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Residential Focus

13 July 2022

#Property, Planning & Development, #Construction, Infrastructure & Projects

Published by:

Nicholas Achurch, Lauren Boswell

Residential Focus

NCAT has ability to determine its own procedures, within limits

The decision in Moody v M K Building Service Group Pty Ltd [2022] NSWCATAP 212 illustrates the Tribunal’s discretion to determine its own procedure in the interests of coming to a just, quick and cheap resolution of the real issues in the proceedings.

Background

The Moodys (Owners) engaged M K Building Service Group Pty Ltd (Builder) to remove existing windows and a wall, and install two load-bearing LVL beams to support the roof and a sliding stacker door (the Works). 

The agreement was partly verbal and partly in writing, to the extent the Builder sent a quotation for the Works, via text message.

The Owners paid a deposit and the Builder began the Works. However, the beams supplied by the Builder were structural pine, not LVL beams. The Owners expressed concern about the adequacy of the substitute structural pine beams, but the Builder assured the Owners that the structural pine beams were adequate for the Works.

After concerns were repeated, an agreement was reached where the Owners would purchase and install a new beam and the Builder would install the sliding stacker door. Subsequently, the Owners changed their mind and requested a refund of the deposit.

The Owners obtained an engineer’s report, which concluded that the structural pine beams installed by the Builder were “structurally insufficient” and needed to be replaced.

The Owners lodged a complaint with NSW Fair Trading. The Builder offered to either install two LVL beams, provided that the Owners paid all outstanding invoices in full, or to provide the (already made) sliding stacker door to the Owners in return for payment.

The Tribunal’s decision below

The Owners commenced proceedings in the NSW Civil and Administrative Tribunal (Tribunal) seeking an order that the Builder repays the deposit of $4,500. The basis of the claim was the Builder’s failure to undertake the Works in accordance with the contract.

The Tribunal found that a contract existed between the Owners and the Builder, and the Builder had breached this contract to the extent that it failed to install LVL beams and the new sliding stacker door.

However, the Tribunal found that the Owners failed to meet their burden of proof in establishing any loss for breach of contract.

The Tribunal further found that there was evidence before it suggesting that the costs involved in the Builder’s work of removing the window and wall, and the manufacture of the sliding door, amounted to a sum exceeding the deposit.

Consideration by the Appeal Panel

The Owners appealed the decision on several grounds, none of which were found to have any legal merit.

However, the Appeal Panel considered that it was appropriate to review the Owners’ grounds of appeal, the material provided, and the decision of the Tribunal to ascertain whether the grounds of appeal exist. In this regard, the Appeal Panel relied on sections 36 and 38(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (Act), which empower the Tribunal to “inquire into and inform itself on any manner as it thinks fit, subject to the rules of natural justice.”

In exercising its discretion to inquire, the Appeal Panel reasoned that it is challenging for litigants in person to draft appropriate grounds of appeal and that it would be unrealistic in practice to have such an expectation. The Appealed added the qualification that any exercise of this discretion is limited as an Appeal Panel must act fairly and impartially, and not adopt the role of advocating for one party or the other.

The Appeal Panel found that the Tribunal had misunderstood the Owners’ claim, and in doing so made an appealable error in failing to exercise its jurisdiction. The Appeal Panel found that the Owners’ claim was not one in breach of contract, but one for restitution on the basis of total failure of consideration.

The Appeal Panel also found that the Tribunal erred in failing to consider making a work order under section 48MA of the Home Building Act 1989 (NSW).

Fundamental misunderstanding of the Owners’ claim

The Appeal Panel found that there had been a total failure of consideration, despite the fact that the Builder had carried out some demolition as:

  • the demolition work was only a minor component of the Works
  • the demolition would not have taken long to carry out
  • the benefit of the demolition of the original window was trivial
  • any preparation work carried out by the Builder was of no benefit to the Owners because the Builder prepared the wall for the wrong beam.

Put another way, the Appeal Panel found that the Owners had paid the Builder and received nothing in return. Accordingly, the Appeal Panel found that the Owners were entitled to the return of the $4,500 deposit.

Failure to consider making a work order

Additionally, the Appeal had found that the Tribunal erred in failing to consider a work order. The making of such an order would be consistent with section 48MA of the Home Building Act 1989 (NSW).

But for the success of the restitution claim, a work order would have been made.

Reminder of the Tribunal’s ability to determine its own procedures, within limits

This decision illustrates the Tribunal’s ability to determine its own procedure, within the confines of section 36 and section 38(2) of the Act, particularly when dealing with litigants in person. Particularly, it speaks to the guiding principle of the Act to facilitate the just, quick and cheap resolution of the real issues in the proceedings, as complimented by the Tribunal’s discretion to inquire into such matters as it sees fit.

In this case, the inquiry revealed the true nature of the Owners’ claim for restitution, which was otherwise obscured by a technical deficiency in the way that the Owners, as litigants in person, had framed their claim.

However, parties should not rely on the Tribunal to find or clarify their claim in each application. Contrast the position here with the short shrift given to a represented party in BKB Constructions Pty Ltd v Sawan.

Consider also the prejudice which may arise to a party which formulates its position, whether on liability risk, or costs risk, based on the case as expressed by its opponent, only to have that redrawn by the Tribunal’s own inquiry. The natural justice limitation in section 38(2) provides a fetter on the Tribunal’s discretion in this regard.

Authors: Christine Jones, Nicholas Achurch & Lauren Boswell

In the media

Kennards Hire’s Construction Confidence Check Shows Belief in Sector Stability
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Australian house build cost jumps $94,000 in fastest rise since 1982: ABS, HIA stats reveal
Australia’s typical house build cost has soared more than $94,000 in 15 months in its biggest surge since McMansions were taking over our suburbs in 1982. Shock new figures revealed in analysis by the Housing Industry Association and News Corp Australia show how the price of the new home dream has exploded since July 1970, when the average new build cost just $11,543 (10 July 2022).  More...

Thousands of Australian companies folded last financial year as collapse nightmare worsens
It’s no secret the construction industry is in crisis, with scores of big-name firms collapsing in recent months, leaving devastated staff and would-be homeowners in the lurch (10 July 2022).  More...

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As the Reserve Bank of Australia pushes ahead with its inflation-fighting interest rate rises, home builders are already feeling the pinch from rising costs (10 July 2022).  More...

How iCIRT is changing the off the plan industry for the better: The Sydney developers to first secure the accreditation
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Expansion of home guarantee scheme builds hope for first homebuyers
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Published – articles, papers, reports

No reprieve for home builders as construction costs continue rising
CoreLogic’s Cordell Construction Cost Index (CCCI) for Q2 2022 showed national residential construction costs increased 10.0% over the 12 months to June 2022, the highest annual growth rate on record outside of the introduction of the GST (11 July 2022). Read more here.

Public feedback sought on ways to improve NSW home building insurance scheme
The NSW Government is calling for public submissions to help shape reforms to improve the compulsory home building compensation insurance scheme for homeowners and builders (5 July 2022). Read more here.

Australian Bureau of Statistics – Building approvals, Australia
Provides the number of dwelling units and value of buildings approved. The May 2022 seasonally adjusted estimate: private sector houses approved fell 2.7%, while private sector dwellings excluding houses rose 32.0% (May 2022: released 4 July 2022). Read the results here.

Practice

Australian Building Codes Board – Corrigendum to NCC 2022 Volume One Preview
This corrigendum provides a correction to the preview draft of NCC 2022 Volume One (8 July 2022). Read the corrigendum here.

Australian Building Codes Board – Access Verification Methods handbook
Provides guidance to use these Verification Methods in NCC Volume One for ramps and access to and within a building (1 July 2022). Read more here.

Cases

Mehieddine v Commissioner for Fair Trading [2022] NSWCATAD 230
ADMINISTRATIVE LAW – Home Building Act – Contractor licences – general building work – relevant experience.
Administrative Decisions Review Act 1997; Home Building Act 1989; Licensing and Regulation (Uniform Procedures) Act 2002.

12 Bridge Street Epping Pty Ltd atf 12 Bridge Street Epping Unit Trust v D.R. Design (NSW) Pty Ltd [2022] NSWSC 866
BUILDING AND CONSTRUCTION – adjudication determination under Building and Construction Industry Security of Payment Act 1999 (NSW) – adjudication application by architect against developer – where developer informed adjudicator that it had not been served with adjudication application – where adjudicator invited submissions as to date and manner of service of adjudication application – whether adjudicator had power to do so – consideration of s 21 of the Act – whether developer’s response to adjudicator’s invitation constituted an adjudication response.
Building and Construction Industry Security of Payment Act 1999 (NSW).

Sayar v Al Shafii; Al Shafii v Sayar [2022] NSWCATCD 64
BUILDING AND CONSTRUCTION – Defective work - Duty to mitigate loss – Certificates not provided; BUILDING AND CONSTRUCTION – Whether contract validly terminated by owner or builder – Status of pre-termination claims – Damages payable; BUILDING AND CONSTRUCTION – Variations – Whether urgent – Amount recoverable.
Civil and Administrative Tribunal Act 2013 (NSW); Home Building Act 1989 (NSW).

Legislation

NSW

Regulations and other miscellaneous instruments
Building and Development Certifiers Amendment Regulation 2022 LW 1 July 2022

Environmental Planning Instruments
Dubbo Regional Local Environmental Plan 2022 (Amendment No 1) LW 8 July 2022
Newcastle Local Environmental Plan 2012 (Map Amendment No 2) LW 8 July 2022
Shoalhaven Local Environmental Plan 2014 (Amendment No 45) LW 8 July 2022
State Environmental Planning Policy (Precincts—Central River City) Amendment (Sydney Olympic Park) 2022 LW 8 July 2022
State Environmental Planning Policy (Transport and Infrastructure) Amendment (Three Ports) 2022 LW 8 July 2022
Clarence Valley Local Environmental Plan 2011 (Amendment No 49) LW 1 July 2022
Coffs Harbour Local Environmental Plan 2013 (Amendment No 27) LW 1 July 2022
Dubbo Regional Local Environmental Plan 2022 (Map Amendment No 2) LW 1 July 2022
Maitland Local Environmental Plan 2011 (Amendment No 33) LW 1 July 2022
Parramatta Local Environmental Plan 2011 (Map Amendment No 2) LW 1 July 2022
State Environmental Planning Policy (Exempt and Complying Development Codes) Amendment (Outdoor Dining) 2022 LW 30 June 2022
State Environmental Planning Policy (Housing) Amendment (Seniors Housing) 2022 LW 1 July 2022
State Environmental Planning Policy (Housing) Amendment 2022 LW 1 July 2022
State Environmental Planning Policy (Precincts—Regional) Amendment (Snowy Mountains Activation Precinct) 2022 LW 1 July 2022
State Environmental Planning Policy (Precincts—Western Parkland City) Amendment (South East Wilton Precinct) 2022 LW 1 July 2022
Temora Local Environmental Plan 2010 (Map Amendment No 1) LW 1 July 2022
Willoughby Local Environmental Plan 2012 (Amendment No 24) LW 1 July 2022

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Nicholas Achurch, Lauren Boswell

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