The Owners - Strata Plan No 78103 v Charlie Habkouk [2014] NSWCATCD 46

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: The Owners - Strata Plan No 78103 v Charlie Habkouk [2014] NSWCATCD 46 Decision date: 10 April 2014 Before: D Goldstein, Senior Member Decision: Application dismissed Catchwords: Limitation period Legislation Cited: Home Building Act 1989, Consumer, Trader and Tenancy Act 2001, Home Building Amendment Act 2011 Cases Cited: Jones v Dunkel (1959) 101 CLR 298, Payne v Parker [1976] 1 NSWLR 191, Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389, Manly Council v Byrne and Anor [2004] NSWCA 123, John W Wade Limited v The Proprietors of Strata Plan 56752 & Ors [2004] NSWSC 312, Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293, Griffith v Gates [2013] NSWCTTT 302 , Sayegh v Vojvodic ] NSWCTTT 436 The Owners Corp SP 74568 v Dyldham Developments [2012] NSWCTTT 361 Category: Principal judgment Parties: The Owners - Strata Plan No 78103 (applicant)

Charlie Habkouk (respondent) Representation: Mr Barham for the applicant, Mr Adams, solicitor, for the respondent Teys Lawyers for the applicant, Adams Partners for the respondent File Number(s): HB 12/42999 Publication restriction: Unrestricted

REASONS FOR DECISION

APPLICATION 1.In this application the applicant seeks work orders and damages alleged to arise out of the respondent's alleged breach of statutory warranties implied pursuant to section 18B of the Home Building Act 1989 (the 'Act') and in negligence. 2.These proceedings concern building defects in strata premises situate at [XXX] Telopea (the 'property'). 3.The applicant is the successor in title to the developer who entered into a building contract with the respondent. 4.Under section 18D of the Act, the applicant has the benefit of the statutory warranties given by the respondent to the developer under section 18B of the Act. There is nothing controversial between the parties in connection with these issues. 5.While the application was commenced in the Tribunal on 15 August 2012, on 8 February 2013 the builder was joined as a party to the application. 6.On 25 March 2013 the builder wrote to the Tribunal stating, among other things, 'I believe that the proceedings against me should be dismissed as the project was handed over to the developer on the 24th June 2005' and 'The substance of my request is that the statutory warranty period has far expired'. 7.On 7 May 2013 the Tribunal made orders requiring the parties to file and serve written submissions 'as to the jurisdiction of the Tribunal to determine this matter'. 8.As described above the respondent has taken the point that this application has not been brought within the time required by section 18E of the Act with the result that the applicant is unable to pursue its claim against the respondent in the tribunal. The respondent has applied for orders to strike out these proceedings on the basis that they have not been brought within the time permitted under section 18E of the Act. 9.The respondent states in submissions dated 13 November 2013 that the time to file the applicant's claim expired on 23 June 2012 well before the applicant filed this application in the Tribunal on 15 August 2012. 10.It is necessary for the purposes of this application to recite some of the facts relating to this application. The facts themselves are not controversial. However, what turns on some of the facts is of consequence to the parties' positions. 11.In these reasons I will refer to the applicant as the owner and to the respondent as the builder. I will refer to the original owner as the developer. I will record at this point that the developer is in liquidation. APPLICANT'S EVIDENCE 12.The evidence that the builder brought in support of his application was limited to documents attached to its various submissions. In addition the builder relied upon documents that were attached to the owner's written submissions. 13.The builder provided written submissions dated 14 March 2014, received in the Tribunal on 17 March 2014, 13 November 2013 and 31 May 2013. RESPONDENT'S EVIDENCE 14.The evidence that the owner brought in response to the application to dismiss was in the form of a number of documents attached to its written submissions lodged in the Tribunal on 5 September 20 FACTS 15.The facts which are relevant to this application are set out below. If there is any disagreement as to a factual issue or the consequences which are alleged to arise from a fact, I will indicate that. 16.The developer, Crowne Equity Developments Pty Ltd, entered into a building contract with the builder on 25 February 2005. 17.The builder relies upon a letter dated 24 June 2005 to sustain an allegation that he 'handed the site over to the Developer as his contract obligations had been fulfilled' on that date. Paragraph 12 of the builder's submissions 13 November 2013. There is a disagreement between the parties about whether the matters referred to by the builder in his letter are factually correct. 18.An interim occupation certificate was issued to the developer on 24 December 2005. 19.A final occupation certificate was issued to the developer on 23 May 2006. 20.On 12 January 2012 the owner's lawyers sent a letter of demand to the builder. 21.Between April and July 2012 there was correspondence and meetings between the parties regarding the property and the owner's claims as regards defective work. 22.On 15 August 2012 the owner instituted these proceedings in the Tribunal. The respondent was named as FMH Projects Pty Ltd 23.On 8 February 2013 the builder was joined as a party to this application. 24.The builder concedes in its written submissions dated 13 November 2013 that section 32 of the Consumer, Trader and Tenancy Tribunal Act 2001 permits the Tribunal to amend the application including the inclusion of a party in circumstances where the limitation period may have expired. 25.He also accepted in his written submissions that the amendment takes place effective the date of the original application. BUILDING CONTRACT 26.The developer and the builder entered into a written building contract HIA CPC February 2004 edition (the 'contract') dated 23 February 2005. 27.The contract was a cost plus contract. The estimated cost of the building works was $297,000 inclusive of GST. 28.The building works as defined in the contract were not ascertainable by reference to plans, drawings or a specification. The best description of the work to be carried out by the builder was to be found in the description of the work that the builder was to carry out and complete in order to be paid the amount stated for the stages of work referred to in the Schedule of Payments. 29.I have had regard to the Schedule of Payments set out in the contract in order to ascertain as best as one can, the work the builder was required to undertake. After completing slabs, walls and the roof the builder was obliged to carry out internal roughins, gyprock, tiling, internal carpentry, internal fitout, render, painting and lock up. 30.The contract provided at clause 11 of Schedule 1 that there was a contractual period of 32 weeks for the building works to reach practical completion. 31.The 32 week period commenced as from the commencement date which is dealt with in clause 8. There is no evidence from the builder before the Tribunal about when work commenced. The owner has produced documentary evidence to show when work was permitted to commence by relevant authorities. 32.Practical completion was defined as meaning 'when the building works are complete except for minor omissions and defects that do not prevent the building works from being reasonably capable of being used for their purpose'. 33.The 'date of practical completion' was defined to mean the 'date of practical completion under Clause 22 except where the date is determined by dispute resolution...'. 34.Clause 22 of the contract dealt with practical completion. The clause set out a series of actions that were to commence with the builder giving a written notice of practical completion to the developer. The notice of practical completion was to contain the information set out in clause 22.2, including, of significance, the builder's 'assessment of the date of practical completion'. Thereafter the owner and developer were to meet on site to inspect the building works. At the meeting the developer was either to pay the final progress claim or if it did not believe that the building works had reached practical completion, it was to give the builder a written notice detailing what was to be done to reach practical completion. 35.Importantly, if the developer paid the final progress claim, the date of practical completion stated in the builder's written notice of practical completion was deemed to be the date of practical completion. 36.In the event the developer did not believe that the building works had reached practical completion and gave the builder a written notice detailing what was to be done to reach practical completion, there was a separate set of contractual procedures to be undertaken to achieve practical completion. 37.In the event that the developer did not respond to the builder's written notice of practical completion and did not pay the final progress claim, clause 22.6 of the contract provides, among other things, that the date of practical completion stated in the builder's notice of practical completion is deemed by the contract to be the date of practical completion. 38.Clause 23 of the contract stated that the builder was not required to obtain any certificate of occupancy or final inspection certificate relating to the building works. APPLICATION OF RELEVANT LAW Section 18E of the Act 39.This provision is of importance to the builder's application. The first question to be decided is which version of section 18E of the Act is applicable to these proceedings. 40.Section 13 of the Home Building Amendment Act 2011 (the 'Amending Act') amended section 18E of the Act by, among other things, amending the warranty period to be 6 years for a breach of an implied warranty resulting in a structural defect and 2 years in any other case. 41.Before the Amending Act took effect, the position was that there was a warranty period of 7 years commencing from the completion of the relevant work. 42.I understand the position of the parties in connection with this application to be that there is a warranty period of 7 years commencing from the completion of the relevant work. 43.Section 18E of the Act states: 1)Proceedings for a breach of a statutory warranty must be commenced within 7 years after: (a) the completion of the work to which it relates, or (b) if the work is not completed: (i) the date for completion of the work specified or determined in accordance with the contract, or (ii) if there is no such date, the date of the contract. Does the Tribunal have jurisdiction in respect of the owner's claim? 44.Section 48K (7) of the Act provides: The Tribunal does not have jurisdiction in respect of a building claim arising from a breach of a statutory warranty implied under Part 2C if the date on which the claim is lodged is after the end of the period within which proceedings for a breach of the statutory warranty must be commenced (as provided by section 18E). 45.In my view to succeed in its application the builder is obliged to establish on the balance of probabilities that the application was lodged seven years after completion of the work the subject of the contract between the parties. The application was lodged in the Tribunal on 15 August 2012. To put it another way, as expressed in Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293, to be successful the builder 'needed to establish that the work was completed more than seven years before the date of the lodgement of the claim'. 46.The builder contends that the building work was complete on 25 June 2005 and as a result these proceedings have been commenced out if time as seven years after 25 June 2005 expires on 24 June 2012 well before the date upon which this application was lodged, 15 August 2012. 47.In my view the builder is in the same position as the builder/developer in Bailey v Owners Corporation of Strata Plan 62666 where Basten JA at paragraph 5, stated, the applicants on the jurisdictional application (who were the respondents to the claims for defective work) as their counsel accepted, 'bore the onus of proof in relation to the facts required to establish a lack of jurisdiction'. 48.In Briginshaw v Briginshaw (1938) 60 CLR 336 Dixon J stated as follows in connection with the civil standard of proof, such observations being relevant to deciding whether a matter is proved on the balance of probabilities: "Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences"