Crystele Designer Homes Pty Ltd v Wood [2024] NSWSC 1438

Andrew Hales  |  Karen Hanigan  |  Sean Cooley

Key takeout

• If an application has been made to the Tribunal commencing proceedings on a building claim cause of action within the applicable limitation period, the Tribunal has power to extend the statutory time limit for the pleading or raising of any non-major defect arising under the same cause of action.

• This approach aligns with the Tribunal’s purpose to facilitate the just, quick and cheap resolution of disputes.

Facts

This judgment is in part an appeal from a NSW Civil and Administrative Tribunal (Tribunal) Appeal Panel decision relating to a claim for breach of the statutory warranties in s18B of the Home Building Act 1989 (NSW) (HBA).  Alternatively, relief was sought by the plaintiff for a judicial review of the Appeal Panel’s decision.

Section 18E of the HBA provides that proceedings for a breach of a statutory warranty must be commenced within 2 years from completion of the work for a breach that results in any defect other than a ‘major defect’.

On 14 October 2020, Wood (owner) commenced Tribunal proceedings against Crystele Designer Homes Pty Ltd (builder) alleging defects constituting a breach of the HBA statutory warranties.  Practical completion of the work had occurred on 9 November 2018.  The initial application identified water ingress (a major defect) and painting defects (non-major defects) and claimed that there were ‘other defects to be identified’.  On 13 November 2020, the owner filed Points of Claim which included the additional defects.  The Points of Claim was filed 4 days outside the 2-year limitation period for non-major defect claims.

The Tribunal ordered the builder to pay money to the owner for the cost of rectifying the defects.  The builder applied for an internal appeal of this decision. The Appeal Panel refused leave to appeal and otherwise dismissed the appeal.

The builder commenced proceedings in the Supreme Court on 4 grounds:

• The Tribunal erred in its determination on the basis that the Points of Claim was filed outside of the 2-year limitation period under the HBA (ground 1).

• Jurisdictional error occurred because the Tribunal took into account the list of defects in the Points of Claim, which was not raised in the initial application and thus was time barred from being considered (ground 2).

• There was a separate error on a question of law by the Tribunal in construing the requirements of the building contract relating to the obligation to comply with architectural plans for ceiling heights (ground 3).

• The Tribunal failed to consider a mandatory relevant consideration, being the statutory preference for rectification orders rather than monetary orders (ground 4).

Decision

The Court granted leave to appeal on grounds 1 and 2 and dismissed the appeal, and refused leave to appeal on grounds 3 and 4.

Grounds 1 and 2 – time bar

The Court held that the owner had made an application that claimed both a major defect and a non-major defect, and the Tribunal was permitted to allow the owner to include additional non-major defects in the Points of Claim that were not particularised in the initial application.  There had been no jurisdictional error on the part of the Tribunal either at first instance or on appeal.

The Tribunal is empowered to extend the period for doing anything under any legislation in respect of which it has jurisdiction (Civil and Administrative Tribunal Act 2013 (NSW) – section 41).  The Court held that, at least after the Tribunal is seized with the jurisdiction to hear a building claim which raises a relevant cause of action (ie an application has been made to the Tribunal within time), the Tribunal may extend the statutory time limit for the raising of any non-major defect arising under the same cause of action.  There is no reason to limit this power.  As the purpose of the Tribunal is to resolve disputes in an informal manner, it would be to the contrary to that purpose to require the initial application to be detailed to the degree a court would require. Instead, the Tribunal was permitted to allow further details to be submitted in the later filed Points of Claim. 

The mandated duty on the Tribunal is to facilitate the just, quick and cheap resolution of the real issues between the parties.  If the Tribunal was confined to only resolving the defects that were particularised in the initial application, the owner would either be required to seek relief in court or to forgo them, leaving the real issues unresolved, meaning the Tribunal would be acting inconsistently with its mandated duty.

Ground 3 – construction of the building contract

There was no question of law in relation to the proper construction of the building contract to require the builder to ensure ceiling heights after the floor covering has been affixed, but rather it was a question of fact.  The Court referred to authority that confirms the construction of a contract in this regard includes the application of the facts to an ordinary English word, which is a question of fact, and not a question of law.

Ground 4 – whether the Tribunal failed to consider making a rectification order

The Tribunal’s finding that the owner lacked trust and confidence in the builder, and that the making of a rectification order would, more probably than not, lead to further applications and constant supervision, was a finding of fact.  It was an exercise of discretion and was not a failure to consider whether a rectification order should be made.