Appellant v Respondents

"5.1.1 domestic building work which is defective, which expression shall include a breach of any of the warranties implied by Section 8 of the Domestic Building Contracts Act namely that the builder warrants that:

a) the work will be carried out in a proper and workmanlike manner and in accordance with the plans and specifications set out in the contract;

b) all materials to be supplied by the builder for use in the work will be good and suitable for the purpose for which they are used and that, unless otherwise stated in the contract, those materials will be new;

c) the work will be carried out in accordance with, and will comply with, all laws and legal requirements including, without limiting the generality of this warranty, the Building Act 1993 and the regulations made thereunder;

d) the work will be carried out with reasonable care and skill and will be completed by the date (or within the period) specified by the contract;

e) if the work consists of the erection or construction of a home, or is work intended to renovate, alter, extend, improve or repair a home to a stage suitable for occupation at the time the work is completed; and

f) if the contract states the particular purpose for which the work is required or the result which the building owner wishes the work to achieve, so as to show that the building owner relies on the builder's skill and judgement, then the work and any material used in carrying out the work will be reasonably fit for that purpose or will be of such a nature and quality that they might reasonably be expected to achieve that result.

5.1.2 a failure to maintain a standard or quality of building work specified in the contract; ..."

8 In the present case a claim was made by the purchasers on the basis that the floor was defective in that it had failed because it was installed other than in a proper workmanlike manner and/or the materials used were not suitable for the purpose for which they were used.

9 It was common ground that if this was the case both the terms of the implied statutory warranties and the express terms of the domestic building contract itself (to which I shall not further refer) had been breached.

10 On 13 November 2002 the first respondent rejected the claim, but subsequently on 2 December 2002 accepted the claim after the purchasers had requested it to reconsider. In letters dated 11 December 2002 and 21 January 2003 the appellant then in turn requested that the first respondent reconsider this decision. After considering the material submitted by the appellant, on 20 December 2002 and again on 7 February 2003, the first respondent affirmed its decision to allow the claim.

11 The decision of the first respondent to accept liability under the policy was contested by the appellant because, if valid, it gave right to a right in turn on the part of the first respondent to compel reinstatement of the floor by the appellant and/or to require the appellant to indemnify the first respondent.

12 The appellant then applied to the Tribunal for a review of the first respondent's decision to allow the claim.

13 The Tribunal dismissed the application and the appellant by leave of a Master of this Court brings this appeal upon the following questions of law:

1. Did the Tribunal err in law in rejecting the evidence of both timber experts where such evidence was consistent and plausible and not contradicted?

2. Did the Tribunal err in law in imposing an onus on the appellant to prove the reason for the shrinkage in the floor-boards?

3. Did the Tribunal err in law in finding that the appellant was liable for shrinkage in the floors because it had not obtained a signed letter complying with clause 10.1 of the Guidelines to Standards and Tolerances published by the Building Control Commission?

4. Was there evidence upon which the Tribunal might properly find that the appellant had breached its contractual obligations in relation to the construction of the floor at 42 St Davids Street Fitzroy?

Ground 1

14 The first ground of appeal is:

"The evidence of Murley and Hay was consistent as to the moisture level of the timber at the time it was laid, that that evidence was not contradicted and was not inherently plausible [sic]. It was not open to the Tribunal to simply reject it."

15 The Tribunal rejected the opinion evidence of both Murley and Hay who were called respectively by the appellant and the first respondent to give expert evidence as to the probable moisture content of the timber flooring when it was laid. There was debate before me as to whether the evidence of Murley and Hay was in fact consistent, but I am prepared to accept for the purposes of the argument that there is as Mr Stuckey submitted a strong case that the only reasonable view open of the effect of the expert evidence was that the opinion of the experts supported the conclusion that the moisture content of the flooring was 12% at the time it was laid.

16 Nevertheless, in my view the Tribunal was entitled to reject this evidence even if both experts are regarded as having given evidence which ultimately supported a similar conclusion with respect to this question. Firstly, such opinion evidence formed part of a body of circumstantial evidence which the Tribunal was required to assess as a whole. Secondly, the Tribunal gave reasons which were open to it for rejecting the opinions of both experts as not properly established.

17 There was no direct evidence of the moisture content of the timber flooring at the time it was laid, although such content could have, and on one view expressed in evidence should have, been tested at that time.

18 The Tribunal was thus confronted with a body of circumstantial evidence from which it was asked by the parties to draw inferences as to the probable moisture content at the relevant time.

19 That evidence included the following:

(a) the current condition of the floor as observed by the Tribunal on a view (it not being bound by the rules of evidence and having carried out such a view in accordance with the requirements of procedural fairness);

(b) evidence as to the manner in which the timber was acclimatised before it was laid;

(c) evidence as to the manner in which the timber could have been acclimatised before it was laid;

(d) evidence from a series of witnesses of the condition of the floor when it was laid, when it was sealed, when possession of the unit was given to the developer, when possession of the unit was given to the purchasers, and since the purchasers went into possession up until the time of the hearing;

(e) evidence as to the ventilation of the premises after possession was given to the developer and before they were given over to the purchasers;

(f) evidence from the experts of the characteristics of the timber used, measurements made by them of its dimensions and moisture content, and extrapolated calculations based on these measurements and the nominal (but not measured) width of the boards when laid;

(g) opinion evidence as to the possible causes of the manifest defects which appeared in the floor over time.

20 It is a fundamental duty of a tribunal to address the question of a particular fact in issue in proceedings before it by reference to the whole of the evidence relevant to that issue and not some part of that evidence alone.[2] It must not deny itself 'the full benefit of the evidentiary impact of the combined weight of all the intermediary facts.'[3] Where a case turns on circumstantial evidence it will be open to the Tribunal to use some facts as tending to support conclusions with respect to other facts although they may not in themselves be directly probative of the matter in issue. In a civil case the Tribunal must ultimately conclude whether relevant inferences are more probable than not on the basis of all the circumstantial evidence before it.

21 The relevant principle was stated by the High Court in the following much cited passage from the judgment of Gibbs CJ and Mason J in Chamberlin v R (No. 2)[4].

"Similarly, in a case depending on circumstantial evidence, the jury should not reject one circumstance because, considered alone, no inference of guilt can be drawn from it. It is well established that the jury must consider 'the weight which is to be given to the united force of all the circumstances put together'. ...

It follows from what we have said that the jury should decide whether they accept the evidence of a particular fact, not by considering the evidence directly relating to that fact in isolation, but in the light of the whole evidence, and that they can draw an inference of guilt from a combination of facts, none of which viewed alone would support that inference. ... When the evidence is circumstantial, the jury, whether in a civil or in a criminal case, are required to draw an inference from the circumstances of the case; in a civil case the circumstances must raise a more probable inference in favour of what is alleged, and in a criminal case the circumstances must exclude any reasonable hypothesis consistent with innocence ..."[5]

22 The experts' opinions in the present case could never constitute more than part of the evidence in issue. The Tribunal was not bound to accept them even if they were consistent. They depended on a series of hypotheses and the application of rates based on averages. Such methodology may give rise to predictions on the balance of probabilities given stated facts but must be measured against all the evidence as to actual facts if it is sought to be applied retrospectively.

23 In the present case the Tribunal stated a fundamental reason for rejecting the opinion of each of the experts. It also criticised the methodology of each. In my view both its fundamental criticism and some of the further criticisms it made were open to it.

24 The Tribunal commenced its discussion of the expert evidence as follows:

"I found the expert evidence to be generally unsatisfactory. Whilst purporting to have prepared their reports in accordance with VCAT Practice Note 2 it was apparent that neither expert had any real understanding or appreciation of his obligations under the Practice Note. In particular, neither expert brought their raw data with them to the hearing. This was a particular concern in relation to Mr Murley's evidence where his viva voce evidence was significantly more expansive than his written report."[6]

25 The raw data in issue comprised the experts' notes of the measurements made of floor board widths and moisture content made by them on site.

26 The accuracy and adequacy of these measurements necessarily underpinned the validity of any opinion based upon them. The experts opinions depended upon the relationship between inferred shrinkage based on the data and measured moisture content on the one hand to the probable moisture content at the time the floor was laid on the other, calculated by the application of an average ratio derived from technical publications.

27 The sufficiency of the measurements might reasonably be regarded as a live question having regard to the limited range of matters recorded in the experts' reports and some aspects of the facts actually recorded such as the fact that some boards measured had a greater width than their nominal width when laid.

28 Murley recorded no measurements of the dimensions of the floorboards in his report. He stated that he measured a range of moisture content of 10.5% to 10.9% but gave no details of the extent of sampling.

29 Hay gave the following measurements of floorboard widths.

"Random measurement of the floorboards found that where measured, face width varied throughout the floor area.

Living area. Face width of floorboards ranged between

108.35mm, 107.70mm and 107.69mm

Meals area. Floorboards ranged between

107.97mm, 108.50mm, 108.02mm, 108.02mm

Kitchen Floorboards ranged between

107.33mm and 107.77mm.

Note: No floorboards measured in vicinity of direct sunlight."

30 He further stated random sampling gave corrected moisture content readings between 11.5% and 12.2%.

31 Part 6 of the Victorian Civil and Administrative Tribunal Act 1998 ("the VCAT Act") provides for the establishment of a Rules Committee.

32 Section 158 of the VCAT Act provides that the Rules Committee may issue practice notes relating to the practice and procedure of the Tribunal.

33 The Practice Note to which the Tribunal refers in its decision relevantly provided:

2.1 An expert witness has a paramount duty to the Tribunal and not to the party retaining the expert.

2.2 An expert witness has an overriding duty to assist the Tribunal on matters relevant to the expert's expertise.

2.3 An expert witness is not an advocate for a party to a proceeding.

3. Content and form of expert's report

3.1 The report of an expert must include the following matters -

1. the name and address of the expert;

2. the expert's qualifications and experience;

3. a statement identifying the expert's area of expertise;

4. a statement setting out the expert's expertise to make the report;

5. all instructions that define the scope of the report (original and supplementary and whether in writing or oral);

6. the facts, matters and all assumptions upon which the report proceeds;

7. reference to those documents and other materials the expert has been instructed to consider or take into account in preparing his or her report and the literature or other material used in making the report;

8. the identity of the person who carried out any tests or experiments upon which the expert relied in making the report and the qualifications of that person;

9. a summary of the opinion or opinions of the expert;

10. a statement identifying any provisional opinions that are not fully researched for any reason (identifying the reason why such opinions have not been or cannot be fully researched);

11. a statement setting out any questions falling outside the expert's expertise and also a statement indicating whether the report is incomplete or inaccurate in any respect;

and in Domestic Building List cases only

12. i) if rectification or demolition or other alteration of premises is recommended, the reason(s) for such recommendation and the likely cost(s) involved;

ii) whether any alternative remedy or remedies are a reasonable alternative.

3.2 The expert must declare at the end of the report, 'I have made all the inquiries that I believe are desirable and appropriate and that no matters of significance which I regard as relevant have to my knowledge been withheld from the Tribunal'."

34 The requirements of the practice note were agitated by the Tribunal during the course of the hearing. The Tribunal specifically stated that in its view the relevant raw data should be produced to it. In my view it was open to the Tribunal to regard non-compliance with the practice note as material in the present case and as therefore potentially rendering the evidence in issue unpersuasive. Whether it was in fact unpersuasive was a question of fact for the Tribunal. The requirements of the practice note were not, however, irrelevant. The Tribunal concluded that the experts failed in their duties to the Tribunal and did not properly verify the fundamental data upon which their opinions were based.

35 The appellant relies on the principle stated in Llewellyn v Reynolds[7]. If a court disbelieves evidence which is inherently probable and uncontradicted, without giving a relevant reason for so doing this will amount to an error of law. Accepting for present purposes but not deciding that the Tribunal was under a like obligation, in the present case the probability of the opinion being correct depended upon the facts upon which it was founded. The Tribunal was not satisfied that those facts were properly verified. It was not satisfied the experts had complied with the duty to the Tribunal set out in the Practice Note. As a matter of law the Tribunal gave an entirely satisfactory answer for not accepting the opinions and was entitled to reject them in all the circumstances.

36 The Tribunal further criticised both the opinions of Murley and Hay on additional bases. Firstly, the Tribunal recorded that the technical literature forming the basis of Murley's methodology was not satisfactorily evidenced before it.

"It seemed that much of his report was based on technical literature that had not been referred to as reference documents, and which was not available at the hearing. It is difficult to accept his interpretation of that literature without having an opportunity to consider it."[8]

37 It was open to the Tribunal to regard such a deficiency both as a breach of the Practice Note and a material reason for rejecting the experts' evidence.

38 Next, it was said that Murley's rejection of a relevant Australian Standard was not helpful and counted against his reliability. This matter was further expanded and I shall return to it.

39 Next, it was said Murley's opinion depended in part upon information supplied to him by the builder. It was open to the Tribunal to reject Murley's opinion if it did not accept that the instructions which he referred to were accurate. It is further apparent from the judgment as a whole that the Tribunal did not accept that relevant instructions with respect to the shutting up of the property were accurate.

40 Next, it was said observations in Murley's report concerning moisture conditions were seemingly inconsistent. I accept Mr Stuckey's submission that this seeming inconsistency derived from a misquote and the Tribunal was in error in making the observations which it did.

41 Next, it was said Murley's readings had not been made in accordance with a metre calibrated for the individual species of eucalypt in issue as required by the relevant Australian Standard and that Mr Murley stated he did not agree with the Standard. It was open to the Tribunal to criticise him with respect to both these matters. The criticism turned on facts conceded by the witness.

42 Lastly, it was said by the Tribunal that in the circumstances it is likely Murley's meter underestimated the moisture content of mountain ash flooring by approximately 1.5 percentage points. Mr Oliver conceded that the evidence did not permit this conclusion to be reliably drawn.

43 In summary, however, the Tribunal was entitled to reject Murley's opinion:

(a) because the measurements forming the starting point of his analysis were not properly verified to its satisfaction;

(b) because it was not satisfied he had complied adequately in his duty to the Tribunal;

(c) because the technical publications forming the basis of the interpretation of the data in issue were not satisfactorily referred to and evidenced before the Tribunal;

(d) because Murley's opinion was in part premised upon instructions which the Tribunal did not accept as accurate; and

(e) because the manner in which the moisture measurements upon which Murley relied were made was not in accordance with the relevant Australian Standard.

44 Mr Hay's evidence was also subject to the same fundamental criticism that his report was not prepared in accordance with the relevant Practice Note and was not properly supported by production of his "raw data".

45 The opinion based on the measurements made by him was further to be rejected on the basis that his initial report was formulated on the basis of a misunderstanding of the original nominal width of the floorboards laid.

46 Once again the Tribunal was entitled to form the view which it did of these matters and to reject Mr Hay's opinion on the basis of them. Once again the fundamental criticism made was sufficient to justify such rejection but in the event the Tribunal stated a further reason for rejection of the opinion.

47 It follows that ground 1 of appeal must fail. It was open to the Tribunal to reject the evidence of Murley and Hay and it did so as a matter of fact on the basis of the evidence before it and by reference to reasons which were open to it.

Ground 2

48 Ground 2 of appeal contends that the appellant was obliged to demonstrate no more than it had committed no breach of its contractual obligations not to explain the defects.

49 There are I think three levels of answer to this ground. First, the Tribunal was positively satisfied that the defects in the timber were due to poor workmanship. It did not ground its decision upon considerations of onus of proof. This is a complete answer to this ground but I elaborate the further answers.

50 Secondly, although it may be accepted that the review proceeding before the Tribunal constituted a rehearing of the question in issue, the evidence was capable of supporting findings as to circumstances bearing the inference that the defects resulted from the manner in which the floor was laid, unless additional circumstances inconsistent with such inference were established by the appellant. Thus, at its simplest, if it were accepted the floor was defective when supplied to the purchaser and a satisfactory chain of continuity subject to no material intervening cause could be established, the inference that the defect resulted from the manner in which the flooring was installed was almost inescapable.

51 It is for this reason the Tribunal observed:

"The major difficulty with the position adopted by the builder, is the failure to explain the significant gapping and splitting after the owners moved in. Although it may well be that some of the shrinkage which occurred during the period August to January was caused by the apartment being closed up for long periods - although there was no technical data/literature produced to support this - I accept the condition of the floor has deteriorated further since they moved in. This was confirmed by Mr D'Azzena who, on looking at the photographs taken by Mr Papaioannou, said the floor was in nowhere near as poor condition when he was last there in February 2002 when he said he thought the overall appearance and condition of the floor was acceptable and that the gapping was not a big issue. He also said that at that time he did not consider any rectification works were necessary. Mr Gombac agreed that he had not considered this to be a major problem in February 2002 because he expected the flooring would expand and the gaps close up during the winter months." [9]

52 Furthermore, it was specifically conceded by Mr Hay in response to counsel for the appellant before the Tribunal that there were three causes of excessive movement of timber floors of the type in issue:

(a) the timber was installed at a moisture level too high for the eventual service environment; or

(b) the timber was exposed to excessive moisture during construction; or

(c) the timber was exposed to excessive changes in the service environment after construction.

53 The appellant submitted in this Court that the appellant established before the Tribunal that (a) and (b) were not the case. The appellant further submitted that in so doing it established that it had performed the contract and satisfied the statutory warranties.

54 I do not accept the Tribunal was bound to conclude (a) and (b) were not the case. Conversely, it was open to it to conclude (c) was not the case.

55 If this framework of analysis is accepted as the appellant submitted it should be, it was therefore open to the Tribunal to infer that the defects in the timber flooring resulted from either the first and/or second causes by rejecting the third cause. If it did so then the appellant was responsible for the defects.

56 In evaluating these matters it must be steadily borne in mind that in an appeal on a question of law it is not for this Court to evaluate the weight of the evidence or substitute its own view of the facts.[10] As Mason CJ (with whom on this point Brennan, Toohey and Gaudron JJ agreed) stated in Australia Broadcasting Tribunal v Bond[11] so long as there is some basis for an inference, in other words the particular inference is reasonably open, no error of law has taken place.[12]

57 The third answer to the second ground of appeal is that the parties joined issue before the Tribunal on the basis of particulars of claim, in which the appellant alleged it was entitled to relief in substance:

(a) because the floor was installed with satisfactory moisture content; and

(b) because the defects resulted from a failure to properly protect the floor from damage after installation and in particular a failure to prevent damage due to direct sunlight and lack of ventilation.

58 Both these propositions were put in final submission to the Tribunal on behalf of the appellant, although the evidentiary basis upon which they were argued changed from that initially put forward by the appellant as a result of the course of the evidence before the Tribunal.

59 If neither of these propositions were accepted by the Tribunal, it is difficult to see that it erred in law in rejecting the appellant's claim. It addressed the claim on the very basis it was invited to by the appellant. The Tribunal was required to engage in the practical task of resolving fairly the issues which had been presented to it by the parties.[13] On appeal this Court must recognise the forensic realities of the way in which the case was put to the Tribunal. It is these realities to which a Tribunal must respond in its reasons.

60 The Tribunal was not satisfied by the appellant's case as to the moisture content of the boards when they were laid. The Tribunal concluded that there was no circumstantial evidence of damage from direct sunlight. It accepted that some shrinkage may have occurred between August 2004 and January 2005 due to the apartment being closed up for long periods but held that this could not satisfactorily explain the continuing shrinkage after the purchasers moved it. It concluded positively that the defects in the floor were on the balance of probabilities caused by edge splitting resulting from poor workmanship.

61 The reality is that the Tribunal rejected the appellant's case on the facts and accepted that of the respondents.

Grounds 3 and 4

62 Grounds 3 and 4 of appeal are as follows:

"3. The Tribunal relied upon considerations and matters which were both irrelevant to the issues which it was required to decide and were contrary to the evidence led in the proceeding.

4. There was no evidence upon which the Tribunal could properly conclude that the appellant had breached its contractual obligations in respect of the construction of the first level floor."

63 These grounds effectively attack the conclusion of the Tribunal that the defects in the floor were due to the poor workmanship of the builder. It is said firstly that the conclusions were influenced by irrelevant considerations:

(a) insofar as the Tribunal commented that its conclusion with respect to poor workmanship was reached "particularly in the absence of any warning by the builder to or acknowledgement by the developer as contemplated by clause 10.1 of the Guidelines to Standards and Tolerances"; and

(b) insofar as the Tribunal found that the timber laid by the appellant was not properly acclimatised.

64 It is said secondly that there was no evidence upon which the Tribunal could be satisfied that edge bonding resulted from poor workmanship. Hence, it is submitted it was not open to the Tribunal to make the following subsidiary findings.

"On the evidence before me it is difficult to determine the exact measurements of the boards or their moisture content when they were laid. However, irrespective of what the moisture content may have been I am satisfied on the evidence before me that the primary cause of the gapping and splitting is the edge bonding - but for the edge bonding it may well have been that there would have been small gaps between each of the boards, and no splitting and that this would have been reasonable in circumstances where timber is a natural product that expands and contracts with the weather conditions. I do not accept that edge bonding to the extent that is occurred here is unavoidable and inevitable if timber is properly acclimatised and not left unsealed for a prolonged period of time as was seemingly the case here. . The edge bonding has prevented this from occurring causing gapping and splitting of greater extent than might otherwise have been expected. Obviously, these findings relate to the flooring in Apartment 1 only. As noted above, I have no evidence before me in relation to the other Apartments and make no findings in relation to the flooring in the Apartment block as a whole. The issuing by the Architect of a Final Certificate on 31 January 2002 is not relevant in relation to apartment 1 which had been sold to the owners who had occupied it since 1 January 2002."

65 I shall deal with the second question first. Both the expert witnesses referred to the phenomen of edge bonding in their reports. Murley stated:

"On inspecting the floor, clumping has occurred, that the boards have gapped unevenly across the floor. Instead of a small gap between each board, there will be a group of boards without gaps between them, then a large gap and then another group of tight boards. The problem is initially caused by a reduction in the moisture content of the boards that is exacerbated by the coating system bonding the boards together and thus not allowing the boards to separate.

The polyurethane finish seeps between the boards on initial application, and on drying securely glues the boards together. The forces involved in the shrinkage will then open up a large gap every four to six board widths.

In some cases, the bond may be stronger than a particular board and that might split the board. This has happened in this instance as can be seen in the attached photos Nos. 1, 2, 3 and 4.

The problem of the clumping cannot be resolved, the edge bond, once established is permanent. Photos 5 and 6 show a 50 cent coin fits easily into the large gaps (over 2 millimetres) which extend over several metres and as such are considered a defect in terms of the Guidelines of the Building Control Commission (Vic) 1999."

66 Mr Hay stated in his first report and also in his second report:

"Edge binding

In a number of areas the top section of the groove profile has split and separated from the body of the various floorboards (see appendix A)."

Appendix A contained a photograph illustrating edge bonding.

67 Further, in cross-examination, Mr Murley stated as follows:

"You don't want, I suggest to you that you do not want the sealant to go in between the boards and glue them. Do you agree with that principle, it's undesirable?---Yes, I do. But the fact that Faster Seal was used in this case which is supposed to alleviate edge bonding, according to its manufacturer - - -

This is a sealant isn't it?---Yes, Faster Seal which is the first sealant coat that was put on the boards.

Is there a product that you can get now that is expected to alleviate that problem?---That's the product that was used and as you can see it has failed dismally, edge bonding has occurred.

Has it failed because there were gaps between the boards when the sealant was applied?---No, because you see Faster Seal itself dries within 15 minutes, it's exceptionally quick drying so therefore it's not going down, being absorbed by the timber. It's designed to sit on top of the timber rather than to go in.

So where it says: 'The problem is initially caused by a reduction in a moisture content of the boards and is exacerbated by the coating system bonding the boards together.' That's a concept you agree with?---Yes.

And is it the case, therefore, that you attribute these gaps in the boards not so much to the fact that they've been stuck together but to the fact that there has been excessive shrinkage, is that the point?---That's right, I'm putting more to that weight because of the fact of the product that was used initially, which was Faster Seal 3000 which dries extremely quickly, forms a bond across the top of the boards. It doesn't lend itself to creeping down between the boards." [14] (My emphasis)

68 This evidence fell to be evaluated in the context of the evidence as a whole, including evidence as to the appropriate procedures for acclimatising timber flooring, the Tribunal's observations of the defects, and the Tribunal's findings as to the nature of ventilation of the flat.

69 In my view it was open to the Tribunal on the evidence to conclude the appellant was responsible for the edge bonding and that such bonding and consequent splitting could have been avoided by good workmanship. This is in substance what the Tribunal found.

70 I turn then to the question of the Guidelines. The Tribunal stated[15]:

"14. I was referred to the 1999 Guides to Standards and Tolerances issued by the Building Control Commission (as it then was). Clause 10.1 is concerned with gaps in exposed timber flooring which provides that gapping in areas affected by direct sunlight is not considered a defect, and further:

Where the manufacturer can establish that the flooring system was laid in accordance with the manufacturer's instructions, the builder shall not be liable for gaps considered as defects where the builder has made the owners aware, as acknowledged by them in writing, that the flooring system installed could suffer significant shrinkage leading to visually obvious movement resulting in gaps well in excess of the normally acceptable

15. Although these are clearly intended as Guidelines only they do provide some assistance in determining the liability of the builder. Notwithstanding that a number of the witnesses called on behalf of both the builder and the insurers indicated that shrinkage is a well known phenomenon when buildings are poorly ventilated and window furnishings are not installed where there are large expanses of glass, there is no mention in the Guidelines of gapping not being a defect where it occurs in areas subject to variations in temperature and climactic conditions alone. Further, if the builder had concerns about the suitability of timber flooring in what they regard as being unprotected conditions this should have been brought to the attention of the developer before it was laid, and the developer asked to sign an acknowledgement as contemplated by the Guidelines. This did not occur, and, in fact, it was not until some months after the floor was laid, that any steps were apparently taken to warn the developer. Therefore under the Guidelines the flooring is a defect for which the builder is liable."

71 In my view these paragraphs amount to no more than statements that:

(a) the Guidelines support the view that gapping coupled with no explanatory excessive variation in temperature and climatic conditions amounts to a defect for which the builder should be regarded as responsible; and

(b) the Guidelines suggest a mechanism whereby the risk with respect to the floor could have been passed to the developer. This mechanism was not adopted in the present case.

72 The Guidelines therefore supported the view that gapping in the circumstances ultimately found by the Tribunal constituted a defect. Further, the failure by the builder to adopt the mechanism suggested by the Guidelines supported the view that the builder did not contemplate gapping of the type that would occur.

73 The Guidelines are no more than a circumstance bearing on the judgment the Tribunal was required to make as to whether the floor was laid in a proper and workmanlike manner. The Guidelines themselves were referred to by both the experts called by the parties before the Tribunal. It was open to the Tribunal to regard them as relevant.

74 Further, and in any event, the Tribunal's decision ultimately rested on a positive finding with respect to the cause of the edge bonding. Even if the Guidelines were irrelevant, reference to them would not constitute a vitiating error because it would not logically invalidate the Tribunal's finding as to edge bonding.[16]

75 Lastly, it was submitted that "the Tribunal appeared to accept and place weight upon Hay's claim about (the) only acceptable manner of acclimatising timber. This claim was that each piece of timber had to be separately exposed. Logically, this made no difference if the timber was laid at the correct mositure level."

76 As I understand this submission, it in effect repeats the substance of first ground of appeal and/or the fourth ground of appeal. For reasons I have already set out the Tribunal was not bound to conclude that the timber was laid at the correct moisture level.

77 Accordingly, each of the grounds of appeal fails and the appeal must be dismissed.

[1] Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue [2001] HCA 49; (2001) 75 ALJR 1342

[2] Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125

[3] Ibid per Winneke P at 128.

[4] [1984] HCA 7; (1984) 153 CLR 521 at 535

[5] These principles as stated are as much applicable to civil as criminal cases: Transport Industries Insurance Co Ltd v Longmuir [1997] 1 VR 125 at 129

[6] The Gombac Group Pty Ltd v Vero Insurance Ltd [2004] VCAT 2540 (23 December 2004) at [9]

[7] [1952] VicLawRp 24; [1952] VLR 171

[8] Above at [9]

[9] Above at [17]

[10] See Transport Accident Commission v Hoffman [1989] VicRp 18; [1989] VR 197 at 200 per Young C J and McGarvie J

[11] [1990] HCA 33; (1990) 170 CLR 321

[12] See further the discussion in Roads Corporation v Dacakis [1995] VicRp 70; [1995] 2 VR 508 at 519-520. The analysis of Batt J was approved by the Full Court of the Federal Court in MIMA v Epeabaka [1999] FCA 1; (1998-99) 160 ALR 543 at 552. See also Gamaethige v MIMA [2001] FCA 565; (2001) 183 ALR 59 and MIMA v Perera [2001] FCA 1212; (2001) 183 ALR 204.

[13] See s.98(1) of the Victorian Civil and Administrative Tribunal Act 1998.

[14] T.316, 322-323

[15] at [14] and [15]

[16] Portland Properties Pty Ltd v Melbourne & Metropolitan Board of Works (1971) 38 LGRA 6 at 18