Anderson v Gold Emporium Pty Ltd t/a Cordony Constructions

NCAT Consumer and Commercial|2021-10-06

Solicitors: Creagh & Creagh (Respondent) File Number(s): HB 20/31442

Introduction

In these proceedings the applicants, Mr and Mrs Anderson, seek compensation in respect of what are alleged to be defective residential building works carried out by the respondent, Gold Emporium Pty Ltd trading as Cordony Constructions. As presented at the hearing, the applicants' claim was for $381,213.16. The applicants' claims arose in respect of five alleged defects or categories of defects, each said to involve a failure to carry out work with due care and skill and/or a failure to comply with the National Construction Code of Australia, in breach of the warranties implied into the contract between the parties by s 18B of the Home Building Act 1989 (NSW) (HBA): 1. Cost to remediate bathroom $9,661.39 2. Cost of rectifying non-compliant back deck $135,037.66 3. Cost of rectifying non-compliant lower area $182,327.06 4. Cost to move pool filter and box $2,969.61 5. "Cost to rectify defects listed in Attachment NN other than back deck" $1,650
The balance of the applicants' claim related to the cost of engaging experts, the "cost of retaining Angus Donald to project manage beyond the original defect period", legal costs and the filing fee in the Tribunal.
The respondent resists the claim, submitting that the applicants have failed to establish that the works carried out by the respondent are defective or in breach of the implied warranties. The respondent submits in the alternative that, if any building works are defective, the Tribunal should make an order pursuant to s 48O of the HBA requiring the respondent to rectify the defective works. The respondent relies upon s 48MA of the HBA which provides: 48MA Rectification of defective work is preferred outcome in proceedings A court or tribunal determining a building claim involving an allegation of defective residential building work or specialist work by a party to the proceedings (the responsible party) is to have regard to the principle that rectification of the defective work by the responsible party is the preferred outcome.

Background

The following statement of the background to the proceedings either reflects factual matters which are not in dispute or documentary material received in evidence. Save to the extent that matters are said to be in dispute, the statement of the background to the proceedings represents my findings of fact. Most of the correspondence from the applicants was signed by Mr Anderson only. Nevertheless Mr Anderson was acting on behalf of both applicants and, unless it is necessary to distinguish between actions or communications from one of the applicants, I will in these reasons for decision treat such communications as sent on behalf of both applicants.
The applicants own a property in Epping New South Wales. On 10 May 2017, the applicants and the respondent entered into a Simple Works Contract in the Australian Building Industry standard form for the carrying out by the respondent on the applicant's property of alterations and additions to the existing dwelling on the property. The scope of works the respondent agreed to carry out was that set out in drawings numbered A01 to A18 and S000, S00 and S01 to S05 which formed part of the contract. The drawings were prepared by Mr Angus Donald, who conceded in the course of oral evidence at the hearing that, although he prepared the drawings and purported to act as architect in relation to the contract, he was not, at the time he did so, a qualified architect.
The work the subject of the contract included excavation and construction of a lower ground floor including storage, study, media and games rooms, the removal of an existing bathroom and ensuite and reconstruction of the bathroom and ensuite with new tiling, the construction of a concrete suspended deck at the rear of the property, and supplying and laying tiles to the lower patio area, among other work.
The work commenced on or about 15 May 2017. Practical completion was achieved on 11 October 2018.
In late 2018 or early 2019, the applicants raised with the respondent the proposition that marble tiles installed by the respondent in the main bathroom were discoloured. Discussions between the parties concerning this issue did not lead to a resolution and in April 2019 the applicants engaged Mr Nicholas Joannides of Partridge Remedial Pty Ltd to provide a report concerning four items: 1. Discolouration of floor tiles in the main bathroom 2. Water seepage and water flow to lower level bathroom and under the house 3. Water ingress through roof into rear ceiling at the rear of the first floor 4. Water ingress into head of doorway in lower-level at the rear of the first floor deck.
Mr Joannides' report, dated 1 May 2019, concluded that there was "most likely water ingress at the bottom of the bathroom west and north walls that is likely the cause of the discolouration to the bath and shower enclosure floor tiles". The report made recommendations for further investigation of the source of the water ingress. The report also made recommendations in relation to further investigation of the other issues in respect of which Mr Joannides had been retained to advise. The report was provided to the respondent. The applicants were dissatisfied with the respondent's response.
At some point in April 2019 the parties involved Fair Trading NSW in their dispute. Although both parties filed detailed chronologies, the circumstances in which and mechanism and communication by which the involvement of Fair Trading NSW was instigated was not disclosed. It is noted at this point that neither party's chronology was adequately cross-referenced to the evidence. Where I have not been able to identify the source document for any assertion included in either party's chronology, I have not regarded that assertion as established by the evidence.
The respondent retained Mr Chris Zervos of CRD Building Consultants and Engineers to prepare a response to Mr Joannides' report. Mr Zervos attended the premises on 15 May 2019. Mr Zervos did not prepare a formal report. In an email to the respondent dated 28 May 2019, Mr Zervos criticised Mr Joannides' report and suggested further testing and investigation.
On 29 May 2019 Mr Andrew Kerin, an inspector from Fair Trading New South Wales, attended the site. On 31 May 2019 Mr Kerin issued a rectification order requiring the respondent to undertake a number of items of rectification of defective work including: "4 Rectify the crack in the PVC adapter connecting the downpipe to the stormwater system outside the western wall of the ensuite bathroom. 5 Investigate and rectify the source of the water ingress through the eastern end of the first floor rear balcony. Make good affected surfaces, including the internal access door of the garage."
The rectification order required the work to be completed by 14 June 2019.
On 13 June 2019 Fair Trading New South Wales issued a notice of completion of the rectification order. On the same day the applicants emailed Mr Kerin suggesting there was still water ingress. Mrs Anderson stated: "It only took four half buckets of water. The water ingress is still occurring - from the eastern wall balcony tracking through the wall into the garage and perhaps affecting the door to swell". Mrs Anderson requested that the matter remain open.
Mr Kerin attended the site on 14 June 2019. On 20 June 2019, Mr Kerin forwarded an email to the parties in the following terms: "I am emailing to clarify the process from here on in. I will not be issuing any further rectification orders. I will be sending a building inspection report which will identify the outstanding issue being the continual water ingress through the rear balcony. From here it is up to Mr Anderson to consider if he wishes to allow the Contractor to rectify again or seek alternate resolution. This is also the option for pursuing issues which I have not included in the rectification order. Mr Cordony you mentioned that you would want to rectify your work. I said this was a tricky detail and if the matter was pursued at NCAT this may be considered by a member and possibly give you another attempt. At present there is water ingress which needs to be fixed. The Contractor has had two attempts to rectify it and now Mr Anderson needs to consider his options. I will send the report shortly and that will conclude my involvement."
About that time the applicants retained Mr Poole of Hydromedial Consulting to provide advice and investigate the cause of water ingress into the main bathroom and lower area.
At that time Mr Adam Cordony, the director of the respondent, sought access to the site, which was refused by the applicants.
Mr Poole's initial report described as "The Photographic Defect Analysis Report" was completed on 16 October 2019. Mr Poole concluded in respect of the bathroom: that the cavity masonry walls did not incorporate a "compliant damp proof course", that the cavities were breached by mortar and demolition debris, that the head flashing above the bathroom window had been incorrectly located, and that the waterproofing membrane was defective.
Mr Poole asserted that the cause of the defect in the waterproofing membrane was related to "insufficient surface preparation, non-compliant application and ground subsidence caused by a delay in the connection of a downpipe to a stormwater drainage point outside the affected corner of the bathroom."
In relation to the tiled balcony and alfresco area Mr Poole expressed the opinion that the balcony "presents multiple major defects", stating that the builder had "made no allowance for grade generally and for tiles and tile bed when setting out the finished height of the concrete slab. Or, the internal timber flooring battens were of insufficient height to allow for the bifold door frame to be set to a height which would allow for the tile bed to be installed with grade away from the bifold door". Mr Poole stated that "the tiles on the balcony have been installed level and without provision for surface drainage toward the external edge and into the gutter". Mr Poole also stated that the waterproofing was non-compliant and that "critical vertical upturns at the abutments with walls have been omitted." Mr Poole further stated that the waterproofing detailing at junctions of dissimilar materials had not been incorporated which had resulted in "deficient adhesion of the membrane to the surface and consequential water penetration at these locations". Finally Mr Poole expressed the opinion that "minimum surface drainage requirements have not been achieved".
Mr Poole identified other defects relating to the roof and garage roof which are not relevant in these proceedings.
Mr Poole's report attached over 130 pages of photographs, including photographs of a corner of the bathroom in which the tiling and screed had been removed to reveal the waterproofing membrane. In three photographs a screwdriver is shown lifting part of the membrane to disclose a hole. The captions to the photographs disclose that they were taken on 7 August 2019.
The evidence disclosed that Mr Poole had undertaken the removal of the tiles and screed to expose the membrane. The respondent had not been invited to attend or permitted to have its own expert observe the removal of the tiles and screed. The respondent maintained that the hole in the membrane was caused when Mr Poole removed the tiles and screed and that the existence of the hole in the membrane was not evidence of defective work. That was a substantial issue in the proceedings.
After receiving Mr Poole's report the applicants wrote to the respondent offering the respondent the opportunity to meet with Mr Poole on site, provided the respondent paid Mr Poole's professional fees for attending. The applicants did not at that stage provide a copy of the report to the respondent or inform the respondent of Mr Poole's name.
On some date in December 2019 or January 2020 the applicants lodged a further complaint with Fair Trading New South Wales.
An email from Mr Cordony to Mr Mark Daniel, Manager - Dispute Resolution and Inspection Branch, Fair Trading New South Wales, sent on 14 January 2020, referred to telephone conversations on 23 December 2019 and 10 January 2020 in relation to the respondent's dispute with the applicants. In that email Mr Cordony recorded that the applicants had claimed to have provided Fair Trading with a "new defects analysis report outlining a significant new number of alleged defects". Mr Cordony noted that the respondent had not been provided with details of the report.
In response Mr Daniel stated "I am yet to review the new complaint from Mr Anderson but intend to do so this week."
On 17 January 2020, Mr Pearson, of Creagh & Creagh, the respondent's solicitors, wrote to the applicants conveying the respondent's offer that it would agree to hold an on-site meeting with the applicants' building expert on the basis that the respondent would meet the cost of the expert's attendance, capped at two hours, provided that the respondent was provided with an electronic copy of the full defects report prior to the meeting. On 24 January 2020 the applicants responded to the respondent's solicitors offering to provide the full Hydromedial report, provided the respondent paid $495 being the cost of two hours of Mr Poole's time and $6,975.80 being half the cost of Mr Poole's report.
On 7 February 2020 Mr Daniel advised Mr Cordony that the applicants had not given permission for Mr Poole's report to be made available to the respondent but indicated that he would list the items raised as concerns.
Later on 7 February 2020, Mr Daniel emailed to Mr Cordony "a defect list based on the items raised in the Hydromedial report which Mr Anderson has not approved for release to you". Mr Daniel referred to a meeting to take place on site, noting that Mr Poole from Hydromedial would be on-site in attendance "to provide clarification where required".
The defect list identified 14 items as follows: 1 Floor waste not installed to standard. 2 DPC does not extend across cavity. 3 Head flashing over window incorrectly installed. 4 Cavity bridged by mortar and debris. 5 Waterproof membrane to bathroom incorrectly installed. 6 Mechanical fastenings to metal roofing goods not compliant 7 Defective roof tile pointing. 8 Roof tiles not adequately fastened. 9 Sarking not correctly installed. 10 Exposed tile batten not suitable for exterior use. 11 Non-compliant roof flashing to roof vent. 12 Defective waterproofing to rear balcony. 13 Defective tiling to alfresco area - delamination; absent expansion joints; inadequate fall. 14 Defective sill flashing to gable end fixed glazing.
On 11 February 2020 a meeting occurred on site, attended by Mr Daniel, Mr Anderson, Mr Cordony, Mr Chris Cordony (Mr Cordony's father), Mr Poole, and Ms Ruth Polin, a solicitor from Creagh & Creagh.
On 18 February 2020 Mr Daniel issued a rectification order specifying works to be completed by 10 April 2020. The work required by the rectification order included: "3 Ensure that the waterproof membrane to the shower/bath area of the bathroom is installed to ensure it is continuous and meets the performance requirements of the BCA. Destructive investigation revealed membrane had been laid over exposed concrete moisture barrier at the wall/floor junction and had failed. This failure allowed moisture penetration from the exterior to the interior of the bathroom." "9 Identify and eliminate water penetration to the rear balcony. There is evidence of water penetration from the rear balcony particularly associated with, but not limited to, perimeter flashing; waterproofing of wall junctions and fixing of balustrade posts." "11 Ground floor rear rooms have evidence of moisture penetration. This area abuts an existing footing which is above floor level and groundwater lies against the footing." "12 Ensure that filter box beside the pool fence is constructed in accordance with the requirements of the standard and does not provide footholds or handholds that may be used to gain entry to the pool area. The top of the filter box was observed to be within the non-climbable zone of the railing pool fence."
On the same day the applicants wrote to Mr Pearson, purporting to set out two options for the resolution of the respondent's obligations. The first option involved the respondent undertaking the rectification work subject to conditions including the provision of a scope of works prior to undertaking any work, supervision of all work by Mr Poole, and the respondent paying compensation in the amount of approximately $40,000. The second option involved the respondent paying the costs of rectification work, estimated to be around $194,000.
On 19 February 2020 Mr Pearson wrote to the applicants in the following terms: "Both parties are in receipt of the rectification order issued 14 February 2020. Our client confirms that it will comply with the terms of the rectification order and to this end has started organising the appropriate resources to complete the works. We note the rectification order places the obligation upon yourselves, to provide access to the site within normal working hours. We assume that you will comply with your obligation."
On 19 February 2020, the applicants responded that they intended to comply with their obligation to provide access but stated that that was "conditional upon" the conditions outlined in the applicants' letter of 18 February 2020.
After further correspondence between the parties, on 21 February 2020 Mr Daniel emailed the parties stating: "As the work is being carried out under an Order from Fair Trading please refer to the order and the issuing correspondence. • Gold Emporium Pty Ltd has been ordered to carry out rectification work and it is a condition of their licence that they comply with the order. • The owner of the property is required to provide access during normal working hours for the contractor to comply with the order. As the contractor is responsible for the rectification work it the responsibility of the contractor to ensure the work is carried out by individuals they are confident are appropriately qualified and licensed to do that work. It is to the benefit of both parties if the owner and the contractor can co-operate in scheduling the work and agreeing on the scope of the work and the proposed methodology. However, it is not the owner's role to direct the work, who should do it or how it should be done. In order for the contractor to be able to carry out the work the owner needs to provide access to the site during normal working hours. As discussed with both parties the contractor should not be impeded from carrying out the rectification work. If, at the expiry of the Order period, the owner is not satisfied that the Order has been complied with Fair Trading will make an assessment of whether the Order has been complied with. The property belongs to the owner and the owner has every right to refuse access to the site if they are not satisfied that the contractor will carry out the rectification work to their satisfaction. I am happy to discuss any aspect of this process with either party and the options available to them."
The applicants forwarded a number of emails to Mr Pearson following that email. In those emails the applicants referred to an incident in December 2019 in which Mrs Anderson claimed to have been followed and intimidated by Mr Cordony. That incident was the subject of evidence in the proceedings. To the extent necessary, I will address it further below. In the correspondence following Mr Daniel's email, the applicants sought to impose upon the respondent a condition that the respondent provide a scope of works and proposed methodology for the rectification works. The applicants also sought an apology to Mrs Anderson.
On 22 February 2020, Mr Pearson emailed the applicants: "There have been a number of emails from you in relation to what should be straight forward arrangements for undertaking rectification works that were discussed on site and the subject of the rectification order. Adam Cordony and his assistant builder will attend at 7 am Monday to conduct the works. The works will follow the schedule our client has forwarded to you. They will not enter the house unless invited and will at all times be respectful of you and Mrs Anderson."
On 23 February 2020 Mr Cordony forwarded to the applicants a "proposed methodology for stage 1 rectifications commencing Monday, 24 February 2020". The work listed in the attachment to that email is not the subject of the present dispute.
On 28 February 2020 Mr Cordony forwarded to the applicants the "proposed schedule and methodology for stage 2 of the rectification works". The email identified the requested dates for the works as 3 to 5 March and 9 and 10 March but noted "if you have any times that would be more suitable for yourself and Kathy, please let me know". The work listed in the attachments to that email included item 9 from the rectification order, that is "identify and eliminate water penetration to the rear balcony". The proposed rectification involved "supply and install new aluminium angle to wall and floor junctions and re-waterproof" and "remove tiles around balustrade posts and re-waterproof with bandage".
The applicants responded that day suggesting that Thursdays and Fridays were not suitable to the applicants and stating: "2. The scope and methodology you have provided for item 9 is, In Mat Poole's words "totally inadequate" and will not achieve anything close to be deemed a satisfactory solution. I am ready, willing and able to allow you to bring your own expert on site to get advice on how to make a suitable approach to rectification. 3. Although it is up to you to decide the scope, scheduling and methodology, I strongly suggest you prepare and present a full scope and methodology for undertaking the deck and bathroom work following input from an expert rather than the piecemeal and substandard approach appearing to lack skill, care and diligence in terms of the contact, BCA and standards that you propose."
That afternoon Mr Daniel emailed the parties: "I have been copied in on correspondence between the parties in scheduling and scoping work. I understand there is disagreement over the scope of work to address item 9 and also aspects of item 3. As discussed separately with both parties, please don't allow this to derail completion of other items in the order. It is in the interests of both parties to complete as much of the rectification work as possible. Item 9 appears to be the most contentious and problematic. While progressing your discussions of a methodology you can both agree to, please ensure the other items in the Order are completed in the most timely manner."
At 2:55 pm that afternoon the applicants emailed Mr Cordony, stating: "I have no issue with you addressing and progressing items 4, 5, 6, 7, 8, 10, 11, 12 and 13 on the Rectification Order. Item 9 is major work requiring an integrated and skilful methodology to do it properly. When you only provide dribs and drabs of how you propose rectifying the balcony /deck, this is not suitable. For me to be comfortable and to obtain expert advice, I need the full proposed methodology from start to finish. The advice I have received on what you have proposed so far is that it would be premature and inefficient to build the hob at this stage. Given the lack of fall on the deck, significant and expert setting up of waterproofing is required, not just removal of a row of tiles. Under the contract I am relying on your skill and expertise to rectify to the BCA and Standards. I will be having Mat Poole examine your work when responding to Fair Trading in relation to my satisfaction with the outcome of the Rectification Order. Similarly with the main bathroom (items 1,2 and 3). Significant work is required to rectify the water penetration and damage done. I require a full and complete scope of works and methodology rather than piecemeal, ad hoc information so that Mat Poole can advise me."
On 10 April 2020 Mr Cordony forwarded to Mr Daniel a report recording the completion of the defects listed in the rectification order of 18 February 2020 other than items 3 and 9. Mr Cordony reported that he had engaged Mr Chris Zervos, a building expert from CRD Building Consultants, to assess the outstanding defects and provide a scope of works.
On 14 April 2020 an on-site meeting took place at which Mr Zervos inspected the bathroom and rear deck.
At 6:46 pm on 14 April 2020 Mr Daniel emailed both parties, attaching an outline of the extent to which the rectification order of 14 February 2020 had been complied with, "as provided by" the respondent, and noting that items 3 and 9 remained outstanding. Mr Daniel stated that, unless advised otherwise by 16 April, he would accept that the other items in the order had been complied with. Mr Daniel requested that the parties provide a timeframe for finalising a methodology for compliance with items 3 and 9 by 17 April 2020 "so that I am able to make a decision whether an extension to the rectification order will provide a reasonable scope for compliance".
Mr Zervos reported the outcome of his site inspection by email to Mr Cordony on 15 April 2020. Mr Zervos stated: "Main Bathroom - 1. I firstly note that within the dwellings main entry, entry foyer and entry into the main bathroom, I had not been able to observe any signs of water damage to external or internal finishes. 2. It was advised by the Building owner that an invasive inspection and a report had been conducted by another Building Consultant company and that many breaches of the Australian Standards and Building Code of Australia's had been found in relation to the bathroom waterproof membrane. 3. I confirm I have not received a copy of this report commissioned by the Building Owner and the Building Owner had advised that they are not willing to provide me with a copy of the report unless Adam Cordony pays 50% of the costs of the report. 4. It was advised by the Building owner that there are many defects identified from the intrusive investigations with the bathroom and the bathroom does not comply with the Building Code of Australia and Australian Standards. 5. It was advised by the Building owner that a flood test of the bathroom membrane was not conducted by the building consultants prior to the invasive inspection and demolishing of tiles in the north/west corner of the shower recess (adjacent to the bathtub). 6. It was advised by the Building owner that their Building Consultant Company had conducted thermal imaging and moisture testing in the shower recess and that in result of this testing the north/west corner had indicated high moisture. 7. It was further advised by the Building Owner that the high moisture was taken as an indication of water and moisture ingress from outside the bathroom. 8. It was clear the shower recess in the north/west corner (adjacent the bathtub) had fully adhered mosaic tiles and tile bedding (also known as screeding) that was demolished and removed (an area approximately 300mm x 300mm) as a result of the alleged invasive investigations. 9. It was visually evident that in the location of the invasive instigations and the demolition of floor and wall tiles within the North/west corner of the shower recess (adjacent to the bathtub), that the membrane was damaged, ripped and cut. 10. It was also advised by the Building Owner that the report has detailed the cause(s) of the high moisture within the bathroom north/west corner and alleged to have damaged the waterproof membrane. In summary whilst considering the second hand advice received by the Building Owner and not being privileged to the intrusive investigation findings, I am unfortunately having to advise that I cannot assist with developing a scope that will address the alleged cause of the waterproofing failure. I further clarify that if you may wish to instruct me to conduct my own testing and invasive investigations, the first step I would need to take is to confirm the performance of the waterproof membrane installed. This is conducted in form of conducting a flood test (including dye test) of the shower recess and within the main bathroom. Unfortunately I must advise this flood test is no longer possible to be undertaken as the waterproof membrane has been disturbed and clearly breached. Whith considerations of the above, my recommendation would be to obtain a copy of the Building Owners commissioned expert report to confirm that there was or was not a flood test conducted to confirm the performance of the waterproof membrane within the main bathroom. Secondly the report will assist to understand what diagnostic steps were exactly taken prior to, during and after the invasive investigations and as to get an understanding from the other expert involved as to what is exactly claimed or alleged to be in breach of the Australian Standards and the Building Code of Australia. Unfortunately due to the above listed circumstances and without the information I cannot make any suggestion, recommendations and or generate a scope to rectify the bathroom shower recess in an order that will address the particular cause of damage. Southern Balcony 1. It was observed that there was water staining within the stairwell adjoining the balcony, Water staining is evident in the adjoining gaming room and garage entrance. 2. It was observed that the bedroom below the balcony has staining along the lower parts of the wall and floor. 3. The external walls of the southern balcony had various openings created, it was advised by the Building owner that these openings of the external walls had been created by their Building Consultant company whom conducted intrusive investigations and the partial removal of the wall claddings and vapour barrier. These wall openings have not been temporarily covered and remain open to the elements. 4. The wall openings show a waterproofing termination angle installed that will appears to vary from 10- 20mm approx. 5. The wall openings shows the exposed timber frame members to be weathered and damp. The vapour barrier installed behind the cladding has been cut and breached by the intrusive investigations. 6. Two whole saw openings where made on the eastern adjoining roof flashing, however where temporarily masked up. 7. Wrought iron balustrade posts are recessed in the slab and positioned under the tiled floor coverings 8. Tile floor covering levels where measured by a digital level and the digital level indications varied between 0.3-1.1% in multiple locations. Considerations where made, that the balcony is open draining and a floor survey and surface water drainage assessment would be a better indication of how the catchment area is performing I must firstly advise that the open areas of the external walls are causing further damage by being left open. I would recommend immediately that the Building Owner have their Consultant attend to site to dry out structural timber members, temporarily treat them or protect and cover these areas that have been left open to the elements (as did along the adjoining roof flashing). Considerations to my scope of works will have to now include (but separate) these areas as contributing damage. In regards to the notes above and my inspection my opinion is clear that the waterproofing termination heights installed to the southern balcony are non-compliant to AS 4654.2 - 2012 Waterproofing membranes for external above-ground use Part 2: Design and installation. I further explain this by inserting the below snippet from AS4654.2-2012; '2.8.1.1 Height Where the membrane termination is to prevent water entry, the finished height of the membrane above the finished surface level shall be sufficient to prevent water, including wind driven, flowing over the top of the membrane.' I would expect to see the wind class in this region to be categorised for this balcony between N1-N3, this however still needing to be confirmed exactly and will be detailed in my scope of works. With the above said I believe I can develop a scope of works to address the waterproofing membrane termination heights by the 27th of April, as previously advised on the 30th March 2020. I do however have to state at this stage I am unaware of any other items being claimed or problems being raised with the balcony. It was advised by the Building Owners expert report and intrusive investigations had identified multiple issues. I therefore suggest prior to this scope being finalized and implemented that I am provided a copy of the report, if the Building Owner would like me to review and or consider any other Defect claimed. If this also is the case and I am provided additional information, further time will be needed for me to make the requested additional review and considerations."
Mr Zervos included in the email a table extracted from AS4654.2 which specified "vertical upward termination heights" for wind classes N1 -N3 as follows: N1, 40mm; N2, 50mm; N3, 70mm.
On 17 April 2020 Mr Pearson wrote to Mr Daniel reporting that Mr Zervos had advised that he was unable to provide a methodology in respect of the bathroom without access to the "intrusive investigation findings" held by the applicants or, alternatively, conducting his own testing and invasive investigations "which seems unnecessarily time-consuming, costly and potentially damaging". Mr Pearson advised that Mr Zervos had confirmed that he would provide a scope of works to address the waterproofing membrane termination heights for the balcony by 27 April 2020.
Mr Daniel replied the same day, with copies to Mr Cordony and Mr Anderson, advising that the applicants had declined to make Mr Poole's report available unless the respondent contributed to the cost. Mr Daniel further stated: "With regards to the points raised: 1 The potential for water ingress to the bathroom has been addressed in items 1 & 2 of the Fair Trading Rectification Order. The scope of works required now is for the reinstatement of the waterproof membrane, making good of the tiled surfaces and reinstatement of bathroom fittings that have been disturbed.There is no need for further investigations other than to provide a scope of works to re-instate the bathroom to full amenity. 2. Mr Zervos has confirmed he is able to provide a scope of works for this aspect of the works."
On 24 April 2020 Mr Pearson forwarded to Mr Daniel, with a copy to the applicants, a scope of works prepared by Mr Zervos, providing "details of the construction methods required to rectify the lack of termination height of the waterproof membrane observed to the rear balcony".
The scope of works required the installation of a "waterproof membrane termination angle (also known as a water stop) to the perimeter of the balcony and adjoining any wall or roof frames". The water stop was required to be sized in accordance with the N2 wind classification requirements stated in AS 4654.2 - 2012.
On 27 April 2020 Mr Daniel emailed the parties noting that he had received the scope of works for the rectification of the rear balcony. Mr Daniel stated "for the purposes of compliance with the order I consider the proposal, if carried out with due care and skill, will achieve compliance with the order."
At some point during April 2020, Mr Daniel extended time for compliance with the rectification order.
The respondent undertook work on the rear deck including the installation of a fresh waterproof membrane during early May 2020. The applicants maintain that that work did not satisfactorily resolve the issues with the deck, asserting, in particular, that the falls on the deck were insufficient and the water stop was not high enough .
On 26 May 2020 Mr Pearson emailed to Mr Daniel and the applicants a scope of works for the rectification of the bathroom, which had been prepared by Mr Cordony. The proposed scope of works involved the removal of tiles damaged in the course of Mr Poole's invasive investigation, the removal of the section of waterproofing membrane which Mr Cordony described as having been "cut by a knife when the investigation took place", the repair of the substrate, if damaged, and cleaning of the substrate, priming the substrate, cleaning the membrane around the repair for a minimum distance of 50 mm, priming the existing membrane, applying two coats of "Dampfix PU" over the repair area, ensuring a minimum 50 mm overlap on the existing membrane, applying a sand and cement bed/screed over the membrane, and reinstatement and grouting of the tiling.
On 26 May 2020 at 9:02 am, the applicants wrote to Mr Pearson, copy to Mr Daniel, asserting that the proposed scope of works was "totally inadequate" and "demonstrates his lack of understanding". At 11:31 am the applicants wrote to Mr Daniel seeking his "urgent intervention". The applicants attached an email from Mr Poole commenting on the respondent's proposed scope of work. Mr Poole expressed the opinion that the scope "falls short of a minimum rectification of the bathroom floor", noting, in particular, that "a localised patch repair of the ruptured membrane is inadequate and fails to address the likely potential of additional compliance breaches" in the preparation of the concrete substrate.
On 12 June 2020 Mr Daniel emailed the applicants noting that he was satisfied that items 1, 2, 4 to 8 and 10 to 13 of the rectification order had been rectified. Mr Daniel noted that item 3 remained unresolved. In relation to item 9, Mr Daniel noted: "The Order requires the elimination of water entry from the rear balcony and there is no evidence that this has not been achieved. Drummy tiles were not assessed but appear to be less than 5% of the tiled area and the builder advises a portion of the floor identified as drummy is laid over joists and fibre cement sheet where the main deck is laid over concrete. Incorrect falls could not be assessed and ponding would need to be demonstrated over a general rather than localised area to sustain a finding that the work is defective. Compliance with the scope of Work is not part of the Order, including the provision of certificates. However, the builder has been requested to provide a brief summary demonstrating to what extent the Scope was followed and to provide the waterproofing certificate."
In early June 2020 Mr Poole undertook further investigations at the site and produced a further report, headed "The Photographic Defect Analysis - Preliminary Report" dated 10 June 2020. This report was forwarded to Mr Daniel who issued a further rectification order on 24 July 2020.
Items 2 and 4 of that rectification order were: "2 Ensure that the slab on ground construction incorporates adequate step downs to prevent the ingress of water" and "4 Ensure tiled external services have sufficient fall to prevent water ingress".
The applicants allege that those items were not addressed by the respondent. The rectification order stated that "Items 2 and 4 will be considered to be complied with if it can be demonstrated that the as-built rectification work achieves compliance with the performance requirements of the NCC".
Mr Daniel issued a Building Inspection Report regarding compliance with the rectification order on 28 August 2020. The report recorded that the rectification order had been complied with and that Fair Trading would take no further action in relation to the work "at this time". Mr Daniel confirmed that items 2 and 4 from the work order "remain outstanding and are the contractor's responsibility." Mr Daniel stated that "the items in the report are not compliant with the National Construction Code but at the time of preparing this report there was no evidence that the work as carried out failed to meet the performance requirements of the Code."
Mr Daniel also stated: "It is also noted that in order to meet the requirements of the Code, all external finished surfaces adjacent to the rear of the house would need to be completed [sic, completely] demolished and the surface lowered, in some places more than 50 mm. This action would impact integration with other external finishes such as the grassed area and pool."
Mr Daniel subsequently issued a certificate on 2 September 2020, recording that the rectification order had been complied with, but noting that: "While the order has been complied with, part of the work as built does not comply with the National Construction Code (NCC). However, at the time of preparing the report, no evidence was available to demonstrate that the work as-built did not meet the performance requirements of the NCC."
The applicants commenced the proceedings in the Tribunal on 22 July 2020.

The evidence

The applicants prepared for the purposes of the hearing a "Court Book" of five volumes, the fourth and fifth of which contained documents filed by the respondent, being the statement of Adam Cordony, dated 4 November 2020, but signed on 6 December 2020, and its annexures. The first three volumes of the applicants' Court Book contained statements or statutory declarations from: Matthew Poole, Jim Conomos, Angus Donald, and each of the applicants.
The statutory declarations from each of the applicants related only to an assertion by Mr Cordony that certain work, which was alleged not to comply with relevant standards, had been completed at the direction of the applicants. The applicants had not otherwise filed any statements of evidence. However, the applicants' Court Book included an outline of submissions, which Mr Anderson indicated set out the factual matters upon which the applicants relied. That outline of submissions was received in evidence as a statement by Mr Anderson.
The applicants' Court Book also included the building inspection reports and rectification orders issued by Fair Trading. Pursuant to section 48N of the HBA, the Tribunal may have regard to, but is not bound by, those building inspection reports.
The applicants' Court Book included three reports prepared by Mr Poole: "The Photographic Defect Analysis Report" dated 16 October 2019; "The Photographic Defect Analysis - Preliminary Report" dated 10 June 2020; and "The Preliminary Bill of Quantities & Costs Estimate for the rectification of additional defects" dated 11 September 2020. The first three volumes of the applicants' Court Book were received in evidence without objection.
The respondent filed a tender bundle containing two volumes (with pages numbered 1R to 661R), the first of which contained Mr Cordony's statement signed on 6 December 2020 and its annexures. That volume was received in evidence without objection. The second volume contained a report dated 10 February 2021 from Eric Byrne, a building consultant specialising in waterproofing consulting, and further documents to which the applicants objected.
The first such document was a letter dated 30 November 2020 from Michael Carter of Coastwide Waterproofing, which was the company which had carried out the waterproofing in the main bathroom. The respondent did not read two paragraphs of that letter (4 and 5). The remaining three paragraphs confirmed that the waterproofing works had been carried out "as per the Australian standards AS3740" and had been inspected "either by a private certifier or local council". Mr Anderson did not object to those paragraphs. At the request of Mr Kent, counsel for the respondent, I deferred ruling on the following two pages (523R and 524R) which were tendered as "corroborative for certain aspects of my client's evidence". Mr Kent did not subsequently renew the tender of those pages and I will not treat them as part of the evidence in the proceedings.
The following pages, 525R to 533R, contained emails between Mr Pearson and CRD Building Consultants, which were tendered only to explain why Mr Zervos did not provide an expert report for the purposes of the proceedings and were admitted on that basis.
The balance of the respondent's tender bundle consisted of photographs of the property, not accompanied by any explanation. Some of the photographs were referred to in the course of evidence, and those photographs are admitted into evidence. The photographs which were not referred to in the course of evidence are not part of the evidence in the proceedings.
As noted, Mr Byrne addressed only the waterproofing in the main bathroom. The respondent did not seek to rely upon any independent expert evidence in relation to the other issues raised by the applicants. The respondent sought to rely upon Mr Adam Cordony to give evidence concerning the building issues raised by Mr Poole's evidence. Mr Cordony was not an independent expert and his evidence was clearly not disinterested. To the extent necessary I will address the contest between Mr Poole's evidence and Mr Cordony's evidence in due course.
Mr Poole and Mr Byrne prepared a joint report addressing the main issues arising in relation to the main bathroom. The joint report was received in evidence.
On the third day of the hearing the applicants sought to tender a witness statement by Mr Poole dated 25 March 2021. The applicants submitted that the statement was a convenient summary of Mr Poole's expert reports. I have received it in evidence on that basis and will not treat any part of that statement as evidence of the matters stated, independently of Mr Poole's reports and oral evidence.
At the commencement of the fourth day of the hearing both sides sought to lead further evidence. That evidence was rejected. The evidence sought to be tendered by the applicants was rejected in part because it sought to expand the basis upon which the applicants had limited their case. At the commencement of the hearing, the applicants had identified the statutory warranties upon which they relied as being those set out in section 18B(1)(a) and (c) of the HBA, that is that the works were not carried out with due care and skill and that they did not comply with the law, being the National Construction Code (with which, pursuant to the Environmental Planning and Assessment Act 1979 (NSW) and regulations in force at relevant times, the work was required to comply). The evidence sought to be tendered by the applicants appeared to raise the allegation that the work was not fit for purpose in breach of the warranty implied pursuant s 18B(1)(e) of the HBA.
Subsequently to the hearing, the applicants sought to file further evidence relating to the consequences of the exceptional rain events which occurred in early 2022. The respondent objected to that evidence being received and directions were made for the parties to file submissions concerning whether the further evidence should be received. The parties filed submissions and I issued a direction that the evidence would not be admitted and that reasons for the rejection of the evidence would be included in my reasons for decision.
The reasons why I have I rejected the evidence were, firstly, because, as the respondent submitted, the evidence was of similar character to that which I had rejected on the fourth day of the hearing and tended to seek to establish that the work carried out by the respondent was not fit for purpose rather than that the work was not carried out with due care and skill or failed to comply with the National Construction Code and, secondly, in any event, although the evidence sought to establish that there had been water penetration from the lower area or rear courtyard into the lower sections of the property, that is the area below the rear deck, the evidence did not attempt to explain or establish the mechanism by which the water was entering the property. Nor did the evidence contain any relevant factual matters that could not have been the subject of evidence filed prior to the hearing. Regardless of the intensity of the weather event, nothing about the consequences of that weather event could not have been the subject of testing prior to the hearing, if the applicant had been prepared to arrange it. The evidence included a letter from the applicants' tenant, who had apparently rented the lower section of the property for three years, which suggested that she had experienced continued water penetration throughout that time. That evidence clearly could have been led at the hearing.
After I had issued my ruling that the further evidence would not be admitted, the applicants sought to file further evidence concerning the pool filter box. I have not taken that evidence into account.
The parties also tendered in the course of the hearing two video recordings, one of which showed Mr Poole tapping with the handle of a chisel on the tiles in the corner where he subsequently excavated to reveal the membrane, and the second of which was Mr Cordony's recording of the incident in December 2019 referred to above (at [38]).
Each of the applicants gave oral evidence, as did Mr Conomos and Mr Donald. Mr Cordony gave evidence in the respondent's case. Mr Byrne and Mr Poole gave evidence concurrently in relation to the main bathroom and the matters the subject of their joint report. Mr Poole also gave evidence concurrently with Mr Cordony in relation to the other aspects of his reports. After the conclusion of the joint evidence Mr Kent cross-examined Mr Poole, seeking to challenge both his independence and the credibility of his evidence.

The issues

The issues which arise in the proceedings are: 1. Whether the existence of the defects alleged by the applicants is established; 2. If so, what is the appropriate remedy, which requires determination of: 1. the appropriate scope of works for rectification; 2. whether it is appropriate to make a work order; and, if not, 3. the reasonable cost of rectification.
The applicants relied to establish the existence of the defects upon the reports of Mr Poole. In respect of the alleged bathroom defect, the Tribunal has the benefit of the joint report of Messrs Poole and Byrne. Nevertheless, even in that respect, an issue arises relating to whether the hole in the membrane was present before Mr Poole conducted his invasive investigation or whether it was in fact caused by the investigation.
In respect of that and other issues, the respondent maintained a challenge to the independence and objectivity of Mr Poole, submitting that his evidence was insufficiently reliable to persuade the Tribunal that the work carried out by the respondent was defective in the respects alleged by the applicants. Mr Poole's evidence was said to be "unreliable, incomplete and misleading".
It is convenient to address respondent's challenge to the evidence of Mr Poole before turning to the various alleged defects.

Mr Poole's evidence

The respondent's challenge to Mr Poole's evidence was based upon a number of matters.
The respondent firstly submitted that Mr Poole's evidence concerning the preparation of his statement of 25 March 2021 suggested he had "abandoned his obligations".
Mr Poole conceded that Mr Anderson had forwarded to him a draft of his statement. Mr Poole initially stated that he had "rewrote the thing entirely". Subsequently Mr Poole acknowledged that parts of the statement were authored by Mr Anderson.
The respondent submitted that: "It is difficult to contemplate a more serious or egregious departure from an expert's duty of impartiality and independence than an expert adopting as his own a report written, whether in whole or in part, by a party to proceedings. This is compounded by the fact that Mr Poole gave evidence which was at best misleading as to Mr Anderson's contribution to the document."
The respondent also submitted that the statement expressed an opinion which Mr Poole acknowledged was incorrect, that is that certain pages of his 10 June 2020 report, and the report from Mr Daniel of Fair Trading New South Wales of 28 August 2020, included "evidence of deterioration and water ingress".
The applicants' response referred to evidence given by Mr Poole when it was suggested to him that it was not appropriate for a party briefing him as an expert to send him a statement: "I didn't see an issue with it because it didn't contain any of the technical aspects that would be relied upon by me the expert."
I understand that answer to be reflective of the proposition that the statement of 25 March 2021 was a summary of Mr Poole's reports.
The applicants also referred to the email under cover of which Mr Anderson had forwarded the statement to Mr Poole which stated: "To save you time, I have cut and pasted from your reports and info you have sent me and put it into the attached. Can you please review it and make sure it is your opinion and your statement - please edit it so that you are comfortable with it being a true statement of your opinion."
In my view the statement by Mr Poole that there was evidence of deterioration and water ingress documented on particular pages of his 10 June 2020 report and in Mr Daniel's 28 August 2020 report did demonstrate a lack of attention to detail on the part of Mr Poole, and a readiness to adopt what Mr Anderson had drafted for him. I note that the report does document evidence of deterioration and water ingress, Mr Poole's error lay in identifying the relevant pages.
That and other aspects of Mr Poole's evidence suggest that his opinions should not be accepted unquestionably, but in my view do not suggest that his opinions should be wholly disregarded. I do not find that Mr Poole was a dishonest witness and do not consider that at any time he sought to mislead or deceive the Tribunal.
The only example of direct inconsistency in Mr Poole's evidence was the assertion that he completely rewrote the statement. I regard that as hyperbole rather than dishonesty. Mr Poole subsequently conceded that "at least parts of [the statement] were authored by Mr Anderson". That is not a concession that the whole or even a substantial part of the statement remained unaltered.
The respondent also relied upon the fact that Mr Poole had signed a statutory declaration also authored by Mr Anderson. Mr Poole maintained that the statutory declaration was accurate. The statutory declaration apparently related to a complaint by Mr Anderson against Fair Trading and was not in evidence. I do not regard that as a matter of relevance in considering Mr Poole's evidence.
The respondent was critical of Mr Poole's reference in his statement to costings for the rectification of the rear deck when the relevant costings were prepared before the respondent had carried out rectification works.
The cross-examination of Mr Poole on this issue was complicated by the fact that Mr Poole did not have the relevant costings in front of him. The respondent relied upon the proposition that Mr Poole had agreed that "the costings were based on the demolition and rebuilding of structural elements" and that "rectification of the defects alleged relating to the back deck in February 2020, prior to the rectification performed by the respondent in May 2020, would not require demolition of structural elements."
It is appropriate to set out the relevant evidence concerning these issues: "Mr Kent: Mr Poole, this preliminary cost estimate was based on the demolition of structural elements. Do you agree with that? Mr Poole: Yeah, I did see some demolition in there, that's correct. Mr Kent: But do you agree that it wasn't your view that the demolition of structural elements were necessary even before the rectification in May? Mr Poole: From my recollection, any structural demolition would be minimal. Is there a specific item you could prompt me to, so I could provide clarification? Mr Kent: I'm just asking - do you agree there was no structural demolition required, prior to the rectification in May? Mr Poole: I'd have to have a look at the document that you're looking at Mr Kent, because I can't provide you with a clear answer on that, without that document. … "Mr Kent: Do you agree that you emailed Mr Anderson regarding the [unintelligible 01:01:18] a scope of works can be developed which won't require the demolition of any structural elements? Mr Poole: Yes. Mr Kent: Just some creative drainage options on the right membrane? Mr Poole: That's correct. Mr Kent: But what I'm putting to you is, is that $135,000 figure does include the demolition of construction elements doesn't it? Senior Member: You mean the demolition of structural elements? Mr Kent: I beg your pardon, a demolition of structural elements. Mr Poole: That's again, I'd have to have a look at the actual elements you're talking about, because those creative drainage options, all run through the apartment below. So to the extent that there was structural works below, that would be clarified without that document. If you could point to the item, I'm sure I could find it and provide it to you. Mr Kent: It says scope of work to be developed, which won't require the demolition of any structural elements. Mr Poole: Okay, this is prior to that scope and that price being done. Mr Kent: What I'm putting to you Mr Poole, is you've given a figure to the Tribunal regarding damages that should be awarded that does include the demolition of structural elements. Mr Poole: Sorry, if you're basing it all on that single email, prior to any of that work being done, in construction terms that doesn't make sense. okay, so if you - I can very easily clarify any of these structural items. If you point me to them, I'll provide you with clarification [unintelligible 01:02:57]. To base your assertion on an email prior to any of that scoping or pricing being done, well that doesn't fly in construction terms."
While that evidence may be relevant to the assessment of the cost of rectification, I do not consider it justifies any finding that Mr Poole's evidence, generally, should not be accepted.
The respondent further pointed to the fact that the costing for the rear deck included some items which were clearly referable to the bathroom. Mr Poole acknowledged that that was the case. The applicants submitted that that was clearly an error. Again, I do not consider it suggests that Mr Poole's evidence, generally, should not be accepted.
The respondent submitted that the applicants' proffering of pre-rectification costings was "grossly dishonest and misleading". The respondent submitted that that was compounded by the fact "that those pre-rectification costings are based on a scope of work which clearly involved the demolition of structural elements".
The applicants responded that Mr Poole acknowledged that the cost had been estimated prior to the rectification work undertaken by the respondent but that Mr Poole had inspected the balcony after rectification and had confirmed in answer to a question from the Tribunal that the figure now would "probably be similar, given that that figure allowed for a drainage provision within the deck, because it became apparent that there wasn't a lot of scope to actually provide a lot of fall, given that… There has been no allowance to drop that concrete slab to allow for the fall in the tiles."
Mr Poole's evidence was that the rectification of the deck will require grinding to increase the fall but that "you would have to provide drainage at the junction between the internal and external room", which would involve the installation of a grated drainage system plumbed into the stormwater drainage system.
Mr Poole stated: "With my supplementary report, what I'm suggesting is that the falls don't comply. Now in saying that, so nothing in that respect has changed and to my knowledge, so what you're saying is that whilst I've done those costings prior, I was supposed to come back with a whole new costings, now it's done?"
The respondent further submitted that Mr Poole's estimate for the rear courtyard encompassed "areas subject to subsequent rectification including the garage and the eastern garage wall, as well as other areas not encompassed within the applicants' claim in these proceedings".
The respondent submitted that the effect of this evidence being placed before the Tribunal, without qualification by Mr Poole or the applicants, was "the potential for the Tribunal to be seriously misled on a fundamental and significant issue."
In response, the applicants submitted that Mr Poole's evidence as to the extent of work required in the rear courtyard area was corroborated by the report of Mr Daniel who had stated that "in order to meet the requirements of the Code, all external finished surfaces adjacent to the rear of the house would need to be completely demolished and surfaces lowered". The applicants also noted that Mr Daniel had recorded in his reports that the rectification order in relation to the rear area had not been complied with in two respects and pointed out that there was no expert evidence led by the respondent to contradict Mr Poole's costings.
The respondent concluded its general attack on Mr Poole with the following submission: "37. The onus is on the applicant to establish its case based upon complete, reliable and soundly based expert evidence. The applicant relies on evidence which, as conceded by its own expert, is incomplete, not intended as evidence to be relied on in litigation, not compliant with the Expert Code of Conduct, fails to disclose relevant assumptions and fails to disclose matters which might qualify the opinion expressed. 38. Just as significantly, it is submitted, the expert evidence relied upon by the applicant does not relate to the present state of the building. 39. It is submitted that a fundamental purpose of the Expert Code is to avoid a situation whereby a respondent (or the Tribunal) is forced to sift through incomplete, unreliable, and out of date evidence in the context of a vaguely particularised claim to arrive at the true position. There is fundamental unfairness in a situation where an applicant dumps such evidence on a respondent, forcing the respondent in effect to prove a contrary state of affairs. 40. It is submitted that the applicants' contention that there is no independent expert evidence to the contrary is disingenuous. It is for the applicant to demonstrate that the evidence it relies on, and particularly expert evidence, is soundly based, reliable and complete. 41. It is submitted that the evidence falls far short of establishing that the preliminary defect reports and costings relied upon by the applicant are reliable or probative evidence upon which the Tribunal could rely. On the contrary, it is submitted that those reports are seriously misleading and should not be relied upon by the Tribunal."
I note that the force of these submissions is somewhat diminished by the fact that the respondent elected not to obtain its own independent expert report other than in relation to the bathroom. A respondent which relies upon alleged inadequacies in the evidence led by the applicant cannot complain if the trier of fact concludes that the applicants' evidence, while not perfect, is sufficient to establish the applicants' case.
The respondent also submitted that the reliability of Mr Poole's evidence was also adversely affected by matters specific to the particular reports.
In relation to the bathroom the respondent submitted that the "methodology and documentation of the invasive investigation of the bathroom was completely unjustified and inadequate." The respondent submitted, in particular, that no flood test had been undertaken, no video recording was made of the excavation, and that the membrane was exposed to sharp tools and a vacuum cleaner.
I will address these issues in when considering whether the applicant has established that the bathroom waterproofing was defective. For present purposes, I note that these matters are not, of themselves, reason to discount the whole of Mr Poole's evidence.
The respondent further submitted that, in the joint report, Mr Poole had referred to moisture readings which he conceded in his oral evidence he had no faith in.
The respondent also submitted that Mr Poole made assumptions to the benefit of the applicants. I note that these assumptions were not identified and not explored in the evidence. The only assumptions disclosed in the evidence were, that the wind factor relevant to the premises was level N2, which was in fact what Mr Zervos had suggested, and that Pymble was not a low rainfall area, which Mr Poole confirmed in his oral evidence he had checked and was correct.
Mr Poole was also criticised in relation to the measurement of the falls on the rear deck. The respondent submitted that Mr Poole's assessment of the inadequacy of those falls was within the margin of error of the instruments which he had used. However, as the applicants point out, Mr Cordony himself acknowledged that the falls did not meet the relevant standard.
Mr Poole was said to have made assertions about the adequacy of the step down at the door to the rear deck without knowledge of what the stepdown actually was.
The applicants' response was that the respondent's submission ignored that the fact that "the actual defect is the absence of a non-compliant stepdown of 50 mm and [it was] the respondent's [sic, Mr Cordony's] own evidence that he built a 40 mm stepdown."
The respondent submitted that Mr Poole had included in his report photographs which are "apt to mislead the Tribunal", because three photographs, said to have shown evidence of water penetration, showed elements of the building which Mr Poole had opened for the purposes of his investigation and had been left exposed to the elements for more than two weeks.
The applicants' response was that, as Mr Poole had stated in his evidence, it is quite evident from the photos that what was visible was the result of long-term water ingress and that Mr Cordony had conceded that there was no water evident on the inside (that is in the internal plaster lining).
The respondent submitted that Mr Poole's evidence ignored the fact that the respondent had performed significant rectification works in relation to "this area of the building", referring to the lower rear area.
The applicants responded that the respondent's submission "ignores the fact that the respondent undertook no rectification action to address "items 2 and 4" as evidenced in the Fair Trading Building Inspection Report", which Mr Daniel's report indicated remained non-compliant.
The respondent also relied upon evidence from Mr Poole concerning his initial employment by the applicants, which he referred to as "to try and bring the builder to the table" and "assisting my client to get the result that he was after". The respondent submitted that "the correspondence between Mr Poole, Mr Donald and the applicant clearly evidences that Mr Poole's role went well beyond that of an independent expert. He was acting as a consultant, advisor and advocate for the applicant in dealings with respondent". The respondent submitted that "Mr Poole assumed the role of an advocate for the applicants' interest from the time that he was engaged. He has continued to be an advocate for the applicants throughout the proceedings."
I am not persuaded that the evidence bears out the respondent's submission. I accept that Mr Poole's initial involvement in the project was not in the role of independent expert, subject to the Expert Code of Conduct, and I consider that the manner in which Mr Poole conducted the invasive investigation of the bathroom floor was not reflective of the conduct of an independent expert. However, Mr Poole subsequently adopted the Code of Conduct in relation to his reports and maintained before the Tribunal that they reflected his independent expert opinion. Particularly in the Tribunal, where parties may be self-represented, it is not infrequent that expert evidence is accepted in circumstances where the requirements of the Code of Conduct for expert witnesses have not been strictly complied with. As paragraph 7 of the Tribunal's Procedural Direction 3 provides "a failure to comply with the code of conduct does not render any expert report or evidence inadmissible but it may, depending on the circumstances, adversely affect the weight to be attributed to that report or evidence". During his evidence, Mr Poole defended his opinions, but I do not consider that he did so otherwise than as an objective and independent expert.
I now turn to consider each of the alleged breaches of statutory warranty alleged by the applicants.

Main Bathroom

As noted above, the alleged defects in the main bathroom were the subject of the joint report of Messrs Poole and Byrne.
The experts disagreed in relation to the waterproofing membrane. Mr Byrne maintained that the membrane had been torn in the course of Mr Poole's investigation. It must be noted that Mr Byrne's opinion concerning the cause of the hole in the membrane was not based upon any direct observation.
Mr Poole maintained that the membrane was defective. Mr Poole raised an issue with the preparation of the subsurface on which the membrane was laid, asserting that two coats of primer had been required and not provided. Mr Poole agreed in the joint report that that was not a reason to replace the membrane.
Mr Poole also agreed that "removal of the membrane sample entailed reasonable force to remove the sample, therefore stretching it." The significance of this evidence, as I understand it, is that it confirms that the state of the membrane after Mr Poole's initial invasive investigation was such that it was not possible to draw conclusions from it in relation to the membrane's undisturbed state.
Both in his report and in oral evidence, Mr Poole described the presence of a fold in the plastic sheeting laid under the membrane which created a ridge under the membrane. Mr Poole suggested that that ridge was responsible for the hole in the membrane.
The experts referred to issues concerning moisture levels and the floor waste in the bathroom under the bath. The experts agreed that a flange should be fitted to the floor waste but otherwise did not suggest any issue concerning the floor waste required rectification
In relation to the bathroom substrate the experts agreed, having removed further parts of the tile bedding along the wall of the bathroom, that there were no falls in the substrate towards the floor waste.
In oral evidence Mr Byrne confirmed that he agreed with Mr Poole that there was a problem with the fall of the floor in the bathroom and described the rectification, which the experts had agreed was necessary, as "we take up the tile bedding in the shower floor area, put the topping down, and make good the falls to the drain."
The respondent submitted that: "114. No claim emerged for non-compliant falls until the issue was raised by the experts at the conclave (after the hearing had commenced). 115. It is submitted that the applicant has not established that the fall to the substrate fails to comply with any Code. 116. It is submitted that Australian Standard 3740-2010 (Annexure A) contains no requirement relating to falls in substrates, as opposed to finished floor surfaces. 117. Regardless, it is submitted that there is no actual loss of amenity or performance failure of the tiled area. 118. The evidence of Mr Byrne was that water would be retained on the affected area of the substrate longer than elsewhere, taking longer to dry out. This would result in that area remaining darkened for longer (T3330ff). This obviously assumes a situation where the bathroom is not used regularly. 119. It is submitted that in circumstances where the tiles would darken generally when exposed to water, no actual damage is established by the breach / non-compliance. It is submitted that any loss of amenity is de minimis. 120. The respondent submits that the non-compliant fall was only identified inadvertently and in circumstances where there was no justification for excavating that tile bed. There is significant unfairness and a virtually impossible burden on builders in those circumstances in relation to relatively trivial non-compliance.
The respondent relied upon the proposition that the relevant standard was reissued in 2021 and that it was only the later standard which required a fall in the substrate. However, in light of Mr Byrne's view that the falls require rectification, I accept that the insufficiency of the fall in the substrate constitutes a failure to carry out work with due care and skill and requires the rectification which Mr Byrne described.
The respondent submitted that, if the membrane had not already been damaged, the rectification of the falls could have taken place without the removal of the membrane. The respondent submitted: "121 … Mr Byrne stated that repairs of this nature (ie. isolated repair) have been carried out for a number of years. The only obstacle would be difficulty taking up the tiles. Both experts agreed that the tiles and screed are easily removed in this case. (See T3256ff)."
Because the membrane has been damaged, it will be necessary to replace the membrane, at least within the wet area of the bathroom (that is the area occupied by the bath and shower delineated by a stepdown within the bathroom and the shower screen).
In those circumstances, the question whether the respondent is liable for the rectification of the bathroom hinges critically upon the question whether the hole in the membrane was present before Mr Poole's investigation or was a consequence of that investigation.
As I have noted above, there are bases upon which Mr Poole's conduct of the investigation can be criticised. He failed to undertake a flood test before commencing destructive investigation. He failed to ensure the investigation was video recorded. He failed to invite the builder to attend to observe the investigation. He inserted a screw-driver into the membrane without fully documenting, including with close up photographs, the hole which he asserted he observed when the screed had been removed.
Nevertheless, on the balance of probabilities, I am persuaded that the hole in the membrane was not caused by Mr Poole's investigation. I am satisfied that the hole was present before the removal of the tiles and the screed in the north-west corner of the bathroom.
I base this conclusion upon Mr Poole's evidence of his investigation as set out in his report of 16 October 2019: "The NW corner floor tiling was 'drummy' and delaminated. This was evident when tapped with the base of a chisel as per the attached footage. The area was invasively analysed via the careful removal of tile the tiles and the cementitious tile bed. In this location the cementitious tile bed did not adhere to the membrane. The membrane was exposed and initial observations noted the small fracture in the membrane in the corner. A screwdriver was used to lift the edge of the tear and allow for closer inspection of the area. Directly beneath the tear in the membrane and projecting outward from the abutment of the RC concrete substrate and the masonry wall was the black polythene film. It became evident that the waterproofer had applied the liquid membrane directly over the bunched polythene plastic located in the corner of the room. The fracture in the membrane replica reflects the pattern of the exposed edge of the black polythene. … The membrane at the location of the polythene press plastic is compromised due to the film thickness not having been achieved where the membrane overlays the 200 um (0.2 mm) thickness of the polythene edge."
I also rely upon Mr Poole's evidence that the screed was easy to remove. I note that the respondent itself submitted that the screed could be removed to rectify the falls without damaging the membrane.
I further rely upon the evidence of Mr Conomos who observed Mr Poole's destructive investigation.
And, finally, I rely upon the evidence provided by photographs included in Mr Poole's report. The reproduction of the photographs in Mr Poole's report is not ideal, but I find assistance from the photographs at pages 113 - 116 of Mr Poole's 16 October 2019 report. Those photographs show various stages in the process of removing the screed. It is apparent from the extent of the remaining screed in the various photographs that the photographs were taken in the order 115, 113, 114, 116.
The photographs suggest that the screed was not adhering to the membrane and could have been scraped away easily without impact on the membrane. Photographs 113 and 114 suggest that the hole in the membrane was present before Mr Poole inserted the screwdriver.
Accordingly, I find that the membrane in the main bathroom was defective and requires rectification for which the respondent is responsible.

Rear Deck

The applicants' complaints regarding the rear deck raise two issues. Firstly, the applicants allege that the fall on the rear deck is insufficient and does not comply with the relevant standards and the National Construction Code. Secondly, the applicants allege that the stepdown from the internal areas to the rear deck was insufficient. Those complaints were supported by Mr Poole's reports.
In response to the applicants' complaint concerning the falls on the rear deck, the respondent was critical of Mr Poole's measurements of those falls. Mr Poole's evidence was that the minimum grade required by the relevant standard was 1:100. Mr Poole referred to his 10 June 2020 report, pages 60 to 64 where he stated: "the recently rectified tiling over the south facing balcony/alfresco does not achieve the minimum degree of compliance regarding surface grade set out within the CRD building report … NCC compliant falls have not been achieved".
Mr Poole provided a number of photographs showing various measuring devices disclosing the slope of the deck not achieving a 1:100 grade.
The respondent submitted: "125. It is submitted that the evidence purporting to record the evidence of falls given by Mr Poole is manifestly unreliable and should not be accepted. 126. Firstly, the level readings recorded in the report are internally inconsistent. Measurements on the lower level photographed at p. 223 and 229 of that report each read 0.5 degrees. 127. The top level on page 223 records 0.8 percent while the top level on p. 229 records 1.0 percent. 128. In cross-examination, Mr Poole agreed that the margin of error represents the difference between what Mr Poole asserts to be compliance and non- compliance (T5154-5156; T5172-5175). 129. When it was put to Mr Poole that the instruments were not taking accurate readings, Mr Poole stated: Well I - you've got three difference levels there. And so they - if you're talking about a .2 or a percent difference, and given that they all show - they're all showing a degree of grade - I'm not a technology expert, I couldn't' answer that, but I would suggest that the instruments provide a reasonable reference point for grade. (T5179-5183) 130. When it was then put to Mr Poole that, "we're talking about very fine margins aren't we sir, in terms of millimetres?", Mr Poole responded, "Yes, you are, but I suppose the bigger issue here is the fact that you've got no drainage at the door ..." (T5188).
However, Mr Cordony conceded in his evidence that the falls did not meet the 1:100 standard. Mr Cordony's evidence was that the falls set out in the standard were only a recommendation, not a requirement. He maintained that, provided water did not pond on the deck, the falls could not be described as insufficient.
Both parties sought to rely upon anecdotal evidence in relation to the question whether water ponded on the deck. The applicants relied upon photographs which they asserted showed water ponding. Mr Cordony asserted that those photographs merely showed the reflective surface of the tiles.
It should not have been a difficult process to adduce evidence of whether or not water was ponding on the deck. I am not persuaded that the photographs establish the situation either way and do not consider the uncorroborated evidence of the applicants to be persuasive.
As noted, Mr Poole asserted in the course of his evidence that the real issue was the absence of drainage adjacent to the doors and the lack of stepdown at the bifold doors separating the interior of the house from the internal alfresco area of the rear deck.
Mr Cordony gave evidence that the stepdown installed by the respondent at the bifold doors was 40 mm and asserted that that was sufficient. Mr Poole asserted that the stepdown was required to be 50 mm. Mr Poole acknowledged that that requirement only applied if the local wind rating was N2. Mr Poole acknowledged that he had no direct knowledge of the relevant wind rating but, as the applicants pointed out, Mr Zervos had referred in his scope of works for rectification of the rear deck to the stepdown being required to comply with an N2 rating.
Mr Zervos' scope of works was the scope of works by reference to which the respondent had undertaken rectification of the rear balcony. It is apparent that the respondent failed to comply with that scope of works.
I infer from the fact that Mr Zervos required the water stop angle to be sized in accordance with the "N2 wind classification requirements as stated in AS 4654.2 - 2012" that Mr Zervos had identified the relevant wind classification for the area as N2.
I note that, in his email to Mr Cordony of 15 April 2020 (extracted at [48] above), Mr Zervos stated: "I would expect to see the wind class in this region to be categorised for this balcony between N1-N3, this however still needing to be confirmed exactly and will be detailed in my scope of works."
I do not find Mr Daniel's report to be of assistance in relation to this issue.
Accordingly, I find that the water stop angle at the bifold doors separating the interior of the house from the internal alfresco area of the rear deck did not comply with the requirements of the National Construction Code in breach of the statutory warranty in s 18B(1)(c) of the HBA, and accordingly requires rectification for which the respondent builder is responsible.

Lower courtyard area

the scope of the alleged defects in the lower courtyard area was identified by the applicants at the outset of the hearing as items 2 and 4 in the Fair Trading NSW rectification order of 24 July 2020. Those items are set out at [61] above.
In the course of the hearing, the alleged defects relied upon by the applicants were limited to items identified as Add (that is additional items) - 4, 7, 8, 10 - 19, and 22 in Mr Poole's report of 10 June 2020. Mr Poole identified items 4, 7, 8, 10, 12, 14, 16, 17, 19 and 22 as relating to the adequacy of step-downs to prevent the ingress of water. Mr Poole identified items 11, 13 and 15 as relating to inadequate falls. Mr Poole's report described the respective alleged defects as follows: 1. Item 4, relating to the east elevation garage wall - "ground level raised above external H3 pine cladding. Non-compliant level of treatment to timber cladding in contact/ below ground level. … H3 treated pine cladding is designated for above ground use only." 2. Item 19 raised the same issue in relation to the tiled paving surface to the south and west wall on the south elevation. 3. Item 7, relating to the east elevation garage wall - "landscaping defect - external ground level exceeds the minimum allowable stepdown between internal and external finished levels". Mr Poole stated that this was a breach of section 3 part 3.1.2 clause 3.1.2.3 of the National Construction Code which required that "the height of the slab on ground above external finished services must be not less than 100 mm above the finished ground level in low rainfall intensity areas". 4. Items 14 and 16 raised similar issues in relation to the west and south elevations, Mr Poole also commented "due to the non-compliant grade of the tiling, the stepdown in this situation should be 150 mm." 5. Item 8, relating to the south facing wall of the cabana - "water ingress defect - to internal area causing structural degradation to building elements". 6. Item 12 expressed the same conclusion in relation to the west facing wall to the lower ground floor adjacent to the cabana. 7. Item 10, also relating to the south facing wall of the cabana - "set out defect - external ground level contrary to FFL requirements of architectural plans". Mr Poole asserted that "the finished height of the tiled paving area does not align with the requirements of the architectural plans or the engineering design. 8. Item 17 raised the same issue in relation to the south elevation. 9. Item 22, also relating to the south elevation - "insufficient surface treatment to structural steel posts causing visible corrosion". 10. Items 11, 13 and 15, relating respectively to the south elevation at the cabana, the west elevation at the south side of the property, and the south elevation, each stated: "floor tiling - surface grade - insufficient degree of grade away from the building - (rainfall category high - 50 mm / 1000 mm / non-permeable) … The degree of fall in the tiles fails to achieve the minimum allowable grade over the first metre away from the building", or words to the same effect. This is said by Mr Poole to be a breach of the National Construction Code clause 3.1.2.3(a)(i) "surface water must be diverted away from class I buildings as follows - 50 mm over the first metre from the building".
The respondent submitted in relation to this evidence: "158. To the extent that there is non-compliance, it is submitted that it is de minimis and there is no evidence of damage or detriment to the applicant. 159. Further, the evidence is that at the time of construction, the applicants requested the builder that the transition from the inside to the outside be made as level as possible. It is accepted that this was not documented and no s 18F defence arises. 160. However it is submitted that in circumstances where the respondent took this course of action at the direction of the applicant, in circumstances where the owners obtained a benefit by the builder acting to his detriment, it is unconscionable for the applicant to now seek to rely on the strict provisions of the contract and the Code. The respondent acted in accordance with the instructions of the applicant. By doing so, the applicant saved money and the transition was constructed in accordance with what they wanted. It is submitted that the applicant is estopped from not resiling from that position to benefit from what was done at their request. 161. It is submitted that these matters also go to the reasonableness of the claim for rectification/ rectification costs. … 178. To the extent there are non-compliances, it is submitted that the applicant has not demonstrated any actual damage or detriment. 179. It is submitted that the purpose of the Code is not to allow owners to deploy building consultants to comb the works for minor non-compliances with a view to bringing claims for damages against builders. It is submitted that actual detriment must be demonstrated. 180. It is submitted that the applicant has not demonstrated that the work does not meet the performance requirements of the Code. 181. The relevant performance requirements of the Code are set out at Part 2.2 of the National Construction Code (Annexure B). It is submitted that the applicant must demonstrate that the works do not satisfy provisions 2.2.1-2.2.3. These provisions which are fundamental to the purpose of the Code have not been considered at any stage by the applicants' expert. His evidence (before the Tribunal, although not revealed in his report) appears to be that this is outside the scope of his expertise.
Annexure B to the respondent's written submissions was a copy of the relevant provisions of the National Construction Code. The respondent's submissions continued: 182. These considerations have not been addressed by the applicant's expert beyond bare assertion of the likelihood of future water ingress. The applicant's expert's original report was prepared prior to subsequent rectification and additional works performed by the respondent. 183. It is submitted that the evidence given by Mr Cordony on the issue of the waterproofing of the back courtyard and the construction of the tiled areas indicates he was acutely conscious of considerations relating to preventing the ingress of water and diverting water away from the building. 184. It is submitted that there is no basis to conclude that there is non-compliance with the performance requirements of the Code. Such was the conclusion reached by Mr Daniel in his report of August 2020. 185. Very significantly, to the extent that falls and step-downs were technically non-compliant with the Code or to the extent that there was a departure from the architectural plans, the evidence of Mr Cordony was that such non-compliances were in fact necessary and unavoidable to build that courtyard such that it complies with the fundamental performance requirements of the Code. 186. Furthermore, there is no proper evidence of required rectification before the Tribunal. The preliminary costing relating to Mr Poole's second report addresses matters well beyond the scope of the applicant's claim and is based on a defect report prepared prior to significant rectification work carried about by the respondent in August 2020. … 188. It is submitted that rectification in the context of minor and technical non-compliances would be a grossly disproportionate, unreasonable and unnecessary measure of damages.
The applicant's response was that Mr Daniel's report recognises that the construction of the rear courtyard areas does not meet the applicable standards.
The applicants submitted that the respondent's submission that Mr Poole's evidence of the likelihood of future ingress was bare assertion is not itself supported by any expert evidence.
The applicants objected to the Tribunal receiving a copy of parts of the National Construction Code in evidence. Given that Mr Poole refers directly to the provisions of the Code it is appropriate that the content of the document be in evidence, and it is admitted into evidence.

Consideration - lower courtyard area

The respondent did not lead evidence to suggest that the particular issues raised by the applicants had been rectified.
Mr Cordony's evidence, and the respondent's submissions, were rather directed to the proposition that the limited falls and stepdowns were constructed in response to requests by the applicants.
The Tribunal noted in the course of the hearing that section 18F of the HBA requires that, before a builder can rely upon instructions from homeowners in answer to a failure to meet standards, there must be a written instruction. The respondent did not assert that there were written instructions or that section 18F had any relevance in the proceedings.
I consider that the respondent's submission relying upon doctrines of estoppel (paragraph 161 of the respondent's submissions) is inconsistent with the provisions of s 18G of the HBA which prohibits contracting out from the statutory warranties.
I do not consider that the alleged failures to comply with plans and specifications (items 10 and 17), or the asserted failure to adequately treat the structural steel posts (item 22) fall within the applicants' case which specifically relied upon the respondent's failure to address items 2 and 4 in the Fair Trading rectification order.
I am satisfied that the remaining items relating to step-downs (that is, items 4 and 19, items 7, 14 and 16, and items 8 and 12) are supported by Mr Poole's evidence and not directly contradicted by the respondent, beyond the general assertion that the water ingress visible in Mr Poole's photographs was a consequence of Mr Poole's investigation itself.
Mr Poole gave evidence that there was evidence of water penetration at the time he made openings to undertake investigations and also gave evidence that the water damage visible in the photographs was long-standing and not something that could have reappeared within a short time.
I also accept that there were inadequate falls (that is items 11, 13 and 15), as Mr Poole asserted, and that those inadequate falls involved a breach of the National Construction Code.
I do not consider that, if non-compliance with the prescriptive provisions of the Code is established and there is evidence of water penetration, the performance requirements of the Code, which require the exclusion of water, can be shown to have been complied with in the absence of evidence of testing to establish that proposition.
In this context, I prefer the evidence of Mr Poole to that of Mr Cordony, where it is in conflict. Mr Cordony's evidence cannot be said to have been independent or disinterested.
Accordingly, I conclude that the defects identified by Mr Poole in his 10 June 2020 report as additional items 4, 7, 8, 11, 12, 13, 14, 15, 16 and 19 involved a failure on the part of the respondent to comply with the National Construction Code and as such constitute breaches of the statutory warranty implied by section 18B(1)(c) of the HBA, which the respondent is responsible for rectifying.

Pool Filter Box

The applicants' original claim regarding the pool filter box was that it was non-compliant in relation to the non-climbable zone requirements under the "Swimming Pools Fencing Act" [sic, Swimming Pools Act 1992 (NSW)]. In their written submissions the applicants also relied upon evidence in Mr Poole's report that the filter box was built with treated pine which was not suitable for installation in contact with the ground.
The respondent submitted: 191. Item 9 claims $2,969 for "Cost to move pool filter and box to compliant position". 192. The applicant in submissions has sought to extend the claim to non-compliant construction relying on Mr Poole's second report of 10 June 2020. It is submitted that this goes beyond the claim sought in the respondent's original statement of claim document. Mr Poole's report does not identify any required rectification and appears to indicate further investigation is necessary. 193. It is unclear what evidence of non-compliance the applicant relies on regarding this alleged defect / claim. It is unclear on what basis the applicant claims damages for rebuilding the pool box when the claim is for the pool box to be moved. The sum of $2,969 is not based on any expert or other appropriate evidence of the cost of moving the pool filter box. 194. The respondent's evidence regarding the pool filter box is set out at 23R-28R. 195. To the extent that the non-compliance is based on the existence of an adjacent tree, the owners' accepted that the tree was their responsibility: see email at 501R. 196. To the extent that the claimed non-compliance is the result of the positioning of a boundary fence, the boundary fence was constructed following litigation with the adjoining owner and after the pool filter box: see 479R; 505R. It is submitted that any non-compliance arising from the fence is not the builder's responsibility. 197. It is submitted that the evidence does not establish any claim regarding the pool filter box.
The applicants did not make any response to those submissions.
I am not satisfied that the applicants have established any case with respect to the pool filter box. There is no evidence from any qualified person to establish that the filter box is not compliant with the Swimming Pools Act or that the respondent was responsible for any such non-compliance. As the respondent points out, the applicant's claim was for the cost of moving the box, not the cost of reconstructing it. I am not persuaded that the applicants have established that the pool filter box is not constructed with due care and skill or does not comply with any applicable standard.

Matters listed in attachment NN

Attachment NN in the applicants' Court book was a document headed "list of outstanding defective work undertaken by Cordony Constructions." The document contained a list of nine items which were said to be defective, with accompanying photographs. As the respondent submitted, there is no evidence to support the applicants' claim in respect of attachment NN.

Other payments claimed by the applicants

The remaining payments claimed by the applicants consisted of items which are properly characterised as costs of the proceedings, that is the cost of engaging experts, legal fees, and the filing fee in the Tribunal, and the "cost of retaining Angus Donald to project manage beyond the original defect period".
In support of the claim in respect of fees paid to Mr Donald, the applicants referred to a bundle of invoices from Mr Donald covering the months from April 2019 to June 2020. The applicants did not otherwise lead evidence to explain why the fees the subject of those invoices were a natural or foreseeable consequence of the respondent's breaches of statutory warranty: Hadley v Baxendale (1854) 9 Exch 341. The costs of the proceedings are not recoverable as damages for breach of contract, and I find that the applicants have failed to establish that the fees paid to Mr Donald were recoverable as damages for the respondent's breaches of statutory warranty.

Remedy

As I have noted above, I am required by s 48MA of the HBA to approach the identification of the appropriate remedy for the respondent's breaches of statutory warranty, which I have found established, on the basis that rectification of the defective work by the respondent is the preferred outcome.
The applicants submitted that the relationship between the parties was such that the respondent should not be permitted to return to the applicants' property to complete rectification works. The applicants relied in particular upon the confrontation between Mr Cordony and Mrs Anderson the subject of the video recording which was tendered in evidence. The applicants submitted that Mr Cordony had followed, confronted and intimidated Mrs Anderson.
The applicants also submitted that the respondent's repeated failure to rectify the defects in the work was a further reason why it would not be appropriate to make an order requiring the respondent to rectify the defective work.
I am not persuaded that the respondent has repeatedly failed to rectify defective work. Although there were three rectification orders issued by Fair Trading NSW, each of those rectification orders related to different parts of the project. The respondent rectified the bulk of the items listed in the rectification orders. The items which the respondent failed to rectify were items in respect of which the respondent maintained either that the defect was caused by the applicants' own expert or that there was no defect in the work. Although I have found that the respondent's work was defective, I do not find that the respondent unreasonably maintained the position that the work was not defective.
In considering this aspect of the applicants' submissions, I also take into account the applicants' refusal to provide a copy of Mr Poole's reports to the respondent. It was not in my view reasonable for the applicants to demand rectification of work claimed to be defective on the basis of an expert building consultant's report without providing a copy of that report to the respondent.
I also note that Mr Anderson sought to impose conditions upon the respondent being permitted to return to carry out rectification work, which conditions were on any view unreasonable. In this regard, I refer in particular to the demand that the respondent agree to pay compensation in the amount of approximately $40,000 as a condition of being permitted to return to rectify the defects the subject of the 18 February 2020 rectification order.
In respect of the relationship between the parties, I have watched the video. There is clearly a confrontation between Mr Cordony and Mrs Anderson, but, as Mrs Anderson acknowledged, she was only present at the location of the confrontation because she had travelled there to observe a building site at which the respondent was carrying out work and not for any other reason. In those circumstances I consider that Mr Cordony's conduct in approaching Mrs Anderson was understandable, albeit probably ill-advised. I do not consider that the actual conversation on that occasion, or any other communication between the parties, could be characterised as "intimidation".
I do not consider that the conduct of either party could be said to have been faultless, however I am not persuaded that the evidence before me establishes that it would be inappropriate to direct the respondent to carry out the rectification of the defective work which I have identified.

Scope of works

It is necessary, before a work order pursuant to section 48O of the HBA can be made, that the work to be performed can be described sufficiently that the parties, and in particular the builder, can understand what is required.
The scope of works required in the bathroom is as outlined in the joint report: remove the floor tiles and tile screed and the existing membrane in the shower bath area only of the main bathroom, re-screed the prepared concrete substrate affording a minimum of 1:80 grade, waterproof the area with a compatible polyurethane waterproofing product in accordance with manufacturer's requirements, and replace tiles.
In relation to the construction of the rear deck, the defect which I have found established is the failure to install a 50 mm water stop angle at the bifold doors separating the interior of the house from the internal alfresco area of the rear deck. The appropriate scope of works for rectification of that defect is the replacement of the existing 40 mm angle with a 50 mm angle with appropriate adjustments to the deck and waterproofing of the deck. It is not clear to me on the evidence whether that can be that can be accomplished without the regrading of the entire deck. If regrading of the deck is necessary, the work required of the respondent to rectify the rear deck will include regrading of the deck. Mr Poole suggested that regrading might be avoided by the installation of a grated drain at the boundary between the internal and external areas of the rear deck. In the event that the regrading of the rear deck would otherwise be necessary in order to permit the installation of the 50 mm angle, the respondent may instead install a grated drain at that boundary.
Mr Poole provided, by his "Preliminary Bill of Quantities and Cost Estimate for Rectification of Additional Defects" dated 11 September 2020, a scope of works for the rectification of each of the additional defects identified in his report of 10 June 2020.
The respondent did not provide any alternative scope of works for the rectification of defective work in the lower courtyard. Mr Poole's report describes a scope of works for the rectification of items 4 (which is stated to also address item 7), 8 to 11, 12 to 14, and 15 to 19. Although items 10 and 17 are included within those addressed it is apparent that no separate rectification is addressed to those items. Item 18 related to the bridging of termite protection due to the raising of the external gravel path over the external timber cladding. It is not apparent that any part of Mr Poole's scope of works in respect of items 15 to 19 separately addresses item 18. I consider that in respect of items 4, 8 to 11, 12 to 14, and 15 to 19, Mr Poole's report of 11 September 2020 sufficiently describes the works necessary to rectify the defective works in the lower courtyard.
The respondent, presumably in reliance upon the principles set out in Bellgrove v Eldridge (1954) 90 CLR 613, submitted that the extent of rectification proposed by Mr Poole was not a reasonable course to adopt. However, the respondent did not put forward any evidence to suggest that there was a less extreme means of rectifying the defects. In the absence of independent expert evidence to contradict Mr Poole, I am not persuaded that the defects which I have found to exist are of such an insignificant nature that rectification would be an unreasonable course to adopt.
Accordingly I will make orders pursuant to section 48O of the HBA requiring the respondent to carry out the following rectification work in a proper and workmanlike manner: 1. Remove the floor tiles and tile screed and the existing membrane in the shower and bath area only of the main bathroom, re-screed the prepared concrete substrate affording a minimum of 1:80 grade, waterproof the area with a compatible polyurethane waterproofing product in accordance with manufacturer's requirements, and replace tiles. 2. Install a 50 mm water stop angle at the bifold doors separating the interior of the house from the internal al fresco area of the rear deck, including regrading and resurfacing the rear deck to the extent necessary to enable the installation of the water stop angle, or installing a grated drain at the boundary of the internal and external areas of the deck. 3. Carry out the scopes of works described in the "Preliminary Bill of Quantities and Cost Estimate for Rectification of Additional Defects" dated 11 September 2020 prepared by Mr Mathew Poole in respect of items identified as ADD 4, ADD 8 to 11, ADD 12 to 14 and ADD 15 to 19.
The parties did not address the question how long would be an appropriate time to allow for the completion of the work. In the absence of any submissions or evidence on that topic, and doing the best I can, I consider that four months is adequate time for the respondent to complete that work.

Cost of rectification

Had I not been persuaded to make a work order I would have accepted Mr Poole's assessment of the cost of rectification of the bathroom at $9661.31. Mr Poole's calculation was set out in a Scott schedule prepared by Mr Poole for the purposes of the proceedings. Mr Byrne did not comment on that costing or provide an alternative.
I would have discounted substantially Mr Poole's assessment of the cost of rectification of the rear deck. As the respondent pointed out, that costing includes items which are clearly attributable to the bathroom rectification. The costing also includes prices attributable to rectification of the roof and it is not clear exactly what work was assumed to have been involved in the rectification of the rear deck. The applicants suggested that the appropriate course was to deduct the amount assessed by Mr Poole as the cost of rectification of the bathroom from the amount calculated by Mr Poole as the cost of rectification of the rear deck. This is not a satisfactory approach, in particular when there are other apparently irrelevant items included in the costing. However, the costing is detailed and clearly includes substantial costs relevant to the rectification of the rear deck.
I have sought to analyse the costings to identify items clearly attributable to the rear balcony. Including demolition, the installation of the strip drain, the installation of the upturn, waterproofing, plastering and tiling, I calculate the costings clearly attributable to the rear deck at approximately $40,000. Some allowance must be made for preliminaries, Mr Poole's allowance was $25,000. I consider that about two thirds of that (that is $16,000) would be the minimum which could be attributed to the rear deck. Mr Poole allowed 15% profit, 5% overheads and 5% for project management. I consider that a total 20% for those items would be appropriate. To that must be added GST of 10%. By my calculation the applicants have established, through Mr Poole's evidence, that the cost of rectification of the rear deck will be at least $85,800.
Mr Poole's evidence concerning the cost of rectification of the rear courtyard area was not sufficient to enable me to make any informed assessment of that cost. Mr Poole stated in his Preliminary Bill of Quantities and Cost Estimate Report that the total cost including GST would be $182,327.06. However, although Mr Poole identified the quantities on the basis of which he claimed to have made that calculation, he did not provide any detail of the calculation. I also note that his estimate included items 1, 2, 3, 5, and 21 to 26, which were not identified by Mr Poole as items falling within items 2 and 4 in the rectification order of 24 July 2020. Accordingly, if I were not prepared to make a work order in respect of the rectification of the lower courtyard I would not have been able to make any assessment of the cost of rectification and could not have made any award of compensation in respect of the breaches of statutory warranty which I have found: see Bell Solar Pty Limited t/as Sunboost v Anderson [2021] NSWCATAP 278, at [59] - [61]; Gallagher v Masters Installation Pty Ltd [2017] NSWCATAP 117, at [51].

Costs

The applicants have succeeded in obtaining orders in their favour. The amount claimed in the proceedings is clearly greater than $30,000. Accordingly, by virtue of rule 38 of The Civil and Administrative Tribunal Rules 2014 (NSW) I do not need to find special circumstances before making an order for costs. Presumptively, as the successful party, the applicants are entitled to an order for their costs. I will order that the respondent pay the applicant's costs as agreed or assessed, but I will grant leave to the parties to apply for a different order within 14 days of publication of these reasons.

Orders

My orders are: 1. Within four months of the date of publication of these reasons the respondent is to carry out on the applicants' property the following rectification work in a proper and workmanlike manner: 1. Remove the floor tiles and tile screed and the existing membrane in the shower and bath area only of the main bathroom, re-screed the prepared concrete substrate affording a minimum of 1:80 grade, waterproof the area with a compatible polyurethane waterproofing product in accordance with manufacturer's requirements, and replace tiles. 2. Install a 50 mm water stop angle at the bifold doors separating the interior of the house from the internal al fresco area of the rear deck, including regrading and resurfacing the rear deck to the extent necessary to enable the installation of the water stop angle, or, at the respondent's option, installing a grated drain at the boundary of the internal and external areas of the deck. 3. Carry out the scopes of works described in the "Preliminary Bill of Quantities and Cost Estimate for Rectification of Additional Defects" dated 11 September 2020 prepared by Mr Mathew Poole, in respect of items identified as ADD 4, ADD 8 to 11, ADD 12 to 14 and ADD 15 to 19. 1. Subject to order (3) below, the respondent is to pay the applicants' costs of the proceedings as agreed or assessed. 2. Either party may file and serve written submissions within 14 days of the date of this decision seeking a different order in relation to the costs of the proceedings and in such event order (2) above will cease to have effect. 3. If either party files submissions in accordance with order (3), the other party may file submissions in response within a further 14 days. 4. Any submissions filed in accordance with orders (3) and (4) must address the question whether the question of costs may be determined on the papers and without a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW).

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 August 2022

At a glance

Court

Decision date

Source

Judgment (19 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (3)

Cited By (1)