Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Pandeli v Hou [2015] NSWCATAP 58 Hearing dates: 24 February 2015 Decision date: 16 March 2015 Jurisdiction: Appeal Panel Before: A P Coleman SC, Senior Member T Simon, Senior Member Decision: Appeal Allowed in part Matter remitted to Tribunal to determine quantum of the appellants' loss Catchwords: APPEAL: Questions of law, Breach of warranty under Home Building Act,1989 (NSW); whether evidence discharged burden to prove breach of statutory warranties; CONTRACT: Terms of contract between the parties, work to be done, objective assessment of contractual terms; work done by contractor; warranty to undertake work in proper and workmanlike manner. EVIDENCE: no adequate evidence as to quantum of appellants' loss. Remittal for determination on proper evidence. Legislation Cited: Civil and Administrative Act, 2013 (NSW) Home Building Act, 1989 (NSW) Cases Cited: Collins v Urban [2014] NSWCATAP 17 Simpson and Pritchard v Steward & Steward [2011] NSWSC 491 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd and Others - (2004) 211 ALR 342 Makita v Sprowles (2001) 52 NSWLR 705 Category: Principal judgment Parties: Mario Pandeli & Rachel Pandeli: Appellants Ying Min Hou: Respondent Representation: Counsel: Mr D Rayment, Counsel for Appellants Respondent in person (with interpreter) Solicitors: Mr C James, Hardings Lawyers: Appellants Mr J Wong, Brighton Lawyers: Respondents File Number(s): AP 14/54607 Decision under appeal Court or tribunal: NCAT Consumer and Commercial Division Date of Decision: 14 October 2014 Before: Mr B Howe, Member File Number(s): HB 14/18871 REASONS FOR DECISION Introduction 1. This is an appeal from a decision of the Consumer and Commercial Division of the Tribunal. The decision under appeal dismissed the appellants' application for compensation for breach of the warranties implied pursuant to s 18B of the Home Building Act, 1987 (NSW) (HBA) into the contract they entered into with the respondent for bathroom renovation, tiling and waterproofing work undertaken at their home. The application was dismissed "because having considered the material placed before it, the Tribunal is not satisfied (at the civil standard of proof) that the grounds required to make the orders sought have been established". 2. The appellants alleged that the work undertaken by the respondent included the installation of a channel drain in their shower recess to allow floor waste to drain. They alleged, inter alia, that the respondent failed to undertake this work in a proper and workmanlike manner and that as a result, there has been substantial damage to their home caused by water escaping from the channel drain and into the surrounding areas of the house. They claimed over $27,000 by way of compensation to remedy the defects caused by the respondent's work. 3. The respondent denied that the installation of the drain was part of his contract and that he was responsible for the loss, or that he had breached any warranties, which may have been implied into his contract with the appellants. 4. In our opinion, properly considered, the appeal involves a question of law, for which leave to appeal is not required. If we were wrong about that, to the extent that the appeal involved some questions that do not involve questions of law, for which leave is required, we have determined that leave ought to be granted. 5. For the reasons set out below, we have decided that the appeal should be allowed. This does not, however, dispose of the matter as having dismissed the application, the Tribunal did not deal with the issue of quantum of the appellants' loss. We are not satisfied on the material before us that the appellants have established by adequate evidence the quantum of the loss they have suffered by reason of the breach of the warranties by the respondent. We have therefore decided to remit the matter to the Tribunal but only for a hearing as to the quantum of the appellants' loss. The Decision Below 1. As has been set out above, the Tribunal ordered that the application be dismissed because it was not satisfied that the appellants had proved that they were entitled to the relief claimed. The relief sought relevantly was for an order for the payment of the sum of $33,154.00. The reasons given in the application said to entitle the appellants to the relief were stated as: "…failure to fulfil rectification order (of the Department of Fair Trading dated 23 September 2013)" and "further damage to walls, floors, doors, cupboards". 2. In the reasons for decision, the Tribunal set out the contents of the quotation from the respondent. We have set this out below. The Tribunal noted that the renovation of the appellants' bathroom involved other work by tradesman other than the respondent, who were paid by the appellants. The Tribunal stated: "From this evidence, it is concluded that the home owners were the "builder" in charge of the total renovation, and who engaged various trades to perform their specific functions of home building". The appellants make much of this finding. They submit that it was not a finding open to the Tribunal and, even if it was and was right, it would not exclude the operation of the implied warranties under s 18 of the HBA. We will return to this matter below. 3. The Tribunal referred to the damage alleged by the appellants to have been suffered as quantified at $27,061.78 in the Scott Schedule served by them and prepared by an expert engaged by them, namely Mr David Zihrul of Building and Waterproofing Consultancy Services Pty Ltd (the Zihrul Report). 4. The Tribunal also referred to the expert report of Mr Fathabadi of ABC Homes (NSW) Pty Ltd served by the respondent. 5. The Tribunal found that both experts reports agreed that the problem with water flowing from the bathroom at the appellants' house is most likely to have been caused by the channel drain installed for the purpose of draining the waste water shower cubicle. 6. The Tribunal referred to the evidence in respect to the supply of the channel drain by the appellants to the respondent. It referred to the respondent's evidence that he was presented with the channel drain and no other parts. It found that if Harvey Norman had delivered the channel drain to the appellants, it should have contained at least stop ends for either end of the drain. 7. The Tribunal also referred to the respondent's evidence that he told Mr Pandeli, one of the appellants, not to use the channel drain, rather they should use a stainless steel one. He said, however, that he was told by Mr Pandeli to "just use it". 8. The Tribunal then referred to the principles by which the applicant before it was required to present evidence so that the Tribunal could be satisfied they are entitled to the relief claimed. The Tribunal noted that the civil burden of proof, being the balance of probabilities, was to be applied. 9. The Tribunal then referred to the warranties implied into contracts for residential building work pursuant to s 18B of the HBA. 10. The Tribunal referred to the conclusions of Mr Zihrul that the respondent's work was not done in a proper and workmanlike manner and in accordance with the contract, did not achieve the purpose for which it was required, and that the materials supplied or used were not suitable for the intended purpose. The Tribunal found that Mr Zihrul's conclusions in this regard …" were not supported by any reasoning to demonstrate why the author can boldly state [such] determination(s)". 11. The Tribunal referred to an email from a Mr Selby from Harvey Norman, which was tendered by the appellants and who supplied the channel drain to the appellants. In that email, Mr Selby noted "problems" with the installation of the channel drain and described it as "almost a worst case scenario". 12. The Tribunal noted that the Fathabadi Report stated that the channel drain assembly was not completed properly prior to its installation, in that the end caps had not been fitted. The Tribunal then referred to the findings in the Fathabadi Report that …"As the assembling parts are made of plastic, it is critical that the plumber uses approved plumbing PVBC pipes cement glue to assemble shower floor waste prior to installation (based on manufacturer's instructions)… The correct installation of the existing drainage is normally NOT part of a tiler's or the "respondent's" duties. In any bathroom renovations which I am responsible for, as the bathroom builder I've never left such an important task to a subcontractor tiler without further directions/instructions… It is important to note that a successful bathroom renovation is a union of different expertise; therefore there is a need and responsibility for a builder/owner to liaise with all subcontractors….This current scenario is as a result of the risk taken by the "applicant" and acting as the project leader or owner builder and using subcontractors like tiler, plumber, electrician to do carry out tasks without any technical supervision. This is certainly a common theme which the NSW Fair Trading is trying to highlight and make owners aware of the responsibilities involved in taking on the owner builder role". 13. The Tribunal stated that it preferred to follow "..the extensive reasoning of Mr Fathabadi's report, to the minimal, if any, explanation contained in the report given by Mr Zihrul." The Tribunal concluded: "Given the minimum information set out in the quotation supplied by the respondent, the small price quoted, and the lack of any detailed plans or scope of work, the Tribunal concludes that the applicants are home owners who took on the role of builders to supervise, as best they could, of various trades to carry out a bathroom renovation in the most inexpensive manner. The Tribunal has no evidence that the respondent has failed to comply with the legislative warranties set out in section 18B of the Home Building Act. The Tribunal is of the view that the applicants are the authors of their own misfortune." The Notice of Appeal 1. The Notice of Appeal was filed on 11 November 2014. It seeks to set aside the order made by the Tribunal dismissing the application. It seeks an order that the respondent pay the appellants the sum of $27,061.78, an order that the respondent's pay the sum of $2035 being the costs of the expert report of Mr Zihrul and an order that the respondent pays the appellants' costs of the Appeal. 2. The grounds of appeal are as follows: "1. The member erred in law in failing to hold the Respondent liable for damages in the amount claimed for breach of the warranties contained within s 18B of the Home Building Act 1989 (NSW) in circumstances where: a. the Respondent admitted that he installed the channel drain in the shower; b. there was no evidence to suggest that any other tradesperson was involved in the installation of the channel drain in the shower; c. the terms of the contract required the Respondent to carry out waterproofing to the bathroom; and d. both parties' experts agreed that the defective installation of the channel drain and insufficient waterproofing caused the water damage the subject of the claim. 2. The member erred in holding that there was no evidence that the Respondent breached the s 1B home warranties in the said circumstances. The member erred in holding that the defective installation of the channel drain was due to the failure on the part of the Applicants (lay persons) to supervise all tradespersons involved in the bathroom renovation when the evidence disclosed that the installation of the channel drain and water proofing were the responsibility of and were performed by the Respondent." The Reply to the Appeal 1. By the Reply to Appeal filed 28 November 2014, the respondent referred to the warranties implied into contracts for residential building work pursuant to s18B of the Home Building Act. The respondent accepted that it was undisputed that the underlying issue of leakage was due to the channel drain installed for the purpose of draining the wastewater from the shower cubicle. The respondent also accepted that it was not disputed that the engagement of the contract provided that the bathroom renovation excluded plumbing work, being the assembly (as distinguished from installation) of the channel drain pursuant to the quotation dated 20 November 2011. The respondent also referred to the evidence before the tribunal that the respondent had warned the appellant of "the potential issue prior to installation, which was not even within the scope of engagement." 2. The respondent said that insofar as there was any issue with respect to "waterproofing", that there was no breach of the warranty implied by s 18B(b) because the expert evidence before the Tribunal was that the problem with leakage was because of the channel drain installed, which was due to assembly not installation. 3. Insofar as grounds 2 and 3 of the appeal were concerned, the respondent asserted that these grounds did not involve questions of law and thus required leave to appeal. The respondent referred to clause 12 of Schedule 4 of CATA and the test to be applied in considering whether or not to grant leave as set out in Collins v Urban [2014] NSWCATAP 17. The respondent said that leave to appeal should be refused. Material before the Appeal Panel 1. The Appeal Panel had before it the following materials: a) the quotation provided by the respondent to the appellants dated 20 November 2011; b) the transcript of the hearing before the Tribunal; c) the decision of the Tribunal annotated with paragraph numbers; d) the document entitled "summary of events"; e) the rectification order of the NSW Department of Fair Trading dated 23 September 2013; the report of the NSW Department of Fair Trading dated 31 October 2013; f) the report dated 25 April 2013 from Plumbing Assist; g) an email to the appellants from Mr Selby of Harvey Norman dated 21 February 2013; h) the report of Mr Zihrul of Building and Waterproofing Consulting Services Pty Ltd; i) the report of Mr Fathabadi of ABC Homes (NSW) Pty Ltd; j) the appellants' Chronology; k) the appellants' Written Submissions; and the respondent's Submissions in Reply. The Submissions of the Parties 1. The appellant submitted that it was "common ground" that the Respondent's waterproofing of the bathroom failed and that the Respondent's installation of the channel drain was defective because it did not have stop ends and a nozzle to the drain installed and that the resulting water leakage caused extensive damage to the appellants' home. They submitted that the dismissal of the claim for rectification costs in such circumstances was "extraordinary". 2. The appellant's primary contention was that "the learned member wrongly held that the respondent's work was not subject to the home building warranties in s18B of the Act because, in the member's assessment, the appellants were to be treated as if they were "the builder" responsible for the overall renovation and, for reasons that are not entirely clear, the member considered that this relieved the respondent having to comply with the home warranties provided by s 18B of the Act." 3. The appellants disputed the finding of the Tribunal that they were "the builder" the purposes of the HBA or at all. Furthermore, the appellants submitted that even if they were "the builder" they were still entitled to the benefit of the warranties provided for in the HBA. 4. The appellants referred to the suggestion in the respondent's Reply to Appeal that the installation of the channel drain was excluded from the work to be undertaken by the respondent because it was "plumbing work". The appellants submitted such finding was not open for various reasons it is unnecessary to set out in full. 5. The appellants submitted that as it was found that the channel drain was installed without the end caps being fitted, it would have been obvious to any person installing it the failure to install the end caps would mean that water will flow out to either side of the length of the plastic drain and gain entry into the betting underneath. In support of the submission the appellant referred to the email from Mr Selby of Harvey Norman and the Plumbing Assist report. The appellants also referred to the report and evidence of Mr Fathabadi to the effect that leakage of the water was because of the absence of the end caps. 6. The appellants also made submissions that any defence under S 18F of the HBA was not available to the respondent as any warning he gave to the appellants with respect to the use of the channel drain was not in writing. 7. The appellants submitted that the majority of their grounds of appeal related questions of law for which no leave to appeal was required. They submitted that insofar as leave was required this was a clearly case of injustice where their claim had been dismissed despite the fact that the respondent, by its expert evidence, had effectively admitted that having carried out defective work causing damage to the appellants' home. 8. Mr Rayment of counsel appeared for the appellants at the hearing of the appeal. He made further oral submissions expanding upon the appellants written submissions. Insofar as is necessary, we will refer to those submissions below. The Respondent's Submissions 1. The respondent submitted that, assuming leave to appeal was granted, the appellants bore the onus of proof to demonstrate that the respondent was in breach of the warranties implied pursuant to the HBA and that the respondent could not avail itself of the defence under S 18F of that act. The respondent submitted that in order to prove breach of the warranties, the appellants needed to prove on the balance of probabilities that the respondent was a builder supervising all work in relation to the bathroom renovation and that the assembly AND installation of the channel drain was within the scope of work to be completed by the respondent. The respondent submitted that if the appellants could not prove both of the former matters, then they would need to prove that the respondent was responsible for supervising work outside of the scope of works as set out in the contract and that if none of these matters could be proved, then the appellant's were required to prove that the water leakage was due to issues of waterproofing from the tile installation (as distinct from the installation of the channel drain). 2. The respondent referred to certain evidence before the Tribunal in support of the submission that the appellants were "owner builder" within the meaning of the HBA. It referred to evidence before the Tribunal which indicated that the quotation provided by the respondent excluded plumbing work and that the evidence before the Tribunal proves that the assembly of the Channel drain was not a tiler's responsibility. It refers to the definition of "plumbing" on the Fair Trading website and submitted that the work done by the respondent does not fit within that definition. 3. The respondent refers to the evidence before the Tribunal which supported a submission that the respondent was not responsible for supervising any other tradesmen at the appellant's house in undertaking the bathroom renovation work. The respondent submitted that the evidence before the Tribunal did not support any conclusion that any damage to the appellant's house was as a result of the waterproofing or tiling work undertaken by the respondent. It also submitted that the defence under 18F was available to it by reason of the warnings and gave to the appellant with respect to the use of the channel drain. 4. Finally, the respondent submitted that, in respect of quantum of loss, in the event that the appeal was successful, both parties should appoint an expert in calculating the cost of any rectification work or, alternatively, the expert already engaged should jointly provide a report regarding the cost of any rectification work. Is Leave to Appeal Required? 1. In our opinion, leave to appeal is not required. That is because the grounds of appeal involve questions of law in that they alleged that the Tribunal, in arriving at its decision has misunderstood the law. Further, insofar as there is an appeal based upon the misapplication of the statutory warranties implied into contracts for residential building work, or the construction of those warranties, these are questions of law: see generally Lombardo v FCT (1979) 28 ALR 574 at 578 per Bowen CJ and the discussion of questions of law in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13]. We note particularly that the appellants allege that the Tribunal made findings unsupported by evidence and that the decision of the Tribunal was "extraordinary". We take the letter to mean that the decision was so unreasonable but no reasonable decision maker would have made it. This raises a question of law. 2. If we are wrong on this aspect, and any of the grounds of appeal do require leave, we are satisfied that the requirements of clause 12 of schedule 4 of CATA are met such as to warrant the grant of leave. That is, we are satisfied that the decision of the Tribunal was not fair and equitable and against the weight of evidence such that the Appellants may have suffered a substantial miscarriage of justice. Undisputed Factual Matters 1. Before undertaking an analysis of the submissions of each of the parties and setting out our conclusions, it is useful to detail, based upon the evidence before the Tribunal and the material that was before the Appeal Panel, the facts that are not in dispute: (a) The appellants engaged the respondent to undertake bathroom renovation work at their home; (b) There was no written contract in the usual sense which specified with any particularity or by reference to plans and specifications, the work that was to be undertaken by the respondent; (c) By a written quotation dated 20 November 2011, the respondent quoted to undertake "Bathroom Renovation including demolition brick work around bath, but excluding Gybrock (sic) plumbing, electrical, painting works", "Waterproofing" and "Others If need resheeting. Let owner know extra cost $500- $800". (d) The quote also had, under a section headed "Conditions" the following: "* 2years no leak Guarantee in price, $80/ per each year for extended Guarantee and up to 7 years. * owner supply tiles and floor waste. * $30/ per items for small things fitting." (e) The total quote price was $6,000 + GST + bin cost + sheeting cost; (f) The respondent did undertake renovation work at the appellants' home; (g) The appellants engaged other tradesman, including a plumber recommended by the respondent but paid directly by the appellants, to do other work associated with the bathroom renovations; (h) The appellants provided to the respondent a plastic channel drain they had purchased from Harvey Norman (the channel drain) to be installed in the shower recess for the floor waste; (i) The appellants instructed the respondent to use the channel drain; (j) The respondent cut a hole in the channel drain so that the hole would align with the drain in the floor when the channel drain was installed; (k) The respondent installed the channel drain into the floor of the shower recess; and (l) When the channel drain was installed, it did not have fitted end plugs so that each end of the channel drain was open. 1. For the reasons discussed below, a review of these undisputed facts, supports the conclusion that the Tribunal erred in its conclusion that the appellants had failed to discharge the burden of proving that there was a breach of the warranties implied into the contract with the respondent by s18B of the HBA. Consideration and Disposition of Appeal 1. As can be seen from above, each of the parties seek to make much of the discussion by the Tribunal of whether the appellants, by engaging various other tradesman for the bathroom renovations, were "builders". Whilst the position taken by the parties is understandable having regard to the references to this issue in the reasons for the Tribunal's decision, we have concluded that the Tribunal did not make a finding that the appellants were "owner builders" within the meaning of the HBA. 2. If such a finding was made it was erroneous. There was no evidence before the Tribunal such that it could be satisfied that the requirements of the HBA as in force at the time the renovation work was undertaken were met. Relevantly, "owner builder" is defined in s3 of the Act to mean "a person who does owner-builder work (within the meaning of Part 6) and who is issued an owner-builder permit for that work." There was no evidence that the appellants were issued an owner-builder permit for the bathroom renovation work is the subject of the proceedings. Further, on the evidence before it, they Tribunal could not have been satisfied that the requirements of s 29 were met to enable a finding that the bathroom renovation at the appellants' house was "owner-builder work" within the meaning of that section. 3. Additionally, we do not accept the appellants' submission that the Tribunal held that the warranties implied under s18B were excluded. When asked to point to a particular part of the reasons of the decision of the Tribunal which made such a finding, Mr Rayment was unable to do so. There is no such finding in the Tribunal's reasons. 4. In our opinion, the relevant finding of the Tribunal was that the appellants had failed to discharge the burden of proof they had to satisfy the Tribunal that the warranties implied into the contract between the parties had been breached. As we set out below, we do not agree with that finding and have formed the view that on the evidence, the appellants have discharged the onus to prove that they are entitled to relief in respect to the defective work undertaken by the respondent. 5. The issue as to whether the appellants were "builders" or engaged other tradesman to do other work really begs the question as to whether or not they had discharged any onus of proof. The Tribunal did not explain any legal consequences flowing from its conclusion that the appellants were "builders" and "authors of their own misfortune". For example, it was not found by the Tribunal that being "builders", the appellants were "owner builders" such that the work undertaken by the respondent was not "residential building work" within the meaning of the HBA. As we have noted, there is no finding that the warranties under s 18B were not implied into the contract between the parties, rather, simply that the appellants had not discharged their onus. 6. Another of the questions which was the focus of submissions during the hearing before the Appeal Panel was whether or not the installation of the channel drain was within the scope of the works to be undertaken by the respondent under the contract he had entered into with the appellants. As has been observed above, the only evidence of the contractual terms between the parties is the written quotation dated 20 November 2011. The quotation has been extracted in paragraph 39 above. 7. It is perhaps not necessary for the purposes of deciding the appeal to resolve this issue. That is because of the simple fact that it is accepted by the respondent that Mr Hou did indeed install the channel drain. That work was "residential building work" within the meaning of the HBA. In our opinion, having undertaken to do that work and having done it, the respondent became subject to the warranties implied by s 18B of the HBA. Even if the respondent was correct in its assertion that the installation of the channel drain was excluded from the contract as it was "plumbing work" (which we do not accept) in our opinion, such an assertion comes to nothing when the respondent did undertake the installation. He did not, as he could have, refuse to do the installation. If the installation was excluded from the contract (which we reject) the later acceptance of the task by the respondent amounts to a variation of the contract such that the warranties under the HBA would be implied and, inter alia, he would be bound to undertake that work in a proper and workmanlike manner. 8. On the basis that is necessary to decide this issue, we find that the installation of the channel drain was within the scope of work to be undertaken by the respondent. The quotation refers to the fact that the owner (the appellant) was to supply the floor waste. We infer, therefore, that the respondent was to install the floor waste (the channel drain) supplied to it by the appellant. If that were not the case, there would be no cause for the respondent to note in the quotation that the appellants would supply the floor waste. There was no suggestion that some other tradesman engaged by the appellants was to install the floor waste supplied by them to the respondent. There was no evidence of any conversations prior to entry into the contract, or other surrounding circumstances, which would suggest that the installation of the channel drain was not within the scope of the contract. 9. We accept that the task of ascertaining the terms of the contract is an objective exercise. The subjective intention of the parties is irrelevant. What must be examined is what each party, by words or conduct, would have led a reasonable person in the position of the other party to believe: see, for example the discussion in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd and Others - (2004) 211 ALR 342. 10. There is a question as to whether it can be said that the fact that the respondent did install the channel drain means that it (the installation) was within the terms of the written contract. Additionally, there is the question as to whether the verbal warnings by the respondent, which we accept he made, not to use this particular type of channel drain but rather use a stainless steel version, can be used to decide if the work was within the terms of the contract. The conduct in installing the channel drain and the conversation are after the date of the written quotation. 11. In Simpson and Pritchard v Steward & Steward [2011] NSWSC 491 at [60] in considering whether the conduct of the parties post the date of the contract could be used to decide whether the contract in that case was subject to a price cap Ball J said: "There is a question concerning the extent to which subsequent conduct can be taken into account in this context. It is clear that it cannot be taken into account in interpreting a contract: see Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407; (2009) 264 ALR 15. However, in County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193 Spigelman CJ expressed the view (at [20]) that it could be taken into account in determining the terms of the contract and McColl JA (at [162]) (with whom Beazley JA agreed) said that subsequent conduct could be taken into account as constituting an admission of the state of the parties rights." 1. In this case, in our opinion, the conduct of the respondent in installing the channel drain supplied to him by the appellants is evidence that the a reasonable person in the position of the appellant would have regarded the installation as a term of the contractual work. Alternatively, it evidences an alteration to the contract to provide that he was to install the channel drain. 2. Further, in our opinion, the conversations between the parties where the respondent indicated not that Mr Hou did not think he should be doing the installation, rather that he did not think the plastic drain was advisable, also evidence that a reasonable person in the position of the appellants would have believed that installation of the channel drain (the floor waste) was part of the contract with the respondent. 3. For those reasons we hold that the installation of the channel drain was within the contractual works to be undertaken by the respondent under the contract it had with the appellants. 4. There may be an associated question as to whether or not the floor waste supplied by the appellants to the respondent was to be fully assembled by them before it was given to the respondent for installation, however, we do not think this question needs to be answered. That is because it must have been obvious to any reasonably competent tradesmen that installing the channel drain without the end plugs fitted would mean that water could escape from either end. 5. Mr Hou gave evidence before the tribunal, and repeated the same in submissions to the appeal panel, that he had verbally warned the appellant's not to use the plastic channel drain, as it did not have any fall. He said that he told them that as they were spending a lot of money on their bathroom renovation, they should not use the cheap plastic channel drain. Mr Hou also gave evidence at the Tribunal and repeated the same in submissions before the Appeal Panel, that there was an additional problem with the channel drain in that it had no hole in it for the water to escape. He cut a hole in the channel drain to align it with the drain over which was to be placed. 6. The evidence was equivocal as to whether or not the appellant's provided the end plugs to the respondent. The appellants' evidence was that they did. The respondent's evidence was that when Mr Hou received the package from the appellants containing the channel drain, the package was open. There was no specific evidence from him about whether or not the package contained the end plugs. Additionally, there was no evidence as to whether or not the appellants provided the respondent with instructions as to the assembly of the channel drain or whether the respondent requested those instructions. There was no evidence that the respondent asked for the instructions or asked for some other tradesman, such as a plumber, to undertake the assembly of the channel drain. It was perfectly open for him to do so. Indeed, if he was not familiar with that type of channel drain, he should have done so. 7. We have referred above to the expert evidence served by the respondent that indicated that Mr Fathabadi concluded that the installation of a channel drain such as the one in this case, is not "normally" part of a tiler's responsibility. He said he would not ordinarily let a sub-contractor do such work without supervision or instruction. However, in our opinion, this is not to the point. Of course, Mr Fathabadi could not opine as to whether the installation of the channel drain was within the scope of the contract. We have held that it was. Further, as we have noted, once the respondent took it upon himself to undertake the work (assuming it was not otherwise incumbent upon him to do it) he was obliged to undertake the work in a proper or workmanlike manner. 8. The Tribunal was critical of the manner by which the expert for the appellant reached his conclusions that the work undertaken in installing the channel drain was not done in a workmanlike manner. Even accepting that the Zihrul Report left much to be desired in terms of the manner by which those conclusions were reasoned and reached (see for example Makita v Sprowles (2001) 52 NSWLR 705) in our opinion, there was evidence before the Tribunal, including the expert evidence served by the respondent, which amply supported the conclusion that the installation of the channel drain without the end plugs was the reason for the water leakage and damage at the appellants property. 9. Indeed, it appears to us that there can be no doubt on the evidence before the Tribunal and the Appeal Panel, including the expert evidence, that whatever damage has been caused to the appellant's property has been caused by water escaping from either end of the channel drain as a result of it being installed without the end plugs being in place. We have formed the view that in installing the channel drain without the end plugs in place the respondent breached the warranty implied into the contract with the appellants, in particular s 18B(a). That is, we find that the respondent is in breach of the warranty that the work to be performed by it would be performed in a proper and workmanlike manner. 10. In relation to the respondent's submission that it can rely on the defence in s 18F of the HBA, such a submission must be rejected. There was no warning or advice given in writing by the respondent to the appellants. Further, the deficiencies of which the appellants complain, namely that the channel drain was not installed with the end plugs, thus allowing water to escape from each end, was not a matter of which the respondent warned the appellants. There is no scope for the respondent to rely on the defence. 11. For the above reasons, we would allow the appeal as to liability. 12. In relation to the quantum of the appellants' loss, the only material before the Appeal Panel was the Scott Schedule prepared by the appellants expert. Directions had previously been made by the Tribunal that any loss set out in any Scott Schedule should be cross-referenced to the expert reports. There has not been done. Additionally, in our opinion, there is no proper breakdown of the work said to be necessary to remedy the defects in the appellants' house, which are said to flow from the defective work undertaken by the respondent. For this reason, we accept the respondent's submission that there should be additional steps to decide the quantum of the appellants' loss. We make no findings as to the extent of any damage caused by the work undertaken by the respondent. That, and the proper scope of the loss recoverable, will be a matter to be determined by reference to sufficient evidence and the relevant authorities. 13. In the circumstances, the matter must be remitted to the Tribunal for a hearing as to the quantum of any loss suffered by the appellant's as a result of the breach of warranty by the respondent. 14. In respect of costs, each party sought orders for costs if they were successful on the appeal. Each party has had a measure of success. The appellants have succeeded in the appeal with respect to liability, however, they did not put before the Tribunal or the Appeal Panel sufficient material as to the measure of their loss or quantum such that the matter could be disposed of finally at the hearing before the Appeal Panel. The respondent has been held to have breached the warranties implied into the contract, but has been successful in part in its submissions with respect to quantum. 15. In the circumstances, the proper order is that there be no order as to costs of the appeal with the intent that each party pay its or their own costs of the appeal. 16. The orders we make are: 1. Appeal allowed in part. 2. The matter is remitted to the Tribunal for a hearing as to the quantum of any loss suffered by the appellant's by reason of the breach of warranty by the respondent. 3. There is no order as to costs of the appeal with the intention that each party bear its or their own costs of the appeal. ********** 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: 30 March 2015