The Owners – Strata Plan 87003 v Raysons Constructions Pty Ltd

1. [1]

   LEEMING JA: The plaintiff Owners Corporation owns the common property in a residential apartment building in Meadowbank. It commenced proceedings in the Civil and Administrative Tribunal of New South Wales (NCAT) on 26 November 2020 against the developer Wekan Pty Ltd and the builder Raysons Constructions Pty Ltd. A certificate of completion had issued on 15 July 2014, slightly more than six years earlier. Despite the passage of time, the Owners Corporation maintained that Wekan and Raysons were liable to compensate it in respect of what it claimed were major defects in the common property, principally manifested by cracks in the concrete and the seepage and pooling of water.

2. [2]

   Prior to the hearing, external management had been appointed to Wekan, which accordingly had the benefit of a stay pursuant to s 440D of the Corporations Act 2001 (Cth). The entirety of the subsequent proceedings in NCAT and in this Court have involved only the Owners Corporation and Raysons.

3. [3]

   The Owners Corporation sued on the “statutory warranties” implied by s 18B of the Home Building Act 1989 (NSW). A claim based on the Design and Building Practitioners Act 2020 (NSW) was not pressed. Originally the Owners Corporation had sought damages, but by the time of its closing written submissions before the Senior Member, its preference was for a work order pursuant to s 48O(1)(c) of the Home Building Act 1989 (NSW).

4. [4]

   There was no issue that:

   1. (1)

      the “warranty period” specified by s 18E(1) was six years expiring on 15 July 2020 for a breach that resulted in a major defect in residential building work;

   2. (2)

      only if the alleged breach of warranty had become “apparent” within the last six months of the warranty period (ie January – July 2020) was the Owners Corporation entitled to bring proceedings as it had done within a further period of 6 months after the expiry of the warranty period, and

   3. (3)

      even then, only if and to the extent that the alleged breaches of warranty on which the Owners Corporation sued had resulted in “major defects” within the meaning of s 18E(1)(b) and (4) could the claim have been brought within time (because the Owners Corporation was well outside the two year period for commencing proceedings for breaches which did not result in a “major defect”).

5. [5]

   Following a two day hearing, NCAT constituted by a Senior Member by decision dated 14 July 2023 found that some but not all of the Owners Corporation’s claims were made out and in due course made a rectification order. The decision is not published on CaseLaw; a “further amended” document of 257 paragraphs dated 24 November 2023 is the only version provided to me. The decision does not disclose what changes were made on either of the occasions it was amended. I was told from the Bar table that they were matters of detail concerning the particular breaches of warranty found by the Senior Member to have been made out, and that they did not affect the portion of his reasons which was the subject of the present appeal.

6. [6]

   Raysons appealed to an Appeal Panel of NCAT pursuant to s 80 of the Civil and Administrative Tribunal Act 2013 (NSW). In fact, it did so before orders were made. That would be irregular unless the position relating to internal appeals in NCAT is different from the position in the case of a court, for it is axiomatic that appeals lie from orders and not from reasons: see BP v State of New South Wales [2019] NSWCA 223 at [11]-[12] and Kramer v Stone (2023) 112 NSWLR 564; [2023] NSWCA 270 at [259] and the cases there cited. But nothing turns on that. An amended appeal filed after orders had been made at first instance challenged by ground 1 the conclusion that the Owners Corporation’s proceedings had been brought within time. Ground 2 was directed to the onus of proof in relation to the extension of the statutory warranty period. The remaining grounds 3-7 challenged what appeared to be the large majority of the Senior Member’s findings of major defects.

7. [7]

   The Appeal Panel upheld the appeal: Raysons Constructions Pty Ltd v The Owners Strata Plan No 87003 [2024] NSWCATAP 113. It only addressed ground 1 explicitly, although the reasoning proceeds on the basis that the Owners Corporation bore the onus of establishing that it came within s 18E(1)(e) and (f). It concluded that the Owners Corporation had not brought the proceedings within time, such that NCAT lacked jurisdiction.

8. [8]

   Although the reasons of the Appeal Panel correctly proceeded on the basis that success on ground 1 would require the appeal to be allowed and the proceedings brought by the Owners Corporation dismissed, there is no consideration of whether it should address the other grounds of appeal, despite their having been fully argued. That is contrary to the approach taken by other Appeal Panels. For example in Imbree v Chief Commissioner of State Revenue [2024] NSWCATAP 158 at [46] and Alta Vale Residential Pty Ltd v The Owners – Strata Plan No 95693 [2024] NSWCATAP 212 at [42] the Appeal Panel considered non-dispositive grounds which had been argued in case it turned out that its decision was found to be wrong, so as to avoid or at least minimise the need for a remitted hearing. That is the approach applicable to courts: Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49 at [8] and [101]. Against this, as will be seen below, the conclusion on ground 1 went to jurisdiction, and (although the Appeal Panel did not in terms rely upon this) there is some force in the proposition that NCAT should not be determining any aspect of a dispute which is not within its jurisdiction, even contingently on the basis that it might be wrong in its conclusion that it lacked jurisdiction. But even so there must have been every reason to think that, given the history of the litigation (four days of hearings, lay and expert evidence, with a substantial rectification order set aside by a decision solely based on the conclusion that the Owners Corporation was out of time, made some four years after proceedings had commenced), the decision of the Appeal Panel dismissing for want of jurisdiction a claim which had previously been upheld both on that point and on the merits would not resolve the controversy. The consequence of the course adopted by the Appeal Panel is the almost certain need for a further hearing in the event that it be wrong on the construction of a provision as to which there was no authority.

9. [9]

   Not unexpectedly, the Owners Corporation has appealed to this Court pursuant to s 83 of the Civil and Administrative Tribunal Act. The further appeal is by way of leave and confined to questions of law. It has been heard by me, sitting in the Common Law Division, exercising the powers of a Judge of this Court pursuant to s 31(3) of the Supreme Court Act 1970 (NSW). There is no notice of contention. Nor is there a contingent cross-appeal concerning grounds 2-7 of Raysons’ appeal, although the parties exchanged written and oral submissions on the question of onus. At the conclusion of a hearing which occupied most of a day, counsel for Raysons stated that in the event that the appeal were allowed in whole or in part, his client wished to renew the grounds of appeal which the Appeal Panel had not determined. Ordinarily, it will be appropriate for a respondent to an appeal who wishes to maintain a decision in its favour based on grounds not determined by the lower court or tribunal to file a notice of contention: see for example Reid v Commonwealth Bank of Australia (2022) 109 NSWLR 149; [2022] NSWCA 134 at [9]. But the present situation is unusual because of the limited scope of the appeal to this Court. Raysons had exercised its right to seek leave to expand its appeal to the Appeal Panel to questions of fact or mixed questions of fact and law. That was a broader jurisdiction than that available in this Court, and hence at least in large measure a notice of contention raising the balance of its internal appeal was not available to Raysons.

10. [10]

    As will be seen below, there are aspects of NCAT’s decisions which must have been disillusioning to both sides in addition to the four years’ delay mentioned above. The first instance decision is replete with patent typographical errors, many of which were noted by the Appeal Panel, on which nothing ordinarily would turn, save perhaps for the possibility that they might support the proposition which is hotly in dispute as to whether the dispositive paragraphs on s 18E also contain a serious error and are not to be read literally. It is clear enough that if they are read literally, they are nonsensical, and at least in large measure the reasons given by the Appeal Panel for granting leave and making further findings of fact turn upon its view that the Senior Member’s reasons bore their nonsensical literal meaning.

11. [11]

    It is regrettable that a large issue before me is whether the reasons of the Senior Member mean what they say, which is how they were construed by the Appeal Panel. From time to time errors will be made in the reasons for decisions of courts and tribunals, and there may be difficulties in applying to correct them once orders have been pronounced and rights of appeal arise: Tre Cavalli Pty Ltd v The Berry Rural Co Operative Society Ltd [2013] NSWCA 235 at [55]. But in the present case, no orders were made until months afterwards, and the reasons were amended twice. It is regrettable that (as I understand the position) no application was made to the Senior Member to clarify whether there had been a slip in the dispositive paragraph of his reasons. As Mason P noted in National Starch and Chemical Pty Ltd v Nelson [1998] NSWCA 155, there are occasions when such an application can avoid appellate review with all the concomitant expense and delay.

12. [12]

    On the Owners Corporation’s submission, the Appeal Panel decision repeatedly misapprehended the findings made by the Senior Member, on the dispositive issue, leading to complaints that there were no adequate reasons or that the reasoning was legally unreasonable.

13. [13]

    The appeal to this Court is not an appeal on all issues. It is an appeal confined to questions of law. That limited jurisdiction permits a determination of the legal meaning of s 18E(1), and whether the Senior Member’s reasons are to be read literally or whether they contain a slip, and thus whether the Appeal Panel erred in law in giving them their literal meaning. But as will become apparent in light of the evidentiary matters addressed below, much of the parties’ dispute is factual, and outside the scope of this appeal.

Background

1. [14]

   The contract between Wekan and Raysons was not in evidence in this Court. It is unclear whether it was tendered in NCAT, although it is plain from an index which was tendered that large amounts of the evidence before NCAT were not tendered by either side in this Court. But it was common ground that it was a contract to do residential building work, which therefore engaged Part 2C of the Home Building Act. Section 18B(1) imported six warranties into the contract. The points of claim alleged that all six were imported, and relied on them all, without once deigning to identify any particular warranty said to have been breached leading to loss or damage constituted by any particular claimed defect. The points of claim particularised a series of alleged defective items of work, including “Water emanating beneath sliding doors”, “water penetration emanating from head of glass sliding door”, “moisture damage to timber sliding doors” and a further 25 items. The remaining particulars seem intended to cast the net as widely as possible.

2. [15]

   The points of claim do not stand alone. They were preceded by a lengthy report of 211 pages obtained by the Owners Corporation and served on Raysons in June 2020, shortly before the expiry of the 6 year warranty period (the RHM Report). It identifies various defects, by reference to each unit and other area in the building. It includes photographs, an expression of the cause of the defect, and an articulation by reference to the particular statutory warranties in s 18B of the breaches.

3. [16]

   By way of example, the RHM Report identifies two defects in the common property near unit 28. The first (item 28.1) is described as follows:

4. [17]

   The author of the report noted that he was “[u]nable to conclusively establish cause of the internal water penetration during inspection” but suggested it was most likely attributable to “[d]eficiency with the window assembly” or “[t]he external perimeter of the window assembly may not be adequately sealed” or “[d]eficiency with the courtyard waterproofing provisions”. The report stated that there was a breach of the warranty to perform work with due care and skill “in failing to construct and waterproof external wall and window opening in a manner that withstands water penetration”, and a breach of the warranty to perform work that complies with the Home Building Act by reference to Performance Requirement FP1.4 of the Building Code of Australia, which stipulated that “a roof and external wall (including openings around windows and doors) must prevent the penetration of water that could cause (a) [u]nhealthy or dangerous conditions, or a loss of amenity for occupants; and (b) [u]ndue dampness or deterioration of building elements”. The report identifies that steps will need to be taken to investigate further and rectify the defect.

5. [18]

   The second item (28.2) was “[c]orrosion is developing at base of steel door jamb on northern side”. This portion of the report likewise identifies the cause, the breaches and the rectification work required or recommended. At some stage, the Owners Corporation abandoned its claim for item 28.2, most probably (I infer) on the basis that it was not a breach of warranty which resulted in a major defect.

6. [19]

   The Owners Corporation was not a party to the contract between Wekan and Raysons. Indeed, it was not in existence when the contract was made. However, it held the common property in the strata scheme in the manner described in Trentelman v The Owners – Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242 at [187]-[188] and became a successor in title to Wekan. Section 18D(1) of the Home Building Act provides that “[a] person who is a successor in title to a person entitled to the benefit of a statutory warranty under this Act is entitled to the same rights as the person’s predecessor in title in respect of the statutory warranty”. There is a qualification to that deeming in s 18D(2) which warrants reproduction because it bears on one of the ultimate questions of construction:

7. [20]

   It will be seen that the qualification in subsection (2) proceeds on the basis that, for the purpose of determining the effect of merger or res judicata or something analogous to those doctrines, one looks at the enforcement of a statutory warranty in relation to a “particular deficiency”. I shall return to this.

8. [21]

   The Owners Corporation only commenced proceedings six years and some four months after the building had been completed, relying on the six month “window” in s 18E(1)(e). Raysons pleaded that the Owners Corporation was out of time, and tendered a bundle of documents produced pursuant to a summons issued at the request of the Owners Corporation seeking “All documents in respect of repair or rectification work undertaken at the property by or at the instigation of Raysons Constructions Pty Ltd … between 15 July 2014 and 30 April 2021”.

9. [22]

   The earliest document in that bundle on which reliance was placed was an email dated 1 November 2014 to Raysons copied to the strata manager, from two occupants of unit 28, who complained about two series of gouges in the entrance, a loose handrail, an incomplete kitchen sink seal, a scratch on a wardrobe door, a chipped tile in the bathroom, and, relevantly for present purposes:

10. [23]

    Although no mention was made of it in either of the NCAT decisions, the email exchange then referred to camera investigations undertaken by plumbers in 2014. A report was evidently obtained and copied to Raysons by email dated 28 February 2019 stating:

11. [24]

    The following emails suggest that Raysons thereafter engaged plumbing contractors to attend to the issue.

12. [25]

    As will be seen, there is a question whether what was known concerning the potential of the balcony of unit 28 not to drain efficiently deprived the Owners Corporation of an ability to sue within the additional six month “window” after the conclusion of the warranty period for breaches of statutory warranties resulting in major defects.

13. [26]

    I shall pass over the balance of that bundle, just as I have passed over the large majority of the RHM Report.

The time for commencing proceedings for breach of the statutory warranties

1. [27]

   Subsections 48K(1), (2) and (7) of the Home Building Act provide:

2. [28]

   The effect of s 48K is tolerably clear. It cuts through the questions of construction which can arise when proceedings are commenced contrary to a time limitation (as evidenced by, for example, David Grant & Co Pty Ltd v Westpac Banking Corporation (1995) 184 CLR 265 at 277; [1995] HCA 43), and makes it plain that the lodging of a claim under Part 2C must be within the time specified in s 18E, in default of which NCAT lacks jurisdiction. Decisions of the Appeal Panel of NCAT have repeatedly so held: see for example S & G Homes Pty Ltd t/as Pavilion Homes v Owen [2015] NSWCATAP 190 at [53]; Jandson Pty Ltd v James [2021] NSWCATAP 274 at [118] and Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 at [8].

3. [29]

   Section 18BA makes it clear that the nature of the cause of action remains one of breach of contract, notwithstanding that the claim is based on a term that is implied by statute, and is brought by a non-party whose entitlement to sue as if it had contracted with the builder is also a product of statute. Thus the Owners Corporation, taking advantage of the deeming provision in s 18D(1), has sued Raysons for breach of the statutory warranties implied in the contract between Raysons and Wekan. But as was said in Parkview Constructions v Owners – Strata Plan No 90018 [2023] NSWCA 66 at [49]:

4. [30]

   The onus rests with the Owners Corporation to establish the elements of its cause of action: Currie v Dempsey (1967) 69 SR (NSW) 116 at 125. Insofar as the Owners Corporation sought damages, the onus lay on it to establish that the breach of contract caused compensable loss. Insofar as the Owners Corporation sought a rectification order pursuant to s 48O(1)(c), it was necessary to establish that such an order is appropriate. In this respect, s 48MA alters the position which would obtain for breach of contract at general law, where unless damages were shown not to be an adequate remedy, equitable relief would be refused. Section 48MA imposes an obligation upon both courts and tribunals determining building claims involving an allegation of defective residential building work to have regard to “the principle that rectification of the defective work by the responsible party is the preferred outcome”.

5. [31]

   Section 18E relevantly provides as follows:

6. [32]

   Subsection (3) authorises regulations which prescribe defects to be a “major defect”. Subsection (4) defines “major element” to include load-bearing components and waterproofing, and “major defect” to include a defect in a major element that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these) which causes, or is likely to cause inter alia the inability to inhabit or use the building (or part of the building) for its intended purpose.

7. [33]

   Section 18E has had a complicated history. A different form of the section was introduced into the Building Services Corporation Act 1989 (NSW) by the Building Services Corporation Legislation Amendment Act 1996 (NSW) (the same amending statute also changed the name of the Act to the Home Building Act 1989 (NSW)). Section 18E in the form it originally took specified a period of seven years, and had no provisions analogous to s 18E(1)(e) and (f) concerning breaches of warranty which first become apparent towards the end of the period.

8. [34]

   Ten years later, the Home Building Amendment (Statutory Warranties) Act 2006 (NSW) inserted s 18E(2), which was a response to the decision of the Court of Appeal in Honeywood as executrix of the estate of the late Neville Honeywood v Munnings (2006) 67 NSWLR 466; [2006] NSWCA 215. There were further minor changes to subsection (2) in 2008 by the Home Building Amendment Act 2008 (NSW). Most of this is summarised in Parkview Constructions at [81]-[84]. It is clear that the new s 18E(2) (and similar provisions such as s 18D(2)) were directed to overturning Honeywood v Munnings and abrogating a res judicata defence where there had already been a determination on a cause of action based on a statutory warranty.

9. [35]

   The Home Building Amendment Act 2011 (NSW) replaced s 18E(1) with a provision substantially similar to the current s 18E(1), including the additional six month period to commence proceedings where the breach of warranty first became apparent at the conclusion of the warranty period. The legislation in that form referred to “structural defect” rather than “major defect”. The Home Building Amendment Act 2014 (NSW) inserted the current terminology of “major defect in residential building work” and the definitions in s 18E(4) of “major defect” and “major element”. Finally, there were minor amendments effected by the Strata Schemes Management Act 2015 (NSW) and the Building Products (Safety) Act 2017 (NSW), on which no party maintained that anything turned.

10. [36]

    I was taken to the second reading speech in 2006 which made amendments to ss 18D and 18E to overturn the result in Honeywood v Munnings. The stated purpose of those amendments was to confer a benefit upon consumers. However, the amendments which are most material for present purposes are those made five years later by the Home Building Amendment Act 2011, replacing the seven year period with a six year period subject to an entitlement to commence up to six months later in the cases where the loss first became apparent in the last six months. The legislation illustrates the limitations accompanying a characterisation of legislation as “beneficial” or “remedial”. The effect of the 2011 Act was to reduce the time period for commencing proceedings on the statutory warranties, from seven years to an absolute maximum of six years and six months. To that extent it was the opposite of beneficial legislation; rather it reduced the rights of homeowners and owners corporations.

11. [37]

    The legislation brought with it a regime to ameliorate the potential harshness of damage which manifested at so close to the end of the limitation period that it would be difficult or impossible to commence proceedings. To my mind, not much turns on whether that aspect of the new regime is regarded as a “beneficial” or “remedial” component of a new provision whose overall effect was adverse to the interests of homeowners and owners corporations.

12. [38]

    No mention was made as the bill passed through the chambers of the additional six month period for which s 18E(1)(e) made provision. In the Legislative Council, mention was made of cognate provisions concerning the compulsory insurance applicable to residential building. It was said that:

13. [39]

    The cognate provisions to which the Minister with carriage of the bill in the Legislative Council referred were ss 103BA and 103BB. Section 103BA applied only to policies for home warranty insurance entered into between 1 May 1997 and 1 July 2002. Such policies responded only if a claim was made during the period of insurance. Subsections (2) and (3) provided:

14. [40]

    Section 103BB applied to policies issued on or after 1 July 2002, and subsection (2) provided:

15. [41]

    The balance of the section addresses the case where a loss has become apparent but an insured event has not occurred so a claim cannot be made.

16. [42]

    The explanatory memorandum sheds no light on the provisions.

17. [43]

    Both sides exchanged submissions on authorities concerning limitation statutes. The Owners Corporation said that by reference to Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293 all aspects of onus rested with the builder who was contending that the proceedings had been commenced out of time. Raysons maintained that once it had squarely flagged that the limitation period was in issue, the onus then shifted to the plaintiff to make good an exception to the six year limitation period, in accordance with Pullen v Gutteridge Haskins & Davey Pty Ltd [1993] 1 VR 27. Raysons said that it had clearly asserted in its points of defence that the proceedings were time-barred, that having raised that issue, it was incumbent upon the Owners Corporation to establish that it was within the additional six month window granted by s 18E(1), and that in order to do that, the Owners Corporation had to demonstrate that what it complained of was unknown to it prior to the six months before the expiration of the six year period (T39).

18. [44]

    Those submissions were not directed to the right issue. The starting point is that s 18E(1)(e) is not a traditional limitation period – which is to say, a time period applicable to an existing cause of action which, if pleaded, may bar the remedy. Nor is it a limitation period in the unusual sense of the Limitation Act 1969 (NSW), which not only bars the remedy but extinguishes the right. Instead, as s 48K(7) makes plain, the commencement of proceedings for a breach of a statutory warranty before the end of the warranty period for the breach is an essential element of the Tribunal’s jurisdiction. The distinction between limitation statutes and statutes going to jurisdiction was stated by Gummow and Kirby JJ in Commonwealth v Mewett (1997) 191 CLR 471 at 534; [1997] HCA 29:

19. [45]

    Another way of making this point is that compliance with s 18E(1)(e) is a matter of which the Tribunal must be satisfied in any event, irrespective of the stance taken by the defendant, whereas (as Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39 illustrates) only if a defendant relies upon a statute of limitations is there any consequence. The distinctions are explained by Windeyer J in Australian Iron & Steel Ltd v Hoogland (1962) 108 CLR 471 at 488; [1962] HCA 13 and by Bell P in Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204 at [68].

20. [46]

    The following matters emerge from the text of s 18E.

21. [47]

    First, the primary obligation imposed by s 18E(1)(a) is that proceedings must be commenced before the end of the warranty period for the breach.

22. [48]

    Secondly, for work such as the present which purports to have been completed, the warranty period commences from that date, and it is unnecessary to consider the case where work has not been completed.

23. [49]

    Thirdly, special provision is made in subsections (1A) and (1B) for cases where a building bond has been lodged. It was not suggested that those provisions bore upon the issues in this appeal.

24. [50]

    Fourthly, s 18E(1)(b) provides that the duration of the warranty period is affected by the character of the damage resulting from the breach: six years if the damage amounts to a “major defect in residential building work”, otherwise two years. As was noted in Parkview Constructions at [92], it strains traditional notions of a cause of action to regard a plaintiff who complains of one major defect and one which is not a major defect as having only a single cause of action, because of the availability of different limitation periods.

25. [51]

    Fifthly, paragraph (e) explicitly authorises the commencement of proceedings after the end of the warranty period in one specific class of case, namely, “if the breach of warranty becomes apparent within the last 6 months of the warranty period”. In accordance with ordinary principles of statutory construction, the general rule in s 18E(1)(a) and (b) is to be read as being subject to the specific qualification in s 18E(1)(e): see the authorities collected and applied by Basten AJA in Croc’s Franchising Pty Ltd v Alamdo Holdings Pty Ltd [2023] NSWCA 256 at [219]-[227].

26. [52]

    Sixthly, the additional six month “window” available pursuant to paragraph (e) is applicable both to breaches which result in major defects and to breaches which do not result in major defects.

27. [53]

    Seventhly, the words “first becomes aware” proceed on the basis that by the time proceedings are commenced suing on the statutory warranty, the plaintiff is aware of the breach, and involve an inquiry into when that awareness was acquired. In particular, the word “first” entails a negative – that until the concluding six months of the warranty period, none of the persons whose states of mind matter was aware of the breach of warranty.

28. [54]

    Eighthly, the concept of a breach of warranty “becoming apparent” resonates with other concepts applicable where limitation periods are extended, such as a plaintiff being “unaware” of various matters for the purposes of ss 60F and 60I of the Limitation Act 1969 (NSW). However, it is defined for present purposes in s 18E(1)(f), in a manner which is quite compressed and warrants careful unpacking. It involves two limbs. On its face, it asks whether “any” person entitled to the benefit of the warranty has either (i) become aware or (ii) ought reasonably to have become aware of the breach; plainly enough, actual awareness is sufficient to disentitle a plaintiff. But a plaintiff also cannot obtain the benefit of the provision if notwithstanding actual unawareness the plaintiff ought objectively to have been aware. That is to say, there is both a subjective and an objective element to the test, and either will be disentitling. There are three elements in applying the paragraph:

    1. (1)

       identifying the various persons who may be entitled to the benefit of the warranty;

    2. (2)

       identifying what is meant, in its application to the particular residential building, by the compressed conclusion of awareness of the breach; and

    3. (3)

       asking whether in relation to each person entitled to the benefit of the warranty the subjective or objective awareness occurred earlier than the six month period at the end of the warranty period.

29. [55]

    Central to the issues arising in this appeal is what is connoted by “becomes aware (or ought reasonably to have become aware) of the breach”. Contrary to the way in which the claim was pleaded and indeed much of the discourse in this area, but as emphasised in oral submissions by Mr Corsaro who appeared in this Court but not in NCAT, it is essential to distinguish between a defect (or equivalently a deficiency) and a breach of warranty.

30. [56]

    A defect or deficiency is manifested in the structure of the building. A breach of warranty is a conclusion involving one or more of the statutory warranties implied by s 18B (read with ss 18C and/or 18D) concerning the way in which the building was designed or constructed.

31. [57]

    That is to say, a defect or deficiency is a physical thing (or the absence of a physical thing). A breach of warranty is a legal conclusion about the way in which residential building work has been performed (or not performed).

32. [58]

    It does not follow from an awareness of a defect that there is an awareness of a breach of warranty. The fact that there are cracks in a slab may be a consequence of a failure to do the work with due care and skill, or it may be a consequence of subsidence following underground tunnelling or mining. The fact that water may collect in a carpark or a veranda of the structure may be a consequence of a failure to perform the work with due diligence, or it may be a consequence of an exceptional rain event which it would never have been anticipated the building would have to sustain. In many cases, depending upon the nature of the defect, the inference that there has been a breach of warranty may more or less readily be drawn, but all will depend upon the particular facts. Sometimes further investigation of a patent defect may be necessary in order to determine that there has been a breach of a statutory warranty. These points were made in a similar context by Derrington J in Vautin v BY Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; 362 ALR 702 at [256] and [262] in respect of statutory guarantees:

33. [59]

    The points of claim paid scant attention to the distinction between a defect and a breach of statutory warranty. It may be that in that respect they were no different from many or most pleadings in cases of this nature, and it may also be that in many or most cases there will not be any great scope for confusion. However where as here the satisfaction of s 18E(1)(e) is a central and threshold issue, it will be vital in order to apply the statute to distinguish between a breach of statutory warranty and a defect.

34. [60]

    Subsection 18E(2) draws a distinction between the enforcement of a statutory warranty in relation to a “particular deficiency” in the past, and the enforcement of the same statutory warranty in relation to a “deficiency of a different kind in the work” in circumstances where the latter is in existence at the time of the first enforcement but is unknown to, and could not reasonably be expected to have been known to, the plaintiff. That provision was directed to overturning the principles recognised in Onerati v Phillips Constructions Pty Ltd (1989) 16 NSWLR 730 and Honeywood v Munnings about the preclusive effect of res judicata and merger of a previous decision enforcing a warranty. In Honeywood v Munnings, Handley JA writing for the Court of Appeal confirmed that at common law the knowledge or lack of knowledge on the part of the plaintiff was irrelevant, with time running from the breach: at [6]-[21]. The subsection does not address the simpler case where the latter deficiency was not in existence at the time the statutory warranty was first enforced in relation to the first deficiency. Instead it proceeds implicitly on the basis that a plaintiff would be able to sue a second time because the relevant damage had not been sustained at the time of the first proceedings. As Handley JA had said at [15], a second action for a later breach of the same contract was not barred “because in such a case there are breaches at different times and separate causes of action”. But s 18E(2) qualifies what was held in Honeywood v Munnings, permitting a plaintiff to sue even if the deficiency had been in existence at the time of the earlier enforcement, so long as the plaintiff did not know and ought not reasonably to have known of the other deficiency, and so long as the plaintiff sued in time.

35. [61]

    In addition to relying on Bailey, the Owners Corporation invoked the beneficial nature of the Home Building Act generally and s 18E in particular, maintaining that the legislation should be construed “so as to give the fullest relief which the fair meaning of its language will allow”: Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 at 503. I do not agree. The general principle is not in doubt. However, it is far from clear that s 18E(1) is to be regarded as remedial or beneficial legislation, having regard to the reduction in time for proceedings to be commenced from 7 years to at most 6½ years. (I shall pass over the question of the character of an amending provision which cuts back upon a remedial provision, not because it is without interest, but because no submissions were directed to it.) And even if it were, it is not the case that every leeway of choice in the construction of s 18E(1)(e) and (f) is to be resolved in favour of the person suing for breach of a statutory warranty.

36. [62]

    I respectfully agree with what is said in P Herzfeld and T Prince, Interpretation (Thomson Reuters, 3rd ed, 2024) at para [10.300]:

37. [63]

    I turn then to the question of the purpose of the provisions in s 18E in order to apply these principles. The general purpose of s 18E is clear. It is important for home owners, developers, builders and their insurers that there be a measure of certainty. A regime of compulsory insurance is in place for residential building contracts, but no differently from most consumer items, the statutory warranty period is not unlimited. The policy choice made by the Legislature is to identify two year and six year periods from completion of the residential building, with the longer period being confined to cases where the damage amounts to a “major defect”. These things are self-evident on the face of the provision, dovetail with the provisions dealing with compulsory insurance especially s 103BB, and were prominent in what was said on behalf of the government when the 2011 amendments were passing through the parliamentary chambers.

38. [64]

    The particular purpose of the qualification to the general rule in s 18E(1)(a) made by (e) and (f) is also tolerably clear. A time limitation of two or six years will produce injustice, and potentially capricious outcomes, in circumstances where the manifestation of a breach of warranty first occurs at the end of the period. The injustice comes about because of the inevitable delay between first becoming aware of a breach of warranty and the bringing of proceedings. In many or most cases it will be necessary for an owners corporation to pass a resolution at a general meeting: see former s 80D of the Strata Schemes Management Act 1996 (NSW) and (differently worded) current s 103 of the Strata Schemes Management Act 2015 (NSW).

39. [65]

    To that end, in circumstances where the requisite knowledge of the breach of warranty first accrues in the last six months of the warranty period, the statute permits an additional six months within which proceedings may be commenced. That is to say, in those specific circumstances, statute creates an exception to what would otherwise be a six or two year period within which proceedings must be commenced.

40. [66]

    The application of the principles invoked by the Owners Corporation to those purposes says very little about what meaning is to be given to the test of subjective and objective awareness of breaches of statutory duty. Contrary to the submissions advanced by the Owners Corporation, it cannot be right to construe the moderately elaborate language of s 18E(1)(e) and (f) on the basis that every leeway of constructional choice should be exercised in favour of a plaintiff. The approach to remedial legislation on which the Owners Corporation relies is merely a particular case of the more general principle that all legislation is to be construed purposively: Sydney Seaplanes Pty Ltd v Page at [97]; Ryan v Commissioner of Police, NSW Police Force (2022) 290 FCR 369; [2022] FCAFC 36 at [110]; Boyle v Director of Public Prosecutions (Cth) [2024] SASCA 73; 332 IR 205 at [82] and [231]. But it is perfectly clear that every taxing provision in a taxation act is not read broadly, and every exemption is not read narrowly, notwithstanding that the purpose of the legislation is to raise revenue. That is because, as Chief Justice Gleeson once explained extrajudicially, the purpose of a taxation act is not to raise revenue by every means possible, but in accordance with a detailed and complex plan of fiscal policy: M Gleeson, “Statutory Interpretation” (Justice Hill Memorial Lecture, 11 March 2009), p 12. Similarly, the purpose of s 18E(1)(e) is not to benefit homeowners unconditionally, but instead to strike a balance between homeowners, builders and their insurers so as to provide a general rule that proceedings must be commenced within six years of completion, with an additional six month window in a particular class of case where the entitlement to sue first became or ought to have become apparent in the last six months of that six year period, in light of the fact that the inflexible application of a fixed limitation period will lead to harsh or capricious results. That purpose does not entail that the plaintiff does not bear the onus of establishing an entitlement to the additional six months within which to commence proceedings. Indeed, the purpose says nothing about onus.

41. [67]

    Raysons made two additional submissions concerning onus. The first was to contend that the six month period commencing six years after the conclusion of the “end of the warranty period” was an “indulgence” afforded by the statute, as to which the plaintiff bore the onus. The second was that it was for the plaintiff to make out all elements of its case, including all elements of the jurisdiction which it sought to invoke. I agree with both submissions.

42. [68]

    The first accords with what was said by Dixon CJ (with whom Fullagar and Kitto JJ agreed) in Dowling v Bowie (1952) 86 CLR 136 at 139-140; [1952] HCA 63, referring to:

43. [69]

    Substantially the same point was made in Vines v Djordjevitch (1955) 91 CLR 512 at 519; [1955] HCA 19. Two qualifications may be noted. The first is that the Chief Justice’s references to “the common law doctrine” and “the common law rule” are to be understood as references to statutory construction: see Chugg v Pacific Dunlop Ltd (1990) 170 CLR 249 at 257; [1990] HCA 41. The second is that the task of statutory construction is in fact somewhat more complicated than what emerges from the passage extracted above. That is because it is quite possible for Parliament to enact a complex provision in which one side bears the onus on all sub-issues. The reasons in Dowling and Vines are alert to this in passages which I have not reproduced. In some cases, this can give rise to highly contestable questions of construction; see for example J Stone, Evidence: Its History and Policies (revised by W Wells, Butterworths, 1991), p 699 (“it is frequently a matter of some refinement to decide where the burden is placed”); see also Environment Protection Authority v Grafil Pty Ltd; Environment Protection Authority v Mackenzie (2019) 101 NSWLR 245; [2019] NSWCCA 174 at [221]-[228]. But at least in respect of the question of onus s 18E(1) is quite straightforward to construe. The obligation to commence proceedings before the end of the warranty period in paragraph (a) is qualified by a “distinct provision” in paragraph (e) by way of “exception or excuse” which turns on additional facts, namely, awareness of the breach first occurring in the last six months of the warranty period. It is for the plaintiff, if it wishes to escape from the confines of the general rule in paragraph (a), to establish that it falls within the indulgence granted by paragraph (e). That conclusion is confirmed by the consideration (to which Raysons also referred in paragraphs 32 and 33 of its submissions in this Court) that it would be invidious for a defendant to bear the onus of negating the absence of subjective awareness of any breach of statutory warranty by the plaintiff, that being something which was peculiarly within the plaintiff’s knowledge.

44. [70]

    Further to the above, s 18E(1) is to be read with s 48K(7) which makes commencing within time jurisdictional. Macfarlan JA agreed with my reasoning in Wilson v Chan & Naylor Parramatta Pty Ltd (2020) 103 NSWLR 140; [2020] NSWCA 213 at [14] that “as was explained in Gaynor v Attorney General (NSW), NCAT is under a duty to satisfy itself whether a claim made to it is within its limited authority: see at [22], [100], [131]. That duty carries with it authority to determine, either positively or negatively, whether it has jurisdiction to determine a claim.” That means that irrespective of the stance taken by the parties, NCAT must be satisfied of its own jurisdiction before making any of the orders sought by the plaintiff. For practical purposes, the moving party in NCAT who commences more than six years after the completion of residential building work can only obtain any of the orders it seeks if NCAT is persuaded of the matters in s 18E(1)(e).

45. [71]

    For all those reasons, the onus rested with the Owners Corporation, as the party seeking to avail itself of s 18E(1)(e), to establish the facts entitling it to do so. Ground 3 of the appeal challenged reasoning which was “necessarily implicit” in the Appeal Panel’s conclusion, and thus is within the scope of this Court’s jurisdiction: see Donohoe v Albulario [2025] NSWSC 9 at [32], applying Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 at [69] and [90]-[91]. It follows that ground 3 of the Owners Corporation’s appeal must be dismissed.

The effect of knowledge of other defects

1. [72]

   A great deal of the Owner Corporation’s oral submissions concerned the conclusions drawn by the Senior Member and the Appeal Panel from documents tendered by Raysons which pointed to complaints about defects in the building in the first 5½ years after completion.

2. [73]

   The Owners Corporation’s case was that only on receipt of the RHM Report did it become apparent that it had a claim for breach of statutory warranty. Because the RHM Report was received in June 2020 – within the last six months of the warranty period – it could commence in accordance with s 18E(1)(e).

3. [74]

   Raysons contended that in light of the awareness of defects in the building reflected in those documents, NCAT should have found that the Owners Corporation was neither first aware, nor ought to have been first aware, of the breaches of statutory warranties in the last six months of the warranty period.

4. [75]

   The primary documents were in evidence, and they were summarised in some detail by the Senior Member at [19]-[27]. Those paragraphs are reproduced below, with (numerous) typographical errors corrected (the only error which matters for present purposes is that when referring in [23] and [26] to the Storm Damage Inspection Report dated 17 June 2016, the Senior Member twice referred to it as a Storm Water Damage Inspection Report, dated 17 June 2018; it will be seen in due course that that seems to have caused the Appeal Panel to consider there were two such reports, one in 2016 and a second in 2018).

5. [76]

   Raysons did not contend before me that there were other matters known to the Owners Corporation in the first 5½ years after completion which bore upon its awareness of breaches of warranty. So far as I can see, at all stages in this litigation, Raysons has contended that the awareness derived from the matters in the paragraphs reproduced above excluded the Owners Corporation from making out an entitlement to bring proceedings pursuant to s 18E(1)(e) in the six month window after the end of the six year warranty period.

6. [77]

   The Senior Member accepted the Owners Corporation’s submission, while the Appeal Panel set aside that finding and upheld Raysons’ submission. On further appeal, the Owners Corporation maintains by grounds 1 and 2 that the Appeal Panel was wrong to conclude there was no jurisdiction and erred in construing the test in s 18E(1)(e).

7. [78]

   There are also two unusual and unfortunate disputes bearing upon this issue. The first turns on a large textual discrepancy in the dispositive findings expressed by the Senior Member at first instance at [35]-[37]. The second turns on a sustained mis-statement of the primary findings by the Appeal Panel. I shall return to the details, to the extent that it is necessary and appropriate to do so in this appeal on questions of law.

8. [79]

   However, those discrepancies which complicate the application of s 18E to the facts of this case need not delay my addressing the questions of law concerning the construction of s 18E(1) which were at the forefront of this appeal. The analysis of the parties’ submissions on those issues can safely proceed on the assumption that the Owners Corporation had learned before the final six months of the warranty period that there had been some defects in the concrete structure (including cracking in the car park leading to water penetration). The parties were at issue as to the consequence of that knowledge.

9. [80]

   The Owners Corporation maintained that knowledge of a particular defect in the first 5½ years of the warranty period did not stand in the way of its being able to avail itself of the additional six months in s 18E(1)(e) in respect of breaches of warranty which resulted in other defects in the building. This was illustrated by the following (extreme) example:

10. [81]

    The Owners Corporation submitted that any notion, associated with Onerati v Phillips Constructions Pty Ltd, that there was a single cause of action, had been displaced by the regime with its differing limitation periods and beneficial purpose in affording an additional six months to commence proceedings.

11. [82]

    On the other hand, Raysons sought to uphold the reasoning of the Appeal Panel that knowledge of various defects in the first 5½ years was fatal to the Owners Corporation being able to bring itself within s 18E(1)(e) in order to bring proceedings for breach of statutory warranties in respect of other defects.

12. [83]

    It will be clearest if I start with the construction of s 18E, then give examples of its operation, before providing my reasons.

13. [84]

    If there is an actual defect or deficiency which not only becomes apparent in the first 18 months or 5½ years following completion but which also is rectified, such that no one is aware of any other breach of statutory warranty resulting in a further defect or deficiency and there is no longer any proper basis to consider that there has been a breach of statutory warranty resulting in a further defect or deficiency, then a plaintiff will not for that reason be disentitled from commencing proceedings in the additional six months provided for by s 18E(1)(e) if some claim for breach of warranty first becomes apparent in the last six months of the warranty period. Importantly, the premise of the proposition in the previous sentence is not merely that the first defect has been rectified. It is that following investigation and rectification, no one is aware and there is no basis to consider that the breach of warranty has extended to further defects, even ones that are not immediately manifest.

14. [85]

    The propositions in the previous paragraph are quite complex. That is because the tests in s 18E(1)(e) and (f) are quite complex. Their application in respect of particular facts is apt to be less complex, at least in many cases. But this appeal is confined to questions of law, which means that broadly speaking the application of the statute to contested facts is outside its scope. Because it is awkward merely to write in terms of abstract propositions, it will be helpful to provide an example.

15. [86]

    Suppose that, a year after completion of a residential building, cracks appear in concrete in the carpark, and after moderate rainfall it is apparent that water has intruded into the ceiling cavity of a lot facing the southern boundary of a building. Timely investigations establish that the cracks are entirely superficial and in no way affect the structural properties of the concrete. On the other hand, timely investigations also show that there is a design flaw in all of the awnings on the southern wall of the building, leading to water inflows during ordinary rain accompanied by a southerly wind which in turn are apt to damage the ceiling. Suppose that filler is applied to the cracks in the concrete, and the ceiling as well as the awning of the affected unit are replaced, but nothing is done in relation to the identical awnings on other south-facing walls of the building. Suppose then that 5¾ years after completion, further cracks appear in the carpark, which this time are found to affect the structural integrity of the building, and also that there is found to be water damage to the ceiling of another south-facing apartment.

16. [87]

    On those facts, there had been a breach of the warranty to perform work which prevented the penetration of water that could cause undue dampness or deterioration of building elements (such as the ceiling), contrary to Performance Requirement FP1.4 of the Building Code of Australia (the provision mentioned above which is found in the RHM Report). It was clear to the owners corporation from the investigations which had taken place a year after completion that the breach was as to the design of the awning, and affected all awnings on the southern external wall of the building. Even if subjectively no one entitled to enforce the statutory warranties appreciated that the problem arose for all awnings on the southern wall, anyone who sought to sue for the water damage incurred after 5¾ years would not be entitled to the six month additional period under s 18E(1)(e). That is because the owners corporation ought reasonably to have become aware of the breach which extended to all south facing awnings years beforehand. On the facts of this example, the actual knowledge of the defect involving one awning and one ceiling entailed at least objective awareness that all south-facing awnings manifested the same breach of statutory warranty.

17. [88]

    On the other hand, on the facts hypothesised above, there was nothing about the original cracks in the concrete in the carpark which would actually have led the owners corporation to be aware that there was a structural deficiency in the concrete which manifested itself after 5¾ years. Nor was there anything about the original cracks which ought to have led to the owners corporation reasonably becoming aware of that breach at any earlier time. In those circumstances, it would not be disentitled from availing itself of the additional six month period in s 18E(1)(e) to bring proceedings because of its knowledge of the earlier cracking.

18. [89]

    The same distinction may be seen in the more extreme examples mentioned during the hearing. Mr Corsaro’s example of one bathroom tile becoming unstuck and being repaired but not disentitling an owners corporation from relying on the six month additional window if the slab collapsed after 5 years and 364 days is an obvious case where the investigation and rectification of the tile did not lead either to disentitling subjective or objective knowledge of the breach in respect of the slab.

19. [90]

    In the course of the hearing, I then added a further fact to that example:

20. [91]

    That modified example posits that the investigation of the tile revealed that the wrong concrete had been used throughout the building, which was a breach of statutory warranty resulting in defects which were not confined to the particular tile, but extended throughout the building. In those circumstances, the owners corporation would be disentitled from using the six month window in s 18E(1)(e) because it knew or at least ought reasonably to have known of the breach earlier than the final six months of the warranty period.

21. [92]

    A further point should be made about the earlier example concerning the awnings and the carpark concrete. It is that the inability to commence proceedings in the additional six month window after the six year warranty period in respect of the defectively designed awnings does not prevent the commencement of proceedings in the six month window based on the breach of statutory warranties in respect of the carpark concrete.

22. [93]

    That may be obvious, but it is as well in light of the Appeal Panel’s reasons to explain the textual basis for it. The Appeal Panel had said at [50]:

23. [94]

    Similarly, Raysons advanced the following submission:

24. [95]

    Both the reasoning of the Appeal Panel and the submission advanced by Raysons appear to proceed on the basis that an awareness of a breach of one of the warranties in respect of the concrete slab was sufficient to attribute sufficient awareness to the Owners Corporation in relation to a breach of that warranty in respect of things unconnected with the slab.

25. [96]

    The Owners Corporation submitted that this was too narrow. It submitted that the provision “does not turn on whether the Plaintiff had general awareness of ‘a’ breach of statutory warranty prior to the final six months of the warranty period” but instead “the proper inquiry is when the Plaintiff became aware of the specific breach of warranty that forms the basis of the proceedings”. I would accept that submission, subject to the qualification that the reference to the plaintiff becoming aware must extend to both subjective and objective awareness.

26. [97]

    The syntax of s 18E(1) is equivocal on this issue. Paragraph (e) of s 18E(1) identifies both subjective and objective awareness in respect of a particular claimed breach of statutory warranty. This is clear from the structure of s 18E(1), which commences with the indefinite article “Proceedings for a breach of a statutory warranty must be commenced …” and is followed, in the paragraphs specifying the conditions which must be satisfied, by consistently repeated references to the definite article: “the warranty period for the breach” and “the breach of warranty”. The first time the noun (in this case “breach”) is mentioned, it is preceded by the indefinite article, which connotes that the provision applies generally to all cases of the noun. The latter times the same noun is mentioned, it is invariably preceded by the definite article, which connotes that the references are to the particular instance of the noun in question. That is conventional legislative drafting, connoting that for whatever breach of statutory warranty is alleged, then for that breach, the particular requirements must be satisfied: see A O’Callaghan, PCO Standard (version 1, 9 May 2023), para 4.13.3 and see for example Haertsch v Whiteway (2020) 102 NSWLR 386; [2020] NSWCA 133 at [18].

27. [98]

    The “breach” which is the subject of s 18E(1)(e) is obviously a shorthand for “breach of statutory warranty”. But that is an ambiguous term. In theory, it might mean any claim for breach of the particular statutory warranty – for example, any claim however manifested that residential building work has not been done with due care and skill and in accordance with the plans and specifications contrary to the warranty implied by s 18B(1)(a). Or it might distinguish between, for example, a claim for breach of the warranty that work involving the pouring of concrete be done with due care and skill and in accordance with the plans and specifications, and a claim that the awnings on the building be chosen with due care and skill and in accordance with the plans and specifications. In theory, s 18E(1) might permit a construction which turned on awareness of a particular warranty being breached, rather than awareness of a particular warranty being breached resulting in a particular manifestation of damage. English syntax admits either possibility, thereby giving rise to a constructional choice.

28. [99]

    But that constructional choice is readily resolved. I am unable to accept that the proper construction of s 18E(1)(e) means that awareness of a breach of statutory warranty manifested by a breach of the BCA in respect of inadequate awnings on the south face of a building disentitles a plaintiff from suing on the same warranty being breached in a completely different way manifested by a structurally inadequate slab, for these reasons.

    1. (1)

       First, it would be a highly capricious and unfair construction to give to a provision whose purpose was to avoid or ameliorate the potential capriciousness and unfairness resulting from an inflexible six year period.

    2. (2)

       Secondly, it would not advance the statutory purpose, which is to permit claims which manifest at the end of the warranty period from being enforced through proceedings commenced in an additional six month window.

    3. (3)

       Thirdly, s 18E is to be read as a whole, and in light of the references to “particular deficiency” and “deficiency of a different kind” in s 18E(2), a harmonious construction is that the determination of awareness from earlier knowledge of defects is at the level of particularity in the examples above, and not based merely on a breach of a particular warranty.

    4. (4)

       Fourthly, the fact that there is an objective element to the awareness, such that a plaintiff may be disentitled from suing on a breach of statutory warranty that resulted in a particular defect by reason of earlier awareness of a different defect, tends to support a construction that the “breach of warranty” is the breach of warranty as manifested in a particular defect, rather than the breach of the particular warranty howsoever it has resulted in damage anywhere in the structure. That is because there will be cases where awareness of a particular breach resulting in a particular defect will entail objective awareness of the same breach resulting in other defects elsewhere in the structure.

29. [100]

    Another way of making this point is that if a plaintiff commenced proceedings alleging multiple defects each of which resulted from a breach of warranty, then the fact that one of the alleged breaches of warranty became apparent (either subjectively or objectively) earlier than the final six months of the warranty period (thereby disentitling reliance on the six month window) does not mean that the remaining alleged breaches of warranty also became apparent at that stage (thereby disentitling reliance on the six month window).

30. [101]

    In order to apply s 18E(1)(e) to the proceedings commenced by the Owners Corporation, it will be necessary to attend to the particular breaches of warranty, as manifested in particular deficiencies, in order to determine whether what was sued on was or ought reasonably have been apparent earlier than the final six months. I do not accept Raysons’ submission that any breach of warranty being apparent earlier than 14 January 2020 is fatal to the entirety of the Owners Corporation’s proceedings, and if that is what the Appeal Panel meant at [50], I respectfully disagree. By way of example, focussing solely on the material which is wholly documentary bearing on the claim made in respect of unit 28 and what was known about that unit’s balcony years earlier, it is far from inevitable that the awareness in November 2014 and the months and years thereafter before the defect was (so it appears) remedied disentitled the Owners Corporation from advancing the different claim in respect of the common property adjoining unit 28 in its points of claim.

31. [102]

    However, I also do not accept the Owners Corporation’s submission that it is sufficient that the defects summarised in [19]-[27] of the Senior Member’s decision be different from the allegations made in the points of claim. The question posed by s 18E(1)(e) and (f) is not merely whether the defects are different. It is whether in light of what was known or ought to have been known by January 2020, the Owners Corporation was aware or ought to have been aware of the various breaches alleged. That reflects the ordinary meaning of the test encapsulated in s 18E(1)(e) and (f).

32. [103]

    Accordingly, I agree with the thrust of one submission made by the Owners Corporation, concerning the letter of Freyssinet Australia Pty Ltd (Freyssinet) to Raysons dated 23 August 2019 which relevantly stated:

33. [104]

    Assuming that letter was reasonably able to be taken at face value (the contrary was not suggested), it did not provide a basis for imputing subjective or objective awareness of breaches of statutory warranty pleaded in 2020. That extract did not put the reader on notice that there was something wrong with the concrete; instead, it did the opposite.

34. [105]

    Those examples are relatively clear. It is easy to see that there may be intermediate cases, which may give rise to very difficult, contestable issues concerning whether an owners corporation ought reasonably to have become aware of a breach of statutory warranty resulting in widespread defects throughout the building, based on the limited things it did know. The parties engaged in that exercise, at least in part. In the Appeal Panel, the Owners Corporation supplied a table seeking to contrast the matters known by reason of the complaints in the first 5½ years and the claims advanced in the points of claim. Before me, a revised version of that table was supplied consensually, at the parties’ request, after the conclusion of the hearing (it will become Exhibit C). But there is no utility in summarising let alone resolving the parties’ submissions as to the identicality, similarity or divergence between what was previously known to the Owners Corporation and the case as advanced in its points of claim. Those matters are quintessentially questions of fact.

35. [106]

    For the reasons which follow immediately below, I have concluded that the Appeal Panel erred in point of law in granting leave, and in making its own findings of fact. That is a sufficient reason for allowing the appeal, and it also means that the proceedings cannot be resolved in this Court.

What did the Senior Member at first instance find?

1. [107]

   The critical passage in the reasons of the Tribunal at first instance is at [35]-[37] as follows, with emphasis added to the critical passages:

2. [108]

   Those paragraphs disclose the following difficulties.

3. [109]

   First and foremost, [35] if read literally contains a positive finding that the matters earlier set out “support a finding that the Owners Corporation was aware of breaches of s 18B warranties” years before the last six months of the warranty period. But [37] then holds, dispositively, that “the evidence is not sufficient to support a finding that the Owners Corporation was first aware (or ought reasonably to have become aware) of the [sic] any breaches of warranty for those matters before the last six months of the warranty period”. Read literally, those two paragraphs are difficult to reconcile. Indeed, they are antithetical.

4. [110]

   Secondly, the intervening paragraph [36] refers not to breaches of warranties but to defects. And [37] makes it plain that the Senior Member was drawing a distinction between the defects and a breach of statutory warranty.

5. [111]

   All of this would make sense if, as Mr Corsaro submitted, [35] were understood as a reference to defects or deficiencies, rather than the breaches of the statutory warranties.

6. [112]

   That is not the only difficulty with those paragraphs. Paragraph 35 purports to summarise the totality of the documentary evidence relied on by Raysons and summarised in the preceding paragraphs [19]-[27] concerning identified defects which had been brought to the attention of the Owners Corporation in the 5½ years following completion. But then paragraph 36 refers to some but not all of those defects, and also refers to others. Paragraph 36 refers to the water penetration, calcium leaks and ceiling cracks in the car park, and the defects in relation to units 1, 12, 13, 29 and 40 all of which have been earlier mentioned. However, paragraph 36 also refers to defects in relation to unit 14 which have not hitherto been mentioned. It is unclear whether that is an error. And paragraph 36 fails to refer to the defects in unit 28 which was the first issue notified, or to the water ingress to unit 3, or to the damage to the ceiling of unit 25 documented in June 2016. It is very difficult to explain those discrepancies.

7. [113]

   There are other errors, mostly minor and obvious, in the reasons of the Senior Member. But although some were raised by me at the hearing, ultimately I do not think that the existence of those errors is especially probative on the only issue that matters, namely, whether there has been confusion between breach of statutory warranty and defect in [35]. Save for the reference to “breaches of s 18B warranties” in [35], the Senior Member was clearly distinguishing in [35]-[37] awareness of the defects manifested in the physical structure of the building with awareness of a breach of duty.

8. [114]

   In its written submissions before the Appeal Panel (paragraphs 6, 9 and 23), Raysons maintained that [35] should be read literally. Raysons also emphasised this in oral submissions: “I rely upon the finding firstly, which is at, sorry, paragraph 35 of the judgment which finds expressly, in my view the matters set out at 18-27 support [the] finding [that] the Owners Corporation was aware of breaches of the warranties as early as”. It is not clear how the Owners Corporation responded to this before the Appeal Panel, for its written submissions focussed on characterising Raysons’ ground as one of fact which should not be the subject of a grant of leave, and the parties only supplied the transcript of the first day of argument in the Appeal Panel, which was wholly occupied by Raysons’ submissions. But in this Court there was no opposition from Raysons on the basis that this was a new point to the submissions made by the Owners Corporation to me that “breaches of s 18B warranties” should be read as a slip for “defects” or “deficiencies”.

9. [115]

   The Appeal Panel accepted Raysons’ submission that [35] of the reasons of the Senior Member should be understood literally, notwithstanding that it was in direct contradiction with [37] and contrary to the tenor of the distinction being drawn between awareness of a defect and awareness of a breach of statutory warranty. The Appeal Panel said at [58]:

10. [116]

    The Appeal Panel in [59] then addressed the distinction between being aware of a defect and being aware of a defect giving rise to a claim for a breach of statutory warranty, but stated that:

11. [117]

    The Appeal Panel made the same point at [62]:

12. [118]

    It is clear from those three passages that the Appeal Panel’s view that [35] was to be read literally materially contributed to the findings of fact made by it.

13. [119]

    Finally, and separately from the above, at [81]-[82] in granting leave to expand the appeal to include errors of fact, the Appeal Panel reiterated the point:

14. [120]

    Thus the discretionary grant of leave to extend Raysons’ appeal to questions of fact was also driven by what the Appeal Panel regarded as the inconsistent findings by the Senior Member at [35] and [37].

15. [121]

    Before me, Raysons sought to defend the reasons of the Appeal Panel, and contended that [35] of the reasons of the Senior Member were to be read literally, leading to the following exchange:

16. [122]

    The question is one of construction of the reasons of the Senior Member. It is to be borne in mind that a legal text may contain an obvious error or a contradiction on its face, and that there are well developed rules to deal with such cases.

17. [123]

    Familiar examples are found in the transcripts of oral reasons. Sometimes because of an uncorrected transcription error, but at least equally as often because spoken English – including the spoken English of ex tempore reasons – is full of errors, the legal meaning of what was said is the opposite of its literal meaning. It is not uncommon when reviewing sentencing remarks to see that “manifest excess” and “manifest inadequacy” have been confused. In such cases, the Court of Criminal Appeal proceeds on the basis of the evident intent of the sentencing judge. This is an aspect of the latitude to be given to ex tempore reasons for judgment: see Acuthan v Coates (1986) 6 NSWLR 472 at 478-9.

18. [124]

    Errors may easily occur with double or triple negatives. The reserved judgment in Director-General of the Department of Environment and Climate Change v Taylor [2007] NSWLEC 530 was corrected after publication so as to insert a missing “not” in the sentence at [26] originally published as “The prosecutor submits that it is uncommon for this type of offence to be committed by persons who are otherwise of good character …”. An accidentally omitted “not” was likewise inserted in Hazeltine Corporation v International Computers Ltd [1980] FSR 521. These are far from isolated examples of instances where reasons for judgment, if read literally, express the opposite of what was intended.

19. [125]

    Another example may be seen in Australian Broadcasting Corporation v Chau Chak Wing (2019) 271 FCR 632; [2019] FCAFC 125 at [176]:

20. [126]

    A Full Court of the Federal Court had no difficulty in correcting an obvious slip in a reserved judgment, with Besanko, Bromwich and Wheelahan JJ describing the process as one of “construing” the reasons to refer to what was obviously intended.

21. [127]

    All those are clear cases for the exercise of the power to amend reasons for judgment which contain obvious slips. Their frequency is hard to judge (not least because different courts (and different judicial officers within the same courts) have different approaches to how transparent the exercise of the power should be). Some courts issue amended judgments with nothing, or nothing permanently on the record, to indicate that that has occurred (an example was noted in the Addendum to Kalls Enterprises Pty Ltd (in liq) v Baloglow [2007] NSWCA 191; 63 ACSR 557, another is mentioned in Briggs v Gleeds [2015] Ch 212; [2014] EWHC 1178 (Ch) at [117] and for others see R J Lazarus, “The (Non)Finality of Supreme Court Opinions” (2014) 128 Harvard Law Review 540 (following which the Supreme Court changed its practice)). Other exercises of the power to amend refer opaquely to the correction of unspecified “typographical errors”, while others make it transparently plain what the original form of the document was. I would respectfully suggest that the latter practice is preferable and best accords with openness and transparency in the exercise of the judicial function.

22. [128]

    But the legal meaning of reasons for judgment, or reasons for an administrative decision, which contain an obvious error, is not altered when a correction is made. Even if the error remains uncorrected, the reasons are construed so as to give effect not to their literal words, but to the obviously intended meaning. That is what the Full Federal Court did in Australian Broadcasting Corporation v Chau Chak Wing, and it is what ordinarily occurs when an appellate court or tribunal encounters an obvious uncorrected error.

23. [129]

    This is merely an instance of a more general approach to the construction of legal texts. For example, errors may be made in contractual documents. Dixon CJ and Fullagar J said in Fitzgerald v Masters (1956) 95 CLR 420 at 426-427; [1956] HCA 53 that words may be supplied, omitted or corrected in an instrument where “it is clearly necessary in order to avoid absurdity or inconsistency”. In that case, a clause of a written contract for the sale of land was construed so that “inconsistent” meant “consistent”. In McHugh Holdings Pty Ltd v Newtown Colonial Hotel Pty Ltd (2008) 73 NSWLR 53; [2008] NSWSC 542, “lessor” was read as “lessee”. They are, as Pollock once noted, “[m]ere verbal blunders”, which common law courts corrected without difficulty: F Pollock, Principles of Contract (Stevens & Sons, 7th ed, 1902), pp 255-256. Those are instances where the legal meaning, reached by a process of construction, is the opposite of the literal meaning.

24. [130]

    Other examples may be found in James Adam Pty Ltd v Fobeza Pty Ltd (2020) 103 NSWLR 850; [2020] NSWCA 311 at [46]-[65], which includes at [57] the following:

25. [131]

    This applies not merely to reasons for judgment and contracts and wills. There may even be occasions (hopefully very rare) where legislation contains an obvious error which may be cured by construction: see for example Coal & Allied Operations Pty Ltd v Crossley (2023) 112 NSWLR 130; [2023] NSWCA 182 and the examples given at [43]-[54]. In Director of Public Prosecutions (Nauru) v Fowler (1984) 154 CLR 627 at 630; [1984] HCA 48 a unanimous High Court observed of a statute that “if the strict grammatical sense of the words is adhered to it would lead to an absurdity” and that, in those circumstances, “the court is entitled to attribute to the provision the meaning which it was obviously intended to have”.

26. [132]

    The error in the Senior Member’s reasons is of essentially the same character as in Fitzgerald v Masters and McHugh Holdings Pty Ltd v Newtown Colonial Hotel Pty Ltd where attention has been focussed on two opposite concepts but by an obvious mistake, reference has been made to the wrong one. The whole point of this aspect of the Senior Member’s reasons was to distinguish awareness of a defect from awareness of a breach of warranty, but in [35] those two categories were confused.

27. [133]

    I have concluded that the correct way to read [35] is that it contains a slip, and “breaches of s 18B warranties” is to be read as “defects” or “deficiencies”. I reach that conclusion conscious that not lightly should it be inferred that something as serious as the reasons for a reserved decision of NCAT contain such a basic error. A court will “not readily accept that people have made mistakes in formal documents”, as Lord Hoffmann said in Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101; [2009] UKHL 38 at [23], in a passage approved in Seymour Whyte Constructions Pty Ltd v Ostwald Bros Pty Ltd (in liq) (2019) 99 NSWLR 317; [2019] NSWCA 11 at [10]. However, decision-makers are human and will make mistakes from time to time, which is why there is a well-developed body of law, sometimes known as “rectification by construction”. (There is ongoing debate about the preferable terminology for the latter doctrine (see Zhong v Guan [2024] NSWCA 300 at [23]-[26]) but no doubt of the doctrine’s existence.) The correction of such obvious errors is, as Latham CJ stated in Tatham v Huxtable (1950) 81 CLR 639 at 645; [1950] HCA 56, “warranted by the established principles of construction”.

28. [134]

    Only very rarely will it be appropriate to conclude that the dispositive portion of reserved reasons for determination does not bear its literal meaning. And the principles of construction involved in correcting such a mistake turn on the intended meaning being self-evident. But I am persuaded that the present is such a case. The alternative is that the Senior Member has directly contradicted himself, in the paragraphs which are dispositive of the threshold issue of jurisdiction, and in a way which Raysons did not even attempt to justify, acknowledging (correctly) that if read literally, the reasoning process was “inexplicable in anyone’s terms”. That cannot have been what was intended. Hence I conclude that this was a slip, albeit a slip which was serious and most unfortunate. That slip does not prevent the reasons from being read as the Senior Member must be taken to have intended, namely, in furtherance of the distinction between an awareness of a defect and awareness of a claim for breach of statutory warranty in respect of that defect.

29. [135]

    Accordingly, the Appeal Panel was wrong to accept Rayson’s submission that [35] was to be read literally, and disclosed a basic inconsistency in the reasoning of the Senior Member. To the contrary, [35] contains a slip, and should be read as a reference to the Owners Corporation being aware of the defects or deficiencies as early as December 2014. The Appeal Panel erred in failing to apply the principles of construction to correct self-evidently erroneous legal texts. That was an error of law.

30. [136]

    There is authority to the effect that errors in the interpretation of the reasons of a tribunal are mere errors of fact: see for example Perera v Minister for Immigration and Multicultural Affairs [2002] FCA 743 at [35]-[36] and FAK19 v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCA 1124 at [30]. Similarly, if the question is whether a decision-maker had regard to a piece of information, it is determined by reference to the reasons construed as a whole, and that is a question of fact: see for example Mentink v Commissioner for Northern Territory Police [2022] FCA 1549; 179 ALD 254 at [82]. All those decisions turn on the particular context in which the law/fact distinction was being deployed, a theme central to M Aronson, “Unreasonableness and Error of Law” (2001) 24(2) UNSWLJ 315, and, famously, there is “no satisfactory test of universal application” for what is or is not a question of law: Collector of Customs v Agfa-Gevaert Ltd (1996) 186 CLR 389 at 394; [1996] HCA 36. But those principles are quite different from the circumstances here, where I have concluded that the Appeal Panel misinterpreted the reasons of the Senior Member because it failed to apply settled principles of construction applicable to legal documents.

31. [137]

    After judgment was reserved, I invited the parties to clarify whether it was common ground that any error in reading [35] of the reasons of the Senior Member literally involved a question of law, or, if not, their submissions on the point. Raysons confirmed its submission that the paragraph bore its literal meaning and contended that “no question of law arises as a consequence of the Appeal Panel’s decision in that regard”. No reasons were given for that contention, which I do not accept. The legal meaning of the Senior Member’s reasons involves the application of the principles of construction summarised above, and the failure of the Appeal Panel to apply those principles gives rise to a question of law. I agree with the Owners Corporation’s submission that the misconstruction of the reasons of the Senior Member because of the Appeal Panel’s process of legal construction gives rise to a question of law.

32. [138]

    If I be wrong about that, I would nonetheless regard the error as being within the limited scope of this appeal, on the basis that it was legally unreasonable for the Appeal Panel to grant leave and find error of fact by taking a literal approach to [35] of the Senior Member’s reasons. Legal unreasonableness was expressly relied on by the Owners Corporation by ground 8 of its appeal. If (contrary to my view) the true position be that the meaning of all aspects of the reasons including the correction of obvious errors is for present purposes a question of fact, then a helpful analogy is the way in which jury verdicts on defamatory meaning may be overturned on appeal, as explained in John Fairfax Publications Pty Ltd v Rivkin [2003] HCA 50; 201 ALR 77 at [1] and [6] (Gleeson CJ); [18]-[20] (McHugh J); [111]-[113] (Kirby J); [183] and [185] (Callinan J) and [220] (Heydon J), where unreasonableness manifests legal error by the tribunal of fact which is reviewable on appeal.

33. [139]

    Enough has been said to show that this is determinative of the appeal. There was material error of law in the grant of leave by the Appeal Panel to extend the appeal to questions of fact. When [35] is understood as a slip, the substantial miscarriage of justice and internal inconsistency which drove the grant of leave disappear. Further, much of the reasoning directed to the conclusion that s 18E(1)(e) was not made out turns on the same point. Even so, I shall address the parties’ other submissions, to the extent I am able to do so.

Other errors of law in the reasons of the Appeal Panel

1. [140]

   The Owners Corporation directed substantial submissions against the reasoning of the Appeal Panel at [54]-[55]:

2. [141]

   The Owners Corporation submitted that much of this was factually wrong, notwithstanding that all that was occurring was summarising the uncontroversial summary made by the Senior Member of uncontroversial documents. Its submissions addressed most of the numbered sub-paragraphs:

   1. (1)

      Contrary to (1), although the Appeal Panel referred to drainage problems with the balconies plural, the cross-referenced paragraph referred only to the balcony of unit 28. Further, the Owner’s Corporation contended that the email was about a hole in the balcony, not a “drainage problem”. It was said “there can be no other way to read this finding, it’s a finding about one balcony and a hole. But this has been encapsulated as being drainage problems generally on all balconies as early as 2014; quite incorrect.”

   2. (2)

      Contrary to (2), there was no mention of “cracks in the car park slabs” in [21].

   3. (3)

      Contrary to (3), there was no mention of “further water ingress issues from the balcony to the interior of unit 13” in [22]. There is no mention of a balcony in that paragraph of the Senior Member’s reasons, or in the email itself, or in any of the emails in that chain (Exhibit A pp 510-515).

   4. (4)

      Paragraphs (4) and (7) make the same errors as did the Senior Member, referring to two Storm Water Damage Inspection reports in 2016 and 2018, as opposed to a single Storm Damage Inspection Report dated 17 June 2016. But more substantively, the report concluded that rectification would be carried out. It was said of this:

   5. (5)

      Paragraphs (8) and (9) deal uncritically with the Freyssinet report and later statements to the same effect that the cracks “do not affect the structural adequacy or serviceability of the structure”, as to which it was said that the Senior Member impliedly accepted the Owner’s Corporation’s submission that those documents could not constitute awareness of any breach of statutory duty. The Appeal Panel appeared to have taken the report, which stated that the cracks did not affect structural adequacy or serviceability, as a “critical fact” (to use its language in [55]) establishing awareness of the opposite.

   6. (6)

      Paragraph (10) was irrelevant, because it occurred within the final six months of the six year warranty period.

3. [142]

   I have reproduced above the evidence bearing upon the defects connected with unit 28. No useful purpose would be achieved in undertaking the same task in relation to all of the defects summarised above.

4. [143]

   No attempt was made by Raysons to defend any aspect of this portion of the reasons of the Appeal Panel. I incline to the view that many of the errors identified by the Owners Corporation are made out. But mere factual error is outside the scope of the appeal to this Court. No useful purpose would be served by analysing whether they reflect some form of legal error based on unreasonable or irrational findings, especially in the absence of submissions from both sides including as to how those errors came to be made. I raised that latter issue during the hearing, but was told that counsel had a view upon which he preferred not to elaborate.

5. [144]

   An important aspect of the reasoning of the Appeal Panel was the conclusion that the “defects as first identified in 2014” were the same as those prosecuted in the points of claim. The Appeal Panel said at [64]-[65]:

6. [145]

   After reproducing the list of defects in the points of claim, the Appeal Panel wrote at [67]-[69]:

7. [146]

   I have concluded that there are two distinct errors in those conclusions. The first is that this approach to fact-finding could only be reached if there were a grant of leave, and that grant of leave was driven by a literal reading of [35] which I have concluded was incorrect in point of law. The same erroneous approach may be seen in [67] where once again reliance is placed on the literal meaning of [35].

8. [147]

   In order to make good the proposition in the concluding paragraph that for the purpose of “calculating the limitation period”, knowledge of the water ingress was sufficient to trigger an obligation to investigate and ascertain all breaches of statutory warranty before the expiration of six years, the Appeal Panel relied on what was said in Cyril Smith & Associates Pty Ltd v The Owners – Strata Plan No 64970 [2011] NSWCA 181 concerning the accrual of a cause of action in negligence. The Appeal Panel said at [72] that:

9. [148]

   The Owners Corporation said that this was quite wrong:

10. [149]

    Raysons maintained that what was said in Cyril Smith was applicable at least by close analogy:

11. [150]

    I would accept the Owners Corporation’s submission. There is a fundamental difference between a claim under s 18E(1)(e) and one for negligence. Damage is the gist of an action in tort. But claims for breach of contract operate differently, hence the reasoning in Conquer v Boot [1928] 2 KB 336 and Honeywood v Munnings that a plaintiff may be shut out of enforcing a breach of warranty which resulted in damage of which the plaintiff could never have been aware merely because it has obtained a judgment on the contract in respect of a breach resulting in a different defect. The harshness of that result led to the intervention of statute. Now that a plaintiff’s claim is controlled by s 18E, the commencement of the warranty period does not turn upon the accrual of a cause of action, but on completion of the work. All of that makes it dangerous to rely by way of analogy on the reasoning in an action for negligence. And in any event, the only relevant time period for the purposes of this litigation is whether or not the Owners Corporation is entitled to the benefit of the additional six months specified in s 18E(1)(e). Further, reference to a “duty to investigate” is unhelpful and may have distracted the Appeal Panel from the statutory question, which extended to whether, in light of what was known from the first 5½ years, the breaches of statutory warranty in the points of claim ought to have been apparent (relevantly) prior to receipt of the RHM report.

12. [151]

    Most fundamentally, it was wrong to proceed on the basis that “as long as there was awareness of a breach within the six year defect limitation period, the defence under s18E(1)(e) could not be triggered”. Putting to one side that the relevant awareness is in respect of a period of 5½ rather than six years, and s 18E(1)(e) is not a defence but an entitlement to sue, both of which may be presumed to be mere slips, I do not accept for the reasons already given that awareness of “a” breach of statutory warranty in the 5½ year period was disentitling in respect of any other breach of statutory warranty.

13. [152]

    After reiterating the fact that the Owners Corporation had observed many examples of staining and water ingress, the Appeal Panel continued at [74]:

14. [153]

    Much of that reasoning has been overtaken by statute. The “Onerati v Phillips principle” formerly had the effect that once a judgment was obtained, the warranty could no longer be enforced. That has not been the law since the enactment of s 18D(2) and 18E(2), a point made in paragraphs [36]-[38] of the Owners Corporation’s submission in chief, which Raysons did not dispute, and which is plainly correct. Further, as noted in Parkview Constructions at [92], the different time periods for “major defects” and other defects strain the conventional notion of there being a single cause of action.

15. [154]

    The Appeal Panel then turned to the Owners Corporation’s awareness, saying at [76]:

16. [155]

    This paragraph evidently proceeds on the basis, with which I respectfully agree, that the onus rested upon the Owners Corporation to establish the facts permitting it to commence in accordance with s 18E(1)(e). However, it refers repeatedly to knowledge of defects, as opposed to knowledge (more precisely, awareness) of breaches of statutory warranties. These are quite different, as the Senior Member, with respect correctly, had been at pains to point out.

17. [156]

    The Appeal Panel concluded at [77]:

18. [157]

    The first sentence refers to defects, rather than breaches of warranty. The second sentence reflects the way the Appeal Panel read [35] of the Senior Member’s reasons, which I have concluded discloses error of law.

19. [158]

    The Appeal Panel then addressed the question of leave. It stated at [81]-[82]:

20. [159]

    Those paragraphs make it plain that the perceived inconsistency between [35] and [37] went directly to the grant of leave. That was an error of law, because the Tribunal read gave [35] its literal meaning, which is not its legal meaning.

Conclusion and orders

1. [160]

   In light of the foregoing, I can explain the outcome of the appeal concisely.

2. [161]

   The Owners Corporation sought leave to appeal on the following eight grounds:

3. [162]

   This is a clear case for the grant of leave. The appeal raises questions of principle, including questions of construction concerning s 18E(1)(e) and (f) which are of general application. I did not understand Raysons to submit to the contrary.

4. [163]

   Ground 3 is not made out. Although it is correct that the Appeal Panel did not explicitly, but only implicitly, determine the question of onus, it correctly proceeded on the basis that the onus rests on the Owners Corporation as moving party to establish the facts which enable it to fall within the additional six month window to sue pursuant to s 18E(1)(e).

5. [164]

   However, grounds 1, 2 and 4 are made out. In large part, that is because I have concluded that the Appeal Panel was wrong to proceed on the basis that the reference in [35] of the Senior Member’s reasons to “breaches of s 18B warranties” bore its literal meaning thereby giving rise to inconsistency and something which was nonsensical and, in Rayson’s words, “inexplicable in anyone’s terms”. I have concluded that there was a slip and the Senior Member is to be understood as referring to a defect or deficiency, in contrast to a breach of statutory warranty, being the very distinction he drew in the immediately following paragraphs. That reasoning was prominent in the conclusion of the Appeal Panel that the Owners Corporation did not engage s 18E(1)(e), and in the decision to grant leave to challenge questions of fact.

6. [165]

   A further basis for upholding grounds 1 and 2 is that the Appeal Panel proceeded on the basis that awareness of any breach of warranty was sufficient to disentitle reliance on s 18E(1)(e), even if the resultant defect had been rectified and even if the subsequent breach was unrelated to the defect originally manifested. However, it will also be clear from the above that I have not accepted the Owners Corporation’s submission that so long as the manifested defect is different from what was known to a plaintiff in the first 5½ years, it will not be disentitled from falling within s 18E(1)(e). Instead, it is necessary to consider the entirety of the knowledge obtained in the first 5½ year period, and then determine whether nonetheless a plaintiff was not aware and ought not reasonably have been aware of the breaches of statutory warranty which it seeks to advance in proceedings commenced after the six year warranty period but within the six month window for which s 18E(1)(e) makes provision. To the extent that the Appeal Panel undertook that exercise, its findings were vitiated by the errors described above.

7. [166]

   The Owners Corporation’s written submissions in support of its proposed appeal developed only the first four of those proposed grounds. Raysons responded in the same fashion, and the Owners Corporation’s written submissions in reply were likewise confined to the first four grounds.

8. [167]

   During the Owners Corporation’s oral submissions, this was explained as follows:

9. [168]

   I do not think it is necessary or appropriate to address grounds 5-8, which were not addressed at all in the Owners Corporation’s written submissions, and which were downplayed in oral address, any more than has already occurred. I have nonetheless identified the submissions, and addressed views on the factual difficulties which are apparent in the reasons of the Appeal Panel, because it may assist the parties to narrow or resolve their dispute in circumstances where it is clear, having regard to the limited jurisdiction of this Court, and the failure by the Appeal Panel to address grounds 3-7 of the appeal to it, that the dispute must return to NCAT. Another way of putting this is that there is no utility in my seeking to address whether undoubted errors of fact answer the pejorative characterisations of unreasonable or inadequate reasons or irrelevant considerations or absence of evidence, especially in circumstances where those grounds were not fully developed or pressed.

10. [169]

    In large measure, the Owners Corporation has been successful in this Court. Costs should follow the event. If either side wishes to be heard further as to the exercise of the costs discretion, application may be made within the period specified in r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW).

11. [170]

    Regrettable though it is, the limited scope of appellate jurisdiction granted to this Court does not permit me to do what continues to divide the parties, which is to determine whether such awareness as the Owners Corporation had prior to January 2020 meant that it was, or ought reasonably to have been aware of, some or all of the breaches of statutory warranty in respect of which it did not commence proceedings until the six month “window” after the conclusion of the six year warranty period, seeking to fall within s 18E(1)(e). That involves findings of fact which cannot be made not least because this Court does not have before it all of the evidence bearing upon it (including the statements of lot owners and the cross-examination of the experts). It includes the quintessentially factual dispute summarised in Exhibit C as to the distinctions between the defects emerging in the first 5½ years and the breaches of statutory warranty pleaded in the points of claim.

12. [171]

    Further, Raysons is entitled to the determination of its application for leave to appeal on grounds 3-7 of its internal appeal. The effect of this Court’s orders will be that the entirety of its internal appeal will be before the Appeal Panel of NCAT to be determined, save for questions of construction of s 18E (including onus) which are determined by the judgment of this Court. I share Basten AJA’s view that no order for remitter is necessary; that is the simple consequence of this Court setting aside the dispositive orders of the Appeal Panel: Donohoe v Albulario at [45].

13. [172]

    I cannot conclude without making an obvious observation. Putting to one side legal costs, the dispute between the parties is in relatively small compass. Much of the material adduced before NCAT was not tendered in this Court, and so I am poorly placed to express a view about the work which is involved. Even so, it would not surprise me if each side’s legal costs to date exceeded the amount at stake. Those legal costs will only grow following the outcome of this further appeal. So too will the distraction of decision-makers in the Owners Corporation, Raysons and its insurer, all of whom must have better things to do with their time, while the litigation continues. There is a great deal to be said for the parties making every effort to compromise their dispute without the need to spend further time and money, much of which will be irrecoverable, in relitigating the issues.

14. [173]

    I make the following orders: