Civil and Administrative Tribunal New South Wales Medium Neutral Citation: S Turnell and W Turnell v Atlantic Construction Pty Ltd [2014] NSWCATCD 89 Hearing dates: 11 March 2014 Decision date: 29 May 2014 Before: F E Gray, General Member Decision: 1.The application was not lodged within the time period stipulated pursuant to s 48K(7) of the Home Building Act 1989, and accordingly that part of the claim is dismissed. 2.The applicant is granted leave to amend their application to include an application pursuant to s 48K(3) of the Home Building Act 1989. 3.The matter is to be listed for a Directions Hearing in relation to the substantive application as soon as practicable. Catchwords: Jurisdiction, time limitations, practical completion Legislation Cited: Home Building Act 1989 Category: Principal judgment Parties: S Turnell and W Turnell (applicants) Atlantic Construction Pty Ltd (respondent) Representation: Mr Marsh (Respondent) File Number(s): HB 13/45520 reasons for decision The application 1The applicants lodged an application with the Tribunal on 27 August 2013 seeking orders that the respondent pay the applicants the sum of $85,552.00, pursuant to the Home Building Act 1989 ("the Act"). Onus and standard of proof 2The applicants bear the onus of proving their case on the balance of probabilities. Preliminary issue 3The matter was listed on 11 March 2014 to determine whether the application was lodged within time pursuant to the Act. 4The applicants assert that their application was lodged within time. The respondent asserts that it was not. 5The applicant was represented by Mr Raine of counsel. The respondent was represented by Mr Marsh. Jurisdiction 6The Tribunal is satisfied of the following: the claim is less than the jurisdiction limit of $500,000.00; and that the subject of the claim was residential building work, as defined under s 3 of the Act, namely that the respondent was involved in the building of a dwelling. The Tribunal is satisfied that the property concerned was a dwelling, as defined under the Act and Regulations. 7The Tribunal has jurisdiction to determine the matter, provided there is compliance with time limitations provided in s 48K of the Act. The contract between the parties was dated 17 May 2005. The relevant time period for the lodgement of a claim in relation to a breach of warranty in relation to this matter is therefore 7 years. Issue to be determined 8The matter was listed before the Tribunal to determine whether the application was lodged within time. The legislation In relation to a claim for a breach of a statutory warranty pursuant to Part 2C of the Act 9Part 2C of the Act comprises sections 18A to 18G inclusive of the Act. Section 18B lists the warranties which are implied in every contract. Section 18E of the Act provides the time limitations imposed in relation to the commencement of proceedings for a breach of a statutory warranty. The section states: 18E Proceedings for breach of warranties (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. (2) The fact that a person entitled to the benefit of a statutory warranty specified in paragraph (a), (b), (c), (e) or (f) of section 18B has enforced the warranty in relation to a particular deficiency in the work does not prevent the person from enforcing the same warranty for a deficiency of a different kind in the work (the other deficiency) if: (a) the other deficiency was in existence when the work to which the warranty relates was completed, and (b) the person did not know, and could not reasonably be expected to have known, of the existence of the other deficiency when the warranty was previously enforced, and (c) the proceedings to enforce the warranty in relation to the other deficiency are brought within the period referred to in subsection (1). 10Section 3B(1) of the Act further states that the date of completion occurs on the date that the work is complete within the meaning of the contract under which the work was done. Where there is no such provision in the contract, or where there is no contract, the completion date occurs on the date of the practical completion of the work. 11In relation to practical completion, section 3B of the Act state as follows (emphasis added) (1) The completion of residential building work occurs on the date that the work is complete within the meaning of the contract under which the work was done. (2) If the contract does not provide for when work is complete (or there is no contract), the completion of residential building work occurs on practical completion of the work, which is when the work is completed except for any omissions or defects that do not prevent the work from being reasonably capable of being used for its intended purpose. It is to be presumed (unless an earlier date for practical completion can be established) that practical completion of residential building work occurred on the earliest of whichever of the following dates can be established for the work: (a) the date on which the contractor handed over possession of the work to the owner, (b) the date on which the contractor last attended the site to carry out work (other than work to remedy any defect that does not affect practical completion), (c) the date of issue of an occupation certificate under the Environmental Planning and Assessment Act 1979 that authorises commencement of the use or occupation of the work, (d) (in the case of owner-builder work) the date that is 18 months after the issue of the owner-builder permit for the work. (4) If residential building work comprises the construction of 2 or more buildings each of which is reasonably capable of being used and occupied separately, practical completion of the individual buildings can occur at different times (so that practical completion of any one building does not require practical completion of all the buildings). The Tribunal's jurisdiction 12Section 48K(7) of the Act further states that the Tribunal does not have jurisdiction in respect of a building claim arising from the breach of a statutory warranty implied under Part 2C of the Act if the date on which the claim was lodged was more than 7 years after the date on which the residential building work was completed. In relation to a claim for the provision of goods or services supplied per s 48K(3) 13Section 48K(3) of the Act states that the Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that have been supplied to or for the claimant if the date on which the claim was lodged was more than three years after which the supply as made. The applicant's evidence in relation to a claim for a breach of a statutory warranty 14The applicants assert that their application was lodged within time. The applicants assert that construction commenced in 2005 and concluded sometime in 2006. There has been a problem with water penetration from the balcony into the room below since the construction ended. The applicant asserts that this is not in dispute and the builder has attended the property numerous times and has not resolved the problem. 15Mrs Turnell gave sworn evidence in which she provided a copy of the building contract (exhibit A). The contract was dated 17 May 2005. The applicants moved into the property on 28 February 2006. The water ingress was first noticed in June 2006. The builder was contacted and attended the premises to rectify the water ingress. It was not fixed. In summary, the applicants complained to the builder on numerous occasions. The builder attended the premises on many occasions to try and rectify the issue and has been unsuccessful to date. Mrs Turnell provided a phone log, summarised from the phone records available to her, which indicates the applicants contacted the builder on at least 62 occasions from February 2009 to July 2013. 16The applicants lodged a complaint with Fair Trading in 2012. A Fair Trading Inspector attended the premises and made a Rectification Order on 17 May 2012. 17Mrs Turnell stated that the last invoice she paid the respondent was on 13 March 2006, by way of an electronic funds transfer. The Occupation Certificate was issued after the applicants engaged a private certifier. Mrs Turnell agreed in cross examination that the private certifier delayed the issuing of the Occupation Certificate due to the landscaping work not being completed. Mrs Turnell did not agree that the proposition that the landscaping was not one of the inclusions in the scope of works. However, Mrs Turnell did state that there had been a difference of opinion between the parties as to the extent to the landscaping work to be included in the scope of works 18Mrs Turnell was question extensively regarding the subject matter of the Rectification Order. The effect of Mrs Turnell's evidence in relation to that issue is that the matters to be rectified were all related to the ingress of water, either preventing it or repairing items damaged through water penetration from the balcony. Mrs Turnell further advised that she told the Fair Trading Inspector that the Rectification Order work had been completed. Mrs Turnell denied telling the Inspector that she was satisfied with the work. The applicant's submissions in relation to a claim for a breach of a statutory warranty 19The applicant submits that they have lodged their application in time, and rely upon the following- (i)The occupation Certificate issue date being 12 October 2006; (ii)The provisions of s 3B of the Act state that completion of residential building work occurs on the date the work is compete within the meaning of the contract the work was done under; (iii)The contract between the parties states relevantly at clause 26.1 that "the builder must give the owner a notice of practical completion at least 5 working days prior to the practical completion being reached". (iv)The contract further defines "practical completion" as "when the building works are complete except for minor omissions and defects which do not prevent the building works from being reasonably capable of being used for their usual purpose". (v)The respondent builder has not complied with clause 26.1, in that he has not issue a notice of practical completion. (vi)Therefore, the applicant argued in their written submission the respondent has breached that part of the contract and one must turn to s 3B of the Act to ascertain the date of completion. (vii)The applicant argue in oral submissions that it is arguable that as the provisions of clause 26 of the contract had not been complied with, then it is arguable that there has never been completion of the building work. (viii)The applicant further argues in their written submissions that the date of practical completion should be the date of the issuing of the occupation certificate, rather than the date they took possession of the premises, as landscaping and the pergola in the backyard had not been completed, in addition to some additional requirements in relation to the front footpath area needing completion to comply with council requirements. In relation to a claim for the provision of goods or services supplied per s 48K(3) 20The applicants also rely upon the issuing of a Rectification Order on or about 17 May 2012. The Rectification Order referred to incomplete building works. 21The rectification work undertaken by the respondent in compliance with the Rectification Order was completed in or about 13 June 2012. The applicant submits that the work undertaken was the rectification of the leak and that each item listed requiring rectification was caused by the leak. That is, although the Rectification Order does not specifically state that the leak must be rectified, it is implicit in that document in the other work to be done that the Rectification Order is in relation to the leak itself. 22The applicant submits that work is the subject of a claim pursuant to s 48K(3) of the Act, as it is 'arising out of the supply of building goods or services'. The applicant submits that there is not requirement for a contract in relation to a claim pursuant to s 48K(3). However, the applicant seeks leave to amend their claim to include a claim under this section. The respondent's submissions 23The respondent argued that there were two causes of action in relation to the claim. 24The respondent argued that the first cause of action was pursuant to Part 2C of the Act, namely an allegation of a breach of the statutory warranties. The respondent argues that this part of the claim has been lodged out of time, namely that it was not lodged within 7 years from the date of completion. 25The respondent submits that s 3B of the Act applies in relation to determining the date of practical completion, as clause 26.1 of the contract has not been complied with. 26The respondent submits that being the case, the provisions of s 3B of the Act are applicable in determining the date of practical completion. The respondent submits that the date of practical completion is on or about 28 February 2006, that being the date that the applicants took possession of the premises. The respondent relies upon the following evidence in support of this contention: (i)The applicants moved into the property within a few days of taking possession of the property; (ii)The applicant paid the last moneys owning under the contract to the respondent on 13 March 2006; and, (iii)The respondent did not undertake any further work on the property after that date, with the exception of rectification work. 27The respondent also relies upon the provisions of the contract which stipulate that the obtaining of any statutory approvals, including the Occupation Certificate, is the applicant's responsibility. Refer Item 11, Schedule 1, and Clause 7. 28The respondent states that in the absence of a notice being issued under the contract, the contract is silent as to when the building works are completed. It is to be noted that both parties ignored the requirements of Clause 26. 29The respondent argues that the second cause of action is one in relation to s 48K(3), which relates to an allegation that the work undertaken by the respondent in compliance with the Rectification Order was defective. A claim pursuant to s 48K(3) is required to be lodged within 3 years of the date of supply. The respondent is of the view that the Rectification Order related only to minor works of a more cosmetic nature and did not specifically relate to the ingress of water from the balcony into the room below. Therefore, any claim pursuant to s 48K(3) is subject to that limitation. 30All of the material provided by the parties has been taken into account in determining the matter, even if it has not been specifically referred to in these reasons. Findings 31The Tribunal makes the following findings in relation to the matter - (i)The parties entered into the contract in relation to the matter on 17 May 2005. (ii)The applicants lodged the application on 27 August 2013. (iii)The applicants took possession of the premises on or about 28 February 2006. (iv)The applicants are out of time in relation to any claim pursuant to s 48K(7), as the date of practical completion is on or about 28 February 2006. A claim for a breach of the statutory warranties therefore had to be lodged before 28 February 2013. (v)The applicants are within the statutory time period in relation to their claim pursuant so s 48K(3), it having been lodged within 3 years of the date of the rectification work being undertaken. The Tribunal formally grants leave for the applicants to amend their application to include a claim pursuant to s 48K(3). 32In coming to that determination the Tribunal has been persuaded by the following evidence- (i)The applicants concede that they took possession of the premises on or about 28 February 2006 and moved into the premises shortly thereafter. (ii)The premises were reasonably capable of being used for their intended purpose on that date. That is, there is no evidence that the premises were not able to be used as residential premises from that date. (iii)Therefore 28 February 2006 is the earliest of the presumptions listed in s 3B(3). (iv)In relation to the claim pursuant to s 48K(3) of the Act, the parties agree that the work the subject of the Rectification Order was carried out in June 2012. Any application must therefore be lodged before June 2015, which is the case here. 33The parties are in conflict as to the scope of work included in the Rectification Order. The applicant asserts that the work is in relation to the leak itself, not merely the sequelae of the leak. The respondent asserts to the contrary: that the Rectification Order is in relation to cosmetic issues only which have been completed. 34The matter is to be listed for a Directions Hearing as soon as practicable to clarify the outstanding issues in dispute in relation to the claim pursuant so s 48K(3)and for orders in relation to the service of evidence. (signed) F E Gray General Member Civil and Administrative Tribunal of New South Wales 29 May 2014 I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 August 2014