ARKI Building Surveyors Pty Ltd (ACN 135 414 587) (struck out as per order dated 30/4/2021)

Bellini v Meldan (Vic) Pty Ltd (Building and Property) [2021] VCAT 833

1. Order the Respondent to pay to the Applicants $80,676.00.
2. Interest and costs will be reserved for further argument.
3. Any application for costs or interest must be made in writing filed with the registry and served no later than 20 August 2021, accompanied by written submissions, affidavit and any settlement offers.
4. Any material in opposition to such an application must be filed with the Registry and served no later than 10 September 2021.
5. The application shall be dealt with on the papers.

1. The Applicants ("the Owners") are the owners of a detached welling unit in Newport ("the Property"). The First Respondent ("the Builder") is and was at all material times a builder. The Second Respondent ('the Building Surveyor") is a building surveyor.
2. The Property was constructed by the Builder pursuant to a major domestic building contract that it entered into some time before 22 July 2011 ("the Contract"). The Building Surveyor was the relevant building surveyor for the construction and issued a building permit on that date. He issued an Occupancy Permit for the Property on 24 August 2012.
3. On 11 February 2013, the Owners entered into a contract to purchase the Property. The purchase was settled on 7 May 2013. As subsequent owners of the Property, by reason of s.9 of the Domestic Building Contacts Act 1995, they are entitled to the benefit of the warranties implied into the Contract by s.8 of that Act.
4. The Owners complain that those warranties are broken, in that there are a number of defects in the Property, and have issued this proceeding claiming damages from the Builder and the Building Surveyor for the cost of rectification and the costs of alternate accommodation whilst the defects are rectified.
5. The claim against the Building Surveyor has been settled for an undisclosed sum, although it remains a party for the purpose of any apportionment pursuant to the provisions of Part IVAA of the Wrongs Act 1958 ("the Wrongs Act").

1. The matter came before me for hearing on 26 May 2021 with 3 days allocated. Mr N. Phillpott of Counsel appeared for the Owners and Ms R.B. Sion of Counsel appeared for the Builder.
2. The Builder was not in a position to proceed and sought an adjournment.
3. After hearing submissions, and it appearing that this was a relatively straightforward defects case, without any factual matters in dispute, I adjourned the hearing to 28 June 2021 with 3 hours allocated.
4. Because of the limited hearing time, I directed that there would be no lay evidence led on that day, that the parties should instead prepare and file an agreed statement of facts, and that the hearing time would be devoted to receiving the evidence of the two expert witnesses.
5. The parties filed an agreed statement of facts as directed, comprising two and a half pages, and the matter returned to me on the adjourned date, 28 June 2021.
6. The time allocated proved to be sufficient for the expert evidence and written submissions by Counsel were subsequently filed.

1. By paragraph 15 of its Points of Defence, the Builder seeks to limit its liability by reliance upon the apportionment provisions of Part IVAA of the Wrongs Act.
2. By s.24AF, Part IVAA of the Wrongs Act applies to (inter alia) a claim for economic loss or damage to property in an action for damages (whether in tort, in contract, under statute or otherwise) arising from a failure to take reasonable care.
3. By s.24AH, a concurrent wrongdoer, in relation to a claim, is a person who is one, of two or more persons, whose acts or omissions caused, independently of each other or jointly, the loss or damage that is the subject of the claim.
4. By s.24AI, in any proceeding involving an apportionable claim, the liability of a party who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the loss or damage claimed that the Tribunal considers just having regard to the extent of that party's responsibility for the loss or damage. Judgment must not be given against the party for more than that amount in relation to that claim.
5. For guidance as to the manner in which the legislative scheme operates, Mr Phillpott referred me to the recent Court of Appeal decision in Tanah Merah (Vic) Pty Ltd v Owners Corporation No.1 of PS613436T & ors. [2021] VSCA 72. In that case, this Tribunal had found at first instance that a claim against a builder was not apportionable, even though other contractors involved in the construction had failed to use reasonable care. That finding was upheld by the Court of Appeal. The following three passages from the judgment are pertinent (citations omitted):

"94 Having found for the Owners against LU Simon on the only claims made by them against LU Simon, the Tribunal then proceeded on the basis that those claims were not apportionable within the meaning of pt IVAA of the Wrongs Act. It did so because the breach of warranty claims which it upheld did not 'aris[e] from a failure to take reasonable care' by LU Simon. The Tribunal then proceeded to determine LU Simon's claims for contribution against the consultants (and Mr Gubitta) - all of which claims were apportionable within the meaning of pt IVAA.

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"117 Notwithstanding what Barrett J said in Reinhold, it seems to us that his Honour's view (as expressed in Perpetual Trustee) is now that the terms in which the claim is framed are an essential determinant of whether a claim can be said to arise from a failure to take reasonable care. In our opinion, that is the correct approach."

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"128 It follows that the Tribunal made no error when it determined that the breach of warranty claims that it had upheld against LU Simon were not apportionable. At best, those claims involved circumstances arising out of failures to take reasonable care by the consultants and Mr Gubitta. The Owners' claims against LU Simon, however, did not themselves arise from any failure to take reasonable care."

(a) in order for a claim against the Builder to be apportionable, I must find that it arose from a failure by the Builder to take reasonable care; and

(b) the terms in which the claim is framed are an essential determinant of whether a claim can be said to arise from a failure to take reasonable care.

1. The claim articulated in the present case was that the Contract included the warranties implied by s.8 of the Domestic Building Contracts Act 1995 and that the Builder was in breach of those warranties.
2. The warranty implied by s.8 that would be relevant in the present context is that implied by subsection 8(d), which provides that there is an implied warranty by the Builder that the works would be carried out with reasonable care and skill and would be completed by the date specified in the contract. A breach of any of the other warranties implied into the Contract by s.8 would not arise from a failure to take reasonable care. Liability for breach of warranty is in contract, and contractual liability is strict.
3. The breach of warranty closest to s.8(d) that is alleged by the Owners in their Points of Claim, was that the Builder failed to ensure that the works were carried out with reasonable care and skill. It is not alleged that the Builder itself failed to carry out the work with reasonable care and skill.

1. The expert witness for the Owners was a Mr P. Cummaudo, a Registered Building Practitioner with 32 years' experience. The expert witness for the Builder was a Mr S. Tiller, a Registered Architect.
2. Mr Phillpott submitted that I should give greater weight to the opinion of Mr Cummaudo, because he has had more direct building experience than Mr Tiller, to whom he referred as "only a registered architect". He said that it was better to have a registered builder, given the nature of the defects.
3. I do not think that I should take such a global approach. They are both qualified to give expert evidence in regard to the matters that I have to decide and I will deal with those matters issue by issue.
4. Their evidence was given concurrently.

1. The following were the defects complained about.

The absence of a termite management system $12,596.00

1. Mr Cummaudo said that, although the Property is in a termite-prone area, no termite management system was installed by the Builder. He said that, consequently, the Property did not meet Performance Requirements of the National Construction Code ("the Code"). He said that protection was required for the penetrations through the slab and also the perimeter of the building.
2. He said that, in order to install the required protection, all cabinets had to be removed to allow the installation of collars to all slab penetrations, and then a chemical reticulation system was needed around the perimeter of the building. He assessed the base cost (without margin and GST) at $28,270.00, which involved disconnecting the plumbing through the slab, removing and replacing all cabinetry, removing sections of concrete around collars to allow the installation of collars and installing the collars, replacing the cabinetry, installing the reticulation system around the perimeter and making good.
3. Mr Tiller agreed that there ought to have been a termite management system, but pointed out that none had been documented. He also said that the Building Surveyor had not required it. He said that a reticulated replenishable perimeter chemical-barrier was the least disruptive method to achieve the required compliance.
4. As to the slab penetrations, he agreed that collars would need to be installed and that some removal would be needed of the powder room toilet and basin, the laundry trough and part of the basin, as well as the kitchen sink and the base of the cupboard underneath, but that full removal and refitment of cabinetry would not be required. He said that access panels would be required for future periodic pest inspections of the collars. For that, he assessed a base cost of $12,596.00.
5. It seems to me that the scope of works suggested by Mr Tiler would be sufficient to address the problem without necessitating the full removal of all of the cabinetry. I also see some virtue in creating access panels for future inspections. I will therefore allow M Tiller's figure.
6. As to any apportionment, Mr Tiller said that the Building Surveyor was equally to blame for the defect and that an appropriate apportionment would be half each.
7. Mr Phillpott said that the liability was a breach of the warranty implied by s.8(c), which is not apportionable. I think that is right. The Builder is liable because it was in breach of the warranty that the work would be carried out in accordance with, and will comply with, all laws and legal requirements including the Building Act 1993 and the regulations made under it.

1. Mr Cummaudo said that the fence erected on the boundary is framed with Machine Graded Pine timber, cement sheeting and exposed polystyrene. He said that those materials were inappropriate and it is clear from the evidence and the photographs that the fence was defectively constructed. He said that it would need to be re-bult, using suitable materials.
2. The photographs in his report show that bottom half of the back of the fence is not clad at all and the timber is deteriorating.
3. The base cost for removing and replacing the fence was assessed by Mr Cummaudo at $6,900.00.
4. Although Mr Tiller said that the fence appeared to be a landscape feature, which would not be covered by the Code, he agreed that it was not properly constructed. He suggested that it should be removed and replaced with a normal paling fence. His base cost for the necessary work was $4,535.00.
5. The difference between the two assessments appears to be the cost of the replacement paling fence. I see no reason to prefer one assessment over the other, and so I will assess the cost at $5,717.50.
6. Ms Sion said that the fence was not constructed by the Builder. There is no evidence to that effect, it is not in the Points of Defence and it is not in the Statement of Agreed facts.

1. Mr Cummaudo said that the Builder had placed grout at the junction of the walls and floor of the shower recesses throughout the Building. He said that a bead of sealant should have been used to waterproof the joints and allow for movement.
2. Hr said that it would be difficult now to remove the grout and put in a bead of sealant without damaging the membrane. He said that the whole shower would need to be reinstalled.
3. He said that, as a result, water was leaking from the ensuite shower into the roof space above the garage, and that there was extensive deterioration to the structural members. The photographs in his report show rotting timber and what appear to be mushrooms growing in it. Mr Cummaudo said that remediation would require inspection by an engineer, replacement of all damaged structural components, replastering and repainting. For all of the necessary work, Mr Cummaudo assessed a base cost $27,110.00.
4. Mr Tiller agreed about the defect, that the shower areas would need to be removed and replaced and that the damage caused by the leaking shower would also need to be repaired. He also agreed that it would be necessary to engage an engineer to inspect the damaged structural timbers in the garage roof space.
5. The difference between the experts concerned the consequential damage. Mr Tiller said there was a lack of maintenance of sealants and grout to the failed ensuite shower, and that the lack of repair over time has caused what was a small leak in the garage to become a significant structural issue. His base cost was $9,432.00 for a considerably lesser scope of works.
6. I prefer Mr Cummaudo's opinion. This seems to me to be poor workmanship rather than any lack of maintenance on the part of the Owners.

1. Mr Cummaudo said that a number of old railway sleepers have been installed in the ground as a feature.
2. He said that, in a termite prone area these might be attacked by termites. He said that they should have been mounted on stirrups. He acknowledged, however, that they were not a structure within the meaning of the Code and that this was not a defect. Nevertheless, he recommended that they be mounted on stirrups, for which he assessed a base cost of $2,730.00.
3. Mr Tiller said that there was no regulation preventing the use of railway sleepers in this way as a landscaping feature. He said that all timber in the ground will rot, although redgum is more resistant to rotting than some other timbers.
4. I am not satisfied that this is a defect.

Missing flashing and the light courtyard $9,445.00

1. Mr Cummaudo said that the step down to the light courtyard was minimal and not as documented. He said that the Builder had filled the courtyard with cement to raise the level, in breach of Australian Standard AS4654.2-2009.
2. He also said that the Builder had installed the windows with external architraves around them and failed to flash the windows and the door. He said that there had been water ingress and consequential damage, both from the lack of flashing and the incorrect level of the courtyard. His base rectification cost was $10,230.00.
3. Mr Tiller agreed as to the defects and assessed a lesser base cost of $8,660.00.
4. There is no reason to prefer one costing over the other and so I will allow $9,445.00.
5. I accept Mr Phillpott's submission that this is a breach of the s.8(c) warranty and is not apportionable.

1. The pipe for the gas supply is "exposed to the elements and will deteriorate over time from exposure to sunlight. Mr Cummaudo assessed a base cost of $930.00 to replace or cover it.
2. Mr Tiller agreed about the defect and assessed a base cost of $794.00.
3. One is as likely to be right as the other, so I shall allow $862.00.

1. The experts agreed that the weep holes on the southern boundary are not 75mm above the finished pavement and that to rectify the problem the pavement will have to be taken up and re-laid at a lower level.
2. Mr Cummaudo assessed a base cost of $13,440.00 for that, which include the cost of a plumber to disconnect and reconnect the hot water service and all of the stormwater plumbing that passes through the paving.
3. Mr Tiller's base cost was $11,051.00. After studying the breakdown of the two costings, I see no reason to prefer one assessment over the other, and so I will allow $12,245.50.
4. Ms Sion said that she was instructed that the paving, which determined the clearance, was not laid by the Builder. That is neither in the Points of Defence nor the Statement of Agreed Facts.
5. I accept Mr Phillpott's submission that this is a breach of the s.8(c) warranty and is not apportionable.

1. Mr Cummaudo said that the weatherboards do not appear to have been painted properly. He said that there were surface irregularities on the weatherboards, due to not using a primer. He said that they should be sanded down and a primer and two coats of paint applied.
2. I was informed during the hearing that the weatherboards used were a pre-primed James Hardie weatherboard which come pre-primed.
3. Mr Tiller said that the upper level showed areas of peeling paint and deterioration by natural weather exposure. He said that an absence of primer was not found. He suggested that the flaking paint was a lack of maintenance.
4. The Occupancy permit for the Building was issued on 24 August 2012 and these photographs showing flaking paint and exposed weatherboards were taken in February 2018, less than 6 years afterwards.
5. I prefer Mr Cummaudo's opinion that the painting was inadequate and will allow his base cost of $7,690.00.

1. The Owners seek damages for the cost of alternate accommodation and furniture storage whilst the repairs are undertaken. In view of the scope of the rectification work that is required, I accept that the Owners would not be able to occupy the Property for the 21 days claimed and the contrary was not asserted.
2. Mr Cummaudo's allowance for alternate accommodation is $6,720.00, for the cost of a serviced apartment in the area at the rate of $320.00 per night, being a rate the Owners had obtained from their own enquiries. Ms Sion put to Mr Cummaudo that the rental might be reduced by half, if a monthly rental was sought in the same area but, not having undertaken any on-line enquiries himself, he was unable to agree or disagree. No alternate figure was suggested by the Builder.
3. On the highly unsatisfactory state of the evidence, I will allow $5,000.00 for alternate accommodation, on the basis that it is unlikely to be less than that, but I am not satisfied that it would be more.
4. A further amount of $2,500.00 is claimed for the cost of a removalist, packing and storage, but it has not been demonstrated that the scope of the rectification work would require the Owners to move out their furniture.

1. The Owners are entitled to an order for the foregoing rectification costs, plus a further $5,000.00 for alternate accommodation while the work is done. That amounts to $80,676.00.
2. Interest and costs will be reserved for further argument.
3. Any application for costs or interest must be made in writing filed with the registry and served no later than 20 August 2021, accompanied by written submissions, affidavit and any settlement offers.
4. Any material in opposition to such an application must be filed with the Registry and served no later than 10 September 2021.
5. The application shall be dealt with on the papers.