Civil and Administrative Tribunal New South Wales Medium Neutral Citation: David Cameron Jones t/as Oz Style Homes v Panchal [2018] NSWCATAP 238 Hearing dates: 25 June 2018 Date of orders: 09 October 2018 Decision date: 09 October 2018 Jurisdiction: Appeal Panel Before: K Rosser, Principal Member D A C Robertson, Senior Member Decision: 1. Leave to appeal refused. 2. Appeal dismissed. 3. The stay of order 1 of the decision under appeal is lifted with immediate effect. 4. The Appellant pay the Respondents' costs of the Appeal as agreed or assessed. Catchwords: BUILDING AND CONSTRUCTION – Home Building jurisdiction of the Tribunal – whether time limits on jurisdiction in s 48K of the Home Building Act apply separately to each claim brought in an application or whether each application constitutes one "building claim" – whether in considering whether to make a work order requiring rectification by the builder it is a relevant consideration that there are defects for which the builder has not been found liable which the home owner will need to employ other builders to rectify WORDS AND PHRASES – "building claim" Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Home Building Act 1989 (NSW) s 48A, s 48K, s 48MA Home Building Amendment Act 2011 (NSW) Home Building Amendment Act 2014 (NSW) Interpretation Act 1987 (NSW) Cases Cited: Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 Deputy Commissioner of Taxation (NSW) v Mutton (1988) 12 NSWLR 104 House v R (1936) 55 CLR 499 Independent Liquor & Gaming Authority v Auld [2018) NSWCATAP 184 Marks v Stafflair [2012] NSWCTTT 199 Marsh v Linmore Pty Ltd [2006] NSWCTTT 672 McGraw-Hinds (Aust) Pty Ltd v Smith (1978) 144 CLR 633 Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 Tinsley v Masterton Homes Pty Ltd [2013] NSWCTTT 26 Water Board v Moustakas (1988) 180 CLR 491 Texts Cited: Pearce & Geddes, Statutory Interpretation in Australia 8th edition 2014 Category: Principal judgment Parties: David Cameron Jones trading as Oz Style Homes (Appellant) Jayeshkumar Panchal and Archita Panchal (Respondents) Representation: Counsel: P Lonergan (Appellant) A Hopkins (Respondents) Solicitors: Reuben George Lawyers (Appellant) Turnbull Bowles Lawyers (Respondents) File Number(s): AP 18/15927 Decision under appeal Court or tribunal: NSW Civil & Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 8 March 2018 Before: I Bailey AM SC, Senior Member File Number(s): HB 16/24423 REASONS FOR DECISION Introduction 1. On 20 July 2012 the Appellant (the Builder) and the Respondents (the Homeowners) executed a contract for the construction by the Builder of a duplex residential building on land owned by the Homeowners. 2. Issues arose between the parties and on 18 May 2016 the Homeowners filed an application in the Consumer and Commercial Division of the Tribunal seeking an amount in excess of $200,000 for alleged breaches of statutory warranties arising pursuant to s 18B of the Home Building Act 1989 (NSW) (HBA), an amount for liquidated damages for delay in completion, and $10,800 for lost rent. 3. By a decision dated 8 March 2018 Senior Member Bailey ordered the Builder to pay the Homeowners the sum of $49,273.25. 4. That sum was calculated as $51,339 in respect of breach of statutory warranty, plus $100 liquidated damages, less $2,165.96 in respect of amounts outstanding under the contract. 5. In his decision the Senior Member determined that the warranty period in respect of the statutory warranties commenced on 31 May 2013 when the keys to the premises were provided to the Homeowners, that the proceedings were commenced outside the warranty period in respect of any breaches of statutory warranty other than those which resulted in a major defect (as defined in s 18E of the HBA), and that only two of the defects alleged by the Homeowners, involving "a problem of significant stormwater entry into the ground level of both the separate dwellings", constituted major defects. 6. The Senior Member also determined that the claim to liquidated damages was brought within the three year time limit imposed by s 48K(3) of the HBA. 7. The Builder's rights of appeal are limited by s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) which provides that an appeal against a decision other than an interlocutory decision of the Tribunal may be made: "as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds." 1. As this appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of cl 12(1) of Sch 4 to the NCAT Act, leave may only be granted under s 80(2)(b): "if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with)." 1. In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarised at [71] and [79] as follows: [71] [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred… [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred. 1. The principles to be applied by an Appeal Panel in determining whether or not leave to appeal should be granted are set out in the decision of the Appeal Panel in Collins v Urban at [84]: The general principles derived from these cases can be summarised as follows: (1) In order to be granted leave to appeal, the applicant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact: BHP Billiton Ltd v Dunning [2013] NSWCA 421 at [19] and the authorities cited there, Nakad v Commissioner of Police, NSW Police Force [2014] NSWCATAP 10 at [45]; (2) Ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed. Grounds of Appeal 1. The Builder's Notice of Appeal, as amended at the hearing of the Appeal, identified three asserted errors of law: 1) The Senior Member erred in finding that the Tribunal had jurisdiction under s 48K of the Home Building Act 1989 (NSW) (the Act) by finding that each cause of action pleaded by the Applicant was a separate, or individual, building claim such that the Tribunal was required to consider its jurisdiction separately for each cause of action. 2) The Senior Member erred in finding that there was a major defect in a major element of the building because: (a) The Tribunal erred in concluding that a major element of the building was a complete building construction at ground level, including the 'whole of the walls, the membrane, the drainage and the backfilling'; and (b) The Tribunal did not identify any relevant attribution, as required under the Act s 18E(4)(a), because the Tribunal found that the major element was the complete building construction at the ground level but that without excavation it was not possible to identify a solution to the water penetration, and what exactly was the defective work was 'uncertain'. 2A) The Tribunal took into account the Homeowner's failure to initiate their application in relation to the non-major defects within the required time in making its decision under s 48MA. This is an irrelevant matter for the purposes of the Tribunal exercising its discretion. 1. The Builder also sought leave to appeal on the ground that the decision was against the weight of evidence in three respects: 3. In the alternative to ground 2 (above) the decision of the Tribunal that there was a major defect was against the weight of evidence because the identified source of the penetration was a hole in the wall through which water gushed but the hole was a drill hole which the Builder did not make. 4. The Senior Member erred in making an order for costs rather than the preferred order for rectification under the Act s 48MA where the decision to do so was against the weight of evidence because: (a) Rectification by the responsible party is the preferred outcome; (b) The Tribunal's primary concern in not making a rectification order was that the scope of rectification work was uncertain and the Homeowner should be able to choose what work should be carried out; and (c) There is no evidence that the responsible party was not capable of completing whatever rectification work that was ordered. 5. The Senior Member erred in deciding that the date of deemed practical completion, as defined in the Act s 3B, was 31 May 2013 and not 24 April 2013 where the decision to do so was against the weight of evidence because: (a) The evidence establishes that the Builder met the requirements of the Act s 3B(3)(b) by last attending the building site to do work, other than remedial work, on 24 April 2013; (b) The Tribunal considered 24 April 2013 only in terms of whether practical completion occurred under the contract, rather than whether deemed practical completion occurred – as set out under the Act s 3B(3)(b)." Ground 1- Jurisdiction 1. Although the contract between the parties was executed and the building work under the contract was completed before the commencement of the Home Building Amendment Act 2014 (NSW) (the 2014 Amendment Act), the Senior Member found, and it was common ground at the appeal, that by virtue of the transitional provisions in Schedule 4 of the HBA, the applicable law was the HBA as amended by the 2014 Amendment Act. 2. Section 48K of the HBA provides as follows: 48K Jurisdiction of Tribunal in relation to building claims (1) The Tribunal has jurisdiction to hear and determine any building claim brought before it in accordance with this Part in which the amount claimed does not exceed $500,000 (or any other higher or lower figure prescribed by the regulations). (2) The Tribunal has jurisdiction to hear and determine any building claim whether or not the matter to which the claim relates arose before or after the commencement of this Division, except as provided by this section. (3) 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 is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made). (4) The Tribunal does not have jurisdiction in respect of a building claim relating to building goods or services that are required under a contract to be supplied to or for the claimant on or by a specified date or within a specified period but which have not been so supplied if the date on which the claim was lodged is more than 3 years after the date on or by which the supply was required under the contract to be made or, if required to be made in instalments, the last date on which the supply was required to be made. (5) The fact that a building claim arises out of a contract that also involves the sale of land does not prevent the Tribunal from hearing that building claim. (6) The Tribunal does not have jurisdiction in respect of a building claim arising out of a building cover contract required to be entered into under this Act if the date on which the claim was lodged is more than 10 years after the date on which the residential building work the subject of the claim was completed. (7) 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). (8) The Tribunal does not have jurisdiction in respect of a building claim relating to: (a) a contract for the supply of goods or services to which none of subsections (3), (4), (6) and (7) applies, or (b) a collateral contract, if the date on which the claim was lodged is more than 3 years after the date on which the contract was entered into. (9) This section has effect despite clause 5 (Relationship between Tribunal and courts and other bodies in connection with Division functions) of Schedule 4 to the Civil and Administrative Tribunal Act 2013. 1. Mr Lonergan, who appeared for the Builder, pointed to the definition of "building claim" in s 48A of the HBA, which is as follows: building claim means a claim for: (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)–(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. 1. Sub-section 48A(2) provides: (2) Without limiting the definition of building claim, a building claim includes the following: (a) an appeal against a decision of an insurer under a building cover contract required to be entered into under this Act, (b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C. 1. Mr Lonergan submitted that paragraph (e) of the definition makes it clear that: Where an application is made to the Tribunal for determination of a building claim, whether one or more claims for remedy are set out does not disturb the result that they are deemed to be a singular 'building claim' – as set out in s48A. This is directly the result set out in the text of s48A(1)(e). 1. Mr Lonergan submitted that this conclusion also derives support from sub-section 48K(1). Mr Lonergan submitted that it is clear that the jurisdictional limit of $500,000 does not apply separately to each type of claim made in an application to the Tribunal but rather is assessed by reference to all claims made in one application. 2. Mr Lonergan submitted that the same approach must be followed in respect of other uses of the term "building claim" in s 48K. 3. Mr Lonergan submitted that the application to the Tribunal constituted one "building claim", that in determining whether the claim was within the jurisdiction of the Tribunal it was necessary to consider all sub-sections of s 48K and that, if the Tribunal's jurisdiction is precluded in respect of one element of a building claim, the Tribunal has no jurisdiction in respect of the whole of the building claim. 4. A similar conclusion was reached by a member of the Consumer Trader and Tenancy Tribunal in Marsh v Linmore Pty Ltd [2006] NSWCTTT 672. In that decision the Member stated: It was submitted on behalf of the Respondent that the Tribunal does not have jurisdiction to hear and determine the application, as it is a building claim relating to building goods or services that were supplied to or for the claimant, which was lodged more than 3 years after the date on which the supply was last made. Section 48K(3) of the Act clearly states that the Tribunal does not have jurisdiction in respect of such building claims. It was submitted on behalf of the Applicants that the building claim arises from a breach of statutory warranty. Pursuant to the provisions of s.48K(7) of the Act, the Tribunal does not have jurisdiction in respect of such claims, 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. As the Applicants lodged their claim within 7 years of the date on which the work was completed, the Tribunal has jurisdiction to hear and determine the matter. It was further submitted on behalf of the Respondent that s.48A(2) of the Act specifically includes a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C, in the definition of "building claim". Thus, s.48K(3) of the Act excludes claims for compensation for loss arising from a breach of statutory warranty, relating to building goods or services that have been supplied to or for the claimant, where the date on which the claim was lodged is more than 3 years after the date on which the supply was last made, from the jurisdiction of the Tribunal. The Applicants rely on the decision of Senior Member Bordon in Farrell v Monks formerly trading as Timberlink Manufactured Homes [2006] NSWCTTT 218 ("Farrell v Monks"). In that matter, Senior Member Bordon ruled as follows: "2. Subsections 48K (3), (4), (5), (6), (7) and (8) set differential time limits on the making of different types of building claims which are identified in the subsections and also referred to in the definition section (section 48A) to the Tribunal. 3. The jurisdictional limitation on the Tribunal in section 48K(3), in my view, is not intended to be a restriction on the types of building claims referred to in the subsequent subsections because they also happen to be claims by the original person supplied with building goods and services. 4. Building claims which, whilst still relating to foods or services that had been supplied to or for the claimant, but arising from a breach of statutory warranty are subject to a limitation on jurisdiction of 7 years. The subsection cannot have been intended to only apply to such building claims as are not referred to in subsection 48K(3). 5. A building claim which is a claim for compensation for loss arising from a breach of statutory warranty implied under Part 2C is specifically identified in 48A as being included in the definition. Section 18E clearly envisages that proceedings for a breach of statutory warranty have a jurisdictional limit of 7 years. Having regard to section 48L where it is provided that the tribunal is to be chiefly responsible for resolving building claims and taking a purposive approach to the interpretation of all relevant provisions, it cannot have been intended that, on the one hand successors in title to a person entitled to the benefit of statutory warranties is able to make application to the Tribunal up to 7 years after the completion of the work while the original person can only bring a claim to the Tribunal within 3 years. 6. Given that the extension of statutory warranties in section 18D which exclude any claims where the statutory warranty has been enforced by the predecessor in title it would be clearly anomalous that enforcement of warranties would occur in different jurisdictions. 7. Section 48K(7) is clearly intended to set a time limit of 7 years on the jurisdiction of the Tribunal conferred by section 48(K)(1) and (2)." It was submitted on behalf of the Respondent that Farrell v Monks was incorrectly decided. The Tribunal in Farrell v Monks ruled that s.48K(3) of the Act was not intended to be a restriction on the types of building claims referred to in the subsequent subsections, because they also happen to be claims by the original person supplied with building goods and services. The Tribunal also ruled that s.48K(7) of the Act is clearly intended to set a time limit of 7 years for the Tribunal to hear and determine building claims arising from a breach of statutory warranty. … The real question is whether or not s.48K(3) excludes the jurisdiction of the Tribunal in respect of building claims, (including claims for compensation for loss arising from a breach of statutory warranty), relating to building goods or services that have been supplied to or for the claimant. The language of s.48K(3) is clear and unambiguous: "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 is more than 3 years after the date on which the supply was made (or, if made in instalments, the date on which the supply was last made)." (Emphasis added). In accordance with s.48A(2)(b), a building claim includes a claim for compensation for loss arising from a breach of statutory warranty implied under Part 2C. Pursuant to the provisions of s.48K(3) of the Act, the Tribunal does not have jurisdiction in respect of a building claim, lodged by a person to whom the goods and services were supplied, more than 3 years after the date on which the supply was last made, including a claim for compensation arising from a breach of statutory warranty implied under Part 2C. Section 48K(7) excludes the Tribunal's jurisdiction in respect of building claims arising from a breach of statutory warranty, if the date on which the claim was lodged is more than 7 years after the date on which the work was completed. However, s.48K(7) does not reinstate the Tribunal's jurisdiction in respect of building claims arising from a breach of statutory warranty, made by the person to whom the goods and services were supplied, excluded under s.48K(3). Section 48K(7) still has meaning as it applies to all building claims arising from a breach of statutory warranty, unlike s.48K(3) which applies only to building claims relating to building goods or services that have been supplied to or for the claimant. 1. We note that the references to seven years in the above passage reflect the provisions of the HBA as it stood prior to the Home Building Amendment Act 2011 (NSW). In other relevant respects ss 48A and 48K have not changed. 2. In Marks v Stafflair [2012] NSWCTTT 199 Senior Member Meadows rejected the reasoning in Marsh v Linmore, and held: 23 It is quite surprising to find that such a basic jurisdictional issue is still the subject of dispute in this Tribunal and particularly that in that regard there are differences of opinion in the published decisions. 24 In attempting to unravel the apparent impasse, I should first of all note that in the current application there is only one issue: does section 48K(3) or section 48K(7) apply? … … 29 … just as section 48K(3) is in "clear and unambiguous" terms, so, in my opinion, is section 48K(7). It would appear that the member [in Marsh v Linmore] … has attempted to read into section 48K(7) an interpretation which supports his interpretation of section 48K(3), which is thus a circular argument. … 32 … In my opinion it is not necessary to hunt about in order to find work to do for section 48K(7): it applies in any case in which there is a claim "arising out of a breach of a statutory warranty implied under Part 2C ...". The fact that a "building claim" includes, in accordance with section 48A(2)(b), a claim for compensation for loss arising from a breach of statutory warranty implied under Part 2C, does not mean that any claim brought pursuant to breach of statutory warranty must therefore be included in section 48K(3) merely because the section includes the words "building claim": that is what section 48K(7) is for. It applies to any claim arising from an alleged breach of a statutory warranty. 1. The decision in Marsh v Linmore was considered and not followed in other decisions of the Consumer Trader and Tenancy Tribunal which are collected in Tinsley v Masterton Homes Pty Ltd [2013] NSWCTTT 26 at [25]-[27]. 2. Mr Lonergan submitted that the decisions of the CTTT which determined that the different limitations on jurisdiction in sub-sections 48K(3) and (7) applied separately to different claims brought in one application did not deal with the argument which he raised, as set out above. 3. Mr Hopkins, who appeared for the Homeowners, submitted that the construction of s 48K propounded by the builder would leave s 18E of the HBA with no work to do. Section 18E sets out the requirement that proceedings for breach of statutory warranty must be commenced within the warranty period and prescribes the warranty periods of six years for breaches of warranty that result in a major defect and two years for any other breaches of warranty. 4. In reply, Mr Lonergan submitted that it was not correct that the construction he propounded would leave s 18E without work to do. Mr Lonergan submitted that, in circumstances where an application to the Tribunal includes claims for breach of statutory warranty in respect of non-major defects and other claims not in respect of breaches of statutory warranty, the effect of s 18E and s 48K(7) would be that the Tribunal would have no jurisdiction if proceedings were commenced more than two years after the commencement of the warranty period. In that way, Mr Lonergan submitted, s18E would still have work to do where a building claim is made only for compensation for one or more defects that are all major defects or where a building claim is made for compensation for a non-major defect and for damages for breach of contract. 5. In the decision under appeal, after referring to the decisions in Marsh v Linmore and Marks v Stafflair, the Senior Member dealt with the Builder's submission as follows: 45. The Tribunal does not accept this submission. The definition of a building claim in section 48A of the Act,…identifies a number of different bases of claim which might be made by a homeowner. These different categories of claim, or in a legal sense, causes of action, under section 18E of the Act are allocated different limitation periods within which proceedings including the claim, or cause of action, must be commenced. 46. When a homeowner commences a Home Building Application, which is one form of "proceedings" under the Civil and Administrative Tribunal Act 2013 (the NCAT Act), they may include a number of different building claims and may pursue claims on alternative bases under the contract and under the Act. 47. As with any action under the law, a plaintiff or claimant may claim, or plead, different or alternative claims. The law imposes limitation periods for each of these different and alternative causes of action. 48. The jurisdiction of the Tribunal specified under section 48K of the Act differentiates between the different types of building claims, or causes of action. There is no justification for interpreting Home Building Applications, being proceedings under the NCAT Act, as if they are merely "building claims" as defined under section 48A of the Act. 49. It is entirely appropriate for the Tribunal, in the Consumer and Commercial Division of NCAT, when dealing with a Home Building Application, to assume jurisdiction over a number of different building actions each of which might be subject to different limitation periods for the commencement of the claims. 50. If issues of jurisdiction arise under section 48K of the Act, as to whether each of the individual building claims, or causes of action, have been commenced within the prescribed periods, and therefore are within jurisdiction, the Tribunal has to address the jurisdictional issues separately. There is no basis, either legal or logical, to conflate the jurisdictional issues of separate or alternative claims. Consideration of Ground 1 1. We accept that Mr Lonergan's argument is not precisely the argument canvassed in the CTTT decisions referred to above. Nevertheless, we do not consider that Mr Lonergan's submissions should be accepted. We consider that the Senior Member's conclusion was correct. 2. We consider that the reasoning in Marsh v Linmore was in error and that the conclusion reached in Marks v Stafflair is preferable. 3. We do not consider that the definition of "building claim" in s 48A(1) requires that all claims brought in an application to the Tribunal constitute one "building claim". 4. Contrary to Mr Lonergan's submissions, s 48A(1)(e) does not provide that a claim in respect of separate breaches of contract or statutory warranty constitutes one building claim. Section 48A(1)(e) provides that a building claim includes a claim for a combination of two or more of the remedies referred to in sub-paragraphs (a) to (d). Different remedies may be sought in respect of breach of contract or breach of statutory warranty. Section 48A(1)(e) provides that a claim for more than one remedy in respect of a breach is one building claim, it does not provide that all claims in respect of alleged breaches of contract or statutory warranty brought in one application constitute one building claim [emphasis added]. 5. We do not consider that the provisions of s 48K(1) require that the term "building claim" where used in sub-sections (3) and (7) must be construed as including all claims brought in one application. 6. We accept that it is the clear intention of s 48K(1) that all claims brought in one application are to be aggregated for the purpose of determining the "amount claimed". However we do not accept that it necessarily follows that references to "a building claim" in other parts of s 48K must be construed as incorporating all claims brought in one application. 7. Although it is ordinarily presumed that an expression used in legislation is used consistently throughout, that presumption "must yield to the requirements of the context": McGraw-Hinds (Aust) Pty Ltd v Smith (1978) 144 CLR 633 at 643, Gibbs ACJ. (See also Clyne v Deputy Commissioner of Taxation (1981) 150 CLR 1 at 10, Gibbs J, and 15, Mason J, and Pearce & Geddes, Statutory Interpretation in Australia, 8th ed 2014 at [4.6]-[4.7].) 8. The definition of "building claim" in s 48A refers to "a claim…that arises from a supply of building goods or services" and includes "a claim for compensation for loss arising from a breach of a statutory warranty" [emphasis added]. 9. The use of the singular ("a supply" and "a breach") is more consistent with each claim in respect of an identified breach of contract or breach of statutory warranty being a separate building claim. 10. Even if we were to accept Mr Lonergan's submission that the definition of "building claim" in s 48A requires that all claims brought in one application to the Tribunal be considered to be one "building claim", we would not conclude that the term as used in sub-sections 48K(3) and (7) should be so construed. 11. The application of a statutory definition is always subject to contrary intention. Section 6 of the Interpretation Act 1987 (NSW) provides: Definitions that occur in an Act or an instrument apply to the construction of the Act or instrument except in so far as the context or subject-matter otherwise indicates or requires. 1. As Mahoney JA held in Deputy Commissioner of Taxation (NSW) v Mutton (1988) 12 NSWLR 104 at 108, the application of a statutory definition might be displaced where the context of an Act as a whole indicates that the definition is not to apply or: were the definition to be applied, the provisions of or the procedure established by the section would not appropriately work. It is, I think, … not necessary that what is laid down by the section in question be impossible of operation; it is sufficient if the result of the application of the definition to a section results in the operation of the section in a way which clearly the legislature did not intend. 1. (See also Pearce & Geddes, Statutory Interpretation in Australia 8th ed, 2014 at [6.68]-[6.69]). 2. In our view the clear intention of sub-sections 48K(3) to (8) is that those sub-sections should apply distributively in respect of each separate claim for compensation or other remedies made in respect of separate breaches of contract or statutory warranty, regardless that many such claims might be made in one application to the Tribunal. 3. Each such separate claim is a "building claim" and the Tribunal's jurisdiction to determine each such claim is to be determined separately. 4. Accordingly, where, as this in case, an application includes claims for damages for breach of contract in respect of delay in performance, claims for damages for breach of statutory warranty resulting in major defects, and claims for damages for breach of statutory warranty which result in defects which are not major defects, the whole application will not be outside of the jurisdiction of the Tribunal merely because the application was commenced more than two years after the commencement of the warranty period. 5. Rather, the Tribunal will not have jurisdiction in respect of the claims for breach of statutory warranty in respect of defects which are not major defects. Provided the application is commenced within three years after the last date on which building services were supplied, the Tribunal will have jurisdiction with respect to the claim for damages for delay and, provided the application is commenced within six years after the commencement of the warranty period, the Tribunal will have jurisdiction in respect of the claims for breach of statutory warranty which result in major defects. 6. The clear statutory intention that s 48K should be so construed is, in our view, apparent from a number of circumstances. 7. The first such circumstance is that the construction propounded by Mr Lonergan would severely limit the jurisdiction of the Tribunal for no obvious purpose. The clear intention of the legislation is that the Tribunal should have jurisdiction to determine claims in respect of major defects when those claims are brought within six years. If that time period is to be truncated to two years whenever a claim is also brought in respect of defects which are not major defects, or three years if a claim is made for breach of contract not involving a statutory warranty, the number of cases in which the Tribunal would have jurisdiction to determine claims involving major defects would be substantially reduced. 8. In practice, the construction propounded by Mr Lonergan would reduce the period within which almost all building claims could be commenced in the Tribunal to two years. 9. Moreover, the construction propounded by Mr Lonergan would have the effect that, even if a home owner who commenced an application more than two years after the commencement of the warranty period sought to include in the application only claims in respect of major defects, a determination by the Tribunal that one defect included in the application was, contrary to the home owner's expectation, not a major defect would result in the Tribunal ceasing to have jurisdiction in respect of the whole application. The inconvenience of such a result would be so great that a construction of the legislation which required that result should be avoided if not required by clear words. 10. We also note that, as Mr Hopkins for the respondent points out, the Tribunal's jurisdiction under s 48K is often to be exercised in applications brought by litigants in person. It would be inconsistent with the beneficial objects of the HBA that the question whether the Tribunal has jurisdiction over a claim involving a major defect should depend on whether the applicant has also included in the application a claim for damages for breach of contract or a claim in respect of a breach of statutory warranty which does not give rise to a major defect. 11. It is not appropriate that individual home owners, seeking compensation in respect of major defects in their homes, should be at risk of having their applications dismissed for want of jurisdiction because they have unwittingly included in their application a claim subject to a lesser limitation period under s 48K. 12. Although Mr Lonergan is correct in suggesting that, on the construction he propounds, it could not be said that the provisions of ss 48K(7) and 18E would have no work to do, the operation of those provisions would nevertheless be severely truncated. 13. Because of the limitation of the jurisdiction of the Tribunal and of the operation of ss 48K(7) and 18E that would flow from the construction propounded by Mr Lonergan, and the manifestly inappropriate and inconvenient consequences that would follow, we conclude that that construction cannot be correct. Accordingly Ground 1 must fail. Ground 2 – Major element 1. The Senior Member addressed the question whether the water penetration involved a defect in a major element of the building in paragraphs [84], [85] and [95] of his decision as follows: [84] The inclusion within the definition of a major element of "fire safety" and "waterproofing" indicates that the element concerned need not be merely a structural component. There are clearly circumstances where the fire safety or waterproofing elements within a building make a significant contribution to the amenity and safety of the building. The element involved in this matter is the complete building construction at the ground level of both separate dwellings … including the concealed, but seriously deficient, waterproofing and drainage alleged to have been installed behind the concrete block walls. [85] One problem associated with identifying a solution to the water penetration is that is not possible to identify precisely what was constructed behind the walls which allegedly were treated with a waterproofing membrane, a system of drainage installed and the void backfilled. Without carrying out extensive demolition and excavation it is not possible to determine what in fact was constructed. The Tribunal considers that is entirely correct to describe the whole of the walls, the membrane, the drainage and the backfilling as a major element of the building. … [95] The Tribunal considers that the defect, which was agreed by the experts as involving "water gushing" out of openings in the wall, and which requires a complex, and to some extent uncertain, scope of work clearly involves a major defect. The evidence established that the use and occupation of the stairs and the garage areas have been significantly impacted. The Tribunal concludes that these areas have not been able to be used for their intended purpose. 1. We understand the Senior Member to be saying that the whole of the walls, the membrane, the drainage and the backfilling relevantly constituted a part of the waterproofing of the building. 2. The Builder submitted that these elements of the building were not part of the waterproofing of the building as the water penetration occurred in the garages which were not required by the Building Code of Australia to be waterproof but rather weatherproof. This submission was not raised below and it would not be appropriate to permit it to be raised on appeal since, had it been raised at first instance, potential disputed factual issues would have arisen: Independent Liquor & Gaming Authority v Auld [2018) NSWCATAP 184 at [249]-]278]; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438; Water Board v Moustakas (1988) 180 CLR 491 at 497. 3. As the High Court held in Water Board v Moustaskas, at 497: A point cannot be raised for the first time upon appeal when it could possibly have been met by calling evidence below. 1. In any event, it does not appear to be the case that the water penetration was limited to the garages. The Senior Member held, at [81]: Although the location of the water penetration is primarily within the garage areas it also occurs at the lowest level of the stairs from the garage to the rest of the dwellings. 1. We do not consider that the Senior Member erred in concluding that the "whole of the walls, the membrane, the drainage and the backfilling" constituted a part of the waterproofing of the building. 2. The evidence before the Senior Member was that waterproofing had been installed behind the walls in the basement areas. The Senior Member appears to have accepted that the fact that water was penetrating these areas was sufficient to establish that there was a defect in the waterproofing. 3. The Builder submitted that the evidence established that the water penetration was occurring through a hole in the wall which was not the responsibility of the Builder. 4. We accept that, if the water ingress was the result of something that occurred after the Builder completed the works, such as someone drilling a hole through the wall and penetrating the waterproofing membrane, it could not be said that the ingress of water was itself sufficient to establish that there had been a defect in the waterproofing when completed by the Builder. However the evidence did not establish that that was the case. The only evidence before the Senior Member concerning the origin of the hole in the wall was the following exchange during the oral evidence of the parties' respective experts, Mr Ryan and Mr Frizzell (at pages 106-107 of the Transcript): Mr Lonergan: So the hole in the wall, you both had a good look at the hole in the wall. Mr Ryan: Mmm-hmm. Mr Lonergan: And if I understand your testimony … Mr Ryan, was that if the hole in the wall was not there then there would be no water penetration coming through the wall, is that fair to say? Mr Ryan: Of that volume, yeah. It wouldn't be that volume coming through, but it could build up somewhere else and then exacerbate more, so it comes through in a blob of dampness rather than a spurt. Mr Lonergan: Right. So is there any evidence of water penetration anywhere other than through this hole? Mr Ryan: Yes, there is some – some mould build-up and there is dampness coming in in both – both areas at the bottom of the stairs. Mr Lonergan: And you agree with that? Mr Frizzell: Yeah, to both units, the stairs to both units. The hole is in 5B, but the area at the base of 5A stairs has got mould in it and dampness on the walls, showing on the walls as well. Mr Lonergan: The hole though, looking at the hole, you've both had a good look at the hole---- Mr Ryan: Mmm-hmm. Mr Lonergan: ----was it man-made penetration, i.e., someone drilling a hole or something to that effect or was this natural I guess crack in structure resulting from force--- Mr Ryan: Being a concrete block and having like a cement bag surface put over the top of it when you bag a surface it's a sealed surface to whatever the bagging is going to be capable of doing. Someone somehow and somewhere has broken through that surface to form a hole. Now, whether they've used a drill, a hammer, a screwdriver, whatever, someone has penetrated it and something. Mr Lonergan: So this is man-made penetration? Mr Ryan: I reckon it is, yeah. Mr Frizzell: I disagree. Senior Member: It probably doesn't matter because if it wasn't there you're going to build up hydrostatic pressure--- Mr Ryan: Correct. Senior Member: ---and the problem is still there. Mr Ryan: Yeah and it'd spread further. Senior Member: Yes. Mr Ryan: It's just that it's come out through that hole. 1. This does not amount to clear and unequivocal evidence or even definite or affirmative evidence that the water penetration into the unit was a result of something that occurred independently of the Builder. 2. The exchange between the Senior Member and Mr Ryan commencing "It probably doesn't matter" appears to indicate that, even if the hole had been created after the Builder had completed the work, the waterproofing had nevertheless been defective when completed. 3. The finding that the waterproofing was defective was a finding of fact. That finding was not made without evidence and in our view was not against the weight of evidence. It was not necessary in order to determine that the waterproofing was defective to identify precisely what was defective. It was sufficient that the waterproofing installed was not performing in that there was water penetration. 4. The Builder's second ground of appeal cannot succeed. Ground 2A – Failure to make a work order 1. The Senior Member determined that it was not appropriate to make a work order for a number of reasons set out at paragraphs [96]-[98] of his decision as follows: [96] The Tribunal considers that it would be inappropriate to give an order that the builder carry out the 'agreed' rectification works for a number of reasons. The primary concern is that, as identified by the experts, the scope agreed for the purpose of costing is somewhat speculative. Until the initial investigative demolition works are carried out, the work which is required to be performed is uncertain. It is probable that modifications to the scope of work will be necessary which raises the issue of who will have control of that process of design. The Tribunal considers that the homeowners should be able to decide, on the basis of advice from an engineer, precisely what work should be carried out to properly deal with the extensive, but uncertain, defective construction of work which is the cause of the water penetration. [97] Another reason for declining to make a work order is the evidence of the performance, or lack thereof, by the builder following the Rectification Order issued by the Department of Fair Trading. The evidence discloses that the builder failed to complete the rectification work and some of the work undertaken by the builder was itself defective requiring additional work. [98] The homeowners' claims for breaches of statutory warranties other than for major defects, have been dismissed for want of jurisdiction,… The homeowners will nevertheless need to have extensive rectification work undertaken including the rectification of the dismissed items. In the Scott Schedule the experts agreed the method and scope of work and assessed the reasonable cost of the rectification for all items as being $94,561.53. The Tribunal concludes that the homeowners ought to be able to have all the rectification work undertaken by a single contractor under a contract which allows them to have control over how the work is performed. 1. The Builder challenges only the third reason; that is, the reason set out in paragraph [98]. We consider that the Builder's challenge is founded upon a misapprehension of that reason. The Member did not take into account the Homeowners' failure to commence proceedings within the two year warranty period in respect of defects which were not major defects. The Member took into account that the Homeowners would need to employ contractors to rectify the defects for which the Builder had not been found liable and that it was desirable that all work should be carried out by one contractor. 2. The position of the Homeowners in this case is no different to that of a home owner whose builder has failed to complete work so that the home owner will need to retain a different contractor to complete the work. We consider that, in each of those situations, it is a relevant consideration, in applying s 48MA and determining whether to make a work order in relation to defects for which a builder has been found liable, that it is likely to be more efficient and convenient for the home owner to have one set of contractors complete all the work required to bring the building work to completion and to a satisfactory standard. 3. Mr Lonergan accepted that the Senior Member's decision not to order rectification by the Builder was a discretionary decision and as such susceptible to challenge on appeal only on the bases outlined in House v R (1936) 55 CLR 499 at 505-505: The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution, for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred. 1. In our view the Senior Member did not take into account an irrelevant consideration. Nor do we consider that the decision was against the weight of evidence or that the decision not to order rectification by the Builder was not fair and equitable. Each of the matters relied upon by the Senior Member was supported by evidence. Therefore Ground 2A must fail. Leave to Appeal Ground 3 1. We have effectively addressed Ground 3 in our consideration of Ground 2. Ground 3 asserts that the finding that there was a major defect was against the weight of evidence because the source of the water penetration was the hole in the wall which the Builder did not make. We have concluded that the finding that there was a major defect was available on the evidence and could not be said to be against the weight of evidence. 2. Accordingly, Ground 3 must fail. Ground 4 1. We have also effectively addressed Ground 4 in our consideration of Ground 2A. 2. Ground 4 must fail. Ground 5 – Practical Completion 1. Mr Lonergan conceded that if the Builder failed in respect of Ground 1, the issue whether the warranty period commenced on 24 April 2013 or 31 May 2013 was only of significance to the extent that any of the Homeowners' claims are subject to a three year limitation period. Once it is accepted that the claim for breach of statutory warranty in respect of water penetration is subject to a six year warranty period the question whether the date of practical completion was 31 May 2013 or 24 April 2013 is irrelevant to that part of the claim. 2. The issue may be relevant to the claim for liquidated damages to the extent that claim was upheld by the Senior Member. However we are not persuaded that the finding that the warranty period commenced on 31 May 2013 was against the weight of the evidence. 3. Pursuant to s 18E of the HBA "the warranty period starts on completion of the work to which it relates". 4. Section 3B of the HBA relevantly provides: 3B Date of completion of residential building work … (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. (3) 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. 1. The Builder asserted that he last attended the site on 24 April 2013 and achieved practical completion under the contract on that date. 2. The Senior Member concluded at [67] that the evidence did not establish that the Builder last attended the site on 24 April 2013. 3. The Senior Member referred to evidence from the Homeowners, being a text message with a photograph attached, sent on 24 April 2013, which "shows temporary fencing on the site and what appears to be an open excavation". The Senior Member concluded "although the photograph is not extremely clear it does not appear to illustrate the state of completion required under the contract". 4. The Senior Member concluded that he could not determine for the purposes of the contract when practical completion had occurred and that in those circumstances the date of practical completion must be determined pursuant to section 3B(3) of the HBA. 5. As the Senior Member was unable to determine the date on which the contractor last attended the site he concluded that the relevant date was the date on which the Builder handed over possession of the work to the Homeowners, which was the date of delivery of the keys. In our view that conclusion was available and it cannot be said to be against the weight of evidence. 6. It is not correct to say the Senior Member considered 24 April 2013 only in terms of whether practical completion had occurred under the contract rather than whether practical completion had occurred in accordance with the requirements of section 3B(3)(b). The Senior Member clearly considered that the Builder had not established that the Builder had last attended the site to carry out work on 24 April 2013. 7. Accordingly Ground 5 must fail. Conclusion 1. As all grounds of appeal and all grounds for leave to appeal have failed, the application for leave to appeal will be refused and the appeal will be dismissed. 2. Orders were made by consent on 17 April 2018 staying order 1 of the decision under appeal until further order of the Appeal Panel. As the appeal has been dismissed the stay should be lifted and we will do so with immediate effect. Costs 1. In their written submissions, the Homeowners submitted that the appeal should be "dismissed with costs" "in line with the decision below". The Homeowners made no further submission in support of their application for costs. The Builder did not address that part of the Homeowners' submissions either in their written submissions in reply or at the hearing. 2. Pursuant to s 60 of the NCAT Act each party to proceedings is to pay the party's own costs unless the Tribunal determines that there are special circumstances warranting an amount of costs. 3. However rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) provide as follows: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if: (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10 (2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000. 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of: (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal. 1. The amount in issue both at first instance and on appeal exceeded $30,000. Accordingly we do not need to find special circumstances before making an award of costs. 2. The Homeowners' submission that costs should be awarded in respect of the appeal "in line with the decision below" fails to acknowledge that the allocation of costs in relation to the appeal falls to be determined by reference to the result of the appeal and not by reference to the result at first instance. 3. Nevertheless, the appeal has been dismissed and the Homeowners have been successful. In those circumstances, the usual order would be that the unsuccessful appellant pay the successful respondents' costs of the appeal. We see no reason to depart from the usual order and will so order. orders 1. The orders we make are: 1. Leave to appeal refused. 2. Appeal dismissed. 3. The stay of order 1 of the decision under appeal is lifted with immediate effect. 4. The Appellant pay the Respondents' costs of the Appeal as agreed or assessed. ********** 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: 09 October 2018