Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Stefanis v Oneview Construction Pty Limited [2019] NSWCATAP 218 Hearing dates: 11 February 2019 Date of orders: 30 August 2019 Decision date: 30 August 2019 Jurisdiction: Appeal Panel Before: K Rosser, Principal Member J Wakefield, Senior Member Decision: (1) Leave to appeal is granted in respect of item 11 (windows) only. (2) Order 1 made by the Tribunal on 20 September 2018 is set aside. (3) In substitution for order 1, the following order is made: "The Builder must pay the Homeowners a total of $86,236.85 within 14 days of these orders". (4) Leave to appeal is otherwise refused and the appeal is dismissed. (5) Any application for costs is to be filed and served within 14 days of publication of these orders and is to be supported by submissions not exceeding five pages in length. (6) Any submissions in response to the costs application is to be filed and served 14 days thereafter. (7) Any submissions in reply are to be filed and served seven days thereafter. (8) If both parties apply for costs of the appeal, they are to file an indexed bundle of costs submissions at the end of the submission period. (9) Subject to the parties' submissions, any costs application(s) will be determined on the basis of the written submissions. Catchwords: APPEAL – Expert evidence - Section 18F defence – Leave to appeal Legislation Cited: Civil and Administrative Rules 2014 Civil and Administrative Tribunal Act 2013 Home Building Act 1989 Cases Cited: Bonita v Shen [2016] NSWCATAP 159 Collins v Urban [2014] NSWCATAP 17 Craftsmen Restoration and Renovations v Thomas Boland, Thomas Boland v The Craftsmen Restoration and Renovations [2008] NSWSC 660 Dixon v. Commonwealth (1981) 61 ALR 173 F Hoffman-La Roche and Co. A.G. v. Secretary of State for Trade and Industry (1975) AC 295 Hernady v Raccani [2016] NSWCATAP 67 House v The King [1936] HCA 40; (1936) 55 CLR 499 Moussa Enterprises Pty Ltd v Stanford [2015] NSWCATAP 99 Pastrovic & Co Pty Ltd v Farrington [2011] NSWDC 94 Pollard v RRR Corporation Pty Limited [2009] NSWCA 110 Porthaze Pty Limited v Friend [2016] NSWCATCD 31 Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Thompson v Chapman [2016] NSWCATAP 6 Texts Cited: Macquarie Dictionary Revised Edition (1981) Category: Principal judgment Parties: Steve Stefanis and Janet Stefanis (Appellants) Oneview Construction Pty Limited (Respondent) Representation: Counsel: Mr B Ilkovski - Respondent Solicitors: Birch Partners Lawyers (Appellant) GA Lawyers (Respondent) File Number(s): AP 18/45234 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 20 September 2018 Before: L Wilson, Senior Member File Number(s): HB 17/24524 and HB 17/09662 reasons for decision Introduction 1. This is an internal appeal under s 80(2) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) against a decision made in the Consumer and Commercial Division of the Tribunal on 20 September 2018 in proceedings HB 17/09662 and HB 17/24524. 2. HB 17/09662 was an application brought under the Home Building Act 1989 (the HB Act) by the appellants (the Owners) against the respondent (the Builder). HB 17/24524 was a cross application brought by the Builder. 3. In those matters, the Tribunal made the following orders: 1. The Builder must pay the Homeowners a total of $84,878.35 within 14 days of these orders. 2. Each party to pay their own costs. 1. For the reasons set out below, we have decided to allow leave to appeal in relation to one disputed item (item 11 – windows). We have otherwise refused leave to appeal and dismissed the appeal. Background 1. The parties entered into a residential building contract on 10 August 2015. Work commenced on the same date. 2. By May 2016, the parties had fallen into dispute. At that time, the Builder left the site and on 5 May 2016, wrote to the Owners proposing that they bring the contract to an end by entering into a deed. The proposed terms were not agreed. On 17 May 2016, the Owners' then solicitor gave a notice of breach to the Builder's solicitor and on 3 June 2016 terminated the contract. 3. In their application to the Tribunal, the Owners sought damages for defective and incomplete works in the sum of $395,000 work, plus costs. 4. The Builder's application sought the balance of the contract price, plus unpaid variations, in the sum of $45,817.40. 5. It was not in dispute before the Tribunal that any damages for incomplete works payable by the Builder would be reduced by the amount that would have been paid to the Builder had the contract been completed. By the time of the hearing, the Owners sought payment of the sum of $268,634.71, after an off-set had been applied. The Builder claimed that $53,017.40 was payable to the Owners, taking into account an off set in its favour of $49,097. 6. In relation to their claim for defective work, the Owners relied on expert evidence from Mr Bournelis and on the evidence of Mr Krekacs, who was the structural engineer engaged by the Owners for the design the building work. When he prepared a report, Mr Krekacs stated in the introduction to the report that the report was "not intended as a court document or as an aid in any court proceedings". The report also did not include an acknowledgement that Mr Krekacs was bound by the Expert Code of Conduct (that is, NCAT Procedural Direction No 3 for Expert Witnesses). 7. The Builder relied on the expert evidence from a building consultant, Mr Hall, and an engineer, Mr Zaioor. 8. A conclave of experts was held on 27 October 2017 and led to the First Conclave Report: see Appeal Bundle page 639. Mr Zaioor did not participate in the conclave. A second conclave of experts between Mr Zaioor and Mr Krekacs produced the Second Conclave Report: see Appeal Bundle page 713. 9. Mr Krekacs participated in the conclaves even though he was not an independent expert and had not prepared his report for the purpose of legal proceedings. He signed a notation on the first conclave report which stated that he may not be able to meet the requirements of an independent expert: Appeal Bundle page 650. The Tribunal relevantly found that where Mr Krekac's evidence conflicted with that of the other experts, the other experts were to be preferred, as they were independent and complied with the Code of Conduct for Expert Witnesses. 10. The Tribunal awarded the Owners $116,490 (including GST and margin), from which was off-set the sum of $31,612.31 awarded to the Builder in respect of its debt recovery and variations claim. This led to an order in favour of the Owners in the sum of $84,878.35. Scope and nature of internal appeals 1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) NCAT Act. 2. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons; 2. Whether the Tribunal identified the wrong issue or asked the wrong question; 3. Whether a wrong principle of law had been applied; 4. Whether there was a failure to afford procedural fairness; 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations; 6. Whether the Tribunal took into account an irrelevant consideration; 7. Whether there was no evidence to support a finding of fact; and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it. 1. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. 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 (Collins v Urban), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance. 1. Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). 2. In Collins v Urban, the Appeal Panel stated at [84] that 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. Submissions and evidence 1. In deciding the appeal, we have had regard to the material provided in the agreed Appeal Bundle (AB), including: * The Notice of Appeal lodged on 19 October 2018; * The Reply to Appeal lodged on 2 November 2018; * The Owners' written submissions lodged on 29 November 2018, 4 and 6 February 2019; * The Builder's submissions lodged on 21 January 2019; * The oral submissions made at the hearing; * The Tribunal's reasons for decision dated 20 September 2019; * The joint bundle of documents provided to the Tribunal below; * The submissions provided to the Tribunal below; and * The transcript of the hearing; 1. We have also had regard to: * The directions made at call over; * The oral submissions made during the appeal hearing; and * The Tribunal applications. Notice of Appeal 1. The Notice of Appeal was lodged on 19 October 2018, which is within the 28 day time period specified in cl 25(4) of the Civil and Administrative Tribunal Rules 2014 (the Rules). Grounds of Appeal 1. The grounds of appeal relied on are set out in the Owners' written submissions: 1. The Tribunal failed to afford procedural fairness by limiting evidence from the Owners' engineer Mr Krekacs. 2. The Tribunal erred in its application of s 18F of the HB Act. 3. The Tribunal failed to give adequate reasons for decision. 1. The Owners seek leave to appeal in relation to a number of the items claimed by the Owners, as well as asserting that the Tribunal's reasons for decision in respect of those items was inadequate. 2. The Owners also appeal the Tribunal's costs decision. Consideration Ground 1 – Treatment of Mr Krekacs' evidence - Denial of procedural fairness 1. The Owners submit that the Owners were denied procedural fairness and the Tribunal erred in preferring the evidence of other experts to that of Mr Krekacs. 2. In relation to this, the Owners submit that Mr Krekacs gave sworn evidence at the hearing that after preparing his report he had been told about and had reviewed the Experts Code of Conduct (that is, NCAT Procedural Direction 3 for Expert Witnesses), that the statements in his report were true and correct and that his evidence give at the conclave would be in accordance with the Expert Code of Conduct. The Owners submit that during cross-examination there was no challenge to Mr Krekacs' evidence that the evidence he was to give would be in accordance with the Expert Code of Conduct, either by the Builder's Counsel or by the Tribunal. 3. The Owners submit that the Tribunal did not provide any reasons as to what it was about Mr Krekacs' purported lack of independence that caused it to "reject his evidence in its entirety (or to the extent to which it was inconsistent with other evidence)" and that "lack of independence alone ought not to result in the evidence of an expert witness being disregarded". 4. The Owners state that they had obtained engineering reports from Mr Krekacs and from Mr Talevski. The Builder did not state that there would be an objection to Mr Krekacs' independence. Following a discussion with the Tribunal and the Builder's Counsel made a forensic decision not to tender Mr Talevski's report, based on the submissions made at the time. 5. We are not satisfied that the Owners were denied procedural fairness because of the manner in which the Tribunal dealt with Mr Krekacs' evidence. 6. First, where a party in proceedings before the Consumer and Commercial Division of the Tribunal in which the sum claimed or in dispute exceeds $30,000 relies on expert evidence, Procedural Direction 3 applies to that evidence. Procedural Direction 3 makes it clear that a failure to comply with the procedural direction does not affect the admissibility of an expert report in proceedings in which the rules of evidence apply, such as the applications that are the subject of these appeal proceedings. However, a failure to comply may, depending on the circumstances, adversely affect the weight to be attributed to the report: see Procedural Direction 3 at [7]. 7. In this case, the Tribunal did not reject Mr Krekacs' report. The Builder did not object to the tender of the report and there was otherwise no basis for the Tribunal to reject the report. However, the fact that Mr Krekacs' evidence was not rejected does not mean that the Tribunal was obliged to place the same weight on it as it did on other evidence. It remained open to the Tribunal to conclude that Mr Krekacs was not an independent expert and to place less weight on his evidence where it was in conflict with that of other expert witnesses than would have been the case had Mr Krekacs been regarded as independent. 8. Second, we consider that it was open to the Tribunal to place less weight on Mr Krekacs' evidence than on that of other expert witnesses in circumstances where Mr Krekacs had been retained by the Owners as the project engineer and therefore had had professional involvement and oversight of the works as they were occurring. Mr Krekacs was clearly not an independent witness in such circumstances. The Owners were on notice Mr Krekacs may not be accepted as an independent expert witness from the time he prepared a report that was expressly not prepared for the purpose of litigation and then signed the notation on the conclave report that referred to the fact that his evidence may not be accepted as independent. We note that when Mr Krekacs' report was tendered at the hearing below, the Owners' then Counsel proposed it go into evidence on the basis that it went to "matters of fact and not expert opinion evidence": see Transcript page 791, AB at pages 37-38. 9. Third, although in oral evidence Mr Krekacs' acknowledged that Procedural Direction 3 had been brought to his attention prior to the hearing and that his evidence during the hearing would comply with Code of Conduct, this does not mean that his report attained the status of an independent expert report or that his evidence would be accorded the same weight as that of other witnesses who had had no prior involvement with the building works. 10. Fourth, it is a fundamental principle of procedural fairness that a party liable to be directly affected by a decision is given the opportunity to be heard. This would ordinarily require that party to be given the opportunity of ascertaining the relevant issues and being informed of the nature and content of adverse material: Dixon v. Commonwealth (1981) 61 ALR 173 at 179. However, as Lord Diplock said in F Hoffman-La Roche and Co. A.G. v. Secretary of State for Trade and Industry (1975) AC 295 at 369: ...[T]he rules of natural justice do not require the decisionmaker to disclose what he is minded to decide so that the parties may have a further opportunity of criticising his mental processes before he reaches a final decision. If that were a rule of natural justice only the most talkative of judges would satisfy it and trial by jury would be abolished. 1. In this case the Owners knowingly engaged Mr Krekacs to prepare a report even though he was the project engineer. They knew that Mr Krekacs' independence was at issue, because: 1. Mr Krekacs' lack of independence was flagged in the conclave report; and 2. Mr Krekacs' report was tendered even though the Owners knew that it did not comply with Procedural Direction No 3. 1. Neither the fact that the Builder did not object to the tender nor Mr Krekacs' belated adoption of Procedural Direction 3 transformed his evidence into independent evidence. The Owners chose to rely on Mr Krekacs' evidence as expert evidence rather than as lay evidence and they also chose not to press the tender of Mr Talevski's report. The Tribunal was not required to make any further comment about Mr Krekacs' evidence or to tell the parties what weight it would be given prior to making a decision. 2. We are not satisfied that the lack of weight given to Mr Krekacs' evidence constitutes a denial of procedural fairness. It was open to the Tribunal to conclude that Mr Krekacs' evidence was not independent expert evidence. However, the Tribunal admitted Mr Krekacs' evidence. Whether the Tribunal gave adequate reasons for not accepting Mr Krekacs in relation to factual issues is considered below. Ground 2 – Section 18F of the HB Act 1. This ground of appeal concerns Scott Schedule items 2 (ix), (xx), (xi), (xii) and (xv), all of which concern brickwork. In relation to these items, the Tribunal relevantly found that: 56 Items 2 (ix), (x), (xi), (xii) and (xv) are concerned with brickwork, as described by the Homeowners' expert on page 152 JB. This is said to be a breach of s.18B(1)(a). It is unclear how these alleged defects were contrary to the plans and specifications in the Contract, which is what the warranty in s.18B(1)(a) concerns, other than the Homeowners' submissions at [60] including that the architectural drawings included notations about the brickwork. These notations were "proposed brick banding to match existing" and "proposed face brickwork to match existing brickwork". 57 These notations may have been in the architectural drawings, however once construction of the bricks commenced, the Builder discovered there was a discrepancy in the existing levels and the brick gauge did not match, the Builder's responsibility was to construct the works level and not match existing levels, which were out by 50mm on the existing house: paragraph [61] Mr Georgiou affidavit page 113 JB. I accept Mr Georgiou advised the Homeowners that matching the existing brickwork was not the correct method of construction and why: paragraphs [62] – [75] pages 114 to 115 JB. I accept the Homeowners nonetheless insisted that the bricks be built in the way that they were. This way was in fact consistent with the notations on the architectural drawings so it is unclear how building in this way was a breach of s.18B(1)(a). 58 Clause 42 of the Contract provided that the building works had to comply with the Building Code of Australia and other relevant standards that the building works are required to comply with under any law. Mr Bournelis wrote in 9.1.2(xii) on page 152 that these were defects because of non-compliance with Australian Standard AS3700. It is unclear if this standard was called up by the BCA or the building works were required to comply with this standard under any law. If so, it would appear to be an allegation of breach of s.18B(1)(c) not (1)(a). I have not been taken to any plans or specifications in which it is stated the damp proof course must comply with AS3700. 59 I have read and had regard to the report of Mr Hall from 9.2.5.1 to 9.2.5.12 on pages 287 to 288 JB. The standard AS3700 is on pages 357ff. I have read and had regard to this standard, but remain unclear if it forms part of the BCA or any other law. I take into account the concession made by Mr Bournelis in cross examination, that the better approach to measure plumbness was to assess a maximum deviation in accordance with item (d) in Table 12.1 of AS3700 page 357 JB. Mr Bournelis confirmed that he did not measure in accordance with item (d), as had Mr Hall. Mr Bournelis accepted that the approach he used (item (c) on page 357 JB) could give a distorted assessment if the maximum deviation of the total height was not assessed as required by Item (d). 60 Mr Bournelis accepted that the discrepancy in mortar joints were a matter of aesthetics and that the discrepancy of the RLs stated in the survey on page 102 JB could be accounted for by mortar joints being squeezed. Andrew Georgiou, director of the Builder, deposed that the Homeowners demanded that the existing brickwork needed to be matched: [62] page 113 JB. The Builder advised that this was not the correct method: see [63] page 113 JB. The Builder sought advice from the certifier and passed on this information to the Homeowners, and despite this, the Homeowners insisted the bricks match the existing: [66]-[69] page 114 JB. The Tribunal accepts the evidence of Mr Georgiou about why he built the bricks in the way they were built (because of the Homeowners clear instructions) and that he advised the Homeowners against this course. I accept that by following the Homeowners' instructions the brickwork took longer: pages 115 – 116 JB. This is despite the male Homeowner denying this occurred during cross examination: It is true it was of prime importance to you and your wife that the work Oneview was doing match up well with what was already constructed? Match existing yes Very important to you to have bricks that matched? Close as possible yes knew it wouldn't be 100% Very important to you close as possible the eaves or rafters match? No supposed to match existing By that you mean what was removed? Existing dwelling Similarly it was very important to you appearance of brick matched closest as possible to bricks existing? Where possible yes Mr Georgiou told you to do that would require bricks to be squeezed so brick beds aligned as close as possible? No That had the effect of complicating how bricks were laid at the property? I don't know Mr Georgiou told you that would cause a complication of how bricks were laid at the property? No 61 I do not accept the oral evidence of Mr Stefanis set out above. Mr Stefanis' oral evidence was at odds with his wife's evidence (about a different issue), appeared at times to be argumentative and defensive, and in some respects was unreasonable. For example, Mr Stefanis refused to pay the variation of the aluminium door for the laundry despite the following exchange during cross examination: Timber laundry door? Yes You agree with me that OV allowed for installation of timber laundry door? Yes That is deducted from this document bc they did not supply that door? Yes In fact supplied aluminium laundry door? Yes Did that bc you requested? They gave me that option You took that option? Yes You knew that it was more than the allowance for the timber door? Yes 62 This was Mr Stefanis' position during the two day hearing and up to 15 March 2018 when his counsel provided his closing submissions in writing. Finally, by the reply submissions [2] provided on 21 March 2018 the Homeowner conceded this variation, which, in the face of the evidence, was the only position he could have taken. His refusal to pay this variation, despite knowing that the option he chose was more than the allowance for the timber door is an example of his unreasonableness. I do take into account that he did, eventually, concede this variation but the timing of the concession speaks volumes. 63 Mr Georgiou's evidence about why the bricks were laid in the fashion they were (113 – 116 JB) was not challenged by the Homeowners and is readily accepted by the Tribunal, because, as submitted by the Builder, it is against the Builder's interests to do work that is more time consuming and complicated than laying bricks in a more consistent method: [87] HO subs. Also, the Builder's (uncontested) evidence about how it was that the bricks came to be laid in the fashion they were, is clearly set out, consistent and has the ring of truth to it: see Mr Georgiou's affidavit paragraphs [58]ff at pages 113 – 116 JB. 64 The Tribunal accepts the Builder's expert's evidence about this alleged defect, pages 287 and 288 of the JB, over the Homeowners' expert because of the concessions the latter made during oral evidence. 65 For all these reasons, the Tribunal does not accept that these sub-items breach s.18B(1)(a) as claimed by the Homeowners, nor do I think these sub-items are a breach of s.18B(1)(c), or any other statutory warranty. I accept that any brick deviation or inconsistency which may be evident now is a result of the Homeowners' express instructions, in spite of explanations to not take that course, to squeeze out the joints. In any event the only discrepancy outside of the tolerances in AS3700 (page 357ff JB) is at one brick only: Mr Hall's report at [9.2.5.1] – [9.2.5.3] page 287 JB which evidence I accept. 1. The Owners submit that the Tribunal erred in accepting Mr Georgiou's evidence presumably established a defence pursuant to s 18F of the HB Act; 2. Section 18F(1) of the HB Act provides: (1) In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from instructions given by the person for whom the work was done contrary to the advice in writing of the defendant or person who did the work. 1. The Owners submit that the Builder did not give advice in writing to the Owners and therefore does not have a defence under s 18F. The Owner cites a decision of a Senior Member of the Tribunal in Porthaze Pty Limited v Friend [2016] NSWCATCD 31 (Porthaze) in support of this proposition. In that matter, the Tribunal stated at [116]: 116 In the absence of written advice from the contractor to the Owners that their instructions would lead to an unsuitable outcome, it is no defence to the Owners' defect claim for the contractor to state that the cause of the defect was their instruction. 1. In relation to the s 18F issue, the Builder's submits that to the extent that Porthaze states that advice to the Owners must be given in writing, it is wrongly decided. 2. We do not accept the Builder's submission. Porthaze is not the only case which concludes that a defence to a claimed breach of statutory based on the work having been done in accordance with instructions to the Builder must be in accordance with s 18F. 3. In The Craftsmen Restoration and Renovations v Thomas Boland, Thomas Boland v The Craftsmen Restoration and Renovations [2008] NSWSC 660 (The Craftsmen), Howie J stated: 95 Although it is unnecessary for this Court to decide the issue, it seems to me that there is a legislative intention that the warranties and defences available are to be only those set out in the Act. The Builder argued that the defence in s 18F was only one defence available. But I find it impossible to accept that, if the defence provided to a statutory warranty does not apply because the Builder has not done what was required to engage the defence, the Builder can look to some other non-statutory defence that does not have such a precondition. 96 The Builder argued that he installed the windows at the express instruction of the architect and that it was obliged to comply with that instruction under the contract notwithstanding the Builder's view, orally expressed to the architect, that the windows were defective. It was submitted that "contractual compliance with an Architect's instructions in the face of reasonable objection by a Builder is within the contemplation of section 18F". I do not accept that submission. The Builder could, and should, have raised those concerns in writing with the architect. The defence would then have applied. It seems clear to me that the defence is limited in order to avoid the very contest that arose in this case: a dispute as to whether the Builder gave advice against the work it was required to carry out. By not giving advice in writing the statutory defence did not apply. There is no justification to read the defence wider than it is stated or to read some other defence into the Act. 97 In my opinion, if the windows were defective, the Builder was in breach of the statutory warranty in respect of them so far as the Owners were concerned. The Builder would have to look to Trend for any compensation for the breach of any warranty that it gave in selling the windows to the Builder. 1. Although the comments concerning s 18F in The Craftsmen were obiter dicta, they are nevertheless persuasive. Further support for the proposition can be found in Pastrovic & Co Pty Ltd v Farrington [2011] NSWDC 94 (Pastrovic), in which the Court stated: I agree with the submission that, as a party to the contract, the Builder only has the defence in section 18F. This provides that, in proceedings for breach of a statutory warranty, there is defence if the Builder proves that the deficiencies about which the owner complains arise from instructions given by the person for whom the work was done and contrary to the advice in writing of the Builder who did the work. 1. We agree with the Court's approach in The Craftsmen and the decision in Pastrovic. We conclude that that if an owner establishes that works were undertaken in breach of statutory warranty, the only defence available to the Builder is that contained in s 18F. In the context of this case, this means that for the Builder to defend a claim for breach of statutory warranty on the basis that the work was done in accordance with instructions, the Builder must demonstrate that the instructions were contrary to its advice in writing. 2. If the Tribunal's findings in relation to items 2 (ix), (xx), (xi), (xii) and (xv) were solely based on the Owners having instructed the Builder to install the bricks in a particular way, then in the absence of the Builder being able to establish a defence under s 18F, we would agree that the Tribunal would have been in error. However, the Tribunal's primary finding was that no breach had been established. As noted above, the Tribunal stated at [55] of the Reasons that the method of construction "was in fact consistent with the notations on the architectural drawings so it is unclear how building in this way was a breach of s.18B(1)(a)". The Tribunal further stated at [65] that it did not think these sub-items are a breach of s.18B(1)(c), or any other statutory warranty. Therefore, while there is merit in the Owners' submission concerning s 18F, it does not assist the Owner in circumstances where the Tribunal was not satisfied that a breach of statutory warranty was established. 3. Ground 2 accordingly fails. 4. The Owners also seek leave to appeal in relation to the Tribunal's findings concerning Items 2 (ix), (xx), (xi), (xii) and (xv), submitting that the Tribunal's findings were against the weight of evidence. We have dealt with the application for leave to appeal below. Ground 3 – Adequacy of reasons Owners' submissions 1. The Owners submit that the Tribunal's reasons for decision are inadequate. In particular, because the Tribunal did not explain what aspect of Mr Krekacs' evidence caused it to find that his purported lack of independence impacted on his findings and in relation to specified claimed defects: items item 4B (steel coating), item 4A (timber roof structure), item 12 (floor slab to ground and lower ground levels) and item 11 (windows). Builder's submissions 1. The Builder submits that the Tribunal's reasons are adequate in relation to those items raised by the Owners. Consideration 1. The requirement that reasons for decision be adequate has been extensively considered both judicially and by the Appeal Panel. 2. Reasons for decision are not required to be lengthy or elaborate. Furthermore, an express finding of fact is not required in respect of every fact leading to, or relevant to, a final conclusion of fact: Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247, per Mahoney JA at 271. 3. In Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 (Resource Pacific Pty Ltd), Basten JA stated with Beazley JA agreeing: When an appellate court is invited to find that a trial judge provided inadequate reasons, it is important to understand the nature of the function being invoked. It is not the function of an appellate court to set standards as to the optimal, or even desirable, level of detail required to be revealed in reasons for judgment. Rather it is to determine whether the reasons provided have reached a minimum acceptable level to constitute a proper exercise of judicial power. Transparency in decision-making is an important value, but it is not cost free, and may involve separate parameters of quantity and quality. [Emphasis added] 1. In Pollard v RRR Corporation Pty Limited [2009] NSWCA 110 McColl JA, with whom Ipp JA and Bryson AJA agreed, identified the principles relevant to the issue of adequacy of reasons. Those observations were summarised as follows in Moussa Enterprises Pty Ltd v Stanford [2015] NSWCATAP 99 at [30]: (1) The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes "a sense of grievance" and denies "both the fact and the appearance of justice having been done", thus working a miscarriage of justice. (2) The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. (3) While a judge is not obliged to spell out every detail of the process of reasoning to a finding, it is essential to expose the reasons for resolving a point critical to the contest between the parties. (4) The reasons must do justice to the issues posed by the parties' cases. Discharge of this obligation is necessary to enable the parties to identify the basis of the judge's decision and the extent to which their arguments had been understood and accepted. (5) Because a primary judge is bound to state his or her reasons for arriving at the decision reached, the reasons actually stated are to be understood as recording the steps that were in fact taken in arriving at that result. Where it is apparent from a judgment that no analysis was made of evidence competing with evidence apparently accepted and no explanation is given in the judgment for rejecting it, it is apparent that the process of fact finding miscarried. 1. In Hernady v Raccani [2016] NSWCATAP 67 at [44] the Appeal Panel further considered the authorities concerning the extent of the requirement to give reasons for decision noting that: (1) the content and detail of the reasons for decisions to be provided will vary according to the nature of the jurisdiction which the body in question is exercising and the particular matter the subject of the decision - Wainohu v New South Wales (2011) 243 CLR 181 at [56]; (2) the administration of justice in this regard requires a pragmatic and functional approach to the obligations imposed upon decision makers at first instance - Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [46]; (3) not only is the obligation not universal in nature, but it is variable in its content and whilst transparency in decision-making is an important value, it is not cost free, and may involve separate parameters of quantity and quality - Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33 at [48]. 1. We have considered whether the Tribunal's reasons for decision were inadequate in respect of the various Scott Schedule items referred to in the submissions. 2. In relation to item 4(b) Steel Coating, the Tribunal stated at [83] of its reasons for decision: 83 NCC 2016 Building Code of Australia – Volume Two, Table 3.4.4.4 is page 360 of the JB. It describes environments and the necessary protective coating for steelwork accordingly. Mr Krekacs agreed, and the Tribunal accepts, that the relevant environment for this contested defect was 'moderate' and that the beam is treated. As explained by the Builder's expert, on page 299 of the JB, the steel beam is compliant with the Building Code of Australia. Given the oral evidence of the Homeowners' engineer, the Builder's expert report and the photographs and BCA extract, I find that there is no breach of s.18B(1)(a) in regards to the timber roof structure. The submissions of the Homeowners in paragraphs [72] to [77] are not accepted by the Tribunal as they conflict with the oral evidence of the experts, are not supported by adequate documentary evidence, and in other respects are inaccurate. 1. The Owners' submissions on the appeal do not address the significance of Mr Krekacs' concessions referred to in [83]. It appears clear from [83] that concessions made by Mr Krekacs during oral evidence, the Builder's expert witness' evidence, photographs and the relevant extract from the Building Code of Australia formed the basis of the Tribunal's conclusion in relation to item 4(b) Steel Coating. We are not satisfied that the Tribunal's reasons for decision in relation to this item fail to reach the "minimum acceptable level" referred to in Resource Pacific Pty Ltd. 2. In relation to item 4(a) (timber roof structure), the issue for determination was whether the timber beams were properly installed and whether they were connected to the BB5 steel as per the engineering details. In [81] to [82] of the reasons for decision, the Tribunal stated: 81 I have read and had regard to the Homeowners' building expert's report at 155 – 156 of the JB and the Builder's building expert's report at 298 – 299 of the JB. Possibly because the Homeowners' counsel formed the view that liability was conceded about item 4 (a), which it was not, the Homeowners make little submissions about this sub-item. I take into account the Builder's submissions in paragraphs [57] to [59]. I also take into account the extensive questioning about item 4 during the concurrent experts' evidence. 82 From reviewing the questions and answers put to the experts during the concurrent evidence session, the Builder's submissions were accurate (at [59]) that Mr Krekacs, the Homeowners' structural engineer who was also their certifying engineer present throughout construction, agreed with each of the observations and findings of the Builder's expert set out in the Builder's submissions in subparagraphs (a) to (l) except (h) and (i). 1. It is sufficiently clear from above paragraphs that the Tribunal based its decision on the Builder's expert's report, the manner in which the Owners' representative ran their case about this particular item and Mr Krekacs' oral evidence. In our view, the basis for the Tribunal's decision was adequately articulated. The Tribunal was not required to specifically identify all of the oral evidence relied on, in circumstances where the critical finding concerning this item was that Mr Krekacs did not, during oral evidence, dispute the Builder's expert's findings concerning this aspect of item 4; that is, the connection of the beam to BB5 steel. We are not satisfied that the Tribunal's reasons in respect of this item can be characterised as inadequate. 2. In relation to item 12 (floor slab to ground and lower ground levels), the parties' experts agreed that the undulating surface of the concrete slab was defective. There was a dispute between the experts as to the existence or otherwise of a "hump" in the slab that needed to be ground down. The Tribunal relevantly stated at [94] to [96] of the reasons for decision: 94 Item 12 is an agreed defect about undulating surfaces. The experts, and parties, disagree about the extent of repairs: page 523 JB. The Homeowners' expert set out the defect on page 159 but as to the rectification method only stated, at paragraph [9.1.12(v)] that the ground floor slab will require topping due to a major hump in the centre of the slab and refers to page 29A on page 193 of the JB. In the joint Scott Schedule on page 523 the Homeowners' expert set out rectification method in more detail which included the installation of a concrete step which will be determined below under incomplete works. 95 In the Builder's expert report the rectification method proposed is set out in paragraph [9.12.1.2] on page 324 of the JB. This is to apply levelling compound to the floor surface only near the office and extend into the office area to comply with the tolerances. On the joint Scott Schedule the Builder's expert allowed "levelling compound 8 sq meters." The hump referred to in photo 29A at page 193 of the JB was not found by Mr Hall, but Mr Hall wrote that "if found, then allow for grinding down of the hump to the required heights": page 324 of the JB. 96 I am not satisfied on the balance of probabilities that the rectification method proposed by the Homeowners' expert is warranted. I am satisfied that the proposed rectification method of the Builder's expert will suffice, and I will omit from the scope of works reference to 8 square meters and rather order that levelling compound to the floor surface only near the office and extend into the office area to comply with the tolerances. The Tribunal must make a money order consistent with the rectification method proposed by the Builder's expert. This is $436. 1. It is implicit in the Tribunal's reasons for decision that the evidence of the Builder's expert was preferred to that of the Owners' expert in relation to the existence of the "hump". Having preferred the Builder's expert's evidence, the Tribunal then preferred the rectification method proposed by that expert. In practical terms, the Tribunal's finding means that the Owners had not discharged the burden placed upon them of establishing the existence and extent of the defect and the method of rectification required. 2. We consider that the Tribunal could have made clearer findings of fact in relation to this particular item. However, we are not satisfied that the Tribunal's reasons for decision are so inadequate that they fail to reach the "minimum acceptable level" referred to in Resource Pacific Pty Ltd. 3. In relation to item 11 (windows), the Tribunal stated at [107] to [108]: 107 Item 11 is a combination of defective and incomplete work. The Homeowners claim that the windows are not installed in an "un-tradesmen like manner" which is to say not with due care and skill: page 158 JB. I do not accept Mr Hall's expert evidence that the windows were adequately installed and are not defective: page 323 JB. This opinion was expressed on the basis of the Builder's evidence that the Works were varied, verbally, by the Homeowners changing the scope of Works. Apparently the Builder complied with the variation, but never claimed for the extra costs of the variation, even in these proceedings in the alternative if item 11 was found in the Homeowners' favour. I am satisfied on the balance of probabilities that the windows need to be removed and reinstated in accordance with the statutory warranties which is what is being sought by the Homeowners: page 525 February conclave report. The cost of this is $1,300. 108 The experts have agreed to install W7, W8, W9, W10, W13, W14 and external door including angels. I do not find that an allowance needs to be made to glaze the windows as this is not in the scope of Works. The Homeowners have not proved the staining on windows 1, 2, 3 and 4 was caused by the Builder. The Builder is not responsible for W8 which was damaged after the Builder left site. However the Tribunal notes, to the extent the parties have agreed to install W8 for the agreed sum of $2,132 the Tribunal will not interfere with this agreement. 1. The Tribunal's two essential findings against the Owners were that the Owners had not proved that mortar staining on windows 1, 2, 3 and 4 was caused by the Builder and that no allowance needed for glazing as glazing was not in the scope of works. We are not satisfied that the Tribunal's reasons for decision are inadequate in relation to either of those issues. Whether the Tribunal's findings were against the weight of evidence is considered below. 2. Overall, while we consider that the Tribunal's reasons were economical in relation to some of the claimed defects and could have been clearer in relation to item 12 (floor slab to ground and lower ground levels), we do not conclude that the reasons for decision fail to meet the required minimum standard. 3. Ground 3 is not established. Leave to appeal 1. The Owners seek leave to appeal on the basis that the Tribunal's findings in relation to a number of items are against the weight of evidence. These items are: * Item 2(iv) (crack in balcony at rear of building); * Item 2(ix), (x), (xii) and (xv) (brickwork); * Item 2(xix) (underpinning); * Item 4(b) (steel coating); * Item 12 (floor slab to ground and lower floor levels); * Item 9 (planter box); * Item 11 (windows); and * Builder's variation for brick change. 1. The Owners' appeal submissions set out the basis on which they claim that the Tribunal's findings are against the weight of evidence. Item 2(iv) (crack in balcony at rear of building) 1. This item concerned a crack on the balcony at the rear of the building. The parties agreed that a 1.25mm crack to the inside of the brick wall to the rear of the upper balcony extended for 2.2 metres. The Owners' position was the balcony was unstable and that brickwork wall had dislocated. The Builder's evidence was that it had not dislocated and that it could be repaired with mortar. 2. The Tribunal's reasons for decision in relation to this issue are set out at [45] to [61] of the Reasons for decision. In essence, the Tribunal preferred the Builder's expert's evidence to that of the Owners. The Tribunal noted (at [45]) that Owners' expert (Mr Bournelis) "did not set out in his report how he came to the conclusion [the wall] was unstable and had dislocated". The Tribunal also noted that Mr Bournelis had given oral evidence only in relation to the wall moving (at [49]). The Tribunal was also critical of Mr Krekacs' evidence, on the basis that evidence he gave orally about his concerns in relation to the wall was not contained in his report: [50] of the Reasons for decision. 3. We are of the view that it was open to the Tribunal to reject Mr Bournelis' and Mr Krekacs' evidence and to not be satisfied that the wall had dislocated. That finding was consistent with the evidence of both the Builder's building expert (Mr Hall) and its engineering expert (Mr Zaioor). Once the Tribunal rejected the claim that the wall had dislocated, it followed that the Tribunal would not accept the Owners' experts' proposed method of rectification. It was open to the Tribunal to accept the method of rectification proposed by the Builder's expert. 4. We are of the view that the findings made by the Tribunal were adequately explained and were available to the Tribunal on the available evidence. We are not satisfied that the Tribunal's findings in relation to this item were against the weight of evidence. Item 2(ix), (x), (xii) and (xv) (brickwork) 1. The Tribunal's findings in relation to this item are set out above. 2. As noted above, part of the Builder's defence in respect of this item was a claim that the brickwork had been done in a particular way because of instructions from the Owners. We have already found that such a defence must be established in accordance with s 18F of the HB Act. As the Builder did not comply with the written notice requirement of s 18F, it could not rely on the Owners' instructions in defence of a claim of breach of statutory warranty. Given that the Tribunal did not find a breach, the Owners' ground of appeal in respect of s 18F does not affect the outcome. 3. However, once that issue is taken out of the equation, we are of the view that it was not against the weight of evidence for the Tribunal to find that the Owners' expert Mr Bournelis considered the defect to be aesthetic. We do not accept the submission made on behalf of the Owners (in the Owners' appeal submission at [72]) that the Owners' expert only made this concession after he was requested in cross-examination to assume an instruction given by the Owner. This is contrary to the Transcript, which indicates that during examination in chief, Mr Bournelis stated that he considered misaligned perpends to be "an aesthetic detail … an aesthetic defect": Transcript, Day 2, AB page 956 line 32. 4. In any event, the Tribunal accepted the Builder's expert's (Mr Hall's) evidence that the only discrepancy outside of the tolerances in AS3700 was at one brick only. In our view, it was open to the Tribunal to accept Mr Hall's evidence in that regard. It was also open to the Tribunal on the evidence to accept Mr Hall's evidence in relation to measurement of plumbness. 5. We are not satisfied that the Tribunal's overall findings were against the weight of evidence. At most, if the issue of the Owners' instructions to Builder is taken out of the equation, the Reasons for decision made it clear that the Tribunal would have accepted Mr Hall's method and cost of rectification, which was to remove and re-fit one brick. A perusal of both Mr Hall's report (from AB page 439) and the First Conclave Report (from AB page 639) does not reveal any costing for such work. Given the limited scope of work, we conclude that the cost would be minimal. To the extent that the Tribunal's finding of no defect was against the weight of evidence, we have taken into account the minimal cost of rectification when considering whether to grant leave to appeal. Item 2(xix) (underpinning) 1. In relation to this item, the Tribunal found that: 76. Sub item 2 (xix) which is expressed as the omission of underpinning to existing walls. The defect is disputed but if found, quantum is agreed at $3,685. The breach is said to be of s.18B(a), which I take to mean (as with all items) s.18B(1)(a) of the HB Act. 77. The Homeowners made no submissions about this defect other than the underpinning was required and has been omitted: [69] of HO subs. The Homeowners' building expert referred only to the engineer's (flawed) report in paragraph (xix) on page 153 of the JB [Joint Bundle]. 78. The Builder included this sub-item in its submissions and evidence about sub-items (xvi)-(xviii), set out above. The same deficiencies apply to this sub-item as to sub-items (xvi)-(xviii). There being no reliable evidence upon which the Tribunal could be satisfied on the balance of probabilities that the underpinning did not occur as per the Engineering details the Tribunal cannot accept that this sub-item is a defect. 1. The Owners' submissions to the Tribunal in relation to this Item 2(xix) were very brief: See [69] AB page 734. The submissions appear to suggest that this sub-item was identical to item 6. However, defect and rectification were agreed in relation to item 6: First Joint Conclave Report at AB page 644. This was not the case in respect of item 2(xix): First Conclave Report at AB page 642. The experts' conclusions at that conclave were that engineering evidence was required. 2. It is unclear that any agreement was reached at the second conclave: Second Conclave Report at AB page 716. However, it is clear from the Builder's submissions at first instance that there was no agreement as to liability: Builder's Submissions at AB page 780. The Builder submitted that the Tribunal should carefully consider Mr Krekacs' evidence on this issue because: 90….Much of the conclusions of the Owners' experts is based upon speculation about the method of works employed at the time of construction. Mr Krevacs [sic] position is conflicted in that he was the Structural Engineer and if there was a problem at the time of construction it should have been picked up by him as the certifying engineer and the person present at the critical stages. He is shifting blame to the Builder. His role during construction compromises the independence of his expert evidence. 1. We are satisfied that it was open to the Tribunal to conclude that Mr Krekacs' evidence was not independent. We are not satisfied that the Tribunal's finding in relation to item 2 (xix) was against the weight of evidence. We note that the Tribunal awarded the Owners the agreed sum of $3650 in respect of item 6, which also referred to underpinning. Item 4(b) (steel coating); 1. In relation to this item, the Owners essentially submit that that Mr Krecacs' evidence should have been accepted and that the finding in relation to the item was against the weight of evidence because his evidence was not accepted. 2. We considered this item in respect of the adequacy of reasons ground. As noted above, it appears clear from [83] of the Tribunal's reasons for decision the Tribunal based its decision on concessions made by Mr Krekacs during oral evidence, the Builder's expert witness' evidence, photographs and the relevant extract from the Building Code of Australia. We are not satisfied that the Owners have established that the Tribunal's findings were against the weight of evidence. Item 12 (floor slab to ground and lower floor levels) 1. We have considered this item above in respect of the adequacy of reasons ground. The Tribunal was faced with competing expert evidence in respect of the extent of the claimed defect. When faced with this situation, the Tribunal was entitled to consider whether the Owners had discharged their burden of establishing the extent of the defect and the rectification work required. The Tribunal found that they had not done so. We are not satisfied that in this case such a conclusion was against the weight of evidence. Item 9 (planter box); 1. The dispute between the parties in respect of this item was whether the planter box was within the Builder's scope of work. The Tribunal evidently accepted the Builder's analysis of this issue, finding that: 102. Item 9 concerned a planter box. I accept that landscaping was excluded by Schedule 4 of the Contract. I accept an allowance has not been made for a planter box in Schedule 3 of the Contract. I do not accept that a planter box is drawn in the structural plans page 37 as submitted by the Homeowners at paragraph [90]. Reference is made by the Homeowners' building expert to a drawing which appears to be that which is on page 33 of the JB. The Tribunal accepts that a planter box is referred to on page 33 of the JB. However the Tribunal does not accept this aspect of the build was to be completed by the Builder, that is, I do not accept it was within the Builder's scope of works. 103. It is arguable a planter box is landscaping, which is excluded works. The Tribunal accepts the Builder's submissions, that, given the questionability of this item being included in the Works, it should have been specifically allowed for in Schedule 3. I also take into account the fact that the quotation upon which the Contract is based is set out at pages 40 to 43 JB. The notation on page 42 makes it clear that the quotation is for lock up stage only. Even though the quotation is not incorporated as a contractual document, each of the matters set out on page 42 of the JB are also set out in Schedule 4. The Tribunal accepts that this implies that the Contract was to lock up stage as well. Both of the items the subject of this claim for incomplete works are external works and outside of lock up stage. I find they were not part of the Builder's scope of works. These are an acceptance of the Builder's submissions in [17]. 1. In relation to this item, the Owners' submissions to the Tribunal were brief: Owners submissions to the Tribunal at AB page 736. The Owners relevantly submitted to the Tribunal: If it is landscaping, it may have been excluded in schedule 4, but it is not landscaping. The plant in the planter box is landscaping. The planter box itself is shown on the structural plans…. 1. We conclude that it was open to the Tribunal to accept the Builder's submissions as to whether the item was within scope, particularly given the brevity and superficiality of the Owners' submissions in relation to this particular issue. We are not satisfied that the Tribunal's conclusion that the planter box was not within the Builder's scope of work was against the weight of evidence. Item 11 (windows) 1. In relation to this item, the Tribunal's relevant findings were that: 1. No allowance needed to be made to glaze the windows as this was not within the Builder's scope of works: Reasons for decision at [108]; and 2. The Owners have not proved the mortar staining on windows 1, 2, 3 and 4 was caused by the Builder. 1. In relation to the glazing issue, the Owners submit that the Tribunal's finding was against the weight of evidence because: 1. The scope of works provided "Supply and install residential powder coat aluminium windows in accordance with architectural detail"; 2. The use of the word "windows" reasonably infers glazing; 3. Architectural drawing CC 05 (AB page 229) details to W4 on the proposed west elevation provides "Proposed aluminium framed glazing to be selected" and the windows schedule at the bottom of that page details the glass to be used in each of the windows and doors. 1. The Builder makes no direct submissions in relation to this issue. 2. We conclude that the Tribunal's finding that glazing was not in the Builder's scope of work is against the weight of evidence. First, we agree with the Owners' submission that the ordinary meaning of the word "window" implies glass. In this regard, The Macquarie Dictionary Revised Edition (1981) relevantly defines "window" as 1. an opening in the wall or roof of a building … commonly fitted with a frame in which are set movable sashes containing panes of glass.... 2. such an opening with the frame, sashes and panes of glass… 3. the frame, sashes, and panes of glass or the like, intended to fit such an opening. 1. Second, the architectural plans clearly show that the windows were to be glazed: AB page 229 2. In relation to the second issue, the Owners submit that: 1. The Owners' expert evidence stated that Windows 1, 2, 3 and 4 show severe mortar stains; 2. The Builder did not lead any evidence that the Owners caused the staining to the windows; and 3. The reasonable inference to be drawn from the existence of the stains is that the stains occurred during the building process. 1. The Owners did not lead any direct evidence that the Builder caused the staining or any evidence to exclude the possibility that another person did not do so. The Tribunal's finding at [108] of the Reasons for decision that Owners had "not proved the staining on windows 1, 2, 3 and 4 was caused by the Builder" was neither unavailable to be made nor against the weight of the evidence. Builder's variation for brick change. 1. The issue concerning this aspect of the Builder's claim was clearly hotly contested. The Builder claimed payment for a variation for internal garage face bricks in the sum of $7,700. This sum was claimed in contract, on the basis that there was a signed variation. The Tribunal's reasons for finding that the Builder was entitled to this payment are set out at [124] to [139] of the Reasons for decision. Relevantly, the Tribunal finds at [139]: It cannot be that the parties agreed to pay nothing for this contested variation, as even the Homeowners accept they owe the reduced amount of $3,600 for this variation, which they had agreed in writing would cost $7,700 extra. The Builder accepts that it tried to negotiate this variation with the Homeowners but it is clear that a consensus, or agreement, was not reached. I accept that by this stage in the performance of the Contract (September or October 2015), tensions were rising between the parties and both parties gave evidence that there were negotiations and disputes about work and payments. In these negotiations the Builder clearly nominated $6,000, then $3,600 for this variation, for which it was contractually entitled to claim $7,700. Clearly the reduced amounts were not accepted by the Homeowners; they did not pay either $3,600 nor $6,000. Unless there was agreement between the parties to further vary the Contract, the Contract is not further varied. The variation which was agreed was $7,700. The Builder is entitled to that sum. 1. The Tribunal's finding that the Owners had paid neither $3600 nor $6000 in respect of the variation is consistent with [77] of the affidavit of Mr Stefanis dated 19 June 2017: JB at p 213. While it is not completely clear, it appears from the Owners' submission on appeal that their position now is that they paid the Builder $3600 in respect of the variation. 2. In our view, the Tribunal's finding that no sum had been paid is not against the weight of evidence, particularly given Mr Stefanis' affidavit. We are also not satisfied that the Tribunal's finding that the Builder was entitled to payment of $7,700 was against the weight of evidence, given that it is not in dispute that the Owners signed a variation in this sum. Leave to appeal 1. Overall, we are not satisfied that the Tribunal's findings were against the weight of evidence, except in relation to window glazing and in relation to the brickwork. However, before any grant of leave to appeal is made we need to be satisfied that this a proper case in which to do so, taking into account the principles set out in Collins v Urban above. 2. In relation to the brickwork claim, we are not satisfied that the Owners may have suffered a substantial miscarriage of justice in circumstances where it is clear that if the Tribunal had found the brickwork defective, it would have found that minimal rectification work was required: that is, the replacement of one brick. We are not satisfied that the Owners should be given to leave in relation to this issue. 3. In relation to whether the Owners may have suffered a substantial miscarriage of justice in respect of the Tribunal's decision concerning the window claim, we accept that, but for the Tribunal making a finding against the weight of evidence in relation to one aspect of the claim concerning the window claim, there is a fairly open chance that a different and more favourable result would have been achieved in respect of that item. 4. In relation to the exercise of the discretion, we accept that the finding that window glazing was not within the Builder's scope of work was a plain and readily apparent error, which was central to the Tribunal's decision in respect of that item. We conclude that leave to appeal should be granted in respect of that part of item 11 that concerns window glazing. 5. This is not a matter that warrants being remitted to the Tribunal. There is sufficient evidence in the Appeal Bundle to allow us to make a finding about the sum to be allowed to the Owners for window glazing. 6. The Owners' expert Mr Bournelis opined that the appropriate allowance for window glazing was $950. This is set out in the First Conclave Report: AB at page 646. The Builders' expert did not provide an opinion on quantum in relation to this item. Mr Bournelis' opinion should therefore be accepted. To this sum should be added the agreed 30% margin ($285), with GST to be added to the resulting sub-total of $1,235. The total allowance for window glazing is $1,358.50, which must be added to the sum the Tribunal awarded to the Owners. 7. The Tribunal's award in favour of the Owners is therefore varied from $84,878.35 to $86,236.85. Costs 1. The Tribunal made the following relevant findings in respect of costs of the proceedings: 176. It can be seen that both parties have been partly successful in their contested claims against the other, and substantially unsuccessful. 177. Both parties claim costs from the other and in dispute in both proceedings was more than $30,000. Therefore the Tribunal does not have to be satisfied that there were special circumstances to award costs to either party: Civil and Administrative Tribunal Rules 2014 r.38(2)(b). 178. Given the outcome of these proceedings, and in keeping with the guiding principle of the Tribunal, I order each party to pay their own costs…. 1. The Owners claim that the Tribunal erred in ordering the parties to pay their own costs, submitting that: 1. The Tribunal should have considered each of the proceedings individually. 2. The Owners were successful in establishing that the Builder should pay them $116,490.66. 3. The general rule is that a successful party has a reasonable expectation of being awarded costs against an unsuccessful party. 4. The Tribunal erred by not referring to the general rule or providing reasons for not following the general rule. 1. It is not in dispute the r 38 of the Rules applied to the Tribunal proceedings. Rule 38 gives the Tribunal a general discretion to award costs even in the absence of special circumstances: Bonita v Shen [2016] NSWCATAP 159 at [38]. 2. As explained in Bonita and in other decisions such as Thompson v Chapman [2016] NSWCATAP 6, the following principles are relevant to the exercise of the costs discretion: 1. the starting point is that the usual order for costs should be made in that only a successful party should be entitled to an order for costs in their favour; 2. the award is to indemnify the successful party for the costs incurred in connection with the proceedings; 3. there is no absolute rule that a successful party should recover their costs, and a departure from the usual order is permissible, for example having regard to offers of compromise which had been made. 1. To successfully appeal against the Tribunal's costs order, the Owners must demonstrate that the discretion to award costs miscarried because of some relevant error. 2. The principles to be applied when determining whether the exercise of discretion has miscarried were set out by the High Court in House v The King [1936] HCA 40; (1936) 55 CLR 499. To overturn a decision made in the exercise of a discretion, it must be demonstrated is that the decision maker: 1. Made an error of legal principle; 2. Made a material error of fact; 3. Took into account some irrelevant matter; 4. Failed to take into account or gave insufficient weight to some relevant matter, or 5. Arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning. 1. In this case, the Tribunal found that while both parties had a degree of success in their applications, they were both substantially unsuccessful. In our view, the Tribunal did not err in making that finding. Relevantly, prior to the hearing the Owners claimed approximately $400,000 without any set-off being taken into account. The value of the claim by the end of the hearing was approximately $290,000, again without any set off being taken into account. The Tribunal awarded the Owner $116,490. While this represents a degree of success against the Builder, it also represents a considerable lack of success in a matter where relatively few concessions were made that were not necessitated by the state of the expert evidence. 2. We are not satisfied that the Tribunal's consideration of the relative success and failure of the parties in two sets of proceedings heard together to which r 38 applies constitutes a miscarriage of the costs discretion. 3. The appeal in respect of the costs order fails. Costs of the appeal 1. We did not hear from the parties in relation to costs of the appeal. As the amount in dispute in the appeal proceeds exceeds $30,000, r 38 applies to costs of the appeal because of the operation of r 38A. This means that costs do not need to be demonstrated for us to make an order for costs. 2. We have made directions in the event that either party seeks an order for costs. Orders 1. Leave to appeal is granted in respect of item 11 (windows) only. 2. Order 1 made by the Tribunal on 20 September 2018 is set aside. 3. In substitution for order 1, the following order is made: "The Builder must pay the Homeowners a total of $86,236.85 within 14 days of these orders". 4. Leave to appeal is otherwise refused and the appeal is dismissed. 5. Any application for costs is to be filed and served within 14 days of publication of these orders and is to be supported by submissions not exceeding five pages in length. 6. Any submissions in response to the costs application is to be filed and served 14 days thereafter. 7. Any submissions in reply are to be filed and served seven days thereafter. 8. If both parties apply for costs of the appeal, they are to file and indexed bundle of costs submissions at the end of the submission period. 9. Subject to the parties' submissions, any costs application(s) will be determined on the basis of the written submissions. ********** 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 August 2019