Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Roxy Pacific Killara Pty Ltd v The Owners – Strata Plan 10053 [2024] NSWCATAP 177 Hearing dates: 28 August 2024 Date of orders: 16 September 2024 Decision date: 16 September 2024 Jurisdiction: Appeal Panel Before: Balla ADCJ Principal Member Decision: (1) The decision of the Tribunal in proceedings 2021/00371562, on 22 April 2024 is set aside. (2) The matter is remitted to the Tribunal to be determined according to law. (3) I do not limit the lodgement of new evidence which might be relied upon. Catchwords: BUILDING AND CONSTRUCTION — Home Building Act 1989 (NSW) — S 48O discretion — Defects Legislation Cited: Civil and Administrative Tribunal Act 2013, s 80(2)(b) Home Building Act 1989 (NSW), ss 48O, 48MA Cases Cited: Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2020) 275 FCR 385 Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 Collins v Urban [2014] NSWCATAP 17 Crystele Designer Homes Pty Ltd v Wood [2023] NSWCATAP 242 House v The King (1936) 55 CLR 499 Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 Leung v Alexakis [2018] NSWCATAP 11 Mifsud v Campbell (1991) 21 NSWLR 725, Minister for Immigration & Ethnic Affairs v Wu Shan Liang Noori Homes Pty v Patel [2023] NSWCATAP 149 at [45]-[47]. Owners Strata Plan No 93227 v In Style Developments [2023] NSWCATCD (unreported) WAEE v Minister for Immigration & Multicultural & Indigenous Affairs (2003) 236 FCR 593 Category: Principal judgment Parties: Roxy Pacific Killara Pty Ltd (Appellant) The Owners – Strata Plan 10053 (Respondent) Representation: Counsel: S Philips (Appellant) J Knackstredt (Respondent) Solicitors: Vincent Young solicitors (Appellant) Bugden Allen Graham Lawyers (Respondent) File Number(s): 2024/00186230 Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Date of Decision: 22 April 2024 Before: M Gracie, Senior Member File Number(s): 2021/00371562 (HB 21/51064) REASONS FOR DECISION 1. This Appeal relates to a residential apartment development of 43 units in two separate buildings in Killara, NSW. 2. The Owners Corporation (OC) commenced proceedings in this Tribunal by filing a Home Building Application on 15 December 2021. That application joined Roxy Pacific Killara (Roxy) as the first Respondent and Southwest Builders Pty Ltd (Southwest) as the second Respondent. Roxy was the developer of the apartment complex and it engaged Southwest to build it. 3. In its Application, the OC claimed there were defects in the construction of the buildings and relied on warranties and remedies provided by the Home Building Act 1989 (NSW) (HBA). The OC asked for: 1. Work Orders directing Roxy and Southwest to rectify or cause the rectification of a large number of defects in the work; and 2. A Money Order for damages of $11,101.75 for expenses incurred by the OC in maintaining or repairing defects in plumbing work and elevators. 1. In its Reply to the claim, Roxy said, inter alia, that any defects had been caused by Southwest. As the statutory warranties were being enforced against Southwest, they could not also be enforced against Roxy. However, if Roxy was found liable, it claimed contribution and indemnity from Southwest, and, said that, as Roxy was not a licensed builder, a Money Order rather than a Work Order was the appropriate remedy. 2. Southwest did not participate in the case management of the proceedings leading up to the hearing, nor did it appear at the three day hearing in May 2023. 3. There were six volumes of evidence before the Senior Member. It included lay and expert evidence and 11 Joint Scott Schedules referrable to each field of expertise covering a large range of defects. 4. The Senior Member's decision was delivered on 22 April 2024. He found some of the work was defective in breach of the statutory warranties contained in the HBA. The effect of the Orders he made were: 1. Roxy and Southwest were jointly and severally liable to pay the OC $6,149. 2. Within 28 days the parties were to: 1. Formulate an agreed draft Work Order to reflect his findings in a form which could be entered as an Order. 2. Identify any areas of disagreement or any omissions/errors in his Reasons other than the findings made on liability. 3. Notify the Tribunal if the parties agreed to the making of a Money Order in respect of any items in lieu of the Work Order. 4. Advise the Registry if a further hearing was required to deal with any aspect of the Orders. 1. Costs were reserved pending the completion of the above Orders. 1. It is common ground that the parties have not complied with Order 2. 2. Roxy has appealed from that decision. It seeks to have Order 2(a) set aside and the matter remitted to the Tribunal and redetermined. 3. The OC asks for the Appeal to be dismissed. 4. Southwest did not appear at the hearing of the Appeal. First Ground of Appeal – Exercise of the discretion in s 48O of the HBA 1. It is common ground that, in relation to this Ground of the Appeal, Roxy asserts that the Senior Member made an error or errors on a question of law. Internal appeals may be made as of right on a question of law: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2)(b). 2. Roxy seeks to set aside the Work Order made by the Senior Member and have it replaced with a Money Order. 3. In deciding to make a Work Order, the Senior Member was exercising the discretion set out in s 48O of the HBA. That section relevantly says: (1) In determining a building claim, the Tribunal is empowered to make one or more of the following orders as it considers appropriate-- (a) an order that one party to the proceedings pay money to another party or to a person specified in the order, whether by way of debt, damages or restitution, or refund any money paid by a specified person, (b) an order that a specified amount of money is not due or owing by a party to the proceedings to a specified person, or that a party to the proceedings is not entitled to a refund of any money paid to another party to the proceedings, (c) an order that a party to the proceedings-- (i) do any specified work or perform any specified service or any obligation arising under this Act or the terms of any agreement, or (ii) do or perform, or refrain from doing or performing, any specified act, matter or thing. (2) The Tribunal can make an order even if it is not the order that the applicant asked for. 1. Section 48MA of the HBA is also relevant. It says: A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the "responsible party") is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome. 1. Roxy relies on four errors it says were made by the Senior Member in his exercise of the s 48O discretion: 1. Applying s 48MA as imposing a rebuttable presumption or preference in favour of making a Work Order when it is but one factor to be taken into account in the exercise of the discretion; 2. Wrongly finding that the decision in Owners Strata Plan No 93227 v In Style Developments [2023] NSWCATCD (unreported) (In Style) supported the conclusion that it is appropriate for the making of a Work Order against two separate entities; 3. Wrongly failing to give sufficient, or any, weight to Roxy's submissions made in its Outline of Closing Submissions dated 4 May 2023 (ROCS) in relation to whether a Work Order should be made against it; 4. Wrongly finding that, as Roxy had defended the proceedings without making a cross application against Southwest, Roxy was wholly liable in respect of the obligations under the prospective Work Order. (1) Construction of s 48MA of the HBA 1. This issue turns on the correct meaning of the closing words of s 48MA: "rectification of the defective work by the responsible party is the preferred outcome". 2. The Senior Member held: 32 Section 48MA of the HBA provides a presumption that rectification of defective work is the preferred outcome in home building disputes… 41 … The discretion for the making of a work order is broad and starts from the rebuttable preference informed by s 48MA as set out above for the making of a work order… 42 … I am not satisfied that Roxy has rebutted the presumption for the making of a work order in the circumstances discussed above. (emphasis added) 1. Roxy says that this approach to s 48MA was wrong. The section does not say that there is a "presumption" that a Work Order will be made so that the presumption has to be rebutted by the opposing party. 2. The OC says that the Senior Member correctly treated s 48MA as expressing a preference in favour of that outcome. 3. I do not accept the submission made by the OC. The words used by the Senior Member disclose that he treated it as a presumption which had to be rebutted. 4. In Leung v Alexakis [2018] NSWCATAP 11 the Appeal Panel held: [137] It is apparent from the reasons that the Tribunal considered that it was mandatory to make an order that the respondent carry out the rectification work… [138] In our view the Tribunal incorrectly interpreted the obligation imposed upon it under s 48MA in making orders in connection with a building claim. [139] Rather, there was a discretion the Tribunal was required to exercise as to whether or not to make an order for compensation, an order in the nature of a work order or some other order as permitted by s 48O(1). In this regard, s 48O(2) provides the Tribunal can make a work order even if not asked for by the applicant who makes a claim for defective residential building work. In doing so, s 48MA requires the Tribunal "to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome". Section 48MA is not, in terms, mandatory. Rather, it is a factor to be taken account of in the exercise of a discretion about what orders should be made to resolve a building claim. [140] Being expressed as a "preferred outcome", it operates in the manner of a presumption. That is, unless the facts of the particular case make it inappropriate to order rectification of the defective work by the responsible party, an order should be made in terms that give effect to the principle. [141] It follows that in so far as the Tribunal approached its task in deciding what order should be made on the basis it was mandatory to make a work order, it failed to exercise any discretion and failed to identify and weigh up the relevant factors necessary to such exercise of discretion. This constitutes an error of law: House v R [1936] HCA 40; (1936) 55 CLR 499 at 504-5. 1. This decision was considered in Kurmond Homes Pty Ltd v Marsden [2018] NSWCATAP 23 at [43]-[46]: [43] Secondly s 48MA is directed towards the remedy or "outcome" to be provided by the court or tribunal where a claimant establishes the responsible party has carried out defective residential building work or specialist work. In this sense, it is not properly described as a "presumption". Rather, it is a remedy to be "preferred" to other forms of order which the court or tribunal might make. [44] Third, while s 48MA provides the court or tribunal "is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome", the section does not mandate that a work order must be made in all cases. Further, the section does not confine the form of orders that may be made under s 48O, including an order that defective work be rectified by the responsible party engaging another person to carry out that work on behalf of the responsible party. [45] Fourth, the term "preferred" is not defined. The HB Act and Regulations do not specify circumstances in which the preferred outcome is not to be adopted. However, guidance as to the meaning of "preferred" and the circumstances that would justify an order for a different outcome is found in the second reading speech where the Minister for Fair Trading makes clear that the purpose of the amendment was to: (1) prevent a homeowner from unreasonably refusing a builder access to a building site to rectify defective work; (2) permit a builder to return to carry out necessary rectification work if they are willing; and (3) support the timely and cost-effective resolution of disputes. [46] That is, in deciding what order should be made, a court or tribunal may consider whether there is a reasonable basis for any objection raised by the homeowner to the builder being permitted to rectify the defective work, the terms of any order, whether the builder is willing to return and whether such an order would support a timely and cost effective resolution of the dispute." 1. In Crystele Designer Homes Pty Ltd v Wood [2023] NSWCATAP 242 (Crystele) the Appeal Panel held: [82]. …. The reference in Leung at [140] to s 48MA of the HB Act operating in the manner of a presumption is apt to mislead. There is no presumption in favour of a work order which must be rebutted for any other order to be made. While the Tribunal is likely to make a work order in the absence of objection by the owner or other relevant countervailing factors, the Tribunal is not precluded in the exercise of its discretion from making another form of order under s 48O of the HB Act provided it has regard to the preferred outcome of a work order. 1. I am satisfied that authorities establish that s 48MA does not say there is a presumption for the making of a Work Order and that the Senior Member was in error in relation to this issue. (2) Owners Strata Plan No 93227 v In Style Developments 1. The Senior Member found that the decision of In Style supported his view that the Work Order could be made against two separate entities with respect to the same building work: 37 The decision of Owners-Strata Plan No 93227 v In Style Developments Pty Ltd [2023] NSWCATCD (In Style) (unreported) … supports my view that it is appropriate for the making of a work order against two persons/entities, namely Roxy and the builder. … I accept that I am not bound by In Style, and the decision (even if the relevant parts are obiter) is merely consistent with the approach I have taken about joint and several liability with respect to the making of a joint and several work order and I have no basis to know whether the work order …." 1. Roxy says that this finding was erroneous for the following reasons: 1. The two separate entities made subject, jointly and severally, to a Work Order in In Style were not the original builder and the developer. They were the developer and the builder which was undertaking rectification works, after the original builder had gone into liquidation. 2. They were found to be jointly and severally liable under a contract and not under the HBA. 1. Roxy said that no authority had been identified in which an applicant claiming breaches of the HBA statutory warranties had obtained relief against both the original builder and the developer with respect to the same defects. 2. The OC says the Senior Member did not act on any incorrect principle in determining the respondents ought to be jointly and severally liable under the Work Order because: 1. The Senior Member recognised, at [37] (set out above), that he was not bound to follow In Style. 2. It is irrelevant that the builder in In Style was not the original builder, nor that liability arose as a result of a settlement agreement. 1. I agree with Roxy that the other matters asserted in Reply by the OC in its written submissions do not address the Ground of Appeal advanced by Roxy, which was that the Senior Member had erred in finding that In Style supported the conclusion that it is appropriate to make a Work Order against two separate entities in these proceedings. 2. I am of the view that the underlying facts leading to the decision in In Style means that the decision was not relevant to the determination of whether a Work Order could be made against Roxy and Southwest jointly under the HBA. I accept the submission made by Roxy that the Senior Member erred. (3) ROCS 1. Roxy filed or provided to the Senior Member three sets of written submissions: 1. An outline of submissions dated 1 May 2023 (ROS); 2. An outline of Closing Submissions dated 4 May 2023 (ROCS). These submissions addressed two issues - firstly whether the Work Order could be made jointly and severally against both respondents and secondly the need for rectification of floors in wet areas; and 3. Further Written Closing Submissions dated 15 September 2023 (RCS). 1. Roxy invited me to infer that, while the Senior Member referred to and had read and considered ROS and RCS, he did not refer to, and did not consider or have regard to ROCS. 2. The OC says: 1. The Reasons demonstrated that the Senior Member did consider each of the submissions made by Roxy in the ROCS and rejected them. 2. Reasons are not to be over-zealously scrutinised with an eye finely attuned to error: Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, 272-273. 3. Whether a failure to refer to a submission or a piece of evidence demonstrates an error will depend on the circumstances of the case and the significance of the omission in context: Mifsud v Campbell (1991) 21 NSWLR 725, 728. 4. An inference that the Tribunal has failed to consider an issue or particular evidence should not be drawn where the reasons are otherwise comprehensive and the overarching issue has been identified: WAEE v Minister for Immigration & Multicultural & Indigenous Affairs (2003) 236 FCR 593 at [ 46]-[ 47]. 1. I agree with Roxy that the other matters asserted in the OC's Reply submissions do not address this issue. 2. I am of the view that it is clear from the Reasons, that the Senior Member did not take into account the submissions in ROCS relating to whether the Work Order could be made jointly and severally against both respondents when determining the exercise of the discretion for the following reasons: 1. The Senior Member did not refer to ROCS when he described the documents which had been provided to him at paras [22] and [24]. 2. The Senior Member observed at [37] that "Roxy's submission did not address whether a work order can be made against separate entities". However Roxy did make submissions in relation to this issue in ROCS. Paragraph 3 of ROCS relevantly says: 3 The issues which are addressed in these submissions are: … (b) whether or not a works order should be made with respect to any defects that have been agreed or may be found, and, if so, whether such an order should be made solely against the Builder or also against Roxy. 1. Paragraphs 24-33 of ROCS then address whether a Work Order should be made against Roxy and whether the Order can be made jointly against both of the respondents. 2. I decline to find, as submitted by the OC, that the Reasons demonstrate that the Senior Member did consider each of the submissions made by Roxy in ROCS and rejected them. As I have set out above, he stated that Roxy had not made any submissions in relation to an issue, whereas those submissions were set out in ROCS. (4) Cross application 1. The Senior Member said, after finding that Roxy was jointly and severally liable with Southwest to rectify the defective works pursuant to proposed Work Order: 39 If I am wrong in my application of the above principles, then I would have found that Roxy as the party who sought to defend the proceedings without any cross­application brought against the builder would be wholly liable in respect of the obligations arising under the prospective work order. Any rights or claims for indemnity or contribution that Roxy may have or seek to pursue against the builder is a matter for Roxy. 40 Presumably, Roxy has its own independent rights against the builder it engaged to undertake the home building work on its behalf under their building contract in respect of the scope of works for rectification of the defects found by the Tribunal. Roxy may itself undertake the necessary rectification works in the proposed work order, engage another party to perform that work or sue the builder so that it is obliged to perform that work at its cost or claim damages for the cost of that work incurred by Roxy. These are not matters for which the OC has to concern itself on the making of a work order against Roxy. 1. The OC says that it is now open to the Appeal Panel to take that course and restrict the Work Order so that it is made against Roxy only, pursuant to s 81(2) of the NCAT Act. 2. Roxy says that because the Senior Member made Orders against both Roxy and Southwest the finding at [39] does not have any significant relevance, but nevertheless should be set aside because it is wrong for the following reasons: 1. The Senior Member had found at paras [41] and [43] that Southwest "was on proper notice of the proceedings, was duly served and elected not to appear" and therefore should be found liable to rectify the defective work pursuant to a Work Order. To make Roxy solely liable under a Work Order would not be consistent with those findings. 2. There was no proper basis for the finding, which was not sought by the OC. 3. As Southwest was a respondent to the initiating Application, there was no need or utility for Roxy to bring any cross application against Southwest. 4. The finding was wrong as a matter of principle because it amounted to making a developer wholly liable for defective work found to have been undertaken by a builder which was a party to the proceedings. 1. The Senior Member does not explain the legal basis on which he could have chosen not to make an Order against Southwest merely because it had not participated in the proceedings after being properly joined. The OC has not made any submission as to the legal basis on which such an Order could be made but simply invited me to make such an Order. 2. I am satisfied that it would not have been open to the Senior Member to take this course. Finding 1. This first Ground of Appeal is an appeal from the exercise of a discretion. In House v The King (1936) 55 CLR 499 at 504-505 the High Court held: "The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution, for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." 1. The interpretation of a statute is directed to ascertaining the document's actual and true meaning. When it is properly construed, there is only one correct meaning. This is why the proper construction of a statute or contract is a question of law: Bianco Walling Pty Ltd v Construction, Forestry, Maritime, Mining and Energy Union (2020) 275 FCR 385 at [66]. 2. If it is alleged that the Tribunal had acted on a "wrong principle", then the question of law would be whether that principle was wrong or correct and, if wrong, whether the Tribunal acted on that principle and whether that materially affected the outcome: Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 at [48]-[53]. This passage was applied by the Appeal Panel in relation to the exercise of the discretion under s 48O of the HBA: Noori Homes Pty v Patel [2023] NSWCATAP 149 at [45]-[47]. 3. I am satisfied that, by construing s 48MA as inserting a presumption for the making of a Work Order, the Senior Member exercised the discretion on a wrong principle. I accept Roxy's submission that the error was material because, had it not been made, the Senior Member would not have started with the assumption that s 48MA involves a rebuttable presumption to be displaced by Roxy, but instead would have assumed that it is but one factor to be taken into account in the exercise of the s 48O discretion. Accordingly I am satisfied that, in respect of this Ground of Appeal, the Senior Member made an error on a question of law. 4. I have found that the Senior Member was in error when he said that the decision in In Style supported his view that the Work Order could be made against two separate entities. However, in view of the qualified manner in which the Senior Member referred to this decision, I am not persuaded that the error was material to his reasoning in the exercise of the discretion. I decline to find that the Senior Member made an error on a question of law in relation to this Ground of Appeal. 5. I am satisfied that by failing to consider the submissions of Roxy in ROCS in relation to a significant issue to be determined in the proceedings, the Senior Member did not afford Roxy procedural fairness and did not take into account a material consideration in his reasoning when he determined the exercise of the discretion and that this is an error on a question of law. 6. Although I have found that the Senior Member's alternate findings in relation to making an Order solely against Roxy would not have been open, in circumstances where that Order was not made, I am not persuaded that the error was material to the Senior Member's decision and I decline to find that the Senior Member made an error on a question of law. 7. I accordingly find that the exercise of the discretion under s 48MA miscarried by reason of the two material errors made by the Senior Member and accordingly Roxy has an appeal as of right under s 80(2)(b) of the NCAT Act in respect of those Grounds of Appeal. B Second Ground of Appeal – Defective floors 1. As I have already said, internal appeals may be made as of right on a question of law, and otherwise with leave: NCAT Act s 80(2)(b). 2. Both parties agree that this Ground of Appeal does not assert an error on a question of law. 3. As this is an appeal from a decision made in the Consumer and Commercial Division, the circumstances in which an Appeal Panel may grant leave to appeal are constrained by cl 12(1) of Sch 4 of the NCAT Act. It provides: (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. In Collins v Urban [2014] NSWCATAP 17 (Collins v Urban), the Appeal Panel at [76] said that such a substantial miscarriage of justice 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. 1. Even if an appellant satisfies the requirements of cl 12(1) of Sch 4, an Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 2. In Collins v Urban, the Appeal Panel relevantly said at [84]: 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 …; 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, 1. Roxy does not appeal from most of the findings made by the Senior Member as to the defects which need to be rectified. Roxy does however appeal from the findings made to rectify 51 bathroom floors. 2. The submissions of the parties turned on the meaning of Clause 3.3 and 3.4 of AS 3740 which provide: 3.3 FALLS IN FLOOR FINISHES Where required, falls in floor finishes shall allow all surface water to drain without ponding except for residual water remaining due to surface tension. For general bathroom floor area, the minimum fall to waste shall be 1:100. 3.4 SHOWER FALLS Falls in shower floors shall be sufficient to prevent: a. surface water from being retained on the shower floor (except for residual water remaining due to surface tension) and b. water from discharging outside the shower area. For shower areas with a vertical separation between the shower area and the wet area, such a shower screen, hob, step down or water stop, the fall to the waste shall be 1:100. As a minimum for other shower areas, the fall to waste shall be 1:80. 1. One expert, Dr O'Donnell, had used a digital spirit level and found the fall to the waste was slightly less than the required 1%. 2. The other expert, Mr Verinder, was told by occupants of the units that they had not seen any ponding or water retention on the floors outside the shower cubicles. He also did not see any evidence of water damage or water lying on a floor during his inspections. 3. The issue before the Senior Member was the interpretation of these two clauses in the Australian Standard - was a deficiency in the fall alone a defect, or did there also need to be evidence of ponding of water on the floors. 4. The relevant paragraphs of the Senior Member's Reasons say: 103 Neither expert undertook water testing. In the case of bathroom and shower areas, I am satisfied on Dr O'Donnell's evidence that the bathroom and shower areas that he measured and found to be non-compliant require rectification irrespective of whether there was no evidence or no complaints of water ponding. Dr O'Donnell said … that a main concern was the height of the tiles at the door to the shower where the strip drain was located. The statutory warranties in the HBA require compliance with the mandatory requirements of AS 3740. The test is not performance based. It is prescribed to require a fall to the waste of 1:100. 104 In the case of laundries, being a wet area that is not a bathroom or shower, a performance based approach suggested by Roxy is warranted by wording of cl 3.3. In the absence of any testing, evidence or complaints of the ponding of water on the floors of the laundries, even acknowledging that these are not usually going to be wet except in the case of an overflow, there has not been any proven failure to comply with the requirement in cl 3.3 so that the water will not drain without ponding (except for residual runoff). Further, there is no evidence to establish that the fall does not permit the drainage of water required by NCC F1.11. 105 A breach of a statutory warranty has been established on the evidence by reason of non-compliance with the mandatory prescriptions imposed by 3.3 and 3.4 in relation to bathrooms and showers. I allow the claim for the rectification of the bathrooms, ensuites, showers and ensuite showers the subject of the items set out above. These have been separately identified by the ARS at [46.b] (bathrooms) and [46.c] (showers). I accept the accuracy of those items identified as relating to bathrooms (including ensuites) and showers (and ensuite showers). 106 I am satisfied a work order should be made requiring rectification of bathrooms and showers as proposed by Dr O'Donnell in Items 3 and 4 of the Building Defects JSS. 107 The laundries have been separately identified in the ARS at [46.a]. I accept the accuracy of those items identified as relating to laundries. I do not allow the claim for laundries being Items 2, 11, 35, 95 and 108 as there is no evidence that surface water does not drain to the waste without ponding. 108 I allow the OC's claims for bathrooms and showers … and the corresponding rectification identified in Items 3 and 4 in a proposed work order. 1. Roxy says that the Tribunal erred in: 1. Finding (at [103], [105], [106] and [108]) that non-compliant bathroom falls had to be rectified without evidence of or complaints of water ponding because the test for a defect was not performance-based, even though it found that non-compliant laundry falls did not require rectification because there was no evidence of water ponding. 2. Not finding that, in the absence of any testing, evidence or complaints of ponding of water on the floors of any of the 51 bathrooms, there had not been any proven failure to comply with clause 3.3 of AS 3740. 3. Finding that a work order should be made requiring rectification of the 51 bathrooms and showers. 1. In its submissions Roxy says that the Senior Member erred for the following reasons. (1) ROCS 1. Roxy made written submissions with respect to the issue of liability for insufficient falls to drains in laundries and bathrooms in ROCS. ROCS at para 3 says: 3. The issues which are addressed in these submissions are: (a) whether it is open to the Tribunal to find that there has been a failure to comply with AS3470-2010 with respect to the falls in laundries and bathrooms and, if so whether any such failure can amount to a defect for the purposes of s 18B of the Act. 1. In paras (7)-(14) of ROCS four cases were discussed. Roxy submitted that those cases were authorities for the proposition that non-compliance with the relevant standard for falls in wet areas was not a defect requiring rectification. 2. Roxy submitted that for this reason alone, the Senior Member erred with respect to his findings as to the operation of clauses 3.3 and 3.4. 3. The OC says that the interstate Tribunal and inferior Court decisions have no binding or precedential effect and, in any event, do not appear to stand for the proposition relied upon. 4. The cases are not mentioned in the Senior Member's Reasons. I have previously found that the Senior Member did not consider the only other submissions made by Roxy in ROCS – that was in relation to whether or not a Work Order should be made solely against Southwest or also against Roxy. I further find that the Senior Member did not deal with the submissions in ROCS at paras (7)-(21) as to the proper construction of AS 3740. (2) Other reasons 1. The next three issues raised by Roxy turn on its submission that the Senior Member's construction of clauses 3.3 and 3.4 of AS 3740 was not open. 2. I decline to make such a finding. The Senior Member has adequately explained how he arrived at the interpretation of those clauses. It was not informed however, by a consideration of the four cases and the submissions in ROCS. Finding 1. In relation to a grant of leave to appeal under cl 12(1) of Sch 4 of the NCAT Act I find that Roxy may have suffered a substantial miscarriage of justice because the decision of the Tribunal under appeal was not fair and equitable. If the Senior Member had read the submissions made by Roxy in ROCS, in particular the four cases from other jurisdictions, there was a "chance which was fairly open" that a different and more favourable result would have been achieved for Roxy. 2. In relation to a grant of leave to appeal under s 80(2)(b) of the NCAT Act, I am satisfied that Roxy has demonstrated an error that is plain and readily apparent which was central to the Senior Member's decision in relation to the defects in the floors and not merely peripheral, so that it would be unjust to allow the finding to stand. 3. The possible consequences of the error are significant. If the Senior Member had considered the submissions in ROCS and found there was no defect in the floors there would be no need to rectify 51 bathrooms which would presumably be expensive and likely to cause significant inconvenience to the individual lot owners and occupiers of those bathrooms. 4. I grant leave to Roxy to appeal from the decision of the Senior Member in relation to this issue. Application for leave to rely on new evidence 1. Roxy sought leave to adduce expert evidence in relation to the cost of rectifying the bathrooms. In view of my findings I do not consider it necessary to consider this application. Further conduct 1. The parties agreed that, if an error was found, the matter should be remitted to the Tribunal to be redetermined. Orders 1. The decision of the Tribunal in proceedings 2021/00371562, on 22 April 2024 is set aside. 2. The matter is remitted to the Tribunal to be determined according to law. 3. I do not limit the lodgement of new evidence which might be relied upon. ********** 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: 16 September 2024