Bourke v Wincrest Group Pty Ltd

NCAT Consumer and Commercial|2020-09-07

REASONS FOR DECISION

The applicants in this matter (owners) entered into a residential building contract with the respondent (builder) in about July 2015 for the construction of a dwelling house in Hornsby Heights.
The owners commenced proceedings in the Tribunal against the builder in July 2018. Those proceedings were resolved by consent orders made on 28 February 2019, which required the builder to rectify a number of defects identified by reference to item numbers in an agreed joint Scott Schedule dated 11 February 2019.
The consent orders required the rectification work to be completed by 30 April 2019.
On 22 January 2020 the owners filed a renewal application pursuant to clause 8 of Schedule 4 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) alleging that the builder had failed to rectify nine items which were the subject of the consent orders of February 2019.
Clause 8 of Schedule 4 to the NCAT Act provides: 8 Renewal of proceedings in respect of certain Division decisions (1) If the Tribunal makes an order in exercise of a Division function in proceedings, the Tribunal may, when the order is made or later, give leave to the person in whose favour the order is made to renew the proceedings if the order is not complied with within the period specified by the Tribunal. (2) If an order has not been complied with within the period specified by the Tribunal, the person in whose favour the order was made may renew the proceedings to which the order relates by lodging a notice with the Tribunal, within 12 months after the end of the period, stating that the order has not been complied with. (3) The provisions of this Act apply to a notice lodged in accordance with subclause (2) as if the notice were a new application made in accordance with this Act. (4) When proceedings have been renewed in accordance with this clause, the Tribunal - (a) may make any other appropriate order under this Act or enabling legislation as it could have made when the matter was originally determined, or (b) may refuse to make such an order. (5) This clause does not apply if - (a) the operation of an order has been suspended, or (b) the order is or has been the subject of an internal appeal.

Item 2 - door to scullery

The parties' experts agreed that the door between the kitchen and the scullery was defective and agreed the rectification cost at $240 before on costs, that is margin, contingency and GST. Accordingly, I will allow the applicants $240 plus, to the extent appropriate, margin, contingency and GST. I will address the appropriate margin and whether an allowance for contingencies is appropriate after addressing the alleged defects.

Item 6 - render to al fresco brickwork

As part of the original consent orders the builder agreed to render the brickwork on the al fresco area, by reason of issues with the face bricks. Mr Bournelis identified what he asserted were a number of defects in the manner in which the builder completed the rendering.
The experts agreed that two aluminium angles installed as a trim above the rear sliding door are defective and require replacement. Mr Bournelis assessed the cost of replacing the angles at $400. Mr Ryan assessed the cost of replacing the angles at $300. The experts did not separately assess the cost of labour for installation.
Mr Bournelis also asserted that the renderer had covered over weep holes in the brickwork which had originally been placed by the bricklayer. Mr Bournelis also stated that the control joints to the rendered rear wall of the al fresco were poorly finished, and appear crooked, resulting in an unsightly finish.
Mr Bournelis further asserted that the timber trims above the al fresco had been overpainted and that that was unsightly. Mr Bournelis included in his report a photograph which does suggest that the timber trims do require repainting.
In oral evidence Mr Ryan stated the crooked control joint could be fixed with a grinder and a sikaflex seal. Mr Ryan also stated that the weep holes were not necessary above the sliding doors in the al fresco. Mr Ryan accepted that it would be necessary to repaint the rendered walls.
Mr Bournelis estimated the cost of patching the render, rectifying the crooked control joint, and painting all new works on completion at $1,560, being 3 days for one worker at $65 an hour. Mr Bournelis also allowed $250 for materials.
Mr Ryan suggested that repainting the walls could be accomplished in 2 hours and the other work could be completed by a carpenter in a further 3 hours. Mr Ryan suggested the paint and sikaflex would cost another $150.
In my view, Mr Bournelis' estimate of 3 days for rectifying a small area of render seems excessive and I prefer Mr Ryan's estimate of 3 hours for a carpenter and 2 hours for a painter. Although Mr Ryan asserted that it would not be necessary to repaint the ceiling, he stated in oral evidence that it would take a painter no more an hour to patch the ceiling trim.
Mr Ryan also stated that it would take no more than an hour to rectify the weep holes if necessary. I accept that the restoration of the weep holes is necessary and allow 1 hour for labour for that task.
Mr Bournelis' evidence was that in his experience the rectification of weep holes was "a laborious task". I am not persuaded on the basis of that evidence that I should allow more than the hour that Mr Ryan suggests it would take.
Accordingly, in respect of the labour required for the rectification of the al fresco area, I allow 7 hours for a tradesperson at $65 an hour, that is $455.
The amount I allow in respect of the al fresco area is (before margin, contingencies and GST) $455 for labour and, doing the best I can, $500 for materials, including the angles.
A further issue raised by Mr Bournelis in relation to the al fresco area was the replacement of two chipped tiles to the front entry porch which Mr Bournelis suggested it would take one tradesperson a whole day, plus $200 worth of materials, to rectify. The builder disputed that the chipped tiles were its responsibility.
Garry Bourke gave evidence that when he left work on the morning of 6 May 2019 the tiles were not chipped and that those tiles were chipped when he returned home that afternoon.
In oral evidence Mr Bourke stated that on a typical day he would start work at 7 am and, because he works for himself, he might leave home at any time between 5.15 and 8.30 am. Mr Bourke asserted that the builder's tradespersons were the only persons going in and out across the front porch where the chipped tiles were and on that basis asserted that it must have been the builder or its employees or contractors that chipped the tiles. In cross-examination Mr Bourke agreed that he doesn't usually check the front porch tiles on his way in and out.
I am not persuaded, on the balance of probabilities, by Mr Bourke's evidence that the builder was responsible for the chipped tiles and accordingly I do not make any award in respect of the cost of replacement of the chipped tiles. Were it necessary to assess the cost of replacement of the tiles, I would not accept Mr Bournelis' evidence, which I consider exaggerated.
In oral evidence Mr Ryan suggested it would take 1 hour per tile to replace the tiles. I accept that evidence and accordingly would allow $130 for labour and $200 for materials in relation to the replacement of the tiles were it necessary to determine that issue.
The builder submitted that in most respects the substantial difference between the experts in relation to the cost of rectification of defects was largely attributable to their assessment of the time it would take to carry out the relevant works. The builder submitted that a comparison of the experts' evidence suggests that Mr Bournelis' assessment of the time it would take to carry out the relevant tasks was excessive and "at odds with ordinary everyday experience". The builder submitted that Mr Ryan's assessment was "more realistic and reasonable".
The builder supported its submission by reference to the evidence given by the experts in respect of the rectification of the chipped tiles on the front porch. Mr Bournelis' evidence was that it would one person a whole day to replace two chipped tiles describing it as "meticulous work and a slow and laborious job". Mr Ryan's evidence was that it would not take more than an hour a tile and in oral evidence Mr Ryan described exactly what was involved.
I have ultimately concluded that the builder is not responsible for the replacement of the chipped tiles. However, I accept the builder's general submission concerning Mr Bournelis' evidence, not only in relation to the chipped tiles but also in relation to other areas of rectification, that his estimates of the time required to complete tasks are excessive and not founded upon a careful analysis of the work involved.

Item 10 - incomplete works upper hallway

Mr Bournelis' evidence was that the bulk of the items required to be rectified in this area were complete, but that there were gaps evident at the floor skirting junctions in the hallway, study and walk in robe and there was excessive silicone on the left-hand side of the architrave to the powder room.
Mr Ryan agreed that these defects remained. Mr Bournelis estimated the cost of repair of these items at $520 for labour, being one tradesperson for one day and $150 for materials. Mr Ryan suggested it would take a carpenter three hours and $100 for materials. This disagreement between the experts was not canvassed in their oral evidence.
I am not persuaded that applying seals to fill the gaps at the four skirting junctions and cleaning up excess silicone on the architrave would take more than three hours and accordingly I accept Mr Ryan's estimate of $295 before margin, contingencies and GST.

Item 12 - laundry

Mr Bournelis asserted that the rectification of the laundry as required by Item 12 was not complete and remained defective.
In the written submissions filed after the hearing the builder acknowledged that it was common ground that Item 12 was defective. However, the experts disagreed to the extent of the defects and the cost of rectification. Mr Bournelis suggested it would take one person twelve hours to complete the relevant work including rectifying the laundry doors and linen cupboard. Mr Ryan stated that the only outstanding item was the repainting of a discoloured door trim and the painting of the linen press, which Mr Ryan stated would take only three hours.
In support of their submission that the extent of work required was that stated by Mr Bournelis, the owners referred to photographs which the owners submitted disclosed that the doors and jambs in the laundry are not painted and that the internal faces of the laundry cupboards and linen cupboards are not painted to match the external finishes.
Mr Bournelis' report does not provide further elucidation of the nature of the issue. I am not persuaded on the basis of the material available that there is more than three hours work required to rectify any issues in the laundry and accordingly I accept Mr Ryan's estimate of three hours at $65 an hour and $75 for paint, that is $270 (before on costs), as the cost of rectifying the laundry.

Item 13 - internal wall patching

Mr Bournelis statement in the joint Scott Schedule was as follows: The painting is poorly completed with numerous walls throughout the ground and first floor have patches where the builder has previously carried out repairs and rectification. Allow to paint skirting previously patched in bed 4. Walls not painted to nearest architectural break or corner to corner, noticeable roller marks to walls with grey paint over stair lights and stair trims.
Mr Bournelis assessed that it would take two painters three days to paint the walls to the nearest corner or architectural break, that is $3,120, and $420 for materials.
Mr Ryan disagreed. He stated that this item had now been partially completed. He stated: "The only outstanding item is the patching and painting to the damaged timber trims in approximately nine areas and removing the paint off the stair wall light cover".
Mr Ryan estimated it would take one painter six hours, that is $390, and $40 for paint.
This item was not addressed in oral evidence. The owners submitted that Mr Bournelis' assessment of the defective paint work was supported by photographic evidence and detailed analysis. The photographs included in Mr Bournelis' report are not of sufficient quality that I can form any view as to the quality of the paint work.
On the evidence before me I am not persuaded that the paint work is defective to the extent asserted by Mr Bournelis and I accept Mr Ryan's estimate of the cost of rectification of $430 before margin, contingencies and GST.

Item 14 - chipped and cracked tiles in power room

The builder disputed that it was responsible for the chipped tiles. Debra Bourke gave evidence of there being damaged tiles in the main water closet and glass shards and a damaged basin in the main WC and broken glass and a damaged basin in the master en-suite.
In cross-examination Ms Bourke suggested that a tradesperson employed by the builder had broken a mirror in the en-suite and that after the broken mirror had been cleaned up she saw a mark on the basin which the cleaner was not able to remove. In relation to the chipped tiles Ms Bourke relied upon two photographs, one of which she said was taken on 20 May 2019 and the other taken on 14 July 2019, as establishing that a tile had been chipped between those dates. Ms Bourke acknowledged that she did not see any contractor or employee of the builder chip the tiles and had not monitored throughout the relevant period who went in and out of the bathrooms. She did assert that neither Gerry Bourke nor herself had used that bathroom, and suggested it was not possible that anyone other than the builder or its contractors had chipped the tile.
In the absence of any direct evidence of the circumstances in which the tiles in the powder room and the en-suite bathroom were chipped, I am not persuaded on the balance of probabilities that the chipped tiles were the responsibility of the builder, and I do not make any award in respect of the cost of rectification of the chipped tiles. If it were necessary to assess the cost of the repair of the tiles, for the reasons expressed above, I accept Mr Ryan's estimate of $120 per tile to repair the two chipped tiles. Mr Ryan agreed that there were paint marks on the floor inside the top floor linen press which he estimated would take a cleaner one hour at $65 an hour and $25 for cleaning solution.
Mr Bournelis agreed to the costing of $90 to clean the paint off the floor. I will allow $90 (plus on costs) in respect of the paint mark on the floor.

Item 17 - balcony off master bedroom

Mr Bournelis stated in his report that the bagged render finish as completed by the builder had not been carried out to the edge of the wall for consistency and an even finish. Mr Bournelis referred to two photographs in his report.
Mr Ryan's response was that there is no defect found to the paint finish in the balcony area.
The photographs included in Mr Bournelis' report do not assist me, but the owners have provided in their tender bundle better copies of those photographs which do appear to show that the bagged finish does not extend to the end of the wall. I note that Mr Ryan did not address that issue, rather asserting that there was no defect found. This issue was not the subject of any oral evidence.
In the circumstances, I accept that the render finish on the balcony requires rectification.
The builder acknowledged in his written submissions that if there were found to be a defect, the owners were entitled to recover damages in the amount of $325 before margin, contingencies and GST.

Item 18 - chipped basin in master en-suite

Ms Bourke gave evidence that she did not observe any chips in the basin prior to the attendance of a sub-contractor to the builder who was carrying out work to install a mirror in the en-suite bathroom. She observed that while the sub-contractor was fitting the mirror, he broke the mirror and that after that sub-contractor had left she observed there was a mark on the one of the basins which turned out to be a chip.
Ms Bourke's evidence was that she used the en-suite bathroom every day. She observed no chip or mark on the basin before the builder attended to remove mirrors and that, after the mirror contractor had completed work and left for the day, she had entered the en-suite and observed there were shattered mirror pieces everywhere and there was a mark on each of the basins, one of which was not able to be removed and proved to be a chip.
The builder acknowledged that, on the basis of Ms Bourke's evidence, it is open to find that the chip in the basin was caused by the builder's sub-contractor.
I accept that the evidence of Ms Bourke, that the chip was not there before the sub-contractor arrived and was there immediately after the sub-contractor departed, is sufficient basis to find that the chip was caused by the builder's sub-contractor.
Mr Bournelis assessed the cost of rectification at $500 for the supply and installation of a new basin.
Mr Ryan suggested that the chipped basin could be fixed with colour resin. The builder submitted that replacing the entire basin due to a single chip is, on any view, unwarranted and that Mr Ryan's proposed solution was "plainly a more reasonable course of action".
I do not agree. The measure of damages for breach of the implied warranty that work will be carried out with due care and skill is the cost of carrying out work to place the owners in the position they would have been if the contract had not been breached in that way, unless that would be an unreasonable course to adopt (Bellgrove v Eldridge (1954) 90 CLR 613). The basin was a new basin and the owners are entitled to an undamaged basin. I do not find that the replacement of the basin ,,is an unreasonable course to adopt.
Accordingly, I accept Mr Bournelis' estimate of $500 before margin, contingencies and GST for the rectification of the chipped basin.

Item 27 - stained face brickwork

It was not in issue between the parties that there was an issue with the brickwork to the extent that some face bricks on the property were showing signs of staining. The contest between the parties related to the extent of the staining and the appropriate method of rectification and the cost of doing so.
Mr Ryan suggested the staining affected 15% to 20% of the brickwork which was a substantial proportion.
The owners submitted that the builder had attempted on two occasions to remove the staining and had not succeeded and that, accordingly, the only appropriate remedy was to render the entirety of the brickwork, at a cost which Mr Bournelis estimated at $49,900 before margin, contingencies and GST.
Mr Mouatt who, as noted above, is a specialist in ceramic science and engineering, and in particular brickwork, identified the source of the staining as manganese staining.
Mr Mouatt gave evidence that manganese stains can be easily removed but that they tend to reoccur unless the bricks are treated with a neutralising substance.
Mr Mouatt's proposed solution involved the application on two occasions of a neutralising solution, followed by the application of a manganese stain removal solution, followed by the further application of a neutralising solution.
Mr Mouatt stated that repeated applications of the neutralising solution may lead to a light efflorescence. Mr Ryan in his oral evidence stated that any efflorescence could be cleaned off with a stiff brush.
Mr Bournelis acknowledged that he had no particular expertise in brick staining.
The owners submitted that Mr Mouatt's suggested solution was not satisfactory because Mr Mouatt could not guarantee 100% that it would be successful. Mr Mouatt was challenged, in oral evidence, on the proposition that he could not guarantee that his proposal would be successful.
Mr Mouatt's evidence was that he had never known his solution to fail but that he had seen one situation where a particular stain removing chemical did not work because other chemicals had been applied to the wall. Mr Mouatt's evidence was that in that situation the solution was to apply a different chemical to remove the stains. Mr Mouatt had tested his stain removal solution on a brick at the premises and it did appear to have removed the stain. The issue was not whether the stain removal solution would remove the stain but, rather, whether the stain would return. Mr Mouatt's solution to the possibility that the stain would return was the application of the neutralising solution.
The builder submitted that requiring a 100% guarantee of success was too high a burden and that the Tribunal is required to determine the facts on the balance of probabilities.
The builder is correct that, in the Tribunal, factual issues are required to be determined on the balance of probabilities, but I would not accept that the fact that a solution proposed to an acknowledged defect had a more than 50% chance of success was sufficient to establish that it was an appropriate solution.
In my view, in determining what is an appropriate solution for the rectification of defective work, a higher level of confidence is required. At the same time, I do not consider that it is necessary that a solution be 100% certain of success in order that it be regarded as an appropriate solution. As I understand Mr Mouatt's evidence, his evidence was not that there was a prospect that his solution might not succeed, rather there is a very slight chance that a different stain removing treatment might be necessary if the initial stain removing treatment is not successful.
Each of the parties was critical of the other by reason of the fact that Mr Mouatt's solution, including the application of neutralising solution to prevent the stain recurring, had not been trialled on the brickwork. It must be acknowledged that it would have been advantageous to the parties and of assistance to the Tribunal if the complete solution had been trialled, to provide some confidence that the solution would be effective in the long term.
However I do not consider that the failure of either side to do so should affect my assessment of the likelihood of success of the proposal.
Mr Mouatt has appropriate qualifications and long experience in dealing with brickwork and I accept his evidence that the solution will almost certainly be successful.
In those circumstances I accept the builder's submission that the treatment as proposed by the builder is an appropriate treatment.
The owners submitted, in the alternative, that the treatment as proposed by Mr Mouatt, if fully implemented, would cost in excess of $20,000 inclusive of margin, contingency and GST. The owners submitted that, as the cost of Mr Mouatt's recommended solution was likely to be that high, it was appropriate to proceed with the owners' preferred solution, which was the full rendering of the brickwork.
I do not accept that submission. First, as I will address subsequently, I am not persuaded that the cost of Mr Mouatt's solution will be as great as the owners submit. Secondly, in any event, once margin, contingency and GST are added to Mr Bournelis' estimate for the cost of rendering, that sum will be at least three and a half times the cost estimated by the owners as the cost of Mr Mouatt's solution.
A second area of dispute in the evidence between Mr Ryan and Mr Bournelis was in relation to whether it would be necessary to erect scaffolding in order to carry out the treatment Mr Mouatt recommended. Mr Ryan had initially estimated a cost of $2,530 before margin, contingencies and GST on the basis that it was only necessary to treat some of the brickwork. In the course of oral evidence Mr Mouatt appeared to concede that it was appropriate to treat the entirety of the brickwork, as it was apparent that there was manganese staining of some of the brickwork and it was not possible to be certain that the same problem was not present in all the bricks.
On that basis, Mr Bournelis' evidence was that it would be necessary to construct scaffolding around the entirety of the building given that at one point the brick faces of the building are at least eight meters high.
Mr Ryan's evidence was that the treatment could be done with an extendable arm so that scaffolding was not required. He stated that the neutralising solution is only used to wet the surface, and that is not necessary to penetrate the solution into the brickwork by the application of pressure. However, as the owners point out, Mr Mouatt had acknowledged that the treatment might result in efflorescence which would need to be removed by brushing.
In the circumstances, and in particular given the occupational health and safety implications of operating at a height of eight metres above the ground, I accept that scaffolding would be required and that the scaffolding would need to be substantial.
Mr Ryan asserted that even brushing could be accomplished with a cherry picker. I am not persuaded that, given the potential need to scrub the brickwork, a cherry picker or anything other than a proper scaffolding would be appropriate.
Mr Bournelis estimated the cost of scaffolding at $4,800 plus margin, contingency and GST. That estimate did not appear to be contingent upon the length of time during which the work would need to be carried out.
The owners submitted that, if multiple applications of the treatment were necessary, allowing time for the bricks to dry out between applications, the rectification of the brickwork could take as long as seventeen days. However Mr Bournelis' estimate appears to accommodate the installation of a scaffolding for that length of time.
Accordingly, I allow $4,800 for the cost of scaffolding.
The remaining issue in respect of the cost of rectification of the brick staining is the cost of labour and materials for the carrying out of the treatment.
The owners submitted that the work involved in neutralising the bricks and removing the staining would take as long as 11 days. This calculation assumed it would take two workers one day to apply the neutralising solution, a further day to repeat the application of the neutralising solution, two days to remove efflorescence arising after the application of the neutralising solution, one day to apply the manganese stain removal solution, another day for a further application of the stain removal solution, a further two days to apply a different stain removal solution in the event that the original solution does not work, another day to apply a further neutralising solution and two further days to remove efflorescence.
The owners also suggested that two days would be required for the erection and removal of the scaffolding.
The owners, relying upon Mr Ryan's estimate that the work would require two cleaners and that the cost of two cleaners for two days would be $2,080, submitted that the cost of labour for each day would be $1,040 per day (before on costs).
The builder submitted the cost of treating the brick work would be no more than $3,330 for labour and materials.
This estimate was founded upon the proposition that the work could be carried out without the use of scaffolding. Furthermore, the builder's calculation did not allow for the cost of the work involved in removing efflorescence, should it occur.
In reply, the owners referred to evidence from Mr Bournelis that he thought that Mr Ryan's costings were very light and otherwise repeated their submissions.
As noted above, I have concluded that it would be necessary to erect scaffolding around the house in order that the brick treatment can take place. To some degree I accept the owners' submission that a number of days labour will be involved. However, for a number of reasons, I consider that the owners' estimate of the labour required (which was not the subject of direct evidence from any of the experts) substantially exaggerates the likely cost of the brick treatment.
First, the owners' estimate was that it could effectively take two workers 13 days to carry out the treatment. Two of those days involved erecting and removing scaffolding. I understand Mr Bournelis' and Mr Ryan's evidence to be that the cost of scaffolding would include the cost of labour to erect and dismantle the scaffolding.
Secondly, the owners' estimate included two days for a second chemical treatment in the event that the removal solution proposed by Mr Mouatt was not successful. I see no reason why the treatment proposed by Mr Mouatt could not be tested on a small section of brickwork before it is applied to the entirety of the stained areas. Thus, it would not be necessary to treat the entire area with two different treatments even if Mr Mouatt's primary solution proves unsuccessful.
Thirdly, I do not understand Mr Mouatt's evidence to be that it is necessary to treat the entirety of the brickwork with the stain removal solution. Rather, only the stained areas require treatment. The intention of the neutralising solution is to ensure that further staining does not occur. I accept that some effort will be required in order to remove any efflorescence that might occur, but I am not persuaded that the likely outcome is that the entire house will need to be thoroughly scrubbed over the course of two days. Nor am I persuaded that that treatment will be necessary again after the final application of neutralising solution.
As I understand Mr Mouatt's description of his solution in paragraphs 12 and 13 of his report, the appropriate method of treatment would be two treatments with the neutralising solution, the brushing off of efflorescence where the neutralising solution causes that to occur, a treatment with the stain removal solution, followed up with a further stain removal treatment to the extent necessary where stains had not been removed, and a final single application of neutralising solution with further removal of efflorescence if necessary. Doing the best I can, I assess the time for that work at one day for each application of solution, plus a further two days for removal of efflorescence, should that occur. I find that that work would take two workers seven days at $1,040 per day. Accordingly, I will allow $7,280 before on costs for labour.
Mr Ryan estimated the cost of the cleaning solution at $250. The owners submitted that the cost of the cleaning solution would be four times that amount on the basis that it would need to be applied four times. The owners also submitted that an allowance of $2,000 should be made for the cost of four applications of neutralising solution.
I consider that the cost of materials lies somewhere between the owners' and the builder's estimates. Doing the best I can, I allow $1,000 plus on costs for the neutralising solution and the stain treatment solution. To the total cost of $8,280 for labour and materials must be added the cost of scaffolding which I have assessed above at $4,800 before on costs. That is a total for Item 27 of $13,680 before margin, contingencies and GST.

Additional item 33 - rainwater tank slab

As I have recorded above, the owners complain that the slab laid by the builder to support the rainwater tanks at the eastern elevation of the property of the home lacks "foundation support".
In their written submissions the owners appeared to concede that this was a new claim in respect of which the Tribunal does not have jurisdiction unless the defect in the slab was a "major defect" as defined in s 18E of the HBA. Sub-section 18E(4) provides: major defect means - (a) a defect in a major element of a building that is attributable to defective design, defective or faulty workmanship, defective materials, or a failure to comply with the structural performance requirements of the National Construction Code (or any combination of these), and that causes, or is likely to cause - (i) the inability to inhabit or use the building (or part of the building) for its intended purpose, or (ii) the destruction of the building or any part of the building, or (iii) a threat of collapse of the building or any part of the building, or (b) a defect of a kind that is prescribed by the regulations as a major defect, or (c) the use of a building product (within the meaning of the Building Products (Safety) Act 2017) in contravention of that Act. major element of a building means - (a) an internal or external load-bearing component of a building that is essential to the stability of the building, or any part of it (including but not limited to foundations and footings, floors, walls, roofs, columns and beams), or (b) a fire safety system, or (c) waterproofing, or (d) any other element that is prescribed by the regulations as a major element of a building.
The owners submitted that the alleged defect was a 'structural defect', by which I understand them to intend to suggest that the alleged defect met the definition of 'major defect' in an element of the building falling within paragraph (a) of the definition of 'major element'.
The owners referred to the decision of Stevenson J in AAI Ltd t/as Vero Insurance v Kalnin Corporation Pty Ltd [2017] NSWSC 548 at [93]. In that decision his Honour was dealing with regulation 57AC(2)(a) of the Home Building Regulation 1997 (NSW), as in force in 2001 and 2002, which defined the term "structural defect" for the purposes of s 103B of the HBA. Section 103B made provision governing the period of cover for contracts of insurance required by s 92 of the HBA. Although there are similarities between the wording of s 57AC(2)(a) and the definitions of 'major defect' and 'major element' in s 18E of the HBA, those provisions are not identical.
In any event, although Stevenson J held that, for a component of a building to be a 'structural element', it must be load bearing so as to be essential to the stability of a building, he was not considering a case such as this where the relevant allegedly defective item is not strictly part of the building at all, but rather supporting an ancillary element external to the building.
I am not persuaded that the slab for the rainwater tank is a "load bearing component of the building that is essential to the stability of the building".
I note that the term 'building' is not defined in the HBA. In my view it is not sufficient that the slab is load bearing in that it supports the weight of the water tanks. To constitute a load bearing element of a building for the purposes of the definition of 'major element' in s 18E of the HBA the slab must in my view be a load bearing element of the dwelling proper. There is no evidence to suggest that is the case in this case. The rainwater tanks are constructed adjacent to the dwelling, but there is nothing to suggest that the tanks themselves, or the slab on which they are situated, provides support to the dwelling.
I note that in Beyer t/as Leisure Pools & Spas Newcastle v Palazzi [2020] NSWCATAP 109 at [79]-[80] a swimming pool was found to be a "building" for the purposes of the definitions of 'major defect' and 'major element' in s 18E. However, clause 3(2)(a) of Schedule 1 to the HBA expressly includes a swimming pool within the definition of 'dwelling', if it is constructed for use in conjunction with a dwelling. There is no equivalent provision concerning rainwater tanks.
In any event, even were I persuaded that the rainwater tank slab was a major element of the building, I am not persuaded that the owners have satisfied the requirements of s 18E(2) of the HBA which provides: (2) The fact that a person entitled to the benefit of a statutory warranty specified in paragraph (a), (b), (c), (e) or (f) of section 18B has enforced the warranty in relation to a particular deficiency in the work does not prevent the person from enforcing the same warranty for a deficiency of a different kind in the work (the other deficiency) if - (a) the other deficiency was in existence when the work to which the warranty relates was completed, and (b) the person did not know, and could not reasonably be expected to have known, of the existence of the other deficiency when the warranty was previously enforced, and (c) the proceedings to enforce the warranty in relation to the other deficiency are brought within the period referred to in subsection (1).
Section 18E(2) provides an exception to the principles of res judicata, which preclude owners who have enforced the statutory warranties in respect of some defects in a building from bringing further claims in respect of further breaches of statutory warranty (see Honeywood v Munnings [2006] NSWCA 215 at [6]-[16]). Unless the owners can satisfy the requirements of s 18E(2), those principles of res judicata would bar the owners from bringing proceedings in respect of the slab under the rainwater tank.
There is no evidence either from the owners or from Debra or Garry Bourke to support the proposition that the defect in the foundations of the rainwater slab was not reasonably discoverable at the time of the commencement of the original proceedings or at the time those proceedings were resolved by consent orders. Nor was any evidence led from Mr Bournelis to that effect.
The owners' claim in respect of the slab under the rainwater tank must fail.

Margin, contingencies and GST

It was common ground between the parties that a 5% contingency and 10% GST should apply to all rectification costs in respect of which the owners have established an entitlement.
However, there was a difference of opinion between Mr Bournelis and Mr Ryan as to the appropriate margin to be added to the raw costs which I have assessed above. Mr Bournelis stated that the "industry standard" for remedial works was 30% plus contingency factor. Mr Ryan stated that "as an expert, now for over 25 years it's been between 15% and 20%".
I recognise that the margin likely to be charged by builders for remedial work, that is work which does not involve the construction of a new building or a substantial addition to an existing building, will attract a higher margin than other building work. However, Mr Bournelis' suggestion that the appropriate margin is 30% seems high, particularly when an allowance for contingency is also involved. Mr Bournelis did not provide any specific evidence to support his assertion that the appropriate margin was 30%.
By reason of my general preference for Mr Ryan's evidence as being more considered and my conclusion that Mr Bournelis' estimates tend to be excessive, I accept Mr Ryan's estimate of 20% as the appropriate level of margin to allow on all costs of rectification.
Accordingly, my calculation of the cost of rectification of the items remaining incomplete or damaged by the builder is as follows: Item 2 Door to scullery $240.00 Item 6 Render to al fresco brickwork 955.00 Item 10 Incomplete works upper hallway 295.00 Item 12 Laundry 270.00 Item 13 Internal wall patching 430.00 Item 14 Chipped and cracked tiles in powder room 90.00 Item 17 Balcony off master bedroom 325.00 Item 18 Chipped basin in master en-suite 500.00 Item 27 Stained face brickwork 13,680.00 $16,785.00 Margin 20% 3,357.00 $20,142.00 Contingencies 5% 1,007.10 $21,149.10 GST 10% 2,114.91 $23,264.01
Rounding to the nearest dollar, I will order the builder to pay the owners $23,264.
The parties sought an opportunity to make submissions in relation to the costs of the proceedings. I will include orders for the filing of submissions in relation to costs, which should address the question whether the issue of costs can be determined on the papers and without a further hearing.
My orders are: 1. The respondent, Wincrest Group Pty Ltd, is to pay the applicants the sum of $23,264 immediately. 2. Either party may file and serve written submissions within 14 days of the date of this decision seeking an order in relation to the costs of the proceedings. 3. If either party files submissions in accordance with order (2), the other party may file submissions in response within a further 14 days. 4. Any submissions filed in accordance with orders (2) and (3) 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). 1. If no submissions are filed in accordance with orders (2) and (3), there will be no order as to the costs of the application.

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: 17 August 2021

Home Building Regulation 1997(NSW)

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Judgment (13 paragraphs)

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Cases Cited (4)