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Residential Focus

24 April 2019

#Property & Real Estate

Christine Jones

Published by Christine Jones

Residential Focus

Form or content? 

In the recent decision of Builtex Constructions Pty Ltd He [2019] NSWCATAP 95, NSW Civil and Administrative Tribunal Appeal Panel dismissed the appellant Builder’s submissions that the respondent Owner repudiated the contract because the Owner failed to provide notice of dispute, hold a dispute resolution meeting, and give a proper notice of default to terminate the contract.

Background

In the Tribunal below, orders had been made awarding the Owner more than $100,000 for breach of statutory warranty and dismissing the builder’s quantum meruit claim. The relevant contract was a Master Builders Association residential building contract. 

The contract before the Appeal Panel was a Master Builders Association residential building contract. The relevant terms are summarised below:

  • clause 26 provided that the party saying that there is a dispute must issue a dispute notice to the other party. Within 10 business days after giving such notice, the parties must confer at least once to attempt to resolve the dispute. In the absence of a meeting, the contract cannot be terminated unless the other party refused to attend the meeting
  • clause 27 provided that the notice must accurately set out the matters giving rise to the issuing of the notice and attach supporting documents
  • clause 28 provided, among other things, that the Owner may only terminate the contract if, in the case of a default capable of remedy, the default continues for 25 days after serving a notice of default.

Grounds of appeal and findings

The Builder relied on, inter alia, 3 grounds of appeal which each challenged that the contract was lawfully terminated, concerning:

  1. clause 27 and the role of the architect – the Tribunal below had found that the architect undertook a supervisory role on behalf of the Owner, and communicated with the builder as the Owner’s agent. The contract did not contemplate this, only naming the architect as the nominating officer for the purpose of the mediation clause. The Appeal Panel found that whilst the contract did not give the architect an official role beyond that, it did not preclude him acting as the Owner’s agent. The Appeal Panel also dismissed an argument that all allegations of default in the clause 27 notice must be established or capable of being established, noting that this would be inconsistent with common law principles
  2. validity of notices and meetings – the Tribunal below had accepted communications from and meetings with the architect as valid for the purpose of clause 26 and 27, even where they were not expressed to be pursuant to or in furtherance of the relevant clauses of the contract. The Appeal Panel agreed that at least one of the notices and meetings met the requirements and in particular found that the meeting which took place with the NSW Fair Trading inspector was not precluded (by its genesis being a complaint to NSW Fair Trading) from being a meeting for the purpose of clause 26 of the contract. An issue that a meeting had taken place more than 10 days after the notice was issued was also given short shrift, the Tribunal noting this could give rise to avoidance/delay so as to manufacture non-compliance and that there was no statement in the contract that a meeting held after the 10 day period would be invalid
  3. validity of notice of default – this was similar to an aspect of ground 1 and failed on similar grounds, that is, unjustified allegations in the default notice did not of themselves invalidate the notice when it was valid in an number of other respects. 

The approach taken by the Tribunal was to look at the substance and effect of the communications, rather than merely how they were badged (or not badged). The cumulative effect is of course easier to see in hindsight. Parties in doubt can seek clarification from their counterparty as to whether communications are intended to be notices for the purpose of the contract, to seek to manage that risk.

Author: Christine Jones

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In the media

Australia's current building compliance issues
With the Lacrosse fire in Melbourne, the Opal Tower scenario in Sydney, along with other fires and building safety and defect issues in buildings in Australia and overseas, we are increasingly seeing that prior to the drama occurring, the problems or potential problems with the building were known (18 April 2019).  More... 

Housing finance numbers continue dive: REIA
The February 2019 Lending to Households and Business figures released by the Australian Bureau of Statistics show that the number of loans for housing, excluding refinancing, continues to decline (09 April 2019).  More... 

HIA: OPipeline of building work continues to shrink
The pipeline of building work which had expanded over recent years has shrunk over the past 6 months as the volume of work entering the pipeline fell away. The home building industry has driven economic growth in Australia since the end of the resources boom (09 April 2019).  More...  

NSW

Brothers who claimed 'exemption' from law fined $100,000 for contempt
The NSW Land and Environment Court heard Mustapha Kara-Ali and his brother Diaa Kara-Ali had a "religious issue with the court" and had ignored court orders to cease construction at a site in Colo in north-west Sydney, for which they did not have development consent (18 April 2019).  More... 

Labourer takes company to court over construction site accident
The company at the centre of a catastrophic scaffolding collapse at Macquarie Park that resulted in the death of one man is being sued over a separate incident in which scaffolding allegedly fell and struck a worker on the north shore (16 April 2019).  More... 

'It's been a long process': Almost 170 Opal Tower apartments still empty, repairs only just beginning
Almost four months after it was evacuated, about half of the units inside Sydney’s troubled Opal Tower remain unoccupied — and rectification work has only recently begun (15 April 2019).  More... 

Published - articles, papers, reports 

Australian Bureau of Statistics
10 April 2019 Building Activity, Australia, Dec 2018 (cat no. 8752.0)
10 April 2019 Construction Activity: Chain Volume Measures, Australia, Dec 2018

Practice and courts

ABCC E-Alert: Contractor APM issued exclusion sanction following building code breach
Victorian building company APM Group (Aust) Pty Ltd (APM) and its related entity APM Holdings (Aust) Pty Ltd has been issued a one-month exclusion sanction for its failure to comply with state security of payments legislation (10 April 2019).  More...  

ABCB reminder: NCC 2019
All three volumes of the NCC 2019 preview, as well as The Guide to Volume One, are now available to download. To get your copy, log into your NCC account through the NCC Online or create your NCC account and login to access. NCC 2019 will be adopted from 1 May 2019. If you’d like an overview of the key changes and dates, please check out the latest ABCB Connect article 'What to expect in NCC 2019' here.  

City of Sydney: Alternative housing idea challenge
The community will have the opportunity to provide feedback on the short-listed concepts as part of the City’s consultation to shape Sydney 2050. The Alternative Housing Ideas Challenge will close on 8 May 2019.  More...  

Hoisting and construction activities in public spaces
The City of Sydney is seeking feedback on proposed new approval processes, controls and responsibilities when operating and working in public places. The Draft local approvals policy and code of practice: hoisting and construction activities in public places provides information for property owners, builders and contractors. The deadline for submissions is 15 May 2019.

New dates for Environmental Planning & Assessment Act updates
Councils, certifiers and other industry practitioners have more time to implement some of the recent EP&A Act updates. Changes affect new provisions for building and subdivision certification, local strategic planning statements for councils in the Greater Sydney Region and community participation plans. While most of the changes will commence on 1 March 2018, there will be a number of other changes that will involve further design and consultation from mid to late 2018. 

Cases

Builtex Constructions Pty Ltd v He [2019] NSWCATAP 95
(1) Leave to appeal is refused. (2) The appeal is dismissed.
APPEAL – construction of building contract – whether notice of dispute given in accordance with the contract – whether notice of default given in accordance with the contract – whether contract validly terminated – exercise of costs discretion – leave to appeal
Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Act 2013; Civil and Administrative Tribunal Rules 2014; Home Building Act 1989 

Apthorpe v QBE Insurance (Australia) Limited & Ors [2019] NSWDC 135
TORTS – workplace injury on a domestic building site – plaintiff roofing labourer fell to ground from roof height after stepping on unsecured bridging planks between roof and a scaffolding platform – determination of liability of builder, scaffolder, fascia and guttering contractor and plaintiff’s employer the tiling contractor – differing assessment schemes for employer’s liability and occupier’s liability; DAMAGES – assessment of claimed heads of damage – Workers Compensation Act 1987 and Civil Liability Act 2002 

The Sydney Building Company Limited v Sinac (No 2) [2019] NSWCATAP 89
COSTS: no question of principle

Elhazouri v Subsidence Advisory NSW [2019] NSWLEC 41
MINE SUBSIDENCE – compensation claim for damage to dwelling and other ancillary structures under now repealed Mine Subsidence Compensation Act 1961 – subsidence at least partial cause of damage claimed – dispute as to extent damage caused by subsidence – competing expert evidence from structural engineers – held causation of damage to dwelling and incorporated garage was mine subsidence – no evidence to support claim for damage to ancillary structures – two months to be allowed to parties to seek to resolve scope and methods of rectification of damage to dwelling MINE SUBSIDENCE – compensation claim for damage to dwelling under Coal Mine Subsidence Compensation Act 2017 not subject to proceedings – no findings with respect to claim under 2017 legislation COSTS – Applicant self-represented – Applicant entitled to limited costs consistent with approach in Cachia v The Hills Shire Council [2010] NSWLEC 136 – contingent costs order appropriate to permit Respondent to make submissions on costs – if no request to be heard within 28 days, limited costs order in Applicant’s favour

Gill v Summit Building Design and Construction Pty Ltd [2019] NSWCATCD 5
BREACH OF CONTRACT - repudiation– assessment of damages – work order – weight of evidence

Scarano v Palm Pools and Spas Pty Ltd [2019] NSWCATAP 79
HOME BUILDING – Whether the Tribunal erred in failing to find that an agreed damages clause is a penalty clause – Whether the appellant should be granted leave to raise a ground on appeal which was not argued before the Tribunal –– Whether the Tribunal should have considered the appellant’s claim under the Australian Consumer Law instead of the Contracts Review Act

Webster v Tom [2019] NSWCATAP 75
|
APPEALS – home building claim against builder – allegation of home owners as to a misclassification of building site by an engineer not joined as a party by the owners – terms of builder’s engagement – agreed scope of works for builder - no error of law – competing expert evidence on ongoing cracking and the construction of piers - whether the Tribunal’s findings were not fair and equitable or against the weight of evidence – whether new evidence was reasonably available - no other grounds for leave to appeal – appeal dismissed

Tom v Jenkins [2019] NSWCATAP 74
APPEALS – builder’s claim against engineer for indemnity in respect of builder’s liability to home owners for defective residential building work – builder’s claim based on allegations of negligence and misleading conduct - extension of time required to appeal – lack of procedural fairness – statutory interpretation of s 48K of the Home Building Act – lack of jurisdiction for the Tribunal to determine the builder’s claim – appeal dismissed. 

Contacts:
Christine Jones, Partner - Construction & Infrastructure (Dispute Resolution) 
T: +61 2 8083 0477 
E: christine.jones@holdingredlich.com

Divya Chaddha, Associate 
T: +61 2 8083 0457
E: Divya.Chaddha@holdingredlich.com

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 newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Christine Jones

Published by Christine Jones

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