Avad Construction Group Pty Ltd v Carl La Rocca;; Carl La Rocca v Avad Construction Group Pty Ltd.

1. It should be noted that the Owner's expert's calculations are slightly different as the result of, with respect, errors in addition. The Owner's expert's figures come to $541,048.00.
2. It should also be noted that some interpretation of the Owner's figures as set out above is required, because some of the calculations are included more than once, as being on an alternative basis. For example, the costs of rectifying the render are included in both items 5.01 and 5.02, clearly meant to be alternative allowances. However, including both figures in the additions gives a misleading impression of the total costs claimed. Allowing the render costs only once will bring the total claimed (in the Joint Scott Schedule) within the jurisdictional limit of the Tribunal. In any case, the applicant has limited his claim to that jurisdictional limit. In my opinion there is no issue in that regard, depending on what is claimed and determined in relation to "inconvenience" at item 5.13.

The Evidence

1. The applicant filed a large bundle of evidence including his statement, his expert's report and various contract documents and drawings.
2. The respondent filed statements of Mr Dionisios Trikilis (Director of the Builder) and Mr Arthur Caltsis (an employee of the Builder who worked on this project as leading hand), supported by the expert's report.
3. Both parties also relied on the Joint Scott Schedule.
4. At the hearing, Mr Trikilis, Mr Caltsis and Mr Todarello for the Builder, and Mr La Rocca and Mr Stanton for the Owner all gave oral evidence and were cross-examined.
5. Both parties were represented by counsel at the hearing.

The Issues

1. As noted already, there is in fact no issue in relation to the Builder's claim.
2. The issues in relation to the Owner's claim are as follows: 1. It is agreed the internal staircase is not built as shown in the drawings. The issue is primarily a factual matter: did the Builder and the Owner discuss the layout of the new upper floor and as a result of the Owner wishing to enlarge one room in that area, did the parties agree to the changed positioning of the internal staircase? Depending on the answer to that question, there is then the legal issue as to whether it is reasonable to order the works claimed by the Owner to in effect completely remove the new upper floor, redo the internal staircase as originally drawn and then to completely redo the upper floor addition. 2. If it is not determined that the upper floor addition has to be completely redone, what is the appropriate method and scope of works, if any, to restore the "amenity" of the room affected by the internal staircase intrusion, the lounge room. 3. There is agreed to be a difference in the pitch of the roof of the new upper floor from that of the original roof on the lower floor. The issue is whether that is to be properly characterised as a defect or not, and, if so, what is the reasonable scope of works and cost to rectify it, essentially, replacing the entire upper floor roof. 4. There are then several relatively minor issues of rectification, some of which are agreed between the parties' experts. 5. Another major issue is the claim by the Owner's expert that the entire new upper floor has been built in such a way that it is displaced 400mm south so that it is resting on a non-load bearing wall. That issue has not been listed separately in the Owner's claim and would be subject to determinations as to whether the Tribunal finds that the upper floor needs replacing anyway. 6. There is a fairly significant issue as to the rectification of faulty rendering, particularly in relation to the joinder between the upper and lower floors. This is caused no simply by the claimed defective works of the renderers on the project, but by a mismatch between the two floors, the upper floor being built plumb and at right angles (about which there is no dispute) but the lower floor was originally not plumb and built at right angles. The Owner's expert suggests the Builder should have corrected the lower floor before constructing the upper floor. As with the previous issue, this is not a separate item in the Owner's claim but is connected with the claim for rebuilding of the upper floor. 7. Another issue, which, like the previous two, is not separately claimed by the Owner but is connected with the claim for rebuilding the upper floor, as that the Owner claims the steel works constructed by the Builder have not been certified and were not made available for certification before those works were covered by the ongoing construction works. 8. Finally, there is the preliminary issue raised by the Builder, to the effect that the Tribunal does not have jurisdiction to hear these claims of the Owner, because they are not "building claims" as defined by the Home Building Act 1989 (the HB Act).
3. I note also that given the nature of some of those issues, particularly (1) and (5), there are issues of credibility of the witnesses, vigorously argued by both parties.

Consideration and Determination

1. I deal first with the jurisdictional issue.

Are the Owner's claims "building claims"?

1. This issue was raised at the commencement of the hearing. At that time, having heard the nature of the Builder's submission, I determined that the hearing would proceed without deciding that issue, and orders were made for the parties to provide written submissions specifically on that submission, which would be decided in effect on the papers at the same time as this reserved decision on the substantive claims.
2. Both parties' counsel provided written submissions on jurisdiction as directed.

The Builder's Submissions on jurisdiction 1. The Builder summarises the claims made by the owner in the amended application. Item 1 of the Schedule of Defects in that application refers to serious departures from the plans and drawings and includes the relocation of the internal staircase, the mismatch in the pitch of the upper and lower floors, the Northern Wall being built 400mm to the South, the upper floor rooms not being built to the planned dimensions and the external walls of the upper floor not sitting plumb on the lower floor external walls. Then, of the remaining items in the amended claim, the Builder refers to the windows lacking mouldings (number 9) and "inconvenience" (number 13). Those are the only items which the Builder asserts are not building claims for the purposes of the HB Act. 2. The Builder then refers to s 48K(1) of the HB Act which prescribes that the Tribunal has jurisdiction to hear and determine any "building claim" in which the amount claimed does not exceed $500,000.00 and to the definition of "building claim" in s 48A(1): 48A Definitions In this Part: building claim means a claim for: (a) the payment of a specified sum of money, or (b) the supply of specified services, or (c) relief from payment of a specified sum of money, or (d) the delivery, return or replacement of specified goods or goods of a specified description, or (e) a combination of two or more of the remedies referred to in paragraphs (a)-(d), that arises from a supply of building goods or services whether under a contract or not, or that arises under a contract that is collateral to a contract for the supply of building goods or services, but does not include a claim that the regulations declare not to be a building claim. … (2) Without limiting the definition of building claim, a building claim includes the following: … (b) a claim for compensation for loss arising from a breach of a statutory warranty implied under Part 2C. 1. The Builder then submits that applying the correct analysis, the Tribunal can look at the "claim document" only and not to any subsequently prepared document. The "serious departures" claim and the windows moulding are contractual claims for unspecified sums and in the amended claim the Tribunal is requested to assess the correct measure of damages. Those claims are therefore not "building claims" and the Tribunal does not have jurisdiction to determine them. 2. The Builder claims support for these submissions in two not particularly recent cases. The first is Archom Limited v Consumer Claims Tribunal (Supreme Court of New South Wales, Unreported, 29 September 1994) in which Simpson SCJ stated: "Whether jurisdiction exists must be determined by reference to the 'claim' made by the claimant. … 'Claim" is to be equated with what is asserted by the claimant; that is what the claimant, rightly or wrongly asserts. Jurisdiction depends upon the correct analysis of the assertion made by the claim in the claim form." 1. The second reference is to Bashton v Elias (Supreme Court of New South Wales, Unreported, 03 June 1999) in which Davies AJ stated: " … provided that a claim asserts on its face a building claim as defined, and provided that the sum specified in that claim is within the jurisdictional limit, the Tribunal will have jurisdiction". 1. In relation to the "general damages" claim, the Builder submits that this is neither a claim for a specified sum of money nor a claim for compensation for loss arising from a breach of a statutory warranty. Therefore, it too is not a building claim and the Tribunal does not have jurisdiction.

The Owner's submissions on jurisdiction 1. The Owner's submissions answer the issue of there being no specified sum by pointing out that by the time the Owner had served his expert evidence, including the Scott Schedule, a "rectification amount was attributable to each defect". Therefore it is submitted, they are all "building claims" as defined. Specifically in relation to item 13, the "general damages" claim, the Owner submits that problem could be solved by reflecting the "well-recognised approach to pleading unliquidated damages" where the jurisdictional limit is claimed. 2. The Owner also points out that the general damages claim is contingent on findings in relation to the other claims. That is, should the Tribunal find that it is not "viable" to rectify a particular defect, then the Owner would have to put up with it but should be compensated for doing so. Any such finding by the Tribunal would be an amount arising from the supply of building services and so within jurisdiction.

Determination of the jurisdictional challenge 1. There is no real dispute between the parties (putting aside the general damages claim for a moment) as to the definition of "building claim". The issue is really that the Builder asserts that the "claim" being claimed is what is contained in the Application Form, whether on paper on online. The Owner does not specifically address that issue, but states that the claim also includes what is provided in later documents, such as any expert reports or Scott Schedule, provided that the opponent is on notice and is not prejudiced. 2. In my opinion the Builder is not assisted by Bashton v Elias. The only assistance from the authorities provided is the phrase of Simpson SCJ in Archom Limited v Consumer Claims Tribunal: "Jurisdiction depends upon the correct analysis of the assertion made by the claim in the claim form". 3. In my opinion, the extract from Archom cannot be utilised to assert that an applicant in this Tribunal is restricted by whatever is written in the claim form. If Her Honour had intended to assert that I cannot accept that further analysis would have been provided. I am not aware and have not been able to find any other reference to Archom to that effect (nor any reference whatsoever). 4. I find that the situation is covered by s 38 of the Civil and Administrative Tribunal Act 2013 (CAT Act): 38 Procedure of Tribunal generally (1) The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision. (2) The Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit, subject to the rules of natural justice. … (4) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. … (6) The Tribunal: (a) is to ensure that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings, and … Although the Builder refers to that section, that reference is limited to a recognition that the Tribunal is not a forum of strict pleading and therefore that "[a] claimant's claims are not to be analysed merely by reference to the rules of pleading, but by an analysis of the substance of the assertions intended to be made". The Builder's submissions then go on to make those analyses. 1. However, in my opinion s 38 goes far beyond that submission. Indeed, in my experience if parties in this Tribunal were limited strictly to what was stated in the "Application Form", many matters, very many matters, would not get to a hearing or if they did, would be dismissed as out of jurisdiction. 2. It is necessary to give proper weight to all the sections and subsections of s 38 as extracted above. That is not done, in this case, by stating that the claim is out of jurisdiction because a liquidated sum is not provided in the application. Provided the rules of natural justice are followed, there is no requirement that an applicant is bound strictly by what appears in the application form. There is no doubt in these proceedings that the Builder was aware of the nature of the claims brought by the Owner, including the specified amounts claimed. 3. I find that the "claim" by the Owner in these proceedings is not limited to the form or words used in the original or the amended application form and that each of the claims brought by the Owner is a "building claim" for the purposes of the HB Act. 4. In regard to the general damages claim, so far as any reference to a "specified sum" is concerned, although the finding in the previous paragraph applies equally to this item, I find that in fact no sum ever was specified and that therefore it is not a building claim, and is dismissed. (As I note below, this claim would have been dismissed in any case, for lack of evidence and compliance with the Civil Liability Act 2002 (CL Act).

Credibility of the witnesses

1. The Builder submits that Mr La Rocca was evasive, combative and argumentative, reluctant to make concessions and, while not giving evidence, disruptive of other witnesses. The Owner's submissions do not directly address these points but in making submissions in relation to the various items, it is implicit that I should accept the Owner's (more reasonable and believable) versions. I have reviewed the notes I took during the two days of hearing. I made a number of notes to the effect that Mr La Rocca was argumentative with counsel at times, and that at least on one occasion he was extremely evasive: seeking to avoid answering a question whether his expert Mr Stanton had advised him there was a problem with the roof (besides pitch). I agree in general with the Builder's submission and have taken that into account when considering the differing versions of the evidence given by the witnesses. I do not go so far as to state that the evidence of Mr La Rocca is not to be trusted unless independently supported.
2. The Builder also submits that Mr Trikilis and Mr Caltsis were both direct and forthright and were not successfully challenged on their evidence. I agree with those submissions. I accept both as witnesses conscientiously attempting to tell the truth is it seemed to them. Mr Caltsis in particular was challenged that he had manufactured his evidence to support his employer. That is certainly hypothetically possible but Mr Caltsis was not shaken in that regard.
3. I was not impressed with Mr Stanton's evidence for the Owner. I do not suggest that he was manufacturing defects nor was he lying or evasive in his evidence as to what he saw, or, as I will suggest below, thought he saw. However, some of Mr Stanton's opinions were simply fanciful when confronted with the evidence. The prime example of that is his opinion in oral evidence that the entire upper floor was constructed 400mm too far to the South and was therefore overhanging the wall. When it was pointed out that in fact it was not overhanging any wall, Mr Stanton stated that it was resting on the wrong wall, a non-load-bearing wall. This statement was totally without supporting evidence. On occasion Mr Stanton was forced to concede his position depended on what he was told by his client. Other evidence of Mr Stanton did not accord with the obvious evidence, such as the allege missing upper floor window mouldings (where he appeared to be persisting in his opinion because that is what his client wished), or the claim of drummy plasterboard. There was a further concern with Mr Stanton's evidence: on a number of occasions his opinion concluded with a "strong recommendation" of further investigation of defects by an appropriately qualified or experienced person. In each case that further investigation has not occurred. That does not assist the Tribunal and it does not lend weight to Mr Stanton's opinions.
4. In contrast, I was impressed with Mr Todarello's evidence which appeared to me to be given with authority but without aggression or in an overly advocating manner. He also at times analysed the evidence or opinions of Mr Stanton in a dispassionate and professional manner, demonstrating his own views in a clear and rational way. I was particularly impressed with his explanations in relation to "drummy" plasterboard, the alleged 400mm movement South and his evidence in relation to the changing pitch in the roof. Mr Todarello also conceded a number of defects in a forthright manner.

Itemised findings

1. I adopt the numbering used in the schedule set out in paragraph 5 above. Item Description Findings Amount 5.00 Preliminaries The determination of this issue depends initially on making findings as to which of Mr Trikilis, Mr Caltsis and Mr La Rocca's versions of discussions should be accepted. Mr Handley's submissions in this regard have much persuasive force, especially in relation to the Builder's version lacking plausibility and the possible significance of the Builder's failure to ensure Mr La Rocca was present when the "stair guy" did his measuring. On the other hand I take into account Mr Caltsis' support for Mr Trikilis. I find that there was a discussion in relation to changing the layout of the upper floor or at least changing the dimensions or one or more rooms. I find that the Owner indicated he wanted those changes. I accept that the Builder failed to comply with the contractual provisions in relation to variations, but nevertheless he was instructed to go ahead. 5.01 remove stairwell and rebuild upper floor It appears to me likely that the Owner may not have realised the consequences of the change to the upper floor layout although the evidence is not clear on that point. I find Mr Trikilis's evidence in relation to cutting the opening for the stairs, and that opening being over the lounge room, made it obvious that the layout of the stairs had changed consequential on the changed upper floor layout. $0.00 The Builder is not liable for the change in orientation of the stairs. They were not constructed in compliance with the drawings but that was a result of the Owner's wishes in relation to the upper floor layout. This item is therefore dismissed. 5.02 Rectify render I note that the quotation sought to be tendered from Mr Denning was rejected at the hearing. The figures provided by Mr Stanton were based on that quotation, the result being that Mr Stanton has not provided a proper costing for this item. I do not accept the scope of work suggested by Mr Stanton which requires virtually complete removal and replacement. A lot of work is required but the photographic evidence does not support complete replacement. $6,366.00 Mr Todarello recommends removing and repairing delaminated coating and repairing cracked joints where necessary. I accept his methodology. The photographic evidence suggests very many cracks and open joints but I accept Mr Todarello's estimate that 2 men for 2 days is sufficient to do that work. It is not clear from the Joint Scott Schedule but I infer that Mr Todarello's figure for this item includes both the itemised works plus the amount for scaffolding, the total of those items being $6,366.00 5.03 Replace damaged windows The assertion of Mr Stanton that all the windows require replacement is not supported by the evidence. However, I am not satisfied that 2 men could do the necessary protection, preparation and repainting in one day. I consider a more realistic estimate would be 2 days and I allow $1,660.00 for labour plus $150.00 for materials. $1,810.00 5.04 repair sagging roof tiles on E elevation I find this defect is proved although I note the caveats contained in Mr Todarello's opinions. Mr Stanton in this item has provided detailed recommendations suited to the nature of the defect. I consider the defect is more serious than requiring only one batten, or rather the bell cast board, to be adjusted as suggested by Mr Todarello. I accept Mr Stanton's assessment. Although Mr Todarello has suggested this defect may not be in breach of the Standard and Tolerances 2007 Guide, he does not formally come to that conclusion and accepts there is a defect. $970.00 5.05 Rectify finish to plasterboard The experts disagree in relation to the extent of this defect although it is agreed there is a defect. In addition, Mr Todarello suggests these works would be done by a painter in preparation for painting. Mr Stanton disagrees as suggests these are items requiring separate rectification. I agree with Mr Stanton. His view is supported by the photographic evidence demonstrating many items requiring repair, none of them major but in my opinion this would require more time than allowed by Mr Todarello. However, Mr Stanton has over-estimated the time required. $5,600.00 The Builder submits in regard to this item that Owner's expert is suggesting merely that the work is less than ideal rather than defective for the purpose of this application. I find that the works are defective as supported by the photographic evidence and, in part, by Mr Todarello. 5.06 silicon sealing in bathroom Agreed $270.00 5.07 support for internal staircase I do not accept Mr Stanton's opinions as to the requirement for a load-bearing wall or for the moving of various items in the lounge room. Firstly, as I have found above, the change in the orientation of the stairs was a direct result of the Owner's instructions in relation to changing the upper floor layout. Secondly, I am not satisfied that the change in the appearance of the lounge room is a defect. There is no evidence that the room cannot be fully utilised according to its purpose. $110.00 However, I find there is a defect in the construction of the stairs which requires minor rectification to prevent squeaking. I accept Mr Todarello's opinion. 5.08 front door furniture Agreed $70.00 5.09 missing moulding to upper floor windows I paid close attention to the evidence of the experts in the hearing on this issue, including and especially the evidence of the drawings. There is no support for this claim which is dismissed. $0.00 5.10 repair paving N elevation I find this was not part of the building works and note that the Owner agreed with that. I find that there was no agreement by the Builder to do any works in regard to the paving. I accept the submission of the Builder that pursuant to the contract he is not responsible for this damage in any case. This item is dismissed. $0.00 5.11 repair aluminium flashing and roof tiles Agreed $720.00 This allegation relates to the fact that although the Builder, it is agreed, covered the premises with a tarpaulin, there was some water ingress following rain. It is alleged certain ceilings were damaged as well as one item of furniture. 5.12 repair water ingress damage The Builder's evidence (that is, Mr Trikilis) agrees this occurred and lists a number of repairs that were made. $0.00 The Builder submits that he is protected by clause 23(2)(c) of the contract which states that he is not liable except if the damage was caused by "failing to take reasonable care in carrying out the building works" and excluding painting even so. The Owner has not provided evidence of what should have ben done by the Builder. In his submissions, the Owner states that "[t]hje Builder admitted responsibility for some water penetration which occurred despite his precautions". This admission did not, in my opinion, go so far as to admit liability for the damage resulting. The phrase "despite his precautions" raises the issue squarely of whether those precautions were reasonable for the purposes of the contract. This is not answered by the Owner. This item is dismissed. 5.13 "inconvenience" This is not referred to in the Owner's submissions. No evidence was called in relation to any method of calculating the quantum of this inconvenience or of calculating the quantum of compensation. No evidence nor any submissions have been provided in relation to the requirements of s 16 of the CL Act. I am satisfied a claim of "inconvenience" is a claim for non-economic loss as defined by the CL Act. This claim is dismissed. $0.00 5.14 fix external staircase This claim depends entirely on the differing evidence of the experts, Mr Stanton who states the "staircase" (in fact just a few steps to a small landing) moved, and Mr Todarello who states it did not. I find this item is not proved by the Owner. $0.00 I find this is not a defect. The Builder's expert agrees that there is a difference in pitch and that best practice would require that the pitch be equal in both roof areas. The Builder candidly admits he made an error in the measurements supplied to the roof truss contractor which resulted in the difference in pitch. The Owner states that he finds the difference in pitch to be very obvious and very distressing to him and to others. He describes the house as looking like one house stuck on top of another different house. 5.15 replace roofing to match pitch There is no evidence or claim to the effect that the roof is otherwise that properly constructed and fit for purpose. $0.00 In my opinion the photographic evidence makes very clear that the difference is minimal and that the overall aspect of the home is not badly affected. I accept the Owner has a strongly different opinion. This is an aesthetic opinion, but I find that the Owner has not demonstrated the roof pitch is so different as to be obvious. I dismiss this item, but I also note that in any case, even if I were disposed to find this a defect, it would not be a reasonable option to replace a completely effective and well-constructed roof for the reasons given, pursuant to the principle in Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613. 5.16 loose plumbing (i.e. downpipe This item was constructed in accordance with the Owner's instructions. It was not meant to be connected to the relevant plumbing. I agree entirely with the Builder's submissions on this item and the opinion of Mr Todarello. $122.00 Subtotal $16,038.00 GST $1,603.80 Total $17,641.80

1. In view of those findings, I make no allowance in regard to the minor rectifications required for preliminaries. I allow GST and for the reasons expressed in the Owner's submissions and my view of the witnesses during the hearing, this is a matter in which s 48MA of the HB Act should not apply. A money order is appropriate. As noted previously the Owner's claim is to be off-set by the Builder's claim in the amount of $6,329.00. The Builder is to pay the Owner the sum of $11,312.80 within 60 days of the date of these orders. G Meadows Senior Member Civil and Administrative Tribunal of New South Wales 17 April 2015

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: 07 July 2015