Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Tabellz Pty Ltd v Office of Finance and Services [2014] NSWCATOD 131 Hearing dates: 10 October 2014 Decision date: 06 November 2014 Jurisdiction: Occupational Division Before: J Kelly, Senior Member Decision: Each of the decisions under review is set aside. In substitution the following decisions are made: none of Tabellz Pty Ltd, Murray Keith Carter, Gregory Alan Catto or Philip Rodney Catto is guilty of improper conduct under the Act. Within 28 days of the date of this decision, Tabellz Pty Ltd is to be repaid $3,000 and Mr Murray Carter is to be repaid $2,000. Catchwords: Residential building work - implied statutory warranty - work to be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract - work to comply with the relevant part of the Building Code of Australia Legislation Cited: Home Building Act 1989 Category: Principal judgment Parties: Tabellz Pty Ltd, Murray Keith Carter, Gregory Alan Catto & Philip Rodney Catto (Applicants) Office of Finance and Services (Respondent) Representation: P Catto (Applicant in person, agent) M Nicoletti, Office of Fair Trading (Respondent) File Number(s): 1420260 reasons for decision Summary 1The applicants, Tabellz Pty Limited (Tabellz), Gregory Allan Catto, Philip Rodney Catto (Mr Catto), and Murray Keith Carter, deny that a balustrade Tabellz constructed at a property at Wahroonga (the balustrade) was residential building work that was not performed in a proper and workmanlike manner and did not satisfy the relevant part of the Building Code of Australia. 2For the reasons that follow, I find that the construction of the balustrade was performed in a proper and workmanlike manner and did satisfy the relevant part of the Building Code of Australia. The decisions under review 3The applicants seek review of the four separate decisions made on 19 June 2014 by a delegate under the Home Building Act 1989 (the Act). 4The delegate found that Tabellz had breached a statutory warranty under section 18B(a) of the Act in respect of the residential building work at Wahroonga and was therefore guilty of improper conduct within section 51(1)(c) of the Act which constituted a ground for taking disciplinary action under section 56(c) of the Act. The delegate was satisfied that the ground for taking disciplinary action against Tabellz set out in the Notice to Show Cause issued on 25 November 2013 had been established, and determined pursuant to section 62(c) of the Act that Tabellz pay the Commissioner of Fair Trading as a penalty, the sum of $3,000. 5The delegate found that the insecure balustrade was not in accordance with the Building Code of Australia Vol. 2, 2010, part 2.1 and was therefore satisfied that the balustrade was not performed in a proper and workmanlike manner, based on the report dated 22 February 2013 prepared by Mr Christopher Nicolson, a Senior Building Inspector employed by the respondent. 6The delegate determined that Mr Nicolson's findings that posts protruded and detracted from the overall appearance, and that paint was peeling and flaking on the black plastic caps, were minor defects. 7The delegate found that because Mr Philip Catto and Mr Gregory Allan Catto were directors of Tabellz at the relevant time, they were also guilty of improper conduct within section 54(1) of the Act which constitutes a ground for taking disciplinary action under section 56(c) of the Act. The delegate determined pursuant to section 62(c) of the Act that both should pay a penalty of $1,500. 8The delegate found that Mr Carter was a director and a nominated supervisor of Tabellz, who had control over the carrying out of the residential building work at Wahroonga. As well as being guilty of improper conduct within section 54(1) of the Act, the delegate found Mr Carter guilty of improper conduct within section 53(1)(b) of the Act in respect of the breach of a statutory warranty at the site in his capacity as a nominated supervisor. The delegate determined that he pay a penalty of $2,000. 9There was no dispute about the status of the second, third and fourth respondents in relation to Tabellz. Description of the balustrade 10On 25 November 2011 Tabellz contracted with the owners of the Wahroonga property to supply and install a gabled awning over half of an existing timber deck which was more than one metre above ground level. That is reflected in the Applicant's Documents (AD) 1-5. 11The work was to be undertaken by Tabellz trading as AllForm Home Additions. 12The delegate found that the balustrade formed part of the contract dated 25 November 2011. I accept the evidence of Mr Catto, which is supported by the documents before me, that the parties entered into a contract variation for the balustrade on 5 December 2011 (AD 7). No issue arises from that finding. There was no issue that the work had been carried out. The specification is minimal: "Railing Pos deck. Style: Florence1 Colour: Rivergum Beige with 80x40 top rail". 13The following findings are made based on the written and oral evidence of Mr Catto and Mr Nicolson, and the contractual documents before the Tribunal. 14The balustrade was constructed along the length of the deck. The two tall 90 millimetre posts supporting the gabled awning (the supporting posts) were used as the middle and western post for the construction of the balustrade. The supporting posts extended through the floor of the deck and were fixed to the beam and joist of the deck. 15Three additional structural 50 mm posts were installed: one between the two supporting posts, one at the eastern end abutting an existing wooden privacy screen (the eastern post) and one between the eastern post and the middle supporting post (the intermediate posts). The 50 mm posts were welded to base plates which were in turn fixed to the deck. The eastern and intermediate posts were "sleeved" by 90 mm posts to conform in appearance with the supporting posts and the 80 mm top rail. I accept Mr Catto's evidence that the 80 mm top rail was not standard and the panels had to be specially made including that specification. The 90 millimetre sleeves were attached to the 50 millimetre posts by screws. 16The balustrade was installed in four prefabricated panels. Each section was attached to the posts on either side by brackets and screws. The sleeved eastern and intermediate posts protruded above the top rail of the balustrade. The dispute between Tabellz and the owners 17A final invoice for $850 was issued to the owners of the Wahroonga property (the owners) on 22 March 2012 but payment was not made (Tribunal Document (TD) 27). 18On 19 September 2012 Tabellz lodged a Trader Initiated Notification of Dispute with the respondent (TD 57-58). 19 On 20 September 2012 the owners wrote to Tabellz listing various concerns about the balustrade (AD 26-32). 20On 27 November 2012 a site inspection was conducted at the Wahroonga property. Mr Nicolson attended the meeting, as did Mr Catto and the owners. 21On 20 December 2012, Mr Nicolson issued a Rectification Order to Tabellz requiring work to be done to the balustrade and completed by 14 February 2013 (TD 24-26). Tabellz was to "provide structural stability to the top rail and altering the top rail so that it extends in one continuous length between the two posts supporting the roof, and in one further continuous length between the right hand roof support post and the privacy screen at the Eastern end of the verandah, and securely fix the top rail to the privacy screen". 22On 8 February 2013, AllForm wrote to the respondent raising a number of issues (TD 67-70). The respondent replied on 14 February 2013 (TD 70-71). 23On 11 February 2013, Tabellz filed an application in the former Consumer Claims and Tenancy Tribunal (CTTT), for payment of the outstanding invoice (TD 72-74). The respondent was not a party to those proceedings. The application was filed before the expiry date for the Rectification Order. Therefore that order no longer had effect for the purpose of s 51 (s48F(2) of the Act). 24Mr Nicolson inspected the balustrade again two days later, on13 February 2013, the day before the Rectification Order had required work to be completed. 25On 27 March 2013 orders by consent were made in the CTTT, including that the owners pay an additional $300 for addition work to be undertaken to the top rail of the balustrade (AD 111-113). 26On 12 April 2013, the owners lodged a cross-claim in the CTTT (AD 114-128). 27On 27 May 2013 the CTTT matters was finalised by consent. (AD144-146). 28Mr Catto confirmed at the Tribunal hearing that there were no outstanding payments in relation to the balustrade. Work carried out to the balustrade after the CTTT proceedings 29It is not in dispute that after the settlement in the CTTT on 27 May 2013, Tabellz carried out additional work at the Wahroonga property and that the balustrade is secure. The additional work was: (1)The eastern and intermediate posts were cut off in line with the top rail and a metal channel installed over the top rail in two sections running from the middle supporting post, to the eastern post and to the western supporting post. (2)The metal channel rail was connected to the timber privacy screen with a metal angle bracket. (3)Steel brackets were installed under the eastern and intermediate posts. (4)10 mm galvanised bolts were installed to the base plates of (5)the intermediate posts, extending through the metal brackets. 30The above description is based on Mr Catto's evidence, Mr Nicolson's Addendum Report (Exhibit R1) prepared after he visited the Wahroonga property on 2 October 2014 and the photographs at AD 143 and in Mr Quinn's report (Ad 213 to 217). I found the photographs very helpful. In some minor respects they caused the Tribunal to describe the additional work differently from Mr Nicolson's description. For example, based on photograph 14, the Tribunal finds that the metal channel rather than the top rail was connected to the privacy screen by a metal angle bracket. 31I accept Mr Catto's evidence that the additional work was done in order to settle a dispute at the least cost and that the owners paid for what he described as the "aesthetics". The applicants do not concede that the additional work indicated that they accepted that the balustrade had been insecure. How these proceedings arose 32On 25 November 2013, the respondent issued the Notices to Show Cause to each of the applicants, attaching the Building Inspection Report dated 22 February 2013, prepared by Mr Nicolson following his inspection on 13 February 2013 (TD 40-54) (the Building Inspection Report). The applicants replied on 7 January 2014 (AD 176-177). The Notices of Decision were issued on 19 June 2014. 33On 25 July 2014, each of the applicant's sought review of the decisions and a stay of the decisions in the Tribunal. On 5 August 2014, the Tribunal made stay orders in relation to Mr Catto and Mr Rodney Catto paying the penalty, pending further order. Tabellz and Mr Carter had paid the penalties. The hearing before the Tribunal 34On 10 October 2014, the Tribunal heard oral evidence from Mr Nicolson, Mr Catto, and Mr Quinn, structural engineer relied on by the applicants. Mr Catto, representing the applicants, and Mr Nicoletti, representing the respondent, made oral submissions. Both the applicants and respondent provided written submissions. Consideration and findings 35Section 18B(a) of the Act implies into every contract for residential building work, a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract. 36It was not in dispute that such a statutory warranty was implied in relation to the construction of the balustrade. 37The respondent claimed that the particular contract entered into required that the balustrade would comply with the relevant part of the BCA, relying on TD 60 which was page two of the Conditions of Contract. In submissions, the respondent claimed that the relevant part of the BCA is Part 3.9.2 Balustrades and Handrails, which incorporates Australian Standard 1170.1 Structural Design Actions. It was agreed at the hearing that Part 3.9.2 is the relevant part of the BCA. Mr Nicolson did not refer to that part of the BCA in his reports. 38A legal issue arose during the hearing. Mr Catto said that the respondent could not take action in relation to improper conduct pursuant to s 51 of the Act because the Rectification Order had ceased to have effect. As I explained to Mr Catto, the respondent was not relying on the Rectification Order (s 51(1)(b)) of the Act, which it accepted had ceased to take effect. It had acted pursuant to s 51(1)(c) in relation to an alleged breach of a statutory warranty. 39The factual issue I have to determine is whether the balustrade was secure as constructed. The two aspects of the construction relevant to that finding are the lack of a continuous top rail from the middle supporting post to the eastern and western posts, and the means of fixing the eastern and intermediate posts to the decking. Evidence on those questions was given by Mr Nicolson, Mr Catto and Mr Quinn. 40Mr Catto conceded at the hearing that there had been some lateral movement in the balustrade but did not concede that it was not secure. He also conceded that the two sections of metal channel installed following the agreement reached in the CTTT, increased the structural stability of the balustrade but said that they were not necessary and were for aesthetic reasons. 41 Mr Nicolson and Mr Catto agreed that Mr Catto had tightened some screws during the site inspection on 27 November 2012. In his letter to the respondent dated 21 February 2103, Mr Catto wrote that he had "noticed that there were some fixing screws on the posts that had been incorrectly installed with a neoprene washer, this was corrected with the washer being removed and screws re-tightened at the conclusion of the site meeting". I accept that evidence which was recorded within three months of the meeting and is generally consistent with the evidence at the hearing of Mr Nicolson and Mr Catto. 42In considering the evidence about the balustrade, I have taken into account that Mr Nicolson inspected it twice - on 27 November 2012 and 15 February 2013 - before the additional work was done. Mr Catto inspected the balustrade at least once on 27 November 2012. Mr Quinn only inspected the balustrade once after the additional work had been done. 43In the Building Inspection Report "Section A - Defective Items", Mr Nicolson described the "insecure balustrade" as follows. There was substantial lateral movement when leaning on the handrail at the intermediate posts and eastern post. The balustrade had been installed in four prefabricated panels and the top rail had been joined mid-span by screw fixing at the intermediate posts. The intermediate and eastern posts had been fixed down to the flooring rather than continuing through the flooring to obtain additional stability from the structural members of the deck framing. 44Mr Nicolson concluded: "It is my professional opinion that the excessive movement in the balustrade is due to poor structural design of the balustrade and that, as a result of this poor design, the structural stability will continue to deteriorate leading to a possible failure in the long term". 45The annotation to photograph 5 in the report states that the eastern post was secured only to the floor. The photograph shows the eastern post abutting a wooden privacy screen. The annotation to photograph 6 states "excessive movement in posts". The photograph shows a hand gripping the top of the eastern post which abuts the wooden privacy screen. 46The annotation to photograph 7 states that: "Trimmers have been installed under the intermediate posts to take screw fixings but this leaves the fulcrum at the base of the post. With the lack of continuity in the top rail this leaves the post open for movement which will increase over time as the screw fixings loosen". 47At the end of Section A of the Inspection Report, Mr Nicolson states: "Part P2.1 of the Building Code of Australia ... specifies that a building or structure, to the degree necessary, must remain stable and not collapse, by resisting the actions to which it may reasonable (sic) be subjected. Whilst the balustrade has not collapsed at this stage, I consider that continual movement applied to the balustrade under normal usage will lead to early deterioration of the structural stability. As the work does not comply with P2.1, the performance requirement of the BCA cannot be shown to have been satisfied". 48In "Section C - Not in a Proper & Workmanlike Manner", Mr Nicolson considered the protruding intermediate posts and paint peeling from caps. He concluded that the intermediate posts had not been installed, and that painting had not been carried out, in a proper and workmanlike manner. Mr Nicolson stated that it was common building practice is to trim the posts below the top rail and allow the top rail to continue through in one continuous length and to apply an appropriate primer prior to installing the finish coat. He concluded in relation to both the protruding posts and the painting of the cap that they detracted "from the overall appearance of the contracted works and therefore fails to comply with section 18B(a) (of the Act) ..." As set out above, the delegate found that these were minor defects. I agree. In making that finding, the Tribunal has taken into account that the caps that were installed were black plastic. The owners objected because they had expected that the balustrade would be one colour, including the caps on the post. That requirement was not included in the contract. Tabellz painted the caps to match the balustrade. That is apparent from the letter dated 20 September 2012 that the owners wrote to Tabellz (AD 26 to 30). 49Based on Mr Catto's evidence and the contract variation for the balustrade (AD 7), I find that the balustrade was constructed from Florence 1 panels. An illustration of a Florence 1 panel is shown on AD 8. It is composed of three parallel horizontal rails: a bottom rail, lower top rail and top rail, and nine vertical rods, five of which end at the lower top rail and four of which extend to the top rail. The outermost vertical rods end at the lower top rail. The three horizontal rails extend beyond the vertical rods. The illustration does not show how the panel is to be installed. No drawing showing the balustrade as constructed was included in the contract. 50I find that the four Florence 1 panels were attached to the posts on either side by brackets and screws at the bottom horizontal rail and lower horizontal top rails. That is apparent from the photographs before the Tribunal. The Tribunal does not accept Mr Nicolson's description that the "top rail joined by screw fixing at intermediate posts". As well as the photographs in his report, that finding is supported by the owners' observations and photographs (AD 28). 51At AD 205, is a document headed "Oxley / Florence Style Balustrade and Handrail panels", dated 29 November 2010, signed by Mr Quinn, and prepared for Allform Home Additions. It shows drawings of "Balustrade Panel", "Handrail/Stair Panel" and an untitled drawing showing a side view of a completed hand/rail stair and balustrade, including supporting posts and structure. It includes drawings of three different styles of base plates. The notes include: "Alternative Fixing Method: Posts installed through deck and secured to joist, bearer or suitable blocking", "All works to BCA 3.9.2, including alt. Eqv. To S1.2; All rails to AS1170, AS1170.1, AS4055 to wind category N3 eqv 36m/s, elevated or low set domestic". It sets out Australian Standards relevant to other aspects of the construction, and stated "Refer Allform Engineering manual for fixing to adjoining & supporting structures". 52I find that the eastern post was not installed only to the floor as Mr Nicolson found, but was attached to a joist at two of the fixings and into the "alternative fixing method", suitable blocking, at the other two. Both intermediate posts were installed into "suitable blocking". Those findings are based on Mr Catto's evidence and Mr Quinn's report which included photographs (AD 208 to 217). The Tribunal finds that Mr Nicolson's reference to "trimmers" in relation to the intermediate posts is a reference to the blocking. 53I accept Mr Quinn's conclusions that the balustrade as originally constructed "may be considered to meet" BCA S1.0.07 Deemed to satisfy; specific performance provisions of BCA Section 2, Objective, Functional and performance requirements, and meets the requirements of BCA Section 2.1. I accept Mr Quinn's evidence that the construction of the balustrade meets BCA 3.9.2 and AS/NZS 1170.1. That evidence includes the Certificate of Compliance (Exhibit A1) and AD 250. 54Mr Nicolson did not dispute the calculations in Mr Quinn's report, acknowledging that he was a carpenter and joiner and not a structural engineer. However, he did not change his opinion about the construction of the balustrade. I find that Mr Nicolson's opinion about the security of the balustrade was not based on any measurements. It was based on his lengthy experience in building work and "leaning on the handrail at the intermediate posts and eastern post" which revealed "substantial lateral movement" and the movement in the intermediate and eastern posts. Understandably, he was concerned about the safety of anyone using the deck which was more than 1 metre above ground level. 55I do not accept Mr Nicolson's evidence at the hearing that the top rail moved freely about 100 mm. He did not record any measurements in his report after two visits to inspect the balustrade. He did not claim that he had taken measurements. His evidence was given more than 18 months after his last inspection. 56Although Mr Nicolson attributed the lateral movement and excessive movement in posts in part to what he considered was poor fixing of the eastern and intermediate posts to the decking, he did not record any lateral movement at those fixings. He did not require any rectification work to be carried out to the fixing of the eastern and intermediate posts. 57I find that there were two causes of the lateral movement that Mr Nicolson found in the balustrade and the excessive movement in the posts which he did not take into account in his evidence. 58The first reason was that some of the ends of the four sections of the top rail were attached to the posts with silicone and others were not attached at all. That finding is based on the photograph and description provided by the owners (AD 28). 59The other reason was the 90 mm sleeves over the eastern and intermediate posts. The sleeves were not fixed to the metal base plate, according to Mr Catto and Mr Quinn. They were fixed to the internal 50 mm structural posts by "Min 3-Max 11 Size 12 x 35 mm Tek screws" (Mr Quinn's report AD 208). 60Mr Nicolson gave evidence that he was not aware of the 90 mm sleeves over the eastern and intermediate posts until Mr Catto gave evidence about it at the hearing. At the hearing he said that made no difference. 61As constructed, the eastern and intermediate posts extended 200 mm above the top rail of the balustrade, based on Mr Quinn's report. I accept his evidence that moving the top of the post amplifies any movement along its length. 62Mr Nicoletti cross-examined Mr Catto seeking to establish that the contract for the balustrade required a "continuous top rail". The Tribunal does not accept that. The Tribunal finds that the reference to "rail & post/beam in steel (Oxley)" and some other words including "... timber/timber print on steel" had been crossed out in the contract for the gabled awning (AD 4). It finds that AD page 31 was only included in the gabled awning contract and not the balustrade variation. Further, the drawing at AD 31, headed "Project Elevation Views" is conceptual, as Mr Catto said. It includes no specifications. As set out earlier, the specifications for the balustrade were minimal and no drawing of the balustrade as constructed was included in the contract. While the owners may have wanted a continuous top rail between the supporting posts and from the middle supporting post to the privacy screen, that expectation was not incorporated into the contract. 63 For those reasons I am not satisfied that the balustrade was not constructed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract. 64I am not satisfied that the balustrade did not comply with Part 2.1 or Part P2.1 or Part 3.9.2 of the BCA. 65I am not satisfied that there has been a breach of a statutory warranty. 66I am not satisfied that any of the applicants is guilty of improper conduct. 67It follows that no disciplinary action can be taken against any of the respondents. 68In their written submissions, the applicants asked for the penalties totalling $5,000 paid by Tabellz and Mr Carter (AD 199) be returned within seven days and that the costs of Mr Quinn's report be recovered from the respondent. Mr Nicoletti made no submissions in relation to either matter. 69I am not satisfied that there are special circumstances in this case that warrant the costs order the applicants seek. Section 60(1) provides that each party to proceedings in the Tribunal is to pay the party's own costs. I find that is appropriate in this case. 70In relation to the repayment of the penalties paid by Tabellz and Mr Carter, as a consequence of my findings and decisions, those penalties should be refunded. Seven days is an unreasonably short time. I find that 28 days is reasonable and fair to both the respondent and Tabellz and Mr Carter. In the absence of Mr Nicoletti submitting that the Tribunal does not have the power to make a decision to that effect, I will make a decision to that effect. Decisions 71Each of the decisions under review is set aside. In substitution the following decisions are made: none of Tabellz Pty Ltd, Murray Keith Carter, Gregory Alan Catto or Philip Rodney Catto is guilty of improper conduct under the Act. Within 28 days of the date of this decision, Tabellz Pty Ltd is to be repaid $3,000 and Mr Murray Carter is to be repaid $2,000. ********** 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: 06 November 2014