Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Building Insurers' Guarantee Corporation v The Owners - Strata Plan 60848 [2012] NSWCA 375
• Hearing dates: 5 September 2012
• Decision date: 16 November 2012
• Before: Macfarlan JA at [1]; Bergin CJ in Eq at [2]; Sackville AJA at [55]

Decision

1. An order in the nature of certiorari quashing the orders made by McLoughlin DCJ on 3 February 2012.

2. Remit the matter to the District Court to hear and determine according to law.

3. The respondent is to pay the applicant's costs of the proceedings in this Court.

Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: [ADMINISTRATIVE LAW] - whether by operation of s 69(5) of the Supreme Court Act 1970 and s 65(1) of the Consumer Trader and Tenancy Tribunal Act 2001 (CTTT Act) the jurisdiction of the Supreme Court to grant an order in the nature of certiorari is limited to decisions affected by jurisdictional error - whether primary judge exceeded appellate jurisdiction conferred by s 67 of the CTTT Act - whether primary judge erred in construction of s 18G of the Home Building Act 1989.
• Legislation Cited: Consumer Trader and Tenancy Tribunal Act 2001 (NSW); Home Building Act 1989 (NSW); Supreme Court Act 1970 (NSW)
• Cases Cited: B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2009) 74 NSWLR 481; Kirk v Industrial Relations Commission (NSW) [2010] HCA 1; 239 CLR 531; Kostas v HIA Insurance Services Pty Ltd & Anor [2010] HCA 32; (2010) 241 CLR 390; Plaintiff S157/2002 v Commonwealth [2003] HCA 2; 211 CLR 476
• Category: Principal judgment
• Parties: Building Insurers' Guarantee Corporation (Appellant); The Owners - Strata Plan 60848 (Respondent)
• Representation: T Lynch/D Hand (Appellant); JT Svehla (Respondent); Mills Oakley Lawyers (Appellant); Snelgroves (Respondent)
• File Number(s): 2012/151653
• Publication restriction: Nil

Decision under appeal

• Jurisdiction: 9101
• Citation: N/A
• Date of Decision: 2012-02-03 00:00:00
• Before: McLoughlin DCJ
• File Number(s): 2011/280490

Judgment

1 MACFARLAN JA: I agree with both Bergin CJ in Eq and Sackville AJA.

2 BERGIN CJ in Eq: The applicant, Building Insurers' Guarantee Corporation (BIGC), seeks orders in the nature of certiorari quashing orders made by the District Court of New South Wales (McLoughlin DCJ) on 3 February 2011 (Owners Corporation of SP 60848 v Building Insurers Guarantee Corporation (Unreported, District Court of New South Wales, McLoughlin DCJ, 3 February 2012)) (the Judgment). The primary judge allowed an appeal brought by the respondent, Owners Corporation Strata Plan 60848 (Owners), pursuant to s 67(1) of the Consumer Trader and Tenancy Tribunal Act 2001 (NSW) (the CTTT Act) from a decision of the Consumer Trader and Tenancy Tribunal (the Tribunal): Owners Corporation of SP 60848 v Building Insurers Guarantee Corporation [2011] NSWCTTT 346.

Background

3 In about 1998/1999 Dorigad Two Pty Ltd (the developer) and Veraxo Pty Ltd (the builder) converted an existing office building in Stanley Street, East Sydney into residential apartments and commercial suites (the Building). These two companies had worked together over a lengthy period and there was no written contract in respect of the conversion of the Building.

4 On around 15 June 1998 FAI Insurance Limited (FAI) issued a home warranty insurance certificate pursuant to Part 6 of the Home Building Act 1989 (NSW) (the HB Act).

5 In August 1999 Owners was constituted and became the registered proprietor of the Building. As a result of the subsequent liquidation of FAI, BIGC indemnified the respondent pursuant to s 103I of the HB Act to the extent that Owners would have been entitled to recover under the insurance contract issued by FAI.

6 In July 2005 Owners lodged a claim with BIGC under Part 6A of the HB Act including relevantly a claim in respect of a lack of waterproofing of the façade of the Building that was causing the ingress of water through the walls and windows of the Building. On 11 January 2007 BIGC denied indemnity on the basis that the builder "was not contracted to waterproof the external façade" of the Building and there was "no breach of statutory warranty."

The Tribunal Proceedings

7 On 30 May 2007, Owners filed an application in the Tribunal, by way of an appeal from BIGC's denial of indemnity (ss 103J and 103ZA of the HB Act). Owners claimed that the builder had breached the warranties in s 18B of the HB Act and that BIGC was not entitled to deny indemnity in respect of the consequential damage from the failure to waterproof the external façade of the Building.

8 The Tribunal proceedings were heard on 27, 28 & 29 October 2010.

9 There was an issue before the Tribunal as to whether a conversation between the principal of the builder, Mr Wray (referred to by the primary judge as Mr Rae - nomenclature which I will adopt for convenience), and the principal of the developer, Mr Onisforou, had occurred in the terms alleged by the builder (in paragraph 27 of Mr Rae's statement). Mr Rae alleged that the conversation was in the following terms:

Rae: The existing windows are leaking and so are the stairwells. There is no cavity in the external walls, it's only a 200mm wall. What do you want me to do?

Onisforou: Don't worry about it. Just keep on building.

10 Mr Onisforou denied that the conversation occurred. The Tribunal preferred the evidence of the builder to that of the developer and found that the conversation occurred ([21] AB 199-200).

11 The Tribunal dismissed Owners' application on 2 August 2011. The Tribunal's Reasons included findings that: the contract between the builder and the developer was wholly oral ([18] AB 199); it was a "do and charge" contract ([15] AB 198); the builder's instructions were that the whole Building was to be stripped out and all external walls were to be retained (the builder was not asked to build any external walls and did not do so) ([15] AB 198); this was not a contract where the builder was required to carry out works to the exterior of the Building ([23] AB 200); "apart from such matters as windows" the builder's contract required work that was limited to the interior of the building ([23] AB 200); the builder did not apply a waterproofing membrane ([16] AB 199); there was no contractual obligation on the builder to carry out any work to apply a waterproofing membrane ([20] AB 199; [23] AB 200); the lack of such a membrane was not a breach of contract by the builder ([20] AB 199); for the builder "to take such steps" (that is waterproofing the Building to make it fit for occupation) was beyond the contract and the warranty in s 18B(e) of the Act did not come into play ([25] AB 200).

District Court Proceedings

12 On 31 August 2011, Owners commenced proceedings in the District Court pursuant to s 67(1) of the CTTT Act by way of an appeal against the Tribunal's decision with respect to a matter of law. The grounds of appeal as claimed in the Summons (AB 81-82) were (with some repetition) that the Tribunal erred in:

1. Making each of the decisions with respect to a matter of law in paragraphs 2 to 9.

2. Deciding that the failure of Veraxo Pty Limited ("Veraxo"), a builder, licensed to carry out residential building work ("work") in the State of New South Wales, under the Home Building Act 1989 (NSW) ("the HBA"), to have applied or installed an external waterproof membrane to the building at 99 Stanley Street, East Sydney ("the Membrane") was not a breach of the statutory warranties contained in s 18B of the HBA ("the Statutory Warranties").

3. Deciding that the Statutory Warranties were not engaged as it was not part of the building contract for Veraxo to apply or install the Membrane.

4. Deciding that the Statutory Warranties would only be engaged where it was a term of the building contract that Veraxo apply or install the Membrane.

5. Deciding that the failure of Veraxo to have complied with the defence contained in s 18F of the HBA was of no application as there was no breach of any of the Statutory Warranties by Veraxo.

6. Deciding that the Statutory Warranties were not engaged and did not apply to the work being carried out by Veraxo.

7. Deciding that in a do and charge building contract the Statutory Warranties upon the builder, in this case Veraxo, are limited and moulded by the express instructions which the builder receives in respect of the work.

8. Deciding that in a do and charge building contract if the builder does not receive an express instruction to do particular work there is no requirement to do it and the Statutory Warranties are not engaged where that work is not done even where the consequence is that the work which is conducted will not:

(a) Result in a dwelling that is reasonably fit for occupation as a dwelling.

(b) Be performed in a proper and workmanlike manner.

(c) Be done in accordance with, and will not comply with, the HBA or any other law.

9. Deciding that in a do and charge building contract if the builder does not receive an express instruction to do particular work which the builder knows or reasonably ought to know ought to be conducted so that the Statutory Warranties are complied with, there is no requirement upon the builder to provide advice in writing of the consequences of the failure to do that work.

13 The parties filed written submissions in November 2011. The primary judge heard oral submissions on 7 December 2011 and then granted leave to the parties to file further submissions and listed the matter on 3 February 2012 for judgment.

14 During the hearing on 7 December 2011 counsel for Owners submitted that as part of the do and charge contract, the builder had done the "external work, such as making bigger window openings, putting in balconies, loggias and painting" (tr 4; AB 109); that the builder received an instruction "to excise" the waterproofing component from the contract (tr 4; AB 109); and that the builder did not comply with (or take advantage of) the defence under s 18F of the HB Act. The primary judge suggested to counsel for Owners that BIGC's case was that the HB Act did not impose any obligation on the builder to go beyond what it was contracted to do. It was at this point that counsel for Owners referred to s 18G of the HB Act and put the following submission (tr 6; AB 111):

So we say that the structure of the legislation is that you can't have a contract that by a term or a requirement in it, or the absence of it, would remove the operative effect of the implied warranties, so that you would end up with is something that doesn't comply, where you don't get a residential dwelling that is fit for occupation.

15 BIGC's counsel did not respond directly to the submission that s 18G of the HB Act had application to the matter. However it was submitted that Owners had to "first get around the finding of fact" by the Tribunal that there was no condition of the contract that the builder would waterproof the external façade (tr 11; AB 116).

The Judgment

16 The primary judge delivered his reasons on 3 February 2012. After referring to some aspects of the procedural history of the matter, the primary judge observed that the "factual matrix" appeared to be agreed and set out the submissions of counsel for Owners in which there was reference to the "uncontradicted evidence" (AB 13; 16). Those submissions as referred to in the Judgment included the following (AB 17):

(l) After three months of commencing the building works, scaffolding was placed around three sides of the external façade of the building.

(m) Scaffolding was in place for three to four months.

(n) After the scaffolding was in place Veraxo did works to the external part of the building this encompassed:

(i) cutting openings for new windows and doors on three of the external walls and creating balconies for each apartment;

(ii) patchwork to external render;

(iii) external painting.

(o) In the course of cutting the holes in the external walls Mr Rae and Veraxo became aware that the external walls were 200mm besser block with no cavity.

(p) By this time Mr Rae had also seen blistering paint and water staining inside of the building, particularly around some of the external windows and the fire exit staircase.

(q) Mr Rae was of the view that the building had an actual problem with water getting in and that something needed to be done to ensure that the external walls were waterproofed.

17 After referring to the conversation between the builder and the developer the primary judge continued (AB 18):

(w) Mr Rae and Veraxo's view was because it was an existing building the waterproofing issue had nothing to do with Mr Rae and Veraxo. Further under their arrangement Mr Rae and Mr Onisforou had their work agreement. Mr Rae and Veraxo only did what Mr Onisforou and Dorigad wanted them to do.

18 The primary judge noted Owners' further submissions including: that Veraxo was prepared to paint the external façade of the Building knowing that the "waterproofing problem had not been addressed" (AB 24); that there was a contractual obligation upon Veraxo to do one of two things; if Dorigad was not prepared to instruct it to fix the water problem, to terminate the contract, or alternatively to issue an advice in writing to Dorigad in terms of s 18F of the HBA Act (AB 24); that where Veraxo undertook all the residential building work involved in the renovation of the Building from commercial offices to seventeen residential dwellings, it could not simply shut its eyes and accept the instruction from Dorigad to do nothing about the water problem (AB 24-25); and that the Tribunal's fundamental error was the legal proposition that the oral instructions issued by Dorigad to Veraxo in effect denuded the statutory warranties of any content with respect to the matters in issue (AB 25).

19 The primary judge also noted Owners' submission that the Tribunal erred in finding that because Veraxo received no instruction under the do and charge contract from Dorigad to apply an external waterproof membrane the statutory warranty was not engaged (AB 26). His Honour said (AB 27, 28-30):

A question with respect to a matter of law that arose for the consideration was, whether or not properly construed, s 18B of the Home Building Act imposed on the builder, an obligation to comply with warranties, in respect of the work that it did not do because it was not part of its contract.

...

The difficulties in this matter arise from the interpretation of those warranties...Clearly then 18B(a), (b), (c), (d) are warranties that are implied because of legislation. 18B(e) also applies. The question is in its construction as to whether the legislature using the word "to the extent of the work conducted in a dwelling that is reasonably fit for occupation as a dwelling". The work of which complaint is made was not conducted, although clearly if the premises were to be made fit for occupation as a dwelling, it is work that should have been conducted and work which the builder was aware should have been conducted in order to make that dwelling reasonably fit for the occupation as a dwelling.

...

The purpose of this legislation is to ensure that successors in title have residential dwellings that are reasonably fit for the purposes of occupation as defined in s 18B(e). Without the application of the waterproofing membrane these residential buildings were not. This was not a small contract in which small internal work was carried out. It was a major construction and contract which, in my view, carried with it, or the benefit of the successors in title, all of the implied warranties and the defendant is not entitled to escape the builder's obligations by contracting out of that warranty by the exclusion of omission and not commission.

Section 18G is in these terms:

"A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void."

There is no dispute, as I have said, nor could there be, that this work that was carried out was for residential building work and with the thence application of part 2C of the Home Building Act. And it is also without dispute that the builder was a licensed contractor for the purposes of that legislation. There was a means provided by the legislation for the builder to escape liability as it were and that is that 18F to which I have referred, the builder chose not to put advice in writing and chose not to repeat the oral instruction that was given to it by Mr Onisforou.

It follows then that it is my view that the learned Tribunal member has erred at law in finding that without express instruction the builder had no contractual obligation under a do and charge contract. The learned Tribunal member, in my view, also erred in finding that s 18F had no application. In my view, it did arise because the builders became specifically aware and brought the attention to the developer of the water penetration and the lack of membrane, more so when painting, and were told "just to keep on building". It was the learned Tribunal member's expressed view that in do and charge contracts statutory warranties do not arise, in my view, they must arise in a contract within that legislation being for a residential building work, then those statutory warranties are implied and, as I have said, cannot be excluded by contract or omission.

20 The primary judge rejected the suggestion that the failure "as to the waterproofing membrane" was faulty design (a matter that was not covered by the FAI Policy or therefore the indemnity) and found that the failure went "specifically to the implied warranties that the legislation has seen fit to impose on builders in contracts such as this" and that it was "not a matter that excludes the insolvent's insurance policy or excludes liability" (AB 30-31). The primary judge also concluded that, "the only means for the builder to have dealt with the matter was pursuant to s 18F and that it failed to do". The appeal was allowed and the matter was remitted to the Tribunal for rehearing (AB 32).

Application to this Court

21 The application for prerogative relief to this Court was heard on 5 September 2012 when Mr T Lynch leading Mr D Hand, of counsel, appeared for BIGC and Mr JT Svehla, of counsel, appeared for Owners.

22 By its Amended Summons filed on 18 June 2012 (AB 1) BIGC contends that the primary judge:

(1) Exceeded the appellate jurisdiction conferred by s 67 of the CTTT Act by deciding "a question with respect to a matter of law" with regard to the construction of s 18G of the HB Act which had not been the subject of the decision before the Tribunal; and

(2) Erred in construing s 18G of the HB Act as operating to treat residential building work not done by a builder (because it was not within the scope of work of the relevant contract) as being work within "the extent of the work contracted" for by the builder for the purposes of s 18B(e) of the HB Act.

23 BIGC originally sought an order that the District Court proceedings be dismissed and that Owners pay the costs of the District Court proceedings. During final submissions BIGC accepted that if successful the only relief to which it would be entitled is an order quashing the decision of the District Court and remitting the matter to the District Court to be dealt with in accordance with law.

Jurisdiction of this Court

24 I have had the benefit of reading the draft judgment of Sackville AJA in respect of Owners' submission that this Court's jurisdiction to grant relief in the nature of certiorari is limited by s 65(1) of the CTTT Act. I agree with Sackville AJA.

Status of "evidence"

25 There may be cases (not this one) in which the Tribunal's findings of fact may be challenged as having been reached against the evidence or the weight of the evidence that may amount to a question with respect to a matter of law: Kostas & Anor v HIA Insurance Services Pty Ltd & Anor [2010] HCA 32; (2010) 241 CLR 390 at [59] per French CJ; at [90]-[91] per Hayne, Heydon, Crennan and Kiefel JJ. However that is to be distinguished from a process of fact finding beyond facts found by the Tribunal. It is not in issue that in an appeal under s 67(1) of the CTTT Act, the District Court must accept the findings of fact by the Tribunal: B & L Linings Pty Ltd v Chief Commissioner of State Revenue (2009) 74 NSWLR 481. However in Kostas v HIA Insurance Services Pty Ltd & Anor, French CJ said at [30]:

By s 67(3)(a) of the CTTT Act, the Supreme Court, where an appeal is successful, may make such orders as the Tribunal should have made. That power is properly exercised where the Court's decision of a question of law leaves only one possible outcome, having regard to undisputed facts or facts found by the Tribunal [53]. Invocation of the ancillary jurisdiction and/or power conferred by s 75A(6) of the Supreme Court Act enables the Court, inter alia, to draw inferences from facts found by the Tribunal or to find facts on materials before the Tribunal which were not in dispute. An occasion for the use of that power would arise, as in this case, where limited fact finding would avoid the need for a remitter to the Tribunal and the imposition upon the parties of additional expense and delay.

26 The proposition that there could be "limited fact finding", in particular "on materials before the Tribunal which were not in dispute" was not endorsed by the majority (Hayne, Heydon, Crennan and Kiefel JJ) in that case. Although the Chief Justice envisaged only "limited fact finding", the difficulties that such an approach may cause would include whether the "materials" were in fact not in dispute; and/or even if the "materials" may not have been in dispute before the Tribunal, whether other evidence (or "materials"), undisputed or otherwise, before the Tribunal affected the veracity of the undisputed materials. It may be very difficult to define the limit of the fact finding in this regard. In any event these observations are not inconsistent with the principle that the District Court must accept the findings of fact made by the Tribunal unless it is contended that those findings are unsupported by the evidence before the Tribunal.

27 One issue in the application was whether the "uncontradicted evidence" referred to by the primary judge in relation to the work on the exterior of the Building was incorporated into the Tribunal's reasons. The reference in the Judgment to the "uncontradicted evidence" (AB 16) was a repetition of Owners' counsel's written submissions (AB 96-98). Although his Honour said that "matters of fact can only be dealt with if there has been a misapplication of the law in the use of those facts or the findings of the Tribunal" (AB 23), it is not clear what alleged findings of fact were relied upon by the primary judge in reaching his conclusions.

28 The primary judge referred to paragraph (n) of Owners' counsel's submissions in which it was suggested that the uncontradicted evidence before the Tribunal was that the builder "did works to the external part of the building" that encompassed "(i) cutting openings for new windows and doors on three of the externals walls and creating balconies for each apartment; (ii) patchwork to external render; (iii) external painting" (AB 17). These were not facts found by the Tribunal. The Tribunal found that the contract between the developer and the builder included a term that "all exterior walls that already existed were to be retained" and the builder was not asked to and did not build any exterior walls ([16] AB 198). The Tribunal also found that the contract did not require the builder "to carry out work to the exterior" and that "apart from such matters as windows, it was limited to the interior" ([23] AB 200). The Tribunal also found that the contract "did not include carrying out work for the application of a membrane to the exterior" ([23] AB 200).

29 The use of the expression "apart from such matters as windows" in this finding was not further mentioned or explained by the Tribunal. From this finding it is reasonable to conclude that the Tribunal accepted that "such matters as windows" could not be characterised as part of the interior work. Although it might also be reasonable to conclude from this finding that the Tribunal accepted that "such matters as windows" was part of the work to the exterior, there was no finding as to what the work on the windows encompassed.

30 The primary judge also referred to paragraph (o) of Owners' counsel's submissions in which it was suggested that the uncontradicted evidence was that "in the course of cutting holes in the external walls" the builder became aware that the external walls were 200mm besser block with no cavity. This was not a fact found by the Tribunal. There was no reference in the Tribunal's reasons to the builder "cutting holes in the external walls". Rather the Tribunal dealt with the competing versions of the conversation between the builder and the developer and found that the builder informed the developer that the "existing windows" were leaking (as were the stairwells), there was no cavity in the external walls and that it was only a 200mm wall.

31 Although it is not clear that the primary judge went beyond the recitation of Owners' counsel's submissions in paragraph (n) and (o) (AB 17), if the content of the paragraphs were accepted as facts, in particular that the builder cut openings for new windows and doors on three of the externals walls and created balconies for each apartment, that would have been impermissible because the Tribunal did not make those findings. The only finding by the Tribunal in relation to "external" work that was included in the do and charge contract was (inferentially) that it included "such matters as windows".

32 Owners also submitted that the language used in paragraph [21] of the Tribunal's reasons (AB 199-200) means that whole of the cross-examination of Mr Rae was incorporated into the reasons. Although the Tribunal's reasons included a general reference to the fact that while Mr Rae was cross-examined "his evidence remained", the balance of the paragraph specifically refers to the passage of his evidence set out in paragraph 50 of BIGC's counsel's submissions. I am satisfied that paragraph [21] is limited to the evidence of Mr Rae and Mr Onisforou in respect of the conversation that Mr Rae claimed he had with Mr Onisforou in relation to the leaking "existing windows" and stairwells and the lack of cavity in the external wall. I am satisfied that the whole of Mr Rae's evidence in cross-examination was not incorporated into the Tribunal's reasons.

Ground 1

33 BIGC submitted that because the Tribunal did not decide any question in relation to or with respect to s 18G of the HB Act, no question about its operation could be made the subject of an appeal to the District Court. It was submitted that the District Court could not decide the appeal to it on the basis of the construction of that provision and in doing so it exceeded the jurisdiction conferred on it by s 67 of the CTTT Act.

34 It was submitted that, in any event, the primary judge did not identify any provision of the do and charge contract in respect of which s 18G of the HB Act might operate. It was also submitted that in circumstances where a contract does not provide for the doing of particular work (the waterproofing work), it is impossible to construe the antecedent decision not to include work in the contract as "a provision of an agreement" as that expression is used in s 18G of the HB Act. It was also submitted that s 18G cannot enlarge the scope of the work beyond that which was the subject of the contract.

35 Owners submitted that the primary judge "gave a coherent and purposive construction to the Act" and that "it was wholly appropriate, and within jurisdiction" for the court to have addressed and made findings concerning section 18G of the HB Act.

36 The relevant sections of the HB Act are as follows:

18B Warranties as to residential building work

The following warranties by the holder of a contractor licence, or a person required to hold a contractor licence before entering into a contract, are implied in every contract to do residential building work:

(a) a warranty that the work will be performed in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract,

...

(e) a warranty that, if the work consists of the construction of a dwelling, the making of alterations or additions to a dwelling or the repairing, renovation, decoration or protective treatment of a dwelling, the work will result, to the extent of the work conducted, in a dwelling that is reasonably fit for occupation as a dwelling,

...

18F Defence

In proceedings for a breach of a statutory warranty, it is a defence for the defendant to prove that the deficiencies of which the plaintiff complains arise from instructions given by the person for whom the work was done contrary to the advice in writing of the defendant or person who did the work.

18G Warranties may not be excluded

A provision of an agreement or other instrument that purports to restrict or remove the rights of a person in respect of any statutory warranty is void.

37 Section 18G renders void agreements between parties pursuant to which the rights of a person (irrespective of whether that person is a party to the agreement) are restricted or removed. For instance, to the extent that any agreement between a developer and a builder restricts or removes rights in respect of any statutory warranties of a subsequent owner of a residence (the construction of which was the subject of the agreement), such provision is void. An example of such a provision would be an agreement by the builder and the developer that the builder and/or the developer would not be liable for any damage caused as a result of any failure to waterproof the subject property. That would be a provision purporting to restrict or remove a subsequent owner's right in respect of the statutory warranty in, for example, s 18B(e) of the HB Act.

38 The primary judge appears to have accepted that the ambit of the warranty in s 18B(e) of the HB Act is defined by the expression, "to the extent of the work conducted" (AB 28-29). However the primary judge concluded that although the work (the waterproofing) "was not conducted", it was "work that should have been conducted" (and the builder knew it should have been conducted) to make the dwelling reasonably fit for occupation and the builder (having notified the developer that there was no waterproofing) was contractually obliged to carry out the waterproofing work (AB 29-30). The primary judge found that the Tribunal erred at law in finding that "without express instruction the builder had no contractual obligation under a do and charge contract" (AB 30).

39 As I read the primary judge's reasons, in particular the references to "contracting out of that warranty" (AB 29) and "statutory warranties" being "excluded by contract or omission" (AB 30), his Honour appears to have concluded that the conversation between the builder and the developer amounted to a provision in an agreement, apparently by omitting waterproofing work from the do and charge contract, whereby Owners' rights in respect of the statutory warranties in s 18B(a), (b), (c) and (e) of the HB Act were restricted or removed. His Honour concluded that this was impermissible and the builder was therefore required to do the work and was liable for breach of the statutory warranty in s 18B(e) of the HB Act because it had failed to avail itself of the defence available under s 18F of the HB Act.

40 The Tribunal found that the terms of the contract were "that set out" in Mr Rae's "oral evidence, as set out in paragraph 15" of the Tribunal's reasons ([20] AB 199). Paragraph 15 was in the following terms:

Mr Wray described Mr Onisforou as a property developer with whom he has worked on over 40 jobs. Mr Wray says that in no instance was there a quotation for the work, there has been no written contract, the engagement was on a do in charge basis, Varexo would organise home warranty insurance, engage sub-contractors, provide regular invoices, and be paid either directly by Mr Onisforou "or one of his entities". The same procedure was followed here. His instructions were that the whole building was to be stripped out, and he was provided with a set of floor plans, and elevation and section drawings. He saw that the drawings had been prepared by Humphrey and Edwards, whom he knew as the architects being engaged by Mr Onisforou at the time. He no longer had a copy of the plans. The drawings were basic, with "a bare amount of detail". These, and some engineering drawings for the slab constructed on the top floor, were the only ones with which he was provided. All exterior walls that had existed were (sic) be retained. Varexo was not asked to build any exterior walls and did not build any.

41 The Tribunal's findings included the following:

In particular, I find that there was no contractual obligation to carry out any work to apply waterproofing membrane to the exterior of the building. Thus, the lack of such a membrane is not a breach of contract by the builder ([20] AB 199);

[T]he deficiency complained of did not arise from any work which the Builder was contracted to carry out ([24] AB 200);

Given that this was a do in charge contract, he could not carry out work beyond his instructions. There was never any guarantee that the builder would be engaged for the work in any event, and the Owner could have retained someone else to carry out the application ([24] AB 200);

[T]o take such steps [the waterproofing work] was beyond the contract of the builder. The warranty does not come into play ([25] AB 200).

42 The Tribunal did not refer to s 18G of the HB Act and did not make any findings with respect to or in reliance on that section. The grounds of appeal in the District Court in which it was necessary to identify the decision by the Tribunal on a question with respect to a matter of law, made no reference to the Tribunal falling into error in failing to decide that a provision of the do and charge contract was that the builder was not to carry out the waterproofing work and that such provision was void under s 18G of the HB Act. The first time s 18G of the HB Act was raised was during final submissions on 7 December 2011 in the exchange between the primary judge and counsel for Owners, referred to in paragraph [14] above.

43 In Kostas v HIA Insurance Services Pty Ltd & Anor, French CJ observed (at [53]) that in the judgment under appeal, Basten JA had said that an appeal under s 67 of the CTTT Act "could encompass decisions which were impliedly made, or necessarily formed part of the decision making process" but that s 67 would prevent "a point of law being taken for the first time on appeal". Although the Chief Justice made no express criticism of these particular findings, his Honour said that the Court of Appeal's reasons "reflected an unduly narrow view of the jurisdiction and powers" conferred by s 67 of the CTTT Act (at [57]). One proposition that the Chief Justice expressly accepted was that the decision the subject of appeal pursuant to s 67(1) of the CTTT Act, "did not have to be a decision of a question expressly disputed by the parties before the Tribunal" (at [59]). It seems to me that the acceptance of this proposition does not, carte blanche, endorse appeals in which a point of law is raised for the first time on appeal. The emphasis should be on the Chief Justice's use of the expression "expressly disputed". It seems to me that the Chief Justice was suggesting that there may be appeals that involve a question with respect to a matter of law that arises out of the decision of the Tribunal albeit that the question was not expressly in dispute before or dealt with by the Tribunal.

44 Owners submitted that it is clear that the primary judge well understood that he could only consider the applicability of s 18G of the HB Act if he first found, as it was submitted he did, that the s 18B warranties applied to the do and charge contract so as to encompass the waterproofing work. It was submitted that the primary judge's findings that the statutory warranties were implied and could not be excluded by contract or omission, were wholly appropriate and that it was within jurisdiction for the primary judge to have addressed and made findings concerning s 18G of the HB Act. Alternatively it was submitted that the primary judge's findings in relation to s 18G were superfluous.

45 Certainly the question of the application of s 18G of the HB Act was not expressly (or otherwise) disputed before the Tribunal. The primary judge appears to have referred to s 18G of the HB Act for the purpose of identifying what he regarded as the error of law committed by the Tribunal in finding (as the primary judge described it) that "without express instruction the builder had no contractual obligation under a do and charge contract" to do the waterproofing work (AB 30). It appears that the primary judge reached this conclusion on the basis that: (1) the builder was aware that the waterproofing work needed to be done; (2) the builder informed the developer of the problems with leaking and the lack of cavity; (3) there is a prohibition in s 18G of the HB Act on contracting out of the statutory warranties; (4) it was not permissible to have a contract with the developer that excluded the waterproofing work; and (5) as a result, even though there was no express instruction to do the work, the builder was obliged to do the work. I am of the view that the findings in relation to and in reliance upon s 18G of the HB Act were pivotal to the conclusions his Honour reached. I do not accept that they are appropriately characterised as "superfluous".

46 Owners made a submission that there are aspects of building work that would be necessarily incidental to the work a builder is contracted to conduct. For instance it was submitted that if a builder is contracted to construct windows in a building and fails to install appropriate flashings thereby allowing water ingress, the failure to install the flashings would fall within the expression "to the extent of the work conducted" in s 18B of the HB Act, notwithstanding that it was work that was not done. I agree with that submission. If a builder in a do and charge contract is instructed to install windows and fails to install flashings, liability under s 18B(e) of the HB Act would be triggered. However that is not what happened in respect of the waterproofing membrane of the external facade of the Building. Assuming for the purpose of the analysis that the builder was contracted to construct and/or renovate and/or install windows in the external facade of the Building, it would be unreasonable to conclude that an incidental part of that work was the waterproofing of the whole of the external facade of the Building.

47 The Tribunal decided that there was no provision in the do and charge contract that the builder was to do (or conduct) the waterproofing work. That does not amount to a provision in a do and charge contract that the builder was to omit from the scope of work for which he was contracted, work that was necessarily incidental to that work. As the Tribunal observed (consistently with the concept of freedom to contract with parties of one's choice) "there was never any guarantee that the builder would be engaged for the work in any event" and the developer could have retained someone else to do that work ([24] AB 200).

48 The application of s 18G of the HB Act was pivotal to the findings made by the primary judge. I am not satisfied that the question of the application of s 18G of the HB Act was a question with respect of a matter of law that was decided by the Tribunal or that was part of the appeal to the District Court. Accordingly I am satisfied that Ground 1 is made out.

49 Even if that is wrong and the primary judge was entitled to consider and apply s 18G of the HB Act, I am satisfied for the reasons stated below that the primary judge fell into error in the application of that section to the decision of the Tribunal under appeal.

Ground 2

50 As I have said earlier, it is not clear what facts the primary judge accepted. However, based on the detailed recitation in the Judgment, it is probable that his Honour accepted as facts the matters referred to as the "uncontradicted evidence" in Owners' counsel's submissions. Those facts were beyond the facts found by the Tribunal. It is not clear what use the primary judge made of those facts but it is probable that they influenced his Honour's conclusions about the conversation between the developer and the builder that the Tribunal found occurred in the terms claimed by Mr Rae. That conversation was the basis upon which the Tribunal found that there was "no contractual obligation to carry out" the waterproofing work ([20] AB 199). The primary judge concluded that the conversation fell foul of s 18G of the HB Act, albeit that there was no identification of any provision of any agreement to which the section applied. I am of the view that it is probable that his Honour impermissibly regarded the so called "uncontradicted evidence" as evidence that the builder was contracted to do work on the façade of the Building. That in part led the primary judge to apply s 18G of the HB Act to make the general findings referred to earlier about statutory warranties being "excluded by contract or omission" (AB 30).

51 The extent of the builder's contract as found by the Tribunal was that the builder was to do the work that the developer contracted it to do. The fact that the builder identified a problem and was not asked by the developer to do any work in respect of the problem does not amount to "a provision of an agreement" purporting to restrict or remove the rights of a person in respect of any statutory warranty. There is no legislative intention in the provisions of the HB Act, and in particular s 18G, to impose on a person who identifies a problem with building works not the subject of its contract and not incidental building work to its contract, a contractual obligation to complete the works.

52 The primary judge erred in construing s 18G of the HB Act as operating in the circumstances to have required the builder to carry out the waterproofing work and its failure to do so as having rendered it liable for breach of s 18B(e) of the HB Act. His Honour should have dismissed the appeal from the Tribunal.

53 The orders I propose are:

1. An order in the nature of certiorari quashing the orders made by McLoughlin DCJ on 3 February 2012.

2. Remit the matter to the District Court to hear and determine according to law.

3. The respondent is to pay the applicant's costs of the proceedings in this Court.

54 SACKVILLE AJA: I gratefully adopt Bergin CJ in Eq's account of the background to this application for relief under s 69 of the Supreme Court Act 1970 ("Supreme Court Act").

This Court's Jurisdiction

55 The respondent ("Owners") submitted that this Court's jurisdiction to grant relief in the nature of certiorari is limited by s 65(1) of the Consumer, Trader and Tenancy Tribunal Act 2001 ("CTTT Act"). Mr Svehla, who appeared for Owners, accepted that in consequence of Kirk v Industrial Relations Commission (NSW) [2010] HCA 1; 239 CLR 531, this Court cannot be deprived of its jurisdiction to quash the District Court's decision, provided that decision was affected by jurisdictional error. However, he contended that s 65(1) of the CTTT Act, when read with s 69(5) of the Supreme Court Act, removes the jurisdiction of this Court to grant relief in respect of non-jurisdictional error by the District Court when making orders on an appeal from a decision of the Consumer, Trader and Tenancy Tribunal ("Tribunal"). Since, so he argued, any error by the District Court in the present case was only non-jurisdictional, BIGC's application had to fail.

Legislation

56 To assess this submission, it is necessary to set out the terms of ss 65 and 67 of the CTTT Act and s 69 of the Supreme Court Act. They are as follows:

CTTT Act

"65 Review by prerogative writ etc generally excluded

(1) Except as provided by this section, a court has no jurisdiction to grant relief or a remedy by way of:

(a) a judgment or order in the nature of prohibition, mandamus, certiorari or other relief, or

(b) a declaratory judgment or order, or

(c) an injunction,

in respect of any matter that has been heard and determined (or is to be heard or determined) by the Tribunal in accordance with this Act or in respect of any ruling, order or other proceeding relating to such a matter.

(2) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the jurisdiction of the Tribunal to determine the matter was disputed if the ground on which the relief or remedy is sought is that:

(a) the Tribunal gave an erroneous ruling as to its jurisdiction, or

(b) the Tribunal erred in refusing or failing to give a ruling as to its jurisdiction when its jurisdiction was disputed.

(3) A court is not prevented from granting relief or a remedy of a kind referred to in subsection (1) in relation to a matter in respect of which the Tribunal has made an order if the ground on which the relief or remedy is sought is that:

(a) the Tribunal had no jurisdiction to make the order, or

(b) in relation to the hearing or determination of the matter, a party had been denied procedural fairness.

...

67 Appeal against decision of Tribunal with respect to matter of law

(1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the District Court against the decision.

...

(3) After deciding the question the subject of such an appeal, the District Court may, unless it affirms the decision of the Tribunal on the question:

(a) make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or

(b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal."

Supreme Court Act

"69 ...

(3) It is declared that the jurisdiction of the Court to grant any relief or remedy in the nature of a writ of certiorari includes jurisdiction to quash the ultimate determination of a court or tribunal in any proceedings if that determination has been made on the basis of an error of law that appears on the face of the record of the proceedings.

(4) For the purposes of subsection (3), the face of the record includes the reasons expressed by the court or tribunal for its ultimate determination.

(5) Subsections (3) and (4) do not affect the operation of any legislative provision to the extent to which the provision is, according to common law principles and disregarding those subsections, effective to prevent the Court from exercising its powers to quash or otherwise review a decision."

Submissions

57 Mr Svehla's submissions rest on the contention that BIGC's application to this Court is for relief "in respect of any ruling, order or other proceeding relating to ... a matter" that has been heard and determined by the Tribunal within the meaning of s 65(1) of the CTTT Act. He says that the District Court's orders relate to the matter heard and determined by the Tribunal because the District Court's orders set aside the Tribunal's determination. It follows, so Mr Svehla argues, that the terms of s 65(1) of the CTTT Act are satisfied.

58 The next step in Owner's argument is that s 69(5) of the Supreme Court Act preserves the operation of s 65(1) of the CTTT Act against what otherwise would be the broader conferral of jurisdiction on this Court by s 69(3) and (4) of the Supreme Court Act. Accordingly, BIGC cannot claim relief in the nature of certiorari unless it establishes that the decision of the District Court was affected by jurisdictional error.

59 BIGC submitted that s 65(1) of the CTTT Act does not apply to an application for relief in relation to a decision of the District Court on an appeal from a Tribunal decision. Mr Lynch contended that the District Court appeal is not, for the purposes of s 65(1) of the CTTT Act, a "proceeding relating to ... a matter" determined by the Tribunal. Thus, so he argued, it is open to BIGC to seek orders quashing the decision of the District Court on the basis of an error of law that appears on the face of the record (Supreme Court Act, s 69(3)), whether or not the error also constitutes a jurisdictional error.

60 Mr Lynch contended that s 65(1) of the CTTT Act is intended to preclude both direct and collateral attacks on orders made by the Tribunal and on orders made in proceedings founded upon the correctness of a Tribunal determination. He gave a number of illustrations of proceedings founded on the correctness of a Tribunal determination. The illustrations included an application to the Registrar of the Tribunal for a certificate which, if filed in a court, operates as a judgment of that court (CTTT Act, s 51); a proceeding to enforce a judgment obtained by filing a certificate; a prosecution against a person for wilfully contravening an order of the Tribunal (CTTT Act, s 52); and a disciplinary complaint against a holder of a contractor licence for failure to comply with a rectification order made by the Tribunal (Home Buildings Act 1989 ("HB Act"), s 51(1)(b)).

Reasoning

61 The CTTT Act does not define the word "proceeding" used in s 65(1). The only other provision in the CTTT Act which uses that word is s 54(3) which is in Div 1 of Part 5 dealing with conciliation. Section 54(1) in Div 1 states that it is the Tribunal's duty, before determining any matter that is the subject of proceedings, to use its best endeavours to bring the parties in the proceedings to an acceptable settlement. Section 54(3) provides that any statement made:

"before the Tribunal or any person at a meeting or other proceeding held for the purpose of [s 54(1)] is not admissible at a hearing of the matter concerned or in any other legal proceedings".

Clearly a proceeding under s 54(3), conducted for the purposes of promoting settlement, would fall within s 65(1) since it would be a proceeding relating to a matter to be determined by the Tribunal.

62 Section 4(1) of the CTTT Act defines "proceedings" to mean:

"proceedings in or before the Tribunal, and includes any alternative dispute resolution procedures under Part 5".

While s 65(1) uses only the singular form of the word "proceeding", the definition of "proceedings" plainly does not include an appeal to the District Court from a decision of the Tribunal.

63 The CTTT Act distinguishes between a "matter" and the proceedings in which the matter is to be determined. This appears from s 54(1) and other provisions in the CTTT Act: see, for example, ss 59(1), 64(b). Section 65(1) makes a similar distinction between a matter that has been or is to be determined and a proceeding (or ruling or order) relating to such a matter.

64 The structure of s 65(1) is that a court is deprived of jurisdiction to grant the specified relief:

• in respect of any matter that has been heard and determined by the Tribunal; and
• in respect of any matter that is yet to be heard or determined by the Tribunal.

The reference in s 65(1) to "any ruling, order or other proceeding relating to such a matter" is apt to describe interlocutory rulings, orders or proceedings in a matter that is yet to be heard or determined by the Tribunal.

65 The most natural reading of s 65(1) is that it is intended to protect from challenge, otherwise than as provided in Part 6, a final decision by the Tribunal that resolves a matter and also any ruling, order or other proceeding made or undertaken by the Tribunal in the course of dealing with the matter before it. The reference to "proceeding" in s 65(1) is explained by the need to protect the Tribunal from an injunction restraining the Tribunal from undertaking a proceeding (such as a hearing) for the purposes of resolving the matter.

66 Section 65(1) of the CTTT Act therefore protects a final decision of the Tribunal disposing of a matter, an interlocutory decision made in the course of dealing with the matter and any proceeding undertaken by the Tribunal for the purposes of hearing and deciding the matter. It is unnecessary for the purposes of this case to decide whether s 65(1) precludes collateral attacks on the orders of the Tribunal in proceedings founded on the correctness of the Tribunal's orders.

67 The language and context of s 65(1) do not suggest that it was intended to protect from judicial review not only the Tribunal's rulings, orders and proceedings, but also orders made by the District Court on an appeal against a decision of the Tribunal with respect to a matter of law. Section 65(1) makes no express reference to decisions or orders of the District Court notwithstanding that s 67(1), which creates the right of appeal to the District Court, is also in Part 6 of the CTTT Act. If s 65(1) was intended to have the operation attributed to it by Owners, it might have been expected to say so expressly.

68 Section 65(1) must also be read in context. Section 65(2) and (3) appear to be drafted on the assumption that s 65(1) protects only rulings or orders made by the Tribunal itself. These provisions preserve the jurisdiction of a court to grant relief in defined circumstances where the Tribunal itself has made a ruling or order. They do not appear to contemplate that s 65(1) might (on Owners' argument) extend to orders made by the District Court on appeal from the Tribunal.

69 It is also necessary to bear in mind that s 65(1) of the CTTT Act is to be interpreted having regard to the "basic rule" that privative clauses are construed:

"by reference to a presumption that the legislature does not intend to deprive the citizen of access to the courts, other than to the extent expressly stated or necessarily to be implied."

Plaintiff S157/2002 v Commonwealth [2003] HCA 2; 211 CLR 476, at [32], per Gleeson CJ; at [72], per Gaudron, McHugh, Gummow, Kirby and Hayne JJ (citing Public Service Association (SA) v Federated Clerks' Union [1991] HCA 33; 173 CLR 132, at 160, per Dawson and Gaudron JJ).

70 It is true that by reason of the decision in Kirk v IRC, Owners' argument, if accepted, would not deprive a person wishing to challenge a decision of the District Court on appeal from the Tribunal of access to this Court for the purpose. But if s 65(1) were given the meaning attributed to it by Owners, it would substantially curtail the scope of judicial review conferred by s 69(3) and (4) of the Supreme Court Act. In reconciling these provisions, the "basic rule" counts against giving s 65(1) of the CTTT Act a wider operation than the statutory language requires.

71 For these reasons, s 65(1) of the CTTT Act does not restrict the scope of this Court's jurisdiction under s 69 of the Supreme Court Act.

Error of Law

72 I agree with Bergin CJ in Eq that the primary Judge erred in law in holding that s 18B(e) of the HB Act applied to the building contract so as to make the builder liable for failing to render the building waterproof. In view of the Tribunal's finding of fact that the building contract did not extend to waterproofing work, s 18B(e) could not operate to impose an implied term requiring the builder to carry out waterproofing work so as to render the premises fit for occupation as a dwelling. It follows that the primary Judge also erred in law in holding that the absence of any requirement in the building contract to perform waterproofing work attracted the operation of s 18G of the HB Act.

73 As I have explained, it is not necessary for BIGC to demonstrate that the District Court's errors of law constituted jurisdictional errors. That question was not addressed in depth in the argument and I express no opinion on it.

74 I agree with the orders proposed by Bergin CJ in Eq.

**********

Amendments

20 November 2012 - changed plaintiff's to defendant's name
Amended paragraphs: 42 and 58

21 November 2012 - BIGC's changed to Owner'sOwner changed to BIGC
Amended paragraphs: 58

Decision last updated: 21 November 2012