Stevenson v Ashton

1. [1]

   HER HONOUR: This is a judicial review of the whole of the decision of an Appeal Panel of the NSW Civil and Administrative Tribunal (“NCAT”).

2. [2]

   By amended summons filed 6 November 2019, the plaintiff seeks firstly, an order that leave be granted to appeal from the whole of the decision of the Appeal Panel of NCAT dated 26 March 2019 in proceedings AP 18/31090 and AP 32837; secondly, that the orders made by the Appeal Panel on 26 March 2019 and 25 September 2019 be set aside; and finally, that the defendant is to pay the applicant’s costs of these proceedings and the proceedings before the Appeal Panel.

3. [3]

   The plaintiff is Phillip Stevenson. The defendant is Jacqueline Anne Ashton. The parties relied upon their joint court books (four volumes).

Legislation

1. [4]

   These proceedings concern alleged breaches of statutory warranties under the Home Building Act 1987 (NSW). It is convenient that I first set out the relevant provisions of the Act.

2. [5]

   Section 3B of the Home Building Act reads:

3. [6]

   Part 2C of the Home Building Act is headed “Statutory warranties”. Section 18B sets out the statutory warranties which are implied in every contract to do residential building work, and which may not be excluded by the terms of any contract or agreement (s 18G). Section 18C provides that a person who is the immediate successor in title to an owner-builder, a holder of a contractor licence, a former holder or a developer who has done residential building work on land is entitled to the benefit of the statutory warranties in s 18B as if the owner-builder, holder, former holder or developer were required to hold a contractor licence and had done the work under a contract with that successor in title to do the work. Section 18D relevantly extends the statutory warranties to any person who is a successor in title to a person entitled to the benefit of a statutory warranty or any person who is a non-contracting owner in relation to a contract to do residential building work.

4. [7]

   Section 18E of the Home Building Act concerns the manner in which proceedings for a breach of a statutory warranty must be commenced. It reads:

Background

1. [8]

   The plaintiff is the current registered proprietor of a terrace house in Darlinghurst previously owned by the defendant (“the property”).

2. [9]

   In early June 2013, when the defendant owned the property, she obtained owner-builder development consent to carry out additions and alterations. On 7 August 2013, a permit was issued. On 14 August 2013, a construction certificated was issued.

3. [10]

   On 23 March 2016, the defendant and the plaintiff exchanged contracts for the purchase of the property. On 24 May 2016, the contract settled. In June 2016, while in occupation of the property, the plaintiff noticed a water leak during heavy rain and consulted with the defendant.

4. [11]

   On 20 November 2016, the plaintiff commenced proceedings in NCAT for breaches of the statutory warranties set out in s 18B of the Home Building Act. It was heard over three days, on 2 and 3 November 2016 and 8 February 2018, by Senior Tribunal Member Robertson (“the Senior Member”).

5. [12]

   The plaintiff claimed that the building contained defects to the following areas:

6. [13]

   The defendant denied that the building contained the alleged defects, with the exception of some which were conceded either at, or shortly prior to, the hearing. It was the defendant’s contention that because “completion” of the works had occurred in May 2014 for the purposes of ss 3B and 18E of the Home Building Act, the Tribunal did not have jurisdiction to determine the plaintiff’s claim for defects which were not “major defects” within the meaning of s 18E(4).

Decision of the Senior Member dated 28 June 2018

1. [14]

   On 28 June 2018, the Senior Member handed down written reasons for his decision: Stevenson v Ashton [2018] NSWCAT. The Senior Member found that the residential building works undertaken to the property had reached practical completion in May 2014. The result of that finding was that the defendant had established an “earlier date for practical completion” for the purposes of s 3B of the Home Building Act, such that the presumption set out in s 3B(3) did not apply.

2. [15]

   The Senior Member made the following determinations:

3. [16]

   The Senior Member found that the reasonable cost of rectifying the defects established by the plaintiff was $42,317.11, and ordered the defendant to pay the plaintiff that sum immediately.

4. [17]

   On 12 July 2018, the defendant filed an appeal against the Senior Member’s decision on the grounds that there was no evidence to support the determination that the defects existing in the first floor balcony and the cladding were “major defects”, such that that those findings constituted errors of law.

5. [18]

   On 25 July 2018, the plaintiff filed a notice of appeal, which was in substance a cross appeal against the Senior Member’s decision, on the following two grounds: firstly, that the Senior Member had erred in holding that the defendant had established an earlier date for practical completion for the purposes of s 3B of the Home Building Act; and secondly, that the Senior Member had applied the wrong legal test for determining whether a defect is a “major defect” within the meaning of s 18E of the Home Building Act, with the result that he erred in finding that the roof and plumbing defects were not major defects.

Decision of the Appeal Panel – 26 March 2019

1. [19]

   On 5 December 2018, the appeals were heard by the Appeal Panel constituted by Senior Members I Bailey AM SC and L Wilson (“the Appeal Panel”).

2. [20]

   Section 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (“CAT Act”) states that internal appeals in NCAT may be made as of right on a question of law, and on any other grounds with leave of the Appeal Panel. At [21] of its decision, the Appeal Panel granted leave to the parties to appeal on both questions of fact and law.

3. [21]

   At the hearing, the Appeal Panel further granted leave to the parties to file supplementary submissions regarding recent authority on the test for establishing “major defects” under s 18E of the Home Building Act.

4. [22]

   On 26 March 2019, the Appeal Panel issued its decision and published its reasons: Ashton v Stevenson [2019] NSWCATAP 67.

5. [23]

   In relation to the date of practical completion pursuant to s 3B of the Home Building Act, the Appeal Panel found at [40] that the evidentiary challenges faced by the plaintiff were substantial and, “in effect, the task was to prove that the residential building work remained incomplete after 20 November 2014.”

6. [24]

   The Appeal Panel noted that the Senior Member had referred to the role of the Council in dealing with the occupation certificate application lodged by the defendant in mid May 2014. As to the completion of the residential building work, the Appeal Panel considered at [42] that the evidence of the Council’s understanding at the time the application was made for the occupation certificate was probative and independent.

7. [25]

   The Appeal Panel stated at [46]-[48]:

8. [26]

   In relation to the test for establishing a “major defect” within the meaning of s 18E(4) of the Home Building Act, the Appeal Panel stated at [68]-[78]:

9. [27]

   At [119]-[121], the Appeal Panel concluded:

10. [28]

    Relevantly to these proceedings, the Appeal Panel reversed the findings of the Senior Member that the first floor balcony and cladding were “major defects” under s 18E of the Home Building Act.

Decision of the Appeal Panel – 25 September 2019

1. [29]

   On 25 September 2019, the Appeal Panel issued its decision as to costs in relation to the 26 March 2019 decision and published its reasons: Ashton v Stevenson; Stevenson v Ashton (No 2) [2019] NSWCATAP 238.

2. [30]

   In its decision, the Appeal Panel ordered that in relation to both proceedings AP 18/31090 and AP 18/32837, the homeowner (the plaintiff in these proceedings) was to pay legal costs of the owner-builder (the defendant in these proceedings) on an ordinary basis as agreed or assessed.

Appeal to this Court

1. [31]

   The plaintiff seeks leave to appeal pursuant to s 83(1) of the CAT Act. Section 83 reads:

2. [32]

   Two cases which deal with the principles governing leave to appeal are Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 (“Das”) and Lee v New South Wales Crime Commission (2012) 224 A Crim R 94; [2012] NSWCA 262 (“Lee”).

3. [33]

   In Das, the Court of Appeal set out the principles to be considered in deciding whether leave to appeal should be granted. At [32]-[33], [35], Basten JA stated:

4. [34]

   Similarly, in Lee, Bathurst CJ at [12] outlined the principles relevant to the granting of leave as follows:

5. [35]

   The nature of the proposed appeal is of relevance in an application for leave to appeal. Where, as here, an appeal can only be on a question of law, then the absence of identifiable questions of law will obviously be fatal to a leave application. There should be some specification of the questions of law which are the subject of the proposed appeal.

6. [36]

   The plaintiff submitted that leave to appeal should be granted pursuant to s 83 of the CAT Act on the basis that the Appeal Panel’s reasons for its decision reveal clear errors of law. Senior counsel for the plaintiff further submitted that this case traverses an important point of law which has not previously been considered, and therefore concerns a matter of public importance (T 4.5).

7. [37]

   Counsel for the defendant conceded that the meaning and application of “major defect” within the legislation may well concern matters of public importance. However, the defendant submitted that the case itself does not flesh out these matters such as to merit the granting of leave (T 2.10).

8. [38]

   In deciding whether leave to appeal should be granted, I am to consider whether the grounds of appeal demonstrate that it is reasonably clear there has been an injustice, in the sense of going beyond what is reasonably arguable that the Appeal Panel was in error.

9. [39]

   For the reasons which follow, I have arrived at the view that the plaintiff has demonstrated a case that is more than reasonably arguable. Additionally, the meaning of “major defect” has not been previously considered in this Court and is a matter of public importance. As such, in the exercise of my discretion, I grant leave to appeal.

10. [40]

    The plaintiff appeals from the whole of the decision of the Appeal Panel dated 26 March 2019 on four grounds. They are that the Appeal Panel erred in holding the following:

    1. (1)

       that establishing a “major defect” within the meaning of s 18E(4) of the Home Building Act requires (a) a proven consequence for the habitation or use of a building, or to the integrity of the building; (b) a proven or probable inability to inhabit or to use the building; (c) probative evidence of the actual impact of a defect upon a building, or what it probably will be; and/or (d) evidence of a real possibility of destruction;

    2. (2)

       that for the purposes of s 3B(3) of the Home Building Act, the plaintiff bore the onus of proving that the residential building work on the subject property was not completed before 20 November 2014;

    3. (3)

       that evidence of the impact upon the inhabitability or use of a building, referred to in s 18E(4)(a)(i) of the Home Building Act, will rarely be a matter for expert evidence and more often will be a matter of fact, not opinion; and

    4. (4)

       that the plaintiff bore the onus of proving that each defect was a “major defect” within the meaning of s 18E(4) of the Home Building Act.

11. [41]

    The advantage of addressing the grounds in order is that the Home Building Act sets out two limitation periods: two years for some defects, and six years for “major defects”. These proceedings were commenced, subject to the Senior Member’s decision as to the date of practical completion, more than two years after the relevant completion date. The effect of that decision is that the plaintiff will only have brought his action in time if the defects are major defects (the first ground of appeal). If the defects are not major defects, the question of practical completion becomes material (the second ground of appeal). At the hearing of these proceedings, senior counsel for the plaintiff submitted that these first two grounds represent the two primary errors vitiating the Appeal Panel’s decision, and that the third and fourth ground “live or die” with them (T 4.41).

12. [42]

    As such, I will now turn to consider the plaintiff’s grounds of appeal in order.

13. [43]

    The plaintiff submitted that in construing s 18E(4) of the Home Building Act, the starting point is the ordinary and grammatical meaning of the words in the provision, having regard to their context and legislative purpose: see SZTAL v Minister for Immigration and Border Protection [2017] HCA 34 at [14] per Kiefel CJ, Nettle and Gordon JJ; HRC Hotel Services Pty Ltd v Chief Commissioner of State Revenue [2018] NSWSC 820 at [108] per Ward CJ in Eq.

14. [44]

    The plaintiff further submitted that the meaning of s 18E is informed by the legislative purpose of the provision. The form of s 18E which is at issue in these proceedings was introduced by the Home Building Amendment Bill 2014 (NSW) (“Amendment Bill”). The explanatory note to the Amendment Bill stated that one of the objects of the Bill was “to amend the [Home Building Act] to deal with” several matters, which relevantly included:

15. [45]

    In the second reading speech of the Amendment Bill in the Legislative Assembly on 6 May 2014, the Hon Stuart Ayres, Minister for Fair Trading, Minister for Sport and Recreation and Minister Assisting the Premier on Western Sydney, stated:

16. [46]

    The plaintiff submitted that the second reading speech may be used to construe s 18E of the Home Building Act: see s 34 of the Interpretation Act 1987 (NSW). The plaintiff argued that the second reading speech indicates that Parliament introduced the definition of “major defect” to expand, not restrict, the range of defects deemed to be “worthy of the six-year warranty period”, which under the Amendment Bill expressly included waterproofing. The plaintiff further argued that the reading speech makes clear that the concept of a major defect forms part of the statutory warranties scheme, which is “a core element of the consumer protection framework” of the Home Building Act. The plaintiff submitted that beneficial legislation designed to protect consumers should not be given a narrow construction. Rather, a “broad and general” approach should be taken to ensure that the construction given to the relevant provision advances the “protective purposes as the Parliament may be imputed to have intended”: see Concrete Constructions (NSW) Pty Ltd v Nelson (1990) 169 CLR 594 at 623 per McHugh J; Devenish v Jewel Food Stores Pty Ltd (1991) 172 CLR 32 at 44 per Mason CJ, referred to with approval in Qantas Airways Ltd v Aravco Ltd (1996) 185 CLR 43 at 60 per Kirby J (dissenting).

17. [47]

    As such, the plaintiff submitted that s 18E(4) of the Home Building Act is a remedial provision. The provision should accordingly be construed so as to give the fullest relief which the fair meaning of its language will allow: see Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 638 per Mason CJ, Brennan, Deane and Dawson JJ, quoted with approval in Antico v Fielding Australia Pty Ltd (1997) 188 CLR 652 at 659-660 per Brennan CJ. It should also be construed in the context of the mischief which Part 2C of the Home Building Act was intended to remedy: see CIC Insurance v Bankstown Football Club (1997) 187 CLR 384 at 408.

18. [48]

    Having set out the context and legislative purpose of the provision, the plaintiff submitted that the Appeal Panel erred in its construction of s 18E of the Home Building Act for the following reasons.

19. [49]

    Firstly, the Appeal Panel’s narrow construction of s 18E(4) is inconsistent with its legislative context and purpose.

20. [50]

    Secondly, the Appeal Panel did not refer to any authority decided by a superior court of record in support of its construction of subsection 18E(4). The plaintiff was not aware of any authority to support the Appeal Panel's reasoning.

21. [51]

    Thirdly, the Appeal Panel’s construction finds no support in the text of s 18E(4). The plaintiff argued that the second element of the causative test set out in s 18E(4)(a), that the defect is “likely” to cause any of the consequences in s 18E(4)(a)(i)-(iii), is undemanding. The word “likely”, in its ordinary and natural meaning, means “probably”, “imports more than a possibility but less than a moral certainty” and a “reasonable prospect” and, in a statutory context, provides for a “not very demanding test”: see State Bank of South Australia v Hellaby (1992) 59 SASR 304 at 312. Nothing in the language of s 18E(4) of the Home Building Act suggests that a defect cannot be a major defect unless the claimant is able to establish by admissible evidence that the defect has already caused one or more of the matters set out in s 18E(4)(a)(i) to (iii).

22. [52]

    Fourthly, the error underlying the Appeal Panel’s construction of s 18E(4) of the Home Building Act can be better understood by applying the Appeal Panel's reasoning to a category of defects other than defects involving water penetration. For example, the definition of “major defect” in s 18E(4) expressly includes “a fire safety system”. A defect within, say, the fire sprinkler system within a block of units which rendered the sprinklers inoperative in the event of a fire would plainly be “likely” to cause the destruction of the building or any part of the building, or the inability to inhabit or use the building or part of the building, within the meaning of s 18E(4)(a)(i) or (ii). However, the plaintiff submitted that if applying the Appeal Panel’s reasoning, the owner of the building would not succeed in establishing that the sprinkler defect is a “major defect” unless the owner led evidence to establish that actual fire damage or destruction to the building or an inability to inhabit the building had already occurred. Similarly, the owner of a building containing defective foundations or footings (referred to in subparagraph (a) of the definition of “major defect” in s 18E(4)) would need to excavate the foundations and demonstrate something more than “incidental damage or superficial deterioration” in order to establish that the defect is a major defect, even if that owner adduced expert evidence to the effect that the likely or inevitable consequence of the defects, if not rectified, would be the partial or complete collapse of the structure. Those outcomes are plainly inconsistent with the text, context and purpose of s 18E(4).

23. [53]

    At the hearing of these proceedings, counsel for the plaintiff further argued that the fire safety example illustrates the irrelevance of the size of the defect. A tiny hole is a gas main, which is capable of easy repair, will still be a major defect for obvious reasons (T 13.5-6). This analogy illustrates that the Appeal Panel focused too greatly on the manifestation of the defect rather than the statutory test (T 13.6-7).

24. [54]

    The plaintiff submitted that for these reasons, the Appeal Panel’s conclusions regarding the meaning and operation of s 18E(4) reveal clear errors of law.

25. [55]

    The plaintiff submitted that it follows that the Appeal Panel’s observations regarding the role of expert evidence in establishing a “major defect” within the meaning of s 18E(4) were also made in error. The question of whether established defects are “likely to cause” any of the outcomes set out in s 18E(4)(a)(i) to (iii) necessarily requires an extrapolation or forecast of future events based on information that is currently known or available, including in relation to the likely performance or deterioration of particular building elements or materials. In most cases, those matters require the application of specialised knowledge based on training, study or experience and are thereby properly the subject of expert opinion.

26. [56]

    The defendant submitted firstly that failure to refer to any superior Court decision is not itself an error of law. Further, were there a decision from a higher Court which contradicts the decision of the Appeal Panel, the homeowner should cite it.

27. [57]

    In response to the plaintiff’s submissions as to the construction of s 18E(4) as setting out a “not very demanding test”, the defendant referred to the Appeal Panel’s decision at [71] to [75]. The defendant submitted that the Appeal Panel made no error.

28. [58]

    As to the plaintiff’s submission that the Appeal Panel’s narrow construction of s 18E(4) was inconsistent with the its legislative context and purpose, the defendant pointed to the Appeal Panel’s reasons at [66] to [78] of its decision.

29. [59]

    The defendant argued that the plaintiff’s analogy to fire safety systems is unhelpful, as by law they are required to be serviced and checked at regular intervals. The defects in this matter are rather in respect of the balcony, cladding and roofing. The defendant submitted that the analogy might be applicable if no rain had fallen on the property for four years. However, the waterproofing system has been subject to the elements, including rain, numerous times in that period. As such, the defendant submitted that the Senior Member was able to determine whether the defects claimed were “major defects” as defined. The defendant submitted that the Appeal Panel was correct in its assessment of the balcony and cladding defaults.

30. [60]

    Finally, the defendant submitted that she agreed with the plaintiff that expert evidence would assist the Tribunal in reaching a conclusion as to whether the consequences set out in s 18E(4)(a) of the Home Building Act were likely to occur. However, she submitted that the plaintiff’s expert evidence was so weak that the Appeal Panel’s observations on the subject were simply remarks made in obiter, and have no bearing on the outcome of the matter.

31. [61]

    Section 18E of the Home Building Act, reproduced earlier in this judgment, sets out time limits for breaches of statutory warranties. Section 18E(1)(b) states that the warranty period for a breach that results in a “major defect” in residential building work is six years, and for “any other case” is two years.

32. [62]

    On 20 November 2016, the plaintiff commenced proceedings. As foreshadowed earlier, this date of commencement falls roughly eight months outside of the two year warranty period for breaches which do not result in “major defects” under Home Building Act. As such, whether the defects which are subject of these proceedings are “major defects” is of critical importance.

33. [63]

    “Major defect” is defined under s 18E(4) of the Home Building Act. Relevantly to these proceedings, s 18E(4)(a) defines major defect to mean a defect in a major element of a building that causes, or is likely to cause, either (i) the inability to inhabit or use the building (or part of it) for its intended purpose; (ii) the destruction of the building (or part of it); or (iii) a threat of collapse of the building (or part of it). “Major element” is relevantly defined under s 18E(4) to mean (a) an internal or external load-bearing component of a building that is essential to its stability; (b) a fire safety system; or (c) waterproofing. At the hearing of these proceedings, counsel for both the plaintiff and defendant agreed that there is no dispute that the defects subject of these proceedings are in a “major element” of a building as defined under the Home Building Act (T 8.34-39).

34. [64]

    Counsel for the plaintiff stated that the focus of the appeal to this Court will be on two defects: those to the balcony and the cladding. At the hearing of these proceedings at first instance, the Senior Member held that both the balcony and cladding defects were major defects. The Appeal Panel overturned these findings. Senior counsel for the plaintiff acknowledged that there were many other defects alleged, but that if the plaintiff cannot succeed on his appeal in relation to these two, there is “no point” addressing the Court on the others (T 9.33-35). This is because the Appeal Panel stated that its reasoning in relation to the balcony and cladding applied equally to the other defects alleged.

35. [65]

    At [49] to [57] of its decision, the Appeal Panel outlined the history of legislative amendments to s 18E of the Home Building Act, and the provision’s present application. In relation to the test for establishing a “major defect” within the meaning of s 18E(4) of the Home Building Act, the Appeal Panel stated at [68] to [70]:

36. [66]

    At the hearing of these proceedings, much was made of the legislative intention behind the amendments made to s 18E in 2014. Senior counsel for the plaintiff submitted that s 18E is intended to serve as remedial legislation expanding the scope for intervention (T 12.9-10). He argued that the Appeal Panel’s reticent use of inverted commas around the words “reforms” in its decision suggested it were not as impressed with the changes to the legislation “as one might expect” (T 13.26-28). However, counsel for the plaintiff argued that because a major defect is more onerous to prove than a “structural defect” as previously required, the reforms have had the practical effect of narrowing homeowners’ recourse to proceedings under the Home Building Act for breaches of warranty.

37. [67]

    In my view, little turns on the the Appeal Panel’s attitude towards the 2014 reforms. The plain language of s 18E defines major defect to mean a defect in a major element “that causes, or is likely to cause” the consequences in s 18E(4)(a)(i) to (iii). It is the Appeal Panel’s application of that phrase which gives rise to this ground of appeal.

38. [68]

    At [71], the Appeal Panel continued its consideration of the test required for establishing a major defect and stated as follows:

39. [69]

    I note that the Appeal Panel’s use of the phrase “must be shown to have, or to probably have, a proven consequence” does not adopt the language of “causes, or is likely to cause” from s 18E(4)(a) of the Home Building Act.

40. [70]

    In IAG Limited t/as NRMA Insurance v Chahoud [2019] NSWSC 767, Basten JA considered the sufficiency of reasons which deviate from statutory language at [12] as follows:

41. [71]

    In these proceedings, it is my view that although it would be preferable for the Appeal Panel to have used the language of s 18E(4)(a), the meaning of its phrasing in this instance is not materially different.

42. [72]

    At [72], the Appeal Panel continued:

43. [73]

    Again, the Appeal Panel’s use of the phrase “proven, or probable” arguably mirrors “causes, or is likely to cause.” However, the Appeal Panel’s following statement that “to prove that a defect has caused either of the consequences there has to be evidence as to the actual impact” suggests that the Appeal Panel was only concerned with defects which had already caused the consequences in s 18E(4)(a)(i) to (iii). Its omission of “likely” consequences was compounded in the following paragraph at [73], when the Appeal Panel stated:

44. [74]

    Again, the Appeal Panel imported the language of the statute in its inclusion of the phrases “possible consequences” and “real possibility of destruction”. However, its conclusion that evidence from the homeowners will be necessary to establish that a major defect exists cannot be correct. The legislation does not require such evidence, nor is the likelihood of a major defect causing the consequences in s 18E(4)(a)(i) to (iii) a matter about which a homeowner may be capable of giving evidence. It may well be that the evidence is better, or even exclusively, the subject of expert opinion. I will return to this issue shortly.

45. [75]

    The Appeal Panel continued at [74] to state, uncontroversially, that a major defect “will have” or “probably will have” certain consequences. However, at [75] to [76], the Appeal Panel stated:

46. [76]

    Nowhere in Vella, the case to which the Appeal Panel refers at [75] of its decision, is it stated that a major defect must be “imminent or probable”. Nor does s 18E(4) require any degree of imminence to the damage. Again, the Appeal Panel’s statements seem to attach a sense of immediacy to major defects which is not otherwise required. Reading its reasons as a whole and fairly, it is my view that although at times the Appeal Panel does state the test in s 18E(4)(a) in its complete terms, the overall effect of its reasons is to seem to require that a major defect is one which is presently manifested and dire.

47. [77]

    At the hearing of these proceedings, counsel for the defendant conceded that the Appeal Panel may have “strayed a little bit from the standard” in its opening remarks (T 32.45). However, she submitted that in applying the statutory test in s 18E to the defects in issue, the Appeal Panel considered the relevant elements as required.

48. [78]

    However, the plaintiff submitted that the Appeal Panel’s observations regarding the role of expert evidence in establishing a major defect within the meaning of s 18E(4) further reveal its error in reasoning. At [77]-[78], the Appeal Panel stated:

49. [79]

    The plaintiff submitted that the Appeal Panel’s statement that the expert evidence amounted to “speculation”, and consisted merely of “some marks on the ceiling below the balcony”, were inaccurate.

50. [80]

    To address these submissions, it is necessary to set out the expert evidence as characterised by the Senior Member and the Appeal Panel in some detail, beginning with the evidence concerning the defects to the balcony and then to the cladding.

51. [81]

    In his decision at first instance, the Senior Member addressed the defects to the balcony at [67] to [93]. It is not necessary for me to reproduce these paragraphs in full here.

52. [82]

    Relevantly, at [67] of his decision, the Senior Member set out the lay evidence of Mr Nisbett, who had concluded that the construction of the balcony did not comply with relevant standards. Mr Dietrich, expert for the respondent, substantially agreed ([69]). At [73], the Senior Member noted that at the hearing of the proceedings, both experts have given combined evidence that without significant further investigation, it was not possible to conclude that the visible stains to the ceiling were the result of the faulty balcony drainage. At [75] of his decision, the Senior Member concluded that he was not persuaded the stains were necessarily a consequence of the defect. Nevertheless, he was satisfied on the basis of the experts’ evidence that the defect existed.

53. [83]

    At [80] to [81] of his decision, the Senior Member concluded:

54. [84]

    In effect, Mr Nisbett provided the opinion that the water penetration would result in certain consequences over time, with which Mr Dietrich agreed.

55. [85]

    In its decision, the Appeal Panel addressed the defects to the balcony at [79] to [88] as follows:

56. [86]

    At [79], the Appeal Panel referred to the Senior Member’s decision at [75], but without the surrounding context. In apparent disagreement with the Senior Member, the Appeal Panel concluded that the visible stains didn’t constitute evidence of the defect. At [83], the Appeal Panel then concluded:

57. [87]

    It is my view that in its reasons, the Appeal Panel did not accurately characterise the Senior Member’s decision or the expert evidence on which it was founded. The Senior Member carefully set out the evidence of Mr Nisbett and Mr Dietrich, as well as the consequences under s 18E(4)(a)(i) to (iii) caused or likely to be caused by a defect for it to constitute a major defect under the Home Building Act ([77]). The Senior Member concluded that although he was not persuaded that the stains were the result of the defect, he was nevertheless persuaded by expert evidence that the defect existed. The Appeal Panel’s statement that the stains on the ceiling were the “only evidence” of the prescribed consequences of water penetration was inaccurate. In considering the role of the expert evidence in establishing a major defect under the Home Building Act, the Appeal Panel again seemed to require that the relevant consequences are presently manifested, which omits the inclusion in s 18E(4)(a) of consequences which the defect is also “likely to cause”.

58. [88]

    The Senior Member’s consideration of the cladding appears at [164] to [184] of his decision. Again, it is not necessary to reproduce it in its entirety here. Relevantly, at [164] to [168], the Senior Member set out the evidence of the plaintiff’s expert, Mr Karsai. Mr Karsai concluded at [167] that the omissions and changes he observed to the cladding “will result in weatherproof failure of all the installed sheeting, with inevitable moisture ingress through the sheeting joints and the missing (or incorrectly installed) flashings. It will also lead to condensation behind the Weatherwrap foil”. It was Mr Karsai’s opinion that the cladding was the result of poor and defected building practices, and was not in compliance with regulations ([168]).

59. [89]

    At [169] of his decision, the Senior Member addressed the defendant’s submissions that Mr Karsai’s report is “nothing more than mere speculation”, as he had done nothing more than comment on photographs. However, at [170] to [171], the Senior Member concluded:

60. [90]

    The Senior Member did not find Mr Dietrich’s evidence persuasive, as he had not addressed the particular defects with which Mr Karsai was concerned. At [172] to [174] of his decision, the Senior Member discussed the photographs which Mr Karsai had used to form his opinion. At [172], the Senior Member accepted Mr Karsai’s evidence that the defects would inevitably in time lead to moisture penetration in the building.

61. [91]

    In its consideration of the evidence concerning the cladding defects, the Appeal Panel stated at [90] to [100]:

62. [92]

    The Appeal Panel’s application of Mr Karsai’s evidence is, with respect, incorrect. At [96], the Appeal Panel again placed too great an emphasis on the present manifestation of the consequences under s 18E(4)(a)(i) to (iii), despite the legislation also permitting defects which are “likely to cause” those consequences to be major defects. Mr Karsai’s extensive evidence was that those consequences were “inevitable”, and it was open to the Senior Member to accept that evidence, and to prefer it to that of Mr Dietrich. As such, the Appeal Panel’s consideration of the cladding defects, and its conclusion at [100] that the Senior Member had reached his conclusion in an “evidentiary vacuum”, was in error.

63. [93]

    For these reasons, it is my view that the Appeal Panel’s conclusions regarding the operation of s 18E(4) reveal clear errors of law.

64. [94]

    The plaintiff submitted that because the defendant raised a challenge to the Tribunal’s jurisdiction to determine the plaintiff’s claims, the defendant bore the onus of proving the factual matters necessary to establish lack of jurisdiction.

65. [95]

    The plaintiff referred to Bailey v Owners Corporation of Strata Plan 62666 [2011] NSWCA 293 (“Bailey”). In Bailey, a developer was sued by an owners corporation in the former Consumer, Trader and Tenancy Tribunal in relation to defective building work. The developer argued that the Tribunal lacked jurisdiction because the owners corporation's claim had been lodged more than seven years after the date on which the work was completed for the purposes of s 48K(7)(a) of the Home Building Act. In order to succeed on that basis, the developer needed to establish two facts: firstly, the date on which the claim had been lodged, and secondly, the date on which the relevant building works were completed. In Bailey at [5], Basten JA stated that the developer “bore the onus of proving the facts required to establish a lack of jurisdiction”.

66. [96]

    The plaintiff submitted that the time at which work was completed within the meaning of s 18E of the Home Building Act is a question of fact: see Vero Insurance Ltd v Kassem [2011] NSWCA 381 at [65] per Campbell JA (Young and Meagher JJA agreeing). The defendant accordingly bore the onus of establishing, as a matter of fact, that all of the work the subject of approval in the owner builder permit had reached practical completion more than two years prior to the date on which the plaintiff commenced proceedings. In that context, in order to defeat the application of the presumption in s 3B(3) of the Home Building Act, the burden of proof fell upon the defendant to establish an “earlier date for practical completion”, being a date earlier than any of the dates set out in s 3B(3)(a) to (d).

67. [97]

    In holding that it was the plaintiff’s “task...to prove that the residential building work remained incomplete after 20 November 2014”, the Appeal Panel incorrectly reversed the onus of proof. The plaintiff submitted that the Appeal Panel’s finding that the Senior Member had decided the issue correctly was accordingly based upon a clear error of law, and for that reason must be set aside.

68. [98]

    The defendant agreed that she bore the onus of displacing the presumption as to the date of practical completion. However, at [58] of the Senior Member’s decision at first instance, he found that the presumption had indeed been displaced. The Senior Member determined this fact on the unchallenged evidence of the defendant’s daughter that she and her parents had moved into the property on 14 May 2014, at which time all work was completed save for the herringbone floor and the carpeting to the attic. Of further relevance to the Senior Member’s determination were tax invoices for roofing materials showing that the roofing works were carried out in March or April 2014; the evidence of a contractor, Mr Edwards, that all works were completed in May 2014 save for the kitchen bench top; and the defendant’s application for an occupation certificate in May 2014 and the Council’s response in July 2014, which noted the discrepancies between the works “as completed” and the approved plans.

69. [99]

    At first instance, the Senior Member found at [61] of his decision that the defendant “had established an earlier date for practical completion for the purposes of s 3B and that therefore the presumption arising pursuant to s 3B(3) does not apply in this case.”

70. [100]

    The defendant submitted that the plaintiff has misconstrued the Appeal Panel comments concerning the onus of proof. The Appeal Panel was not saying that the plaintiff bore the onus, prima facie, of displacing the presumption. Rather, the defendant argued that the Appeal Panel was observing that in order to overcome the findings at first instance, the plaintiff would need to adduce evidence to rebut that finding of fact. The plaintiff did not do so. The defendant argued that the Appeal Panel’s meaning is clear in the context of the surrounding paragraphs and the decision as a whole. As such, this ground of appeal is misconceived and should be dismissed.

71. [101]

    It is common ground that the residential building work to the property was not undertaken pursuant to any written contract. Accordingly, s 3B(2) of the Home Building Act applies so that the completion of the work occurred on the date of its “practical completion”.

72. [102]

    Section 3B of the Home Building Act is extracted earlier in this judgment. Section 3B(3)(d) states that in the case of owner-builder work, the presumed date of practical completion (unless an earlier date for practical completion can be established) is the date 18 months after the issue of the relevant owner-builder permit. The owner-builder permit for the works in these proceedings was issued on 7 August 2013. As such, the date of presumed practical completion under s 3B of the Home Building Act is 6 January 2015. However, at the hearing of these proceedings at first instance, the Senior Member was satisfied that practical completion had in fact occurred at an earlier date of March 2014.

73. [103]

    The Senior Member’s consideration of the issue of the completion date appears at [58] of his decision as follows:

74. [104]

    The Senior Member then considered the plaintiff’s contrary evidence and submissions, and stated that he did not accept them. He then concluded at [62] to [63]:

75. [105]

    The question of whether the presumed date of practical completion had been displaced on the available evidence was in issue before the Appeal Panel. The Appeal Panel’s consideration of the issue appears at [33], [35] to [36] of its decision as follows:

76. [106]

    Having considered the available evidence on which the Senior Member made his determination, the Appeal Panel then stated at [37] to [40]:

77. [107]

    The Appeal Panel then outlined the plaintiff’s evidence, which included the date of issue of the owner-builder permit of 7 February 2015, and the date of issue of the occupation certificate on 22 September 2015. At [47] of its decision, the Appeal Panel concluded that the recognition by the council that the works were complete in 2014 supported the Senior Member’s conclusion that the date of practical completion occurred in March of that year.

78. [108]

    The plaintiff submitted that in considering the significance of the available evidence, the Appeal Panel reversed the onus of proof. At [37], the Appeal Panel stated that for the plaintiff to have commenced proceedings within the limitation period, “he would have to prove” that the residential building work was not completed before 20 November 2014. At [40], the Appeal Panel repeated the assertion that “the evidentiary challenge faced by [the plaintiff] was substantial and, in effect, the task was to prove that the residential building work remained incomplete after 20 November 2014”.

79. [109]

    In Bailey, the Court of Appeal stated that where a party seeks to rely on a limitation period which it must prove by establishing an earlier date, the onus or proof rests with the person making the assertion. In these proceedings, the relevant party is the defendant.

80. [110]

    I note that when considering the Appeal Panel’s reasons, I am not to read “with an eye finely tuned for error”: McGinn v Ashfield Council [2012] NSWCA 238 per McColl JA at [17] (Sackville AJA and Gzell J agreeing); Walsh v Parramatta City Council [2007] NSWLEC 255; (2007) 161 LGERA 118 at [67] per Preston CJ citing Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; (1996) 185 CLR 259 at 291.

81. [111]

    I also bear in mind that what constitutes sufficient reasons for an Appeal Panel differs from that of a court. In Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; (2013) 303 ALR 64 (“Wingfoot”), the High Court stated at [54] to [55]:

82. [112]

    While Wingfoot refers to a medical panel under the Accident Compensation Act 1985 (Vic), the standard for written reasons set out at [54]-[55] above apply equally to the Appeal Panel in this case.

83. [113]

    At the hearing of these proceedings, counsel for the defendant agreed that, read plainly, the Appeal Panel’s statements concerning the onus of proof were wrong (T 25.4). However, she submitted that the context of the statements is important. The Appeal Panel was considering the issue on appeal from the Senior Member’s decision that the defendant had displaced the presumed date of practical completion in s 3B of the Home Building Act. Read as a whole and fairly, the defendant submitted that the Appeal Panel’s comments simply convey that if the plaintiff seeks to overturn the Senior Member’s finding in his favour, he must provide evidence that the presumption is not displaced.

84. [114]

    I am conscious that I must read the Appeal Panel’s reasons as a whole and in context. Nevertheless, the inescapable effect of the Appeal Panel’s plain words is to reverse the onus of proof from the defendant to the plaintiff. This is an error of law.

85. [115]

    Counsel for the defendant submitted that even if the Appeal Panel erred, its error would make no material difference to the outcome because the Appeal Panel nevertheless found that the defendant had established the earlier completion date on the evidence outlined in [40] to [48] of its decision (T 25.32).

86. [116]

    However, in order to exercise my discretion not to set aside the decision of the Appeal Panel, I would need to be satisfied that if the matter were remitted, a different result could not be produced: see Stead v State Government Insurance Commission [1986] HCA 54; (1986) 161 CLR 141. I am not satisfied that a different result could not be produced in this case. The Appeal Panel reversed the onus of proof. More importantly, the defendant and plaintiff presented contradictory evidence on which a different conclusion might be reached if considered afresh.

87. [117]

    As stated earlier, at the hearing of these proceedings, counsel for the plaintiff stated that these first two grounds represent the two primary errors vitiating the Appeal Panel’s decision, and that the third and fourth grounds rise or fall with them, as they concern substantially the same alleged errors (T 4.41). As I am remitting the matter in relation to the first two grounds of appeal, it is not necessary for me to consider grounds three and four.

88. [118]

    For these reasons, I exercise my discretion to set aside the decision of the Appeal Panel dated 26 March 2019. The matter is remitted to NCAT for determination in accordance with law.

89. [119]

    Costs follow the event. The defendant is to pay the plaintiff’s costs of the amended summons filed 6 November 2019 on an ordinary basis.

90. [120]

    As to the costs in relation to the proceedings before the Appeal Panel, the appropriate order for costs is that they are reserved, to allow the parties to make submissions.