Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Miller v Kadir [2020] NSWCATAP 57 Hearing dates: 16 March 2020 Date of orders: 02 April 2020 Decision date: 02 April 2020 Jurisdiction: Appeal Panel Before: P. Durack SC, Senior Member G.Sarginson, Senior Member Decision: (1) The appeal is upheld. (2) Order 2 made by the Tribunal on 13 December 2019 in Matter HB 19/29787 that the cross-claim proceedings be dismissed is set aside. (3) The cross claim in Matter HB 19/29787 is remitted for re-determination by the Tribunal. (4) The Tribunal is directed to list the cross claim for directions at a date to be allocated by the Tribunal Registry but not earlier than 3 weeks from 16 March 2020. (5) NOTED: Whilst the parties have not arrived at a concluded agreement to settle the matter, the Appeal Panel notes the parties expressed the following with regard to the potential resolution of the dispute: (a) The appellant ('the homeowner') and the respondent ('the builder') agree the pool does not currently meet Australian Standards concerning the level of the pool, as set out in the report of the building inspector of NSW Fair Trading dated 19 December 2019. (b) The builder has expressed his intention to perform work to rectify the pool so that it meets the relevant Australian Standards with regard to the level of the pool. (c) The builder will conduct an inspection of the pool within 2 weeks. (d) The homeowner will provide reasonable access so that an inspection will occur. (e) The parties will have further discussions regarding an appropriate scope of works to rectify the defect in the pool so that it meets Australian Standards as set out in the report of the building inspector of NSW Fair Trading. (f) Additionally, the builder intends to carry out the work referred to in Section C of the Notice of Appeal; namely clean and seal tiles; and complete path from home to pool gate. Catchwords: APPEALS – home building - building defect in swimming pool – errors in dismissing claim Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Home Building Act 1989 (NSW) Cases Cited: Catapult Constructions Pty Ltd v Denison [2018] NSWCATAP 158 Category: Principal judgment Parties: Martin Miller (1st Appellant) Tracy Miller (2nd Appellant) Danny Kadir (Respondent) Representation: Appellant (Self Represented) Respondent (Self Represented) File Number(s): AP 19/56877 Publication restriction: Nil Decision under appeal Court or tribunal: NSW Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not Applicable Date of Decision: 13 December 2019 Before: M McCue, General Member File Number(s): HB 19/05716 & HB 19/29787 REASONS FOR DECISION Overview 1. After hearing from the parties on 16 March 2020 we made orders allowing this appeal, setting aside the order dismissing a cross-claim and remitting the cross-claim to the Tribunal for re-determination. These are our reasons for doing so. 2. In 2019, Mr and Mrs Miller (the homeowners), had a pool built at their house in Claremont Meadows by Mr Kadir (the builder). Unfortunately, the pool as built was far from level. The homeowners refused to pay the builder the final instalment for the pool. This amount has now been paid by the homeowners after an order to pay it was made by the Tribunal in proceedings brought by Mr Kadir to recover the amount (HB 19/05716). 3. At the same time as ordering the homeowners to pay the final instalment the Tribunal dismissed the homeowners cross-claim in respect of the defect with the pool. That occurred in the circumstances outlined below. The homeowners now appeal against that dismissal. 4. These reasons are shorter than they might otherwise have been because at the hearing of the appeal, Mr Kadir (who appeared by telephone) accepted that the pool had not been constructed in accordance with Australian Standards because of the level issue and he said he wished to correct the defect. 5. In view of this, we gave the parties an opportunity to see if they could agree on a scope of works which could become the subject of an agreed work order which we could make by consent. However, they were not able to agree on the method of rectification, at this time, although they intend to pursue discussions after an inspection by the builder. 6. The notations to the orders we made disposing of the appeal reflect these developments. Background 1. After the pool was constructed, the homeowners obtained a Rectification Order from NSW Fair Trading dated 19 December 2018 (RO) issued by the building inspector, Mr Scalise. This required the builder to complete the work set out in the Schedule to the order by 8 February 2019. 2. The RO contained an expert opinion from Mr Scalise as follows: Defective Work 1. Fibreglass pool shell – carry out remedial work to cause the final level of the pool to be level to within the tolerances set out by AS/NZS 1839:1994 including but not limited to compliance with Section 7.5 of the standard: currently, the North-Eastern and South- Eastern corners of the pool shell (on the side of the steps) are outside of the tolerances set out by the standard and pose an undue aesthetic concern. 1. As provided for in the legislation, the RO ceased to have effect because Mr Kadir commenced his claim to recover the final instalment before 8 February 2019 (the date by which the work was to be completed under the work order). During the proceedings, the claim by Mr Kadir was amended to include a claim under the principles of quantum meruit. 2. Subsequently, on 27 June 2019, the homeowners lodged a cross- claim seeking an order for remediation of the pool. (They also sought compensation for loss of earnings but at the hearing before us Mr Miller stated that such a claim was no longer pursued). Hearing in the Tribunal and its reasons 1. At the hearing at first instance the homeowners relied upon the content of the RO, including the views expressed in it by Mr Scalise. The homeowners did not present any expert evidence as to the means of rectification and the costs to rectify, although the Tribunal had directed them to provide any expert report in support of their claim before the hearing. No expert evidence was presented by the builder, including no expert response to Mr Scalise. 2. The absence of any expert evidence about rectification was raised by the Tribunal with the homeowners and in response Mr Miller referred to his attempts to obtain such evidence and indicated that he could obtain such evidence for a later hearing. The builder objected to any further delay involving, as it must, an adjournment of the hearing. The Tribunal indicated that it was not inclined to allow any adjournment at which point the homeowners left the hearing and did not return. 3. The Tribunal then "[A]ccordingly" dismissed the cross-claim and proceeded to hear and determine the builder's claim. 4. The reasons indicate that the Tribunal followed this course for a number of reasons as follows: 1. The only expert material the homeowners had presented was "commentary" from the "Fair Trading Officer" in an email sent on 31 January 2019 to the effect that: It is my opinion that although the fibreglass pool is fit for its intended purpose and does not leak water, the fibreglass pool shell as installed poses an aesthetic concern due to it being 23mm out of level between the South-Eastern corner North-Eastern corner which exceeds the tolerances set out within AS/NZS 1839:1994 Section 7.5. 1. The opinion from Fair Trading about level tolerances was "limited to the aesthetics only". 2. There was an absence of any expert evidence from the homeowners about how to rectify, and as to the cost of doing, even though directions had been made to allow for that evidence. 3. Whilst the homeowners had written to the Tribunal before the hearing expressing concern that the builder had not provided any report in response to the comments from Fair Trading, the builder was under no obligation to do so unless the homeowners served a report quantifying the nature of any rectification and any loss flowing from any alleged breach of warranty. Disposition of the appeal 1. In taking the course that it did, it seems to us that the Tribunal erred in a number of respects. 2. First and foremost (and this encompassed more than one error), it failed to appreciate that the material presented by the homeowners established that the work had been done contrary to Australian Standards and, as a consequence, in breach of the warranty in s 18B (c) of the Home Building Act 1989 (the HBA ) – a warranty that the work will be done in accordance with any law. 3. It was an error by the Tribunal not to have identified and applied this warranty. 4. In the absence of any competing expert evidence presented by the builder, such breach was incontrovertibly established by both the comments in the email that the Tribunal did refer to and also by the expert opinion of Mr Scalise contained within the RO, which was overlooked by the Tribunal, including that the pool was defective and as set out in the passage we referred to in paragraph 8 above. We note here that the Tribunal may have regard to such a report as that from Mr Scalise, although it is not bound to do so: s48N(1) of the HBA. 5. In this regard, the Tribunal also erred in treating Mr Scalise's opinion about tolerances as an opinion about aesthetics only. 6. Secondly, the Tribunal erred by then not proceeding to consider its options about a remedy given that there was clear and inconvertible evidence of breach of the statutory warranty under s 18B (c) of the HBA. In that context, the merits of an adjournment to obtain evidence about rectification appeared almost compelling, particularly if the Tribunal proceeded, in any event, to hear and determine the builder's claim in debt and also bearing in mind the homeowners lack of expertise about what more it needed to do over and above the clear expert opinion that it had from Mr Scalise. 7. Another, far less attractive option (because of uncertainty as to what precisely needed to be done) was for the Tribunal to make a work order in general terms consistent with Mr Scalise's opinion to "carry out remedial work to cause the final level of the pool to be level to within the tolerances set out …." (as set out above). Orders to perform rectification work that do not contain a clear scope of works are problematic because they may create confusion and further disputes about whether or not the rectification order has been complied with: Catapult Constructions Pty Ltd v Denison [2018] NSWCATAP 158 at [58]-[59]. 8. Finally, an option for the Tribunal to consider was whether to find that the homeowners had proved breach of the statutory warranty under s 18B (c) of the HBA by the builder, but had provided no or insufficient evidence for the Tribunal to make a work order in favour of the homeowners under s 48O of the HBA or to order the payment of damages. 9. The error we are now addressing, however, was in failing to address these considerations in the exercise of its discretion as to how to proceed. 10. These involved both errors of law and fact. Principally, there were errors of law in not asking the right questions whether there had been a breach of the warranty in s 18B (c) and failing to consider the significance of such a breach (plainly, a relevant consideration) in deciding the course it would take in disposing of the matter. 11. The homeowners had a right of appeal on any question of law: s80 (2) (b) of the Civil and Administrative Tribunal Act. Orders and notations 1. For these reasons we made the orders and notations as follows: 1. The appeal is upheld. 2. Order 2 made by the Tribunal on 13 December 2019 in Matter HB 19/29787 that the cross-claim proceedings be dismissed is set aside. 3. The cross claim in Matter HB 19/29787 is remitted for re-determination by the Tribunal. 4. The Tribunal is directed to list the cross claim for directions at a date to be allocated by the Tribunal Registry but not earlier than 3 weeks from 16 March 2020. 5. NOTED: Whilst the parties have not arrived at a concluded agreement to settle the matter, the Appeal Panel notes the parties expressed the following with regard to the potential resolution of the dispute: 1. The appellant ('the homeowner') and the respondent ('the builder') agree the pool does not currently meet Australian Standards concerning the level of the pool, as set out in the report of the building inspector of NSW Fair Trading dated 19 December 2019. 2. The builder has expressed his intention to perform work to rectify the pool so that it meets the relevant Australian Standards with regard to the level of the pool. 3. The builder will conduct an inspection of the pool within 2 weeks. 4. The homeowner will provide reasonable access so that an inspection will occur. 5. The parties will have further discussions regarding an appropriate scope of works to rectify the defect in the pool so that it meets Australian Standards as set out in the report of the building inspector of NSW Fair Trading. 6. Additionally, the builder intends to carry out the work referred to in Section C of the Notice of Appeal; namely clean and seal tiles; and complete path from home to pool gate. ********** I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar Amendments 02 April 2020 - Typographical error 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: 02 April 2020