied upon by the builder for leave to appeal. Whether s 18(1)(a) of the HB Act on its proper construction applied to works not undertaken or required to be undertaken (being stormwater management and sub-floor drainage works) 1. Amended ground of appeal 3 is misconceived because it is premised on the incorrect assumption that the builder was not required to comply with the extracted provisions of the National Construction Code 2016 pursuant to s 18B(1)(c) of the HB Act. It follows that the builder has not established that it may have suffered a substantial miscarriage of justice within cl 12(1)(a) of Sch 4 of the NCAT Act and so we refuse to grant leave to appeal on this ground. Whether the Tribunal failed to consider evidence material to an issue in the case, namely whether Mr Fugar was acting for the builder, being paragraphs [6] to [8] of the statement of Mr Hanna dated 9 August 2023 1. The statement of Mr Keogh dated 3 July 2023 relevantly contains the following evidence: "5. On 29 March 2018 I received an email from Jake Fugar from SDA Structures attaching a tax invoice SDA1 3315. A copy of the email from Jake Fugar to myself dated 29 March 2018 at 9.03am attaching the tax invoice is annexed and marked "A". 6. Shortly after receiving the tax invoice I approached John Hanna at the site and we had a conversation in words to the following effect: Steven Keogh: "Here's an invoice from the engineer. Is this for you or me to pay?" John Hanna: "I'll take care of it." … 8. On or about 29 June 2018 I received a further tax invoice from SDA Structures being invoice SDA1 3890. Shortly after receiving that tax invoice I handed the tax invoice to John Hanna on site for him to pay. Annexed and marked "C" is an email chain between Jake Fugar, John Hanna and myself in the period 29 June 2018 at 3.52pm to 11 July 2018 at 6.30am and the attachments therein." 1. The statement of Mr Hanna dated 9 August 2023 relevantly contains the following evidence: "3. I also refer to the Further Witness Statement in Reply of Steven John Keogh dated 3 July 2023, to which I respond below. I have used headings to identify the paragraph of the statement being responded to. Where I have not responded to a paragraph it does not follow that I agree with its contents. … Paragraph 6 6. I deny the conversation set out in paragraph 6. Paragraphs 7 & 8 7. I agree that Samchris paid the two SDA invoices referred to, but only so that the progress of construction on the site would not be affected. 8. The Applicants from the outset of the project were raising matters with me regarding their cashflow issues. SDA still needed to inspect and certify the works, and I was concerned that construction would stall if SDA was not paid. It was not my intention to just pay the fees and not receive reimbursement from the Applicants, but I forgot to seek reimbursement from the Applicants after the invoices were paid." 1. In cross-examination Mr Keogh gave evidence that at around the time of receiving the SDA invoices there was "uncertainty about cash-flow". He admitted that, despite that uncertainty, he did not enquire with SDA as to why he had received the invoices, nor did he ask SDA to reissue them to the builder. 2. The builder in the builder's appeal submissions relevantly made the following submissions: 1. the Tribunal gave significant weight to the evidence that invoices issued by SDA for Option B had been paid by the builder, but it failed to consider the evidence of Mr Hanna as to why that had occurred or provide any reasons as to why his evidence was not accepted; 2. despite the absence of any challenge to Mr Hanna's evidence, the email which corroborated Mr Hanna's testimony, and the unreliability of Mr Keogh's recollection, the Tribunal at [91] of the Decision accepted Mr Keogh's evidence of the conversation with Mr Hanna. Implicit in that acceptance is a finding that Mr Hanna's evidence on this issue was rejected; 3. Mr Hanna's evidence was significant, in that it provided an explanation for payment of the SDA invoices which, if accepted, was inconsistent with the significant weight given by the Tribunal to the fact that the builder was the one that paid them. 1. The owners in the owners' appeal submissions relevantly submitted that when dealing with the payment of the 29 March 2018 SDA invoice, it was not necessary to resolve the dispute as to why the builder paid it as the central finding made was that the builder (having paid it) did not seek reimbursement of that expense from them. This finding is persuasive evidence that the builder engaged Mr Fugar independently of them, as had the builder done so on some other basis there would be a reasonable expectation for it to seek reimbursement of the payment from them. Conclusion 1. We are not satisfied on the basis of this evidence relied on by the builder that the evidence in its totality preponderates so strongly against the conclusion found by the Tribunal that Mr Fugar was acting for the builder in requesting Option B it can be said that the conclusion was not one that a reasonable Tribunal member could reach. This conclusion was supported by the unchallenged findings that Mr Hanna dealt with the problem of the footings by dealing with Mr Fugar directly without any involvement of the owners, the revised drawings created at the request of Mr Hanna were emailed directly from Mr Fugar to Mr Hanna in the 9 March 2018 Fugar email which was not copied to the owners, the 29 March 2018 SDA invoice was paid by the builder, and the failure of the builder to request the owners to pay this invoice or reimburse it for having paid the invoice. It follows that the builder has not established that it may have suffered a substantial miscarriage of justice within cl 12(1)(b) of Sch 4 of the NCAT Act and so we refuse to grant leave to appeal on this ground. Whether s 18B(1)(e) of the HB Act on its proper construction applied to works not carried out by the builder or otherwise not required to be carried out by the contract 1. Amended ground of appeal 6 is misconceived because it is premised on the incorrect assumption that the builder was not required to comply with the extracted provisions of the National Construction Code 2016 pursuant to s 18B(1)(c) of the HB Act. It follows that the builder has not established that it may have suffered a substantial miscarriage of justice within cl 12(1)(a) of Sch 4 of the NCAT Act and so we refuse to grant leave to appeal on this ground. Grounds set out in the amended notice of appeal for seeking leave to appeal 1. Notwithstanding the grounds set out in the Amended Notice of Appeal for seeking leave to appeal, the builder in the builder's appeal submissions has only addressed submissions directed to issue 2 which we have already dealt with. 2. The grounds in [1(a)] to [1(c)] and [1(e)] of section C of amended notice of appeal have already been dealt in our decision in relation to issue 1 and the alleged failure of the Tribunal to deal with material evidence. It follows that the builder has not established that it may have suffered a substantial miscarriage of justice within cl 12(1)(a) of Sch 4 of the NCAT Act and so we refuse to grant leave to appeal on these grounds. 3. The ground in [1(d)] of section C of amended notice of appeal raises the application of the rule in Jones v Dunkel. The Appeal Panel has set out the authorities which explain the rule in Jones v Dunkel in Redmyre Group Pty Ltd v Stockman [2023] NSWCATAP 305 at [76], [93]-[96] including Morley & Ors v Australian Securities and Investments Commission [2010] NSWCA 331; (2010) 247 FLR 140 at [634] (Spigelman CJ, Beazley and Giles JJA): "[634] The first matter was the familiar, although often misunderstood, Jones v Dunkel reasoning from a party's unexplained failure to call a witness the party would be expected to call. The fact-finding tribunal may infer that the evidence of the absent witness would not assist the case of that party, or it may draw with greater confidence an inference unfavourable to that party. There is no compulsion to reason in either way. The reasoning cannot make up for absence of proof: before there can be greater confidence in an inference unfavourable to a party, the inference must already be available on the evidence. Conversely, if the party's case is otherwise proved, the inference that the absent witness would not assist the party's case does not detract from the proof. It is sufficient to refer to Manly Council v Byrne [2004] NSWCA 123 at [44]-[55], [69]-[74]." 1. The Tribunal dealt with the builder's submissions about the rule in Jones v Dunkel at [99] to [101] of the Decision. 2. The builder in the builder's appeal submissions apart from submitting that the Tribunal did not explain why it rejected its submission that Mr Fugar was in the camp of the owners did not explain how the rule in Jones v Dunkel was incorrectly applied in circumstances where the onus was on the builder to prove he had a defence under s 18F(1)(b) of the HB Act. There was an absence of proof by the builder that Mr Fugar was acting for the owners. We are not satisfied that there is an error in fact finding by the Tribunal by reason of the misapplication of the rule in Jones v Dunkel. It follows that the builder has not established that it may have suffered a substantial miscarriage of justice within cl 12(1)(a) of Sch 4 of the NCAT Act and so we refuse to grant leave to appeal on this ground. The exercise of the discretion under cl 12(1) of Sch 4 of the NCAT Act 1. Even if we had been satisfied that the builder may have suffered a substantial miscarriage of justice, then having regard to the matters in Collins at [84(2)], we would not have exercised the discretion under cl 12(1) of Sch 4 of the NCAT Act to grant leave to appeal against the work order. Issue 4: the costs of the appeal 1. Counsel for the owners applied for an order for the costs of the appeal. Counsel for the builder conceded that it should pay the owners' costs of the appeal in the event the appeal was wholly unsuccessful. As in our view this concession was correctly made, we have decided that the builder should pay the owners' costs of the appeal. Orders 1. As the stay of the work order granted on 17 April 2024 is lifted by reason of this decision, it is appropriate to vary it to provide that the rectification works must be carried out with six months of the date of this decision. 2. We make the following orders: 1. Leave to appeal is refused. 2. The appeal is otherwise dismissed. 3. Order 1(a) made on 8 March 2024 is varied to substitute "the orders in appeal proceedings 2024/00126894" for "these orders". 4. The appellant is to pay the respondents' costs of the appeal as agreed or assessed under the applicable costs legislation. ********** 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: 28 June 2024